IMPORTANT NOTICE

NOT FOR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the offeringcircular (the “Offering Circular”) attached to this e-mail. You are therefore advised to read this disclaimer carefully before reading,accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by thefollowing terms and conditions, including any modifications to them from time to time, each time you receive any information as aresult of such access. You acknowledge that the access to the Offering Circular is intended for use by you only and you agree youwill not forward or otherwise provide access to any other person.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE INTHE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

THE SECURITIES (THE “SECURITIES”) (AS DESCRIBED IN THE OFFERING CIRCULAR) HAVE NOT BEEN, ANDWILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHERJURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPTPURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THISOFFERING IS MADE SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO REGULATION S UNDER THESECURITIES ACT.

THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAYNOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND, IN PARTICULAR, MAY NOT BE FORWARDED TO ANYADDRESS IN THE UNITED STATES. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENTIN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN AVIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Confirmation of Your Representation: You have accessed the attached document on the basis that you have represented to GFSecurities (Hong Kong) Brokerage Limited, China Minsheng Banking Corp., Ltd., Hong Kong Branch, Oversea-Chinese BankingCorporation Limited, Orient Securities (Hong Kong) Limited and Shanghai Pudong Development Bank Co., Ltd. Hong KongBranch (the “Joint Lead Managers”) that: (1) you and any customers you represent are not in the United States, (2) the e-mailaddress that you gave us and to which this e-mail has been delivered is not located in the United States, (3) you consent to deliveryof this document and any amendments or supplements by electronic transmission, and (4) to the extent you purchase the Securities,you will be doing so in an offshore transaction as defined in regulations under the Securities Act in compliance with Regulation Sthereunder. This Offering Circular is not a prospectus for the purposes of the European Union’s Directive 2003/71/EC (and anyamendments thereto) as implemented in member states of the European Economic Area (the “Prospectus Directive”). This OfferingCircular has been prepared on the basis that all offers of the Bonds offered hereby made to persons in the European Economic Areawill be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus in connectionwith offers of such Bonds.

The communication of the attached document and any other document or materials relating to the issue of the securitiesoffered hereby is not being made, and such documents and/or materials have not been approved, by an authorised person for thepurposes of section 21 of the United Kingdom’s Financial Services and Markets Act 2000, as amended. Accordingly, suchdocuments and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom.The communication of such documents and/or materials as a financial promotion is only being made to those persons in the UnitedKingdom falling within the definition of investment professionals (as defined in Article 19 (5) of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2005 (the “Financial Promotion Order”), or within Article 49 (2) (a) to (d) of the FinancialPromotion Order, or to any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order (allsuch persons together being referred to as “relevant persons”). In the United Kingdom, the securities offered hereby are onlyavailable to, and any investment or investment activity to which the attached document relates will be engaged in only with, relevantpersons. Any person in the United Kingdom that is not a relevant person should not act or rely on the attached document or any ofits contents.

The Offering Circular has been made available to you in electronic form. You are reminded that documents transmitted viathis medium may be altered or changed during the process of transmission and consequently neither the issuer, the Joint LeadManagers nor any of their affiliates, directors, officers, employees, representatives, agents and each person who controls any of themaccepts any liability or responsibility whatsoever in respect of any such alteration or change to the Offering Circular distributed toyou in electronic format or any difference between the Offering Circular distributed to you in electronic format and the hard copyversion.

Restrictions: The Offering Circular is being furnished in connection with an offering in offshore transactions outside theUnited States in compliance with Regulation S under the Securities Act solely for the purpose of enabling a prospective investor toconsider the purchase of the Securities.

Nothing in this electronic transmission constitutes, and may not be used in connection with, an offer or an invitation by oron behalf of any of the issuer or the Joint Lead Managers to subscribe or purchase any of the Securities, in any place where offersor solicitations are not permitted by law and access has been limited so that it shall not constitute in the United States or elsewheredirected selling efforts (within the meaning of Regulation S under the Securities Act). If a jurisdiction requires that the offering bemade by a licensed broker or dealer and the Joint Lead Managers or any affiliate of the Joint Lead Managers is a licensed broker ordealer in that jurisdiction, the offering shall be deemed to be made by the Joint Lead Managers or such affiliate on behalf of theissuer in such jurisdiction. Any Securities to be issued in respect thereof will not be registered under the Securities Act and may notbe offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration.Access has been limited so that it shall not constitute a general solicitation in the United States or elsewhere. If you have gainedaccess to this transmission contrary to the foregoing restrictions, you will be unable to purchase any of the Securities.

You are reminded that you have accessed the Offering Circular on the basis that you are a person into whose possession theOffering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located.

Actions that you may not take: If you receive the Offering Circular by e-mail, you should not reply by e-mail to this electronictransmission, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generateby using the “Reply” function on your e-mail software, will be ignored or rejected.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and itis your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.

The contents of this offering circular have not been reviewed by any regulatory authority in Hong Kong. You are advised toexercise caution in relation to the offering. If you are in any doubt about any of the contents of this offering circular, you shouldobtain independent professional’s advice.

OFFERING CIRCULAR STRICTLY CONFIDENTIAL

Shangrao City Construction InvestmentDevelopment Group Company Limited上饒市城市建設投資開發集團有限公司

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

US$300,000,0005.7 PER CENT. SENIOR BONDS DUE 2020

ISSUE PRICE: 100.0 PER CENT.

The 5.7 per cent. senior bonds due 2020 (the “Bonds”) will be issued in the aggregate principal amount of US$300,000,000 by Shangrao CityConstruction Investment Development Group Company Limited (the “Company” or “Issuer”).

The Bonds will bear interest on their outstanding principal amount from and including 28 December 2017 at the rate of 5.7 per cent. per annum.Interest on the Bonds is payable semi-annually in arrear on 28 June and 28 December each year, commencing on 28 June 2018. Unless previously redeemedor purchased and cancelled, the Bonds will mature at their principal amount on 28 December 2020.

The Bonds will constitute direct, unconditional, unsubordinated and, subject to Condition 4(a) of the Terms and Conditions of the Bonds,unsecured obligations of the Company and shall at all times rank pari passu and without any preference among themselves. The payment obligations ofthe Company under the Bonds shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 4(a) of the Terms andConditions of the Bonds, at all times rank pari passu with all other present and future unsecured and unsubordinated obligations of the Company. Allpayments of principal, premium (if any) and interest by or on behalf of the Company in respect of the Bonds shall be made free and clear of, and withoutwithholding or deduction for, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected,withheld or assessed by or within the PRC to the extent described in “Terms and Conditions of the Bonds – Taxation”.

The Bonds may be redeemed at the option of the Company in whole, but not in part, at any time at their principal amount together with interestaccrued up to, but excluding, the date fixed for redemption in the event of certain changes affecting taxes of the PRC. At any time following the occurrenceof a Relevant Event (as defined in the Terms and Conditions of the Bonds), the holder of any Bond will have the right, at such holder’s option, to requirethe Company to redeem all, but not some only, of that holder’s Bonds on the Put Settlement Date (as defined in the Terms and Conditions of the Bonds) at101 per cent. (in the case of a Change of Control (as defined in the Terms and Conditions of the Bonds)) or 100 per cent. (in the case of a No RegistrationEvent (as defined in the Terms and Conditions of the Bonds)) of their principal amount, together with accrued interest up to, but excluding, such PutSettlement Date.

Investing in the Bonds involves certain risks. See “Risk Factors” beginning on page 17 for a discussion of certain risk factors to be considered inconnection with an investment in the Bonds.

The Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or thesecurities laws of any other jurisdiction, and, subject to certain exceptions, may not be offered or sold within the United States and are only being offeredand sold outside the United States in offshore transactions in compliance with Regulation S under the Securities Act (“Regulation S”). For a description ofthese and certain restrictions on offers and sales of the Bonds and the distribution of this Offering Circular, see “Subscription and Sale”.

The denomination of the Bonds shall be US$200,000 each and integral multiples of US$1,000 in excess thereof.Approval in-principle has been received from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation of

the Bonds on the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reportscontained herein. Approval in-principle from, admission to the Official List of, and listing and quotation of the Bonds on, the SGX-ST are not to be takenas an indication of the merits of the Company or any other subsidiary or associated company of the Company or the Bonds.

Fitch Ratings (“Fitch”) has assigned a corporate rating of BB+ to the Company with a stable outlook. The Bonds are expected to be rated BB+ byFitch. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time bythe assigning rating agency. Investors should evaluate the rating independently of other ratings (if any) of the Bonds or other securities of the Company.

Pursuant to the Notice on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知) (the “NDRC Notice”) promulgated by National Development and Reform Commission (the“NDRC”) of the PRC on 14 September 2015 which came into effect on the same day, the Company has registered the issuance of the Bonds with theNDRC and obtained a certificate from the NDRC on 7 November 2017 evidencing such registration. Pursuant to the NDRC Notice, the Company will fileor cause to be filed the requisite information and documents relating to the issue of the Bonds with the NDRC within 10 PRC Business Days (as defined inthe Terms and Conditions of the Bonds) after the Issue Date.

The Bonds will be represented initially by beneficial interests in a global certificate (the “Global Certificate”) in registered form which will beregistered in the name of a nominee of, and shall be deposited on 28 December 2017 with, a common depositary for Euroclear Bank SA/NV (“Euroclear”)and Clearstream Banking S.A. (“Clearstream”). Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected onlythrough, records maintained by Euroclear and Clearstream. Except as described herein, certificates for Bonds will not be issued in exchange for interests inthe Global Certificate.

Sole Global Coordinator, Joint Bookrunner and Joint Lead Manager

GF SecuritiesJoint Bookrunners and Joint Lead Managers

China MinshengBanking Corp., Ltd.,Hong Kong Branch

OCBC Bank Orient Securities(Hong Kong)

Shanghai PudongDevelopment BankHong Kong Branch

The date of this Offering Circular is 19 December 2017

* for identification purposes only

TABLE OF CONTENTS

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . 1

SUMMARY CONSOLIDATEDFINANCIAL INFORMATION OFTHE COMPANY . . . . . . . . . . . . . . . 4

SUMMARY OF THE OFFERING . . 13

RISK FACTORS . . . . . . . . . . . . . . . . . 17

TERMS AND CONDITIONS OF THEBONDS . . . . . . . . . . . . . . . . . . . . . . 47

SUMMARY OF PROVISIONSRELATING TO THE BONDS INGLOBAL FORM . . . . . . . . . . . . . . . 68

USE OF PROCEEDS . . . . . . . . . . . . . 70

EXCHANGE RATEINFORMATION . . . . . . . . . . . . . . . 71

Page

CAPITALISATION AND

INDEBTEDNESS OF

THE COMPANY . . . . . . . . . . . . . . . 73

DESCRIPTION OF

THE COMPANY . . . . . . . . . . . . . . . 74

DIRECTORS, SUPERVISORS AND

SENIOR MANAGEMENT . . . . . . . 92

PRC LAWS AND REGULATIONS . . 96

TAXATION. . . . . . . . . . . . . . . . . . . . . 108

SUBSCRIPTION AND SALE . . . . . . 110

GENERAL INFORMATION . . . . . . 114

INDEX TO FINANCIAL

INFORMATION . . . . . . . . . . . . . . . F-1

IMPORTANT NOTICE

The Company has prepared this Offering Circular and is solely responsible for its

contents. The Company accepts full responsibility for the accuracy of the information

contained in this document and confirms, having made all reasonable enquiries, that to the

best of its knowledge and belief there are no other facts the omission of which would make

any statement herein misleading.

This Offering Circular has been prepared by the Company solely for use in connection

with the proposed offering of the Bonds described in this Offering Circular. The distribution

of this Offering Circular and the offering of the Bonds in certain jurisdictions may be

restricted by law. Persons into whose possession this Offering Circular comes are required by

the Issuer and GF Securities (Hong Kong) Brokerage Limited, China Minsheng Banking

Corp., Ltd., Hong Kong Branch, Oversea-Chinese Banking Corporation Limited, Orient

Securities (Hong Kong) Limited and Shanghai Pudong Development Bank Co., Ltd. Hong

Kong Branch (the “Joint Lead Managers”) to inform themselves about and to observe any

such restrictions. No action is being taken to permit a public offering of the Bonds or the

possession or distribution of this Offering Circular or any offering or publicity material

relating to the Bonds in any jurisdiction where such action is prohibited by law would be

required for such purposes. There are restrictions on the offer and sale of the Bonds and the

circulation of documents relating thereto, in certain jurisdictions and to persons connected

therewith. For a description of certain further restrictions on offers, sales and resales of the

Bonds and the distribution of this Offering Circular, see “Subscription and Sale”. This

Offering Circular does not constitute an offer of, or an invitation to purchase, any of the

Bonds in any jurisdiction in which such offer or invitation would be unlawful. By purchasing

the Bonds, investors represent and agree to all of those provisions contained in that section of

this Offering Circular.

– i –

No person has been or is authorised in connection with the issue, offer or sale of the

Bonds to give any information or to make any representation concerning the Company or the

Bonds, other than as contained herein and, if given or made, any such other information or

representation should not be relied upon as having been authorised by the Company, the Joint

Lead Managers, the Trustee or the Agents (as defined in the Terms and Conditions of the

Bonds) or any of their respective affiliates, directors, officers, employees, agents, advisors or

representatives. Neither the delivery of this Offering Circular nor any offering, sale or delivery

made in connection with the issue of the Bonds shall, under any circumstances, constitute a

representation that there has been no change or development reasonably likely to involve a

change in the affairs of the Company or the Group, or any of them since the date hereof or

create any implication that the information contained herein is correct as at any date

subsequent to the date hereof. This Offering Circular does not constitute an offer of, or an

invitation by or on behalf of the Issuer, the Joint Lead Managers, the Trustee or the Agents or

any of their respective affiliates, directors, officers, employees, agents, advisors or

representatives to subscribe for or purchase any of the Bonds and may not be used for the

purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any circumstances

in which such offer or solicitation is not authorised or is unlawful.

This Offering Circular is being furnished by the Company in connection with the offering

of the Bonds exempt from registration under the Securities Act solely for the purpose of

enabling a prospective investor to consider purchasing the Bonds. Investors must not use this

Offering Circular for any other purpose, make copies of any part of this Offering Circular or

give a copy of it to any other person, or disclose any information in this Offering Circular to

any other person. The information contained in this Offering Circular has been provided by

the Company. Any reproduction or distribution of this Offering Circular, in whole or in part,

and any disclosure of its contents or use of any information herein for any purpose other than

considering an investment in the Bonds offered by this Offering Circular is prohibited. Each

offeree of the Bonds, by accepting delivery of this Offering Circular, agrees to the foregoing.

This Offering Circular is not a prospectus for the purposes of the European Union’s

Directive 2003/71/EC (and any amendments thereto) as implemented in member states of the

European Economic Area (the “Prospectus Directive”). This Offering Circular has been

prepared on the basis that all offers of the Bonds offered hereby made to persons in the

European Economic Area will be made pursuant to an exemption under the Prospectus

Directive from the requirement to produce a prospectus in connection with offers of such

Bonds.

– ii –

The communication of this Offering Circular and any other document or materials

relating to the issue of the Bonds offered hereby is not being made, and such documents

and/or materials have not been approved, by an authorised person for the purposes of section

21 of the United Kingdom’s Financial Services and Markets Act 2000. Accordingly, such

documents and/or materials are not being distributed to, and must not be passed on to, the

general public in the United Kingdom. The communication of such documents and/or

materials as a financial promotion is only being made to those persons in the United Kingdom

falling within the definition of investment professionals (as defined in Article 19 (5) of the

Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Financial

Promotion Order”), or within Article 49 (2) (a) to (d) of the Financial Promotion Order, or to

any other persons to whom it may otherwise lawfully be made under the Financial Promotion

Order (all such persons together being referred to as “relevant persons”). In the United

Kingdom, the Bonds offered hereby are only available to, and any investment or investment

activity to which this Offering Circular relates will be engaged in only with, relevant persons.

Any person in the United Kingdom that is not a relevant person should not act or rely on this

Offering Circular or any of its contents.

No representation or warranty, express or implied, is made or given by the Joint Lead

Managers, the Trustee or the Agents or any of their respective affiliates, directors, officers,

employees, agents, advisers or representatives as to the accuracy, completeness or sufficiency

of the information contained in this Offering Circular or any other information supplied in

connection with the Bonds and nothing contained in this Offering Circular is, or shall be

relied upon as, a promise, representation or warranty by the Joint Lead Managers, the Trustee

or the Agents or any of their respective affiliates, directors, officers, employees, agents,

advisors or representatives. The Joint Lead Managers, the Trustee and the Agents and their

respective affiliates have not independently verified any of the information contained in this

Offering Circular and can give no assurance that this information is accurate, truthful or

complete. Each person receiving this Offering Circular acknowledges that such person has not

relied on the Joint Lead Managers, the Trustee or the Agents or any of their respective

directors, officers, employees, agents, advisers or affiliates in connection with its investigation

of the accuracy of such information or its investment decision, and each such person must rely

on its own examination of the Company and the merits and risks involved in investing in the

Bonds. See “Risk Factors” for a discussion of certain factors to be considered in connection

with an investment in the Bonds.

To the fullest extent permitted by law, none of the Joint Lead Managers, the Trustee, the

Agents or any of their respective affiliates, directors, officers, employees, agents, advisers or

representatives accepts any responsibility for the contents of this Offering Circular or any

statement made or purported to be made by any such person or on its behalf in connection

with the Issuer, the Group, the issue and offering of the Bonds. Each of the Joint Lead

Managers, the Trustee, the Agents and their respective affiliates, directors, officers, employees,

agents, advisers or representatives accordingly disclaims all and any liability whether arising in

tort or contract or otherwise which it might otherwise have in respect of this Offering Circular

or any such statement.

– iii –

None of the Joint Lead Managers, the Trustee, the Agents or any of their respective

affiliates, directors, officers, employees, agents, advisers or representatives undertakes to

review the financial condition or affairs of the Company for so long as the Bonds remain

outstanding nor to advise any investor or potential investor of the Bonds of any information

coming to the attention of any of the Joint Lead Managers, the Trustee, the Agents or their

respective affiliates, directors, officers, employees, agents, advisers or representatives.

This Offering Circular should not be considered as a recommendation by the Joint Lead

Managers, the Trustee or the Agents that any recipient of this Offering Circular should

purchase the Bonds. Each potential purchaser of the Bonds should determine for itself the

relevance of the information contained in this Offering Circular and its purchase of the Bonds

should be based upon such investigations with its own tax, legal and business advisors as it

deems necessary.

Any of the JLMs or its affiliates may purchase the Bonds for its or their own account and

enter into transactions, including credit derivatives, such as asset swaps, repackaging and

credit default swaps relating to the Bonds and/or other securities of the Company or its

subsidiaries or associates at the same time as the offer and sale of the Bonds or in secondary

market transactions. Such transactions may be carried out as bilateral trades with selected

counterparties and separately from any existing sale or resale of the Bonds to which this

Offering Circular relates (notwithstanding that such selected counterparties may also be

purchasers of the Bonds). Furthermore, investors in the Bonds may include entities affiliated

with the Group.

Investors are advised to read and understand the contents of this Offering Circular

before investing. If in doubt, investors should consult his or her advisor.

IN CONNECTION WITH THE ISSUE OF THE BONDS, GF SECURITIES (HONG

KONG) BROKERAGE LIMITED ACTING IN ITS CAPACITY AS STABILISING

COORDINATOR (THE “STABILISING COORDINATOR”) (OR PERSONS ACTING ON

BEHALF OF THE STABILISING COORDINATOR) MAY, TO THE EXTENT

PERMITTED BY APPLICABLE LAWS AND DIRECTIVES, OVER-ALLOT THE BONDS

OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE

OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE

PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT ANY STABILISING

COORDINATOR (OR PERSONS ACTING ON BEHALF OF ANY STABILISING

COORDINATOR) WILL UNDERTAKE STABILISATION ACTION. ANY

STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH

ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE BONDS

IS MADE AND SUCH STABILISING, IF COMMENCED, MAY BE DISCONTINUED AT

ANY TIME AND MUST BE BROUGHT TO AN END NO LATER THAN THE EARLIER

OF 30 DAYS AFTER THE ISSUE DATE OF THE BONDS AND 60 DAYS AFTER THE

DATE OF THE ALLOTMENT OF THE BONDS.

– iv –

Approval in-principle from, admission to the Official List of, and listing and quotation ofthe Bonds on, the SGX-ST are not to be taken as an indication of the merits of the Companyor any other subsidiary or associated company of the Company or the Bonds. In making aninvestment decision, investors must rely on their own examination of the Company and theterms of the offering of the Bonds, including the merits and risks involved. See “Risk Factors”for a discussion of certain factors to be considered in connection with an investment in theBonds. The Company, the Joint Lead Managers, the Trustee and the Agents (in each case asdefined herein) and their respective directors, officers, advisers, employees, agents, affiliatesand representatives are not making any representation to any purchaser of the Bondsregarding the legality of any investment in the Bonds by such purchaser under any legalinvestment or similar laws or regulations. The contents of this Offering Circular should not beconstrued as providing legal, business, accounting or investment advice. Each person receivingthis Offering Circular acknowledges that such person has not relied on the Joint LeadManagers, the Trustee, the Agents or any of their respective directors, officers, advisers,employees, agents, affiliates and representatives in connection with its investigation of theaccuracy of such information or its investment decision.

Market data and certain industry forecasts and statistics in this Offering Circular havebeen obtained from both public and private sources, including market research, publiclyavailable information and industry publications. Although the Company believes thisinformation to be reliable, this information has not been independently verified by theCompany, the Joint Lead Managers, the Trustee or the Agents or their respective affiliates,directors, officers, employees, agents, advisers or representatives, and none of the Company,the Joint Lead Managers, the Trustee or the Agents or their respective affiliates, directors,officers, employees, agents, advisers or representatives makes any representation as to theaccuracy or completeness of that information. In addition, third party information providersmay have obtained information from market participants and such information may not havebeen independently verified. This Offering Circular summarises certain documents and otherinformation, and investors should refer to them for a more complete understanding of what isdiscussed in those documents.

The Company, having made all reasonable inquiries, confirm that: (i) this OfferingCircular contains all information with respect to the Company, its subsidiaries and affiliatesreferred to in this Offering Circular and the Bonds; (ii) the statements contained in thisOffering Circular relating to the Company and its subsidiaries and affiliates referred herein,are true and accurate and do not omit to state a material fact necessary in order to make thestatements herein, in the light of the circumstances under which they were made, misleading;(iii) the opinions and intentions expressed in this Offering Circular with regard to theCompany and its subsidiaries and affiliates are honestly held, have been reached afterconsidering all relevant circumstances and are based on reasonable assumptions; (iv) there areno other facts in relation to Company, the Group and the Bonds, the omission of whichwould, in the context of the issue and offering of the Bonds, make this Offering Circularmisleading; and (v) the Company has made all reasonable enquiries to ascertain such facts andto verify the accuracy of all such information and statements. They accept responsibilityaccordingly.

The contents of this Offering Circular have not been reviewed by any regulatoryauthority in any jurisdiction. Investors are advised to exercise caution in relation to the offer.If investors are in any doubt about any of the contents of this Offering Circular, investorsshould obtain independent professional advice.

– v –

PRESENTATION OF FINANCIAL INFORMATION

This Offering Circular contains the audited consolidated financial statements of the

Company as at and for the years ended 31 December 2014, 2015 and 2016 and the reviewed

consolidated financial statements of the Company as at and for the nine months ended 30

September 2016 and 2017 (the “Company’s Consolidated Financial Statements”), which were

prepared in accordance with PRC GAAP and have been audited or reviewed by Zhongxinghua

Certified Public Accountants LLP. The Company has not prepared its financial statements or

consolidated financial statements, as the case may be, in accordance with International

Financial Reporting Standards (“IFRS”).

The Company’s Consolidated Financial Statements have been prepared in Chinese only

and an English translation of such financial statements (collectively, the “Financial Statements

Translation”) has been prepared by Zhongxinghua Certified Public Accountants LLP and

included in this Offering Circular for reference only. None of the Joint Lead Managers or their

respective directors, officers, employees, agents, advisers or representatives has independently

verified or checked the accuracy of the Financial Statements Translation and can give no

assurance that the information contained in the Financial Statements Translation is accurate,

truthful or complete.

This Offering Circular contains certain information regarding the Company’s EBITDA.

EBITDA is not a standard measure under PRC GAAP. EBITDA is a widely used financial

indicator of a company’s ability to service and incur debt. EBITDA should not be considered

in isolation or construed as an alternative to cash flows, profit for the year or any other

measure of financial performance or as an indicator of the Company’s operating performance,

liquidity, profitability or cash flows generated by operating, investing or financing activities.

The Company has included EBITDA because it believes it is a useful supplement to cash flow

data as a measure of the Company’s performance and its ability to generate cash flow from

operations to cover debt service and taxes. EBITDA presented in this Offering Circular may

not be comparable to similarly titled measures presented by other companies. Investors should

not compare the Company’s EBITDA to EBITDA presented by other companies because not

all companies use the same definition.

ROUNDING

In this Offering Circular, where information has been presented in thousands or millions

of units, amounts may have been rounded up or down. Accordingly, figures shown as totals in

certain table may not be an arithmetic aggregation of the figures which precede them.

References to information in billions of units are to the equivalent of a thousand million

units.

– vi –

CERTAIN DEFINITIONS AND CONVENTIONS

In this Offering Circular, unless otherwise indicated or the context otherwise requires,

references to:

Unless the context otherwise requires, references to “2014”, “2015” and “2016” in this

Offering Circular means the Company’s financial years ended 31 December 2014, 2015 and

2016, respectively.

• The “Company”, the “Group” and words of similar import refers to Shangrao CityConstruction Investment Development Group Company Limited itself, or toShangrao City Construction Development Group Company Limited and itsconsolidated subsidiaries, as the context requires;

• “China” or the “PRC” refers to the People’s Republic of China, excluding, forpurposes of this Offering Circular only, Taiwan, Hong Kong and the Macau SpecialAdministrative Region;

• “Hong Kong” refers to Hong Kong Special Administrative Region of the PRC;

• “IFRS” refers to the International Financial Reporting Standards;

• “MOFCOM” refers to the Ministry of Commerce of the PRC;

• “NDRC” refers to the National Development and Reform Commission of the PRC;

• “PBOC” refers to the People’s Bank of China, the central bank of the PRC;

• “PRC GAAP” refers to the generally accepted accounting principles in the People’sRepublic of China;

• The “PRC government” refers to the central government of China and its politicalsubdivisions, including provincial, municipal and other regional or local governmententities, and instrumentalities thereof, or where the context requires, any of them;

• “CNY”, “RMB” or “Renminbi” refers to the legal currency of the PRC;

• “SAFE” refers to the State Administration of Foreign Exchange of the PRC or itscompetent local counterpart;

• “SASAC” refers to the State-owned Assets Supervision and AdministrationCommission of the PRC;

• “SAT” refers to the State Administration of Taxation of the PRC;

• “SOE” refers to state-owned enterprises; and

• “US$” or “U.S. dollars” refers to the legal currency of the United States.

– vii –

The Company records and publishes its financial statements in Renminbi. Unlessotherwise stated in this Offering Circular, all translations from Renminbi into U.S. dollarswere made at the rate of RMB6.6533 to US$1.00, the noon buying rate in New York City forcable transfers payable in Renminbi as certified for customs purposes by the Federal ReserveBank of New York on 30 September 2017. All such translations in this Offering Circular areprovided solely for your convenience and no representation is made that the Renminbiamounts referred to herein have been, could have been or could be converted into U.S. dollars,or vice versa, at any particular rate, or at all. For further information relating to the exchangerates, see “Exchange Rate Information”.

Unless specified otherwise, references in this Offering Circular to, and financial andother information presented with respect to, the Company are to such information of theCompany compiled on a consolidated basis.

The English names of the PRC nationals, entities, departments, facilities, laws,regulations, certificates, titles and the like are translations of their Chinese names and areincluded for identification purposes only.

FORWARD-LOOKING STATEMENTS

This Offering Circular contains certain forward-looking statements. All statements otherthan statements of historical facts contained in this Offering Circular constitute“forward-looking statements”. Some of these statements can be identified by forward-lookingterms, such as “anticipate”, “target”, “believe”, “can”, “would”, “could”, “estimate”,“expect”, “aim”, “intend”, “may”, “plan”, “will”, “would” or similar words. However, thesewords are not the exclusive means of identifying forward-looking statements. All statementsregarding expected financial condition and results of operations, business plans and prospectsare forward-looking statements. These forward-looking statements include but are not limitedto statements as to the business strategy, revenue and profitability, planned projects and othermatters as they relate to the Company discussed in this Offering Circular regarding mattersthat are not historical fact. These forward-looking statements and any other projectionscontained in this Offering Circular (whether made by the Company or by any third party)involve known and unknown risks, including those disclosed under the caption “RiskFactors”, assumptions, uncertainties and other factors that may cause the actual results,performance or achievements of the Company to be materially different from any futureresults, performance or achievements expressed or implied by such forward-lookingstatements or other projections.

These forward-looking statements speak only as at the date of this Offering Circular. TheCompany expressly disclaims any obligation or undertaking to release publicly any updates orrevisions to any forward-looking statement contained herein to reflect any change in theCompany’s expectations with regard thereto or any change of events, conditions orcircumstances, on which any such statement was based.

The factors that could cause the Company’s actual results, performance andachievements of to be materially different include, among others:

• risks associated with the Company’s business activities;

• general economic and political conditions, including those related to the PRC;

– viii –

• the Company’s ability to implement the Company’s business strategy and plan ofoperation;

• the Company’s ability to expand and manage the Company’s growth;

• the Company’s financial condition and results of operations;

• fluctuations in foreign currency exchange rates; and

• those other risks identified in the “Risk Factors” section of this Offering Circular.

The Company does not undertake any obligation to update or revise publicly any of theopinions or forward-looking statements expressed in this Offering Circular as a result of anynew information, future events or otherwise.

– ix –

SUMMARY

The summary below is only intended to provide a limited overview of information described

in more detail elsewhere in this Offering Circular. As it is a summary, it does not contain all of

the information that may be important to investors and terms defined elsewhere in this Offering

Circular shall have the same meanings when used in this summary. Prospective investors should,

therefore, read this Offering Circular in its entirety.

OVERVIEW

The Company is the primary financing, investment, asset management and capital

operation platform of the Shangrao government, Jiangxi Province, China, and is controlled by

Shangrao SASAC. Since its establishment in 2002, the Company has played an essential and

active role in implementing the Shangrao government’s major strategic initiatives for urban

planning and municipal construction, and has received strong financial and operational

support from the Shangrao government. The Company’s business primarily focuses on

infrastructure projects in Shangrao and the provision of financing services and asset

management for Shangrao public services. As at the date of this Offering Circular, the

Company has 12 wholly owned subsidiaries, six majority owned subsidiaries and 12 joint

ventures and associate companies, with a diversified business portfolio, including

infrastructure and resettlement housing construction, land development and other businesses

such as hotel management, public transportation, sewage treatment and building materials

trading. As at 30 September 2017, the Company had total assets of RMB58,390.2 million and

net assets of RMB28,321.7 million, with a debt to asset ratio of 51.5 per cent. The Company’s

enterprise credit rating was “AA+” in 2017 by China Cheng Xin International Credit Rating

Co., Ltd.

Set forth below is an overview of the principal business segments of the Company as at

the date of this Offering Circular:

• Infrastructure and resettlement housing construction. As the primary infrastructureand resettlement housing construction management platform of the Shangraogovernment, the Company has undertaken most of the infrastructure constructionprojects in Shangrao, including road, bridge and transportation hub construction,and park renovation. In addition, the Company has also undertaken most ofresettlement housing constructions for relocated households due to the urbandevelopment of Shangrao. For the years ended 31 December 2014, 2015 and 2016,and the nine months ended 30 September 2017, the Company’s revenue frominfrastructure and resettlement housing construction was nil, RMB994.3 million,RMB1,308.6 million and RMB1,334.9 million (US$200.6 million), respectively,representing 0 per cent., 62.4 per cent., 62.0 per cent. and 82.1 per cent.,respectively, of the Company’s total revenue.

– 1 –

• Land development. Besides infrastructure and resettlement housing construction, theCompany also conducts land development projects, including land transfer and landconsolidation. As at 30 September 2017, the Company has completed six landtransfer projects with an aggregate site area of approximately 447,090 million sq.m.and obtained the total land transfer fees of approximately RMB1,984 million. As atthe same date, the Company was undertaking two land consolidation projects withan aggregate site area of approximately 3,779,413 million sq.m. For the years ended31 December 2014, 2015 and 2016, and the nine months ended 30 September 2017,the Company’s revenue from land development was RMB820.0 million, RMB452.0million, RMB603.8 million and RMB143.2 million (US$21.5 million), respectively,representing 90.0 per cent., 28.4 per cent., 28.6 per cent. and 8.7 per cent.,respectively, of the Company’s total revenue.

• Others. To diversify the Company’s business portfolio, the Company has alsoinvested in hotel management, public transportation services, sewage treatment andbuilding materials trading, either through its subsidiaries or joint ventures. Inaddition, as the primary financing platform of Shangrao SASAC, the Company hasestablished cooperation relationship with more than 50 financial institutions tofinance the infrastructure projects in Shangrao since its establishment. As at 30September 2017, the aggregated paid-in investment for such projects wasapproximately RMB49.6 billion. For the years ended 31 December 2014, 2015 and2016, and the nine months ended 30 September 2017, the Company’s revenue fromother businesses was RMB92.0 million, RMB147.3 million, RMB199.3 million andRMB150.2 million (US$22.6 million), respectively, representing 10.1 per cent., 9.2per cent., 9.4 per cent. and 9.2 per cent., respectively, of the Company’s totalrevenue.

For the years ended 31 December 2014, 2015 and 2016, and the nine months ended 30September 2017, the Company’s total revenue amounted to approximately RMB912.0 million,RMB1,593.6 million, RMB2,111.6 million and RMB1,638.2 million (US$246.2 million),respectively. For the same periods, the Company’s profit was approximated RMB158.9 million,RMB247.0 million, RMB376.1 million and RMB316.8 million (US$47.6 million), respectively.

COMPETITIVE STRENGTHS

The Group believes that its competitive strengths outlined below distinguish it from itscompetitors and are important to its success and future development:

• Primary financing, investment, asset management and capital operation platformunder Shangrao SASAC, with strong support from Shangrao government;

• Diversified funding channels and strong financing capacity; and

• Experienced management and operational teams with sound corporate governance.

– 2 –

BUSINESS STRATEGIES

The Group will continue to increase the value of its assets, optimise its capital structureand enhance its operational efficiency to become a top-tier state-owned capital operationalplatform in support of the “One Belt One Road Initiative”, supply-side reforms and industrialupgrade of the PRC government through implementing the following strategies:

• Continue to enhance the Group’s position as the primary financing, investment,asset management and capital operation platform in Shangrao and promote itsfunctions to optimize state-owned capital and assets;

• Continue to adopt centralised management of the Group’s capital and a prudentfinancial policy to control cost and improve profitability; and

• Strengthen risk management and internal control systems.

RECENT DEVELOPMENTS

On 26 October 2017, China Development Bank Corporation, Jiangxi Branch, granted aRMB50.0 million loan with an annual interest rate of 4.4 per cent. and a term of 25 years. On2 November 2017, Industrial Bank, Nanchang Branch granted a RMB500.0 million loan withan annual interest rate of 6.2 per cent. and a term of two years.

GENERAL INFORMATION

We were incorporated in the PRC in 2002. Our headquarters and principal place ofbusiness is at No. 84 Zhongshan Road, Xinzhou District, Shangrao, Jiangxi Province, PRC.Our website is http://www.jxsrct.com/. Information contained on our website does notconstitute part of this offering memorandum.

– 3 –

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY

The following tables set forth the Company’s selected financial information as at and for theperiods indicated. The selected financial information as at or for the years ended 31 December2014, 2015 and 2016 and as at or for the nine months ended 30 September 2016 and 2017 setforth below is derived from and should be read in conjunction with the financial statements of theCompany as at or for the years ended 31 December 2014, 2015 and 2016 and as at or for the ninemonths ended 30 September 2017, including the notes thereto, and the auditor’s report in respectof the years ended 31 December 2015 and 2016 which have been audited by ZhongxinghuaCertified Public Accountants LLP and the nine months ended 30 September 2017 which havebeen reviewed by Zhongxinghua Certified Public Accountants LLP and which are includedelsewhere in this Offering Circular. Although the Company’s financial information has beenprepared and presented in accordance with PRC GAAP, the financial statements as at or for theyears ended 31 December 2014 and 2015 were prepared in accordance with the requirements ofChinese Accounting Standards for Business Enterprises and Accounting System for BusinessEnterprises (企業會計制度), and the financial statemtents as at or for the years ended 31December 2016 and as at or for the nine months ended 30 September 2017 were prepared inaccordance with the requirements of the Accounting Standards for Business Enterprises (企業會計準則). Therefore, the line items discussed in financial statements prepared according to thesetwo accounting standards are not identical. In the financial statements as at or for the year ended31 December 2016, the adjusted financial figures as at or for the year ended 31 December 2015according to the requirements of Accounting Standards for Business Enterprises are alsoenclosed. Unless indicated otherwise, all financial figures as at or for the year ended 31December 2015 are those adjusted according to the requirements of Accounting Standards forBusiness Enterprises. Prospective investors should read the summary audited consolidatedfinancial information below in conjunction with the Company’s audited consolidated financialstatements and the related notes included elsewhere in this Offering Circular. Historical resultsare not necessarily indicative of results that may be achieved in any future period.

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Summary Consolidated Income Statement of the Company

The following table sets forth the summary consolidated income statement of theCompany for the years ended 31 December 2014 and 2015. Financial figures in the followingtable are derived from the audited financial report of the Company for the year ended 31December 2015.

For the year ended 31 December

2014 2015

(RMB) (RMB)Revenue from main operations ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 894,128,692.93 1,550,549,346.34

Less: Costs of main operations ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 766,929,285.29 1,405,173,320.11Business taxes and surtaxes⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,317,330.13 11,467,838.95

Gross profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 123,882,077.51 133,908,187.28Add: Income from other operations ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 16,630,673.64 42,147,839.36Less: Selling expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 16,552,890.92 16,876,981.48

General and administrative expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 26,999,997.93 73,822,215.66Financial expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 36,268,523.82 83,320,287.84

Operating profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 60,691,338.48 2,036,541.66Add: Investment income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 26,505,979.86 5,020,594.43

Revenue from subsidies ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 72,000,000.00 232,479,038.20Non-operating income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 126,086.87 691,375.40

Less: Non-operating expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 454,656.48 6,961,625.06Total profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 158,868,748.73 233,265,924.64

Less: Income tax ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 19,616,715.63 24,324,821.17Profits or losses attributable to minority interest ⋅ ⋅ ⋅ ⋅ ⋅ -1,666,943.69

Add: Unrecognized investment loss ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Net profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 139,252,033.10 210,608,047.16

Add: Undistributed profits at the beginning of year ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 833,918,420.48 959,247,549.14Profits available for distribution ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 973,170,453.58 1,169,855,596.30

Less: Appropriation to statutory surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 13,922,904.44 22,089,575.04Less: Appropriation to statutory public welfare fund ⋅ ⋅

Employee benefits and bonus ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Profit reinvestment ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Profits available for distribution to shareholders ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 959,247,549.14 1,147,766,021.26Less: Preferred dividends payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Appropriation to discretionary surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Common dividends payable⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 73,478,000.00Common dividends conversed to capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Other income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Undistributed profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 959,247,549.14 1,074,288,021.26Other financial dataEBITDA(1) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 230,717,619.58 418,752,009.48EBITDA Margin(2) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 25.30% 26.28%

– 5 –

Notes:

(1) We calculate EBITDA by adding back interest expense, depreciation, amortization and tax to net profit.EBITDA is not a standard measure under PRC GAAP. EBITDA is a widely used financial indicator of acompany’s ability to service and incur debt. EBITDA should not be considered in isolation or construedas an alternative to cash flows, profit attributable to shareholders or any other measure of performanceor as an indicator of our operating performance, liquidity, profitability or cash flows generated byoperating, investing or financing activities. EBITDA does not account for taxes, net finance costs anddepreciation and amortization. In evaluating EBITDA, we believe that investors should consider, amongother things, the components of EBITDA such as turnover and operating expenses and the amount bywith EBITDA exceeds capital expenditures and other charges. We have included EBITDA hereinbecause we believe it is a useful supplement to cash flow data as a measure of our performance and ourability to generate cash from operations to cover debt service and taxes. EBITDA presented herein maynot be comparable to similarly titled measures presented by other companies. Investors should notcompare our EBITDA presented by other companies because not all companies use be same definition.

(2) EBITDA margin is calculated by dividing EBITDA by revenue.

– 6 –

The following table sets forth the summary consolidated income statement of theCompany for the years ended 31 December 2015 and 2016, and the nine months ended 30September 2016 and 2017. Financial Figures in the following table are derived from theaudited financial report of the Company for the year ended 31 December 2016 and thereviewed financial report of the Company for the nine months ended 30 September 2017.

For the years ended 31 December For the nine months ended 30 September

2015(3) 2016 2016 2017

(RMB) (RMB) (US$) (RMB) (RMB) (US$)(unaudited) (unaudited) (unaudited) (unaudited)

Total operating revenue ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,593,602,260.34 2,111,628,200.81 317,380,578.18 1,362,199,443.09 1,638,248,069.09 246,230,903.32Including: Operating income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,593,602,260.34 2,111,628,200.81 317,380,578.18 1,362,199,443.09 1,638,248,069.09 246,230,903.32

Total operating costs ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,590,240,072.68 2,133,256,305.99 320,631,311.68 1,370,276,624.89 1,671,728,930.20 251,263,122.09Including: Operating expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,406,078,394.75 1,806,494,079.58 271,518,506.54 1,131,726,213.63 1,459,154,431.96 219,312,887.13

Business taxes and surtaxes ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 11,467,838.95 25,251,030.63 3,795,264.10 12,015,140.85 18,326,879.61 2,754,554.82Selling expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 16,876,981.48 19,294,327.29 2,899,963.52 13,408,571.62 12,774,992.84 1,920,098.72General and administrative expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 69,209,058.64 72,630,608.89 10,916,478.87 50,478,563.34 70,841,653.28 1,064,382.08Including: Research and development expenses ⋅ ⋅Financial expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 83,320,287.84 192,636,322.76 28,953,500.18 141,417,100.48 98,848,648.98 14,857,085.80Including: Interest expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 88,557,507.80 198,180,155.50 29,786,745.75

Less: Interest income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 5,655,673.23 5,767,482.07 866,860.37Exchange net losses (“-” for gains) ⋅ ⋅

Asset impairment losses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,287,511.02 16,949,936.84 2,547,598.46 21,231,034.97 11,782,323.53 1,770,899.18Others ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Add: Gains from changes in fair value (“-” for losses) ⋅ ⋅ ⋅Investment income (“-” for losses) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 17,395,054.43 30,233,502.05 4,544,136.30 19,881,503.92 7,809,867.22 1,173,833.62Including: Income from investments in associates and

joint ventures ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ -12,301,961.46 3,200,878.55 481,096.38 2,500,658.92 -17,864,967.10 -2685128.75Operating profits (“-” for losses) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 20,757,242.09 8,605,396.87 1,293,402.80 11,804,322.12 -25,670,993.89 -3858385.15

Add: Non-operating income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 233,170,413.60 370,937,894.97 55,752,467.94 285,223,925.37 344,376,609.74 51,760,270.80Including: Gains from disposal of non-current assets ⋅ 10,435.00 1,568.39

Profits from exchange of non-monetaryassets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Government grants ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 232,479,038.20 370,598,900.00 55,701,516.54 284,945,005.19 344,177,639.06 51,730,365.24Profits from debt restructuring ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Less: Non-operating expenses⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6,961,625.06 3,480,885.26 523,181.77 1,743,400.58 1,917,413.29 288,189.81Including: Losses from disposal of non-current assets ⋅ 1,451,322.88 374,475.71 56,284.21 373,568.75 5,992.65 900.70

Losses from exchange of non-monetaryassets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Losses from debt restructuring ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total profits (“-” for losses) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 246,966,030.63 376,062,406.58 56,522,688.98 295,284,846.91 316,788,202.56 47,613,695.84

Less: Income tax expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 25,204,993.37 19,614,073.64 2,948,021.83 15,478,688.49 10,248,392.46 1,540,347.27Net profits (“-” for losses) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 221,761,037.26 356,448,332.94 53,574,667.15 279,806,158.42 306,539,810.10 46,073,348.58Net profits attributable to owners of the parent company ⋅ ⋅ ⋅ 223,427,980.95 356,075,160.88 53,518,578.88 279,507,313.39 306,085,352.05 46,005,042.92Minority shareholders’ gains/losses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ -1,666,943.69 373,172.06 56,088.27 298,845.03 454,458.05 68,305.66Other financial dataEBITDA(1) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 418,752,009.48 619,038,589.57 93,042,338.32 485,449,242.05 451,637,812.77 67,881,774.87EBITDA Margin(2) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 26.28% 29.32% 29.32% 35.64% 27.57% 27.57%

Notes:

(1) We calculate EBITDA by adding back interest expenses, depreciation, amortization and tax to netprofit. EBITDA is not a standard measure under PRC GAAP. EBITDA is a widely used financialindicator of a company’s ability to service and incur debt. EBITDA should not be considered inisolation or construed as an alternative to cash flows, profit attributable to shareholders or any othermeasure of performance or as an indicator of our operating performance, liquidity, profitability or cashflows generated by operating, investing or financing activities. EBITDA does not account for taxes, netfinance costs and depreciation and amortization. In evaluating EBITDA, we believe that investorsshould consider, among other things, the components of EBITDA such as turnover and operatingexpenses and the amount by with EBITDA exceeds capital expenditures and other charges. We haveincluded EBITDA herein because we believe it is a useful supplement to cash flow data as a measure ofour performance and our ability to generate cash from operations to cover debt service and taxes.EBITDA presented herein may not be comparable to similarly titled measures presented by othercompanies. Investors should not compare our EBITDA presented by other companies because not allcompanies use be same definition.

(2) EBITDA margin is calculated by dividing EBITDA by revenue.

– 7 –

(3) The financial figures for the year ended 31 December 2015 are extracted from the consolidated incomestatement of the Company for the year ended 31 December 2016 and was prepared according to therequirements of the Accounting Standards for Business Enterprises.

Summary Consolidated Balance Sheet of the Company

The following table sets forth the consolidated balance sheet of the Company as at 31December 2014 and 2015. Financial figures in the following table are derived from the auditedfinancial report of the Company for the year ended 31 December 2015.

As at 31 December

2014 2015

(RMB) (RMB)Current assets:Monetary capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,475,226,885.37 9,030,576,689.70Short term investments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Notes receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Dividends receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Interest receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Accounts receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,805,947,104.77 3,266,575,760.06Other receivables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,191,579,903.70 3,770,545,130.25Prepayments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 345,126,013.85 620,100,979.32Allowance receivable⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Inventories ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 16,847,923,855.42 17,990,084,837.58Prepaid and deferred expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,260,873.10Long-term liability investment due within one year ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Other current assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total current assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 23,665,803,763.11 34,680,144,270.01Long-term investment:Long-term equity investments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 141,109,169.65 146,179,951.14Long-term liability investment ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 117,825,383.42 768,940,383.42Total long-term investment ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 258,934,553.07 915,120,334.56Including: Consideration differences ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Fixed assets:Original value of fixed assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 514,905,914.20 6,908,674,916.93Less: Accumulated depreciation ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 41,701,727.92 110,796,475.61Net value of fixed assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 473,204,186.28 6,797,878,441.32Less: Impairment provision for fixed assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Net amount of fixed assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 473,204,186.28 6,797,878,441.32Construction materials ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,762,448.00 3,762,448.00Construction in progress ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 423,358.48 2,449,507.15Fixed assets pending for disposal ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total fixed assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 477,389,992.76 6,804,090,396.47Intangible assets and other assets:Intangible assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 53,471,946.74 50,435,954.37Long-term prepaid expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 4,953,585.90 718,155.13Other long-term assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total intangible assets and other assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 58,425,532.64 51,154,109.50Deferred taxation:Deferred taxation debits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅TOTAL ASSETS ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 24,460,553,841.58 42,450,509,110.54

– 8 –

As at 31 December

2014 2015

(RMB) (RMB)Current liabilities:Short-term borrowings ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 579,700,000.00 899,200,000.00Notes payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 80,000,000.00Accounts payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 43,866,385.59 247,519,180.39Advances from customers ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 66,996,354.43 69,670,691.72Accrued payro1l ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,098,308.92 1,042,859.92Welfare payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Dividends payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Taxes payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 98,996,488.93 122,701,769.84Other payables to government ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 839,326.54 1,217,849.84Other payables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,952,213,013.11 2,154,920,304.55Provision for expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Provisions ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Long-term liabilities due within one year ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 4,504,700,000.00 1,772,000,000.00Other current liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total current liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 8,248,409,877.52 5,348,272,656.26Long-term liabilities:Long-term borrowings ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 5,535,000,000.00 10,269,180,000.00Bonds payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,357,445,723.20 5,190,931,858.84Long-term payables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 182,677,752.55Special accounts payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 40,000,000.00 40,000,000.00Other long-term liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 13,391,750.00Total long-term liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 7,932,445,723.20 15,696,181,361.39Deferred taxation:Deferred taxation credit ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅TOTAL LIABILITIES ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 16,180,855,600.72 21,044,454,017.65Minority interests ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 238,728,192.67Owner’s equity:Paid-in capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 620,000,000.00 620,000,000.00Capital reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6,555,425,438.46 19,305,920,620.86Surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 145,025,253.26 167,118,258.11Including: Statutory surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Unrecognized investment loss⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Undistributed profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 959,247,549.14 1,074,288,021.26Total owner’s equity ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 8,279,698,240.86 21,167,326,900.23Total liabilities and owner’s equity ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 24,460,553,841.58 42,450,509,110.54

– 9 –

The following table sets forth the consolidated balance sheet of the Company as at 31

December 2015 and 2016 and 30 September 2017. Financial Figures in the following table are

derived from the audited financial report of the Company for the year ended 31 December

2016 and the reviewed financial report of the Company for the nine months ended 30

September 2017.

As at 31 December As at 30 September

2015(1) 2016 2017

(RMB) (RMB) (US$) (RMB) (US$)(unaudited) (unaudited) (unaudited)

Current assets:Monetary capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 9,030,576,689.70 10,738,079,740.35 1,613,947,926.65 10,937,629,442.00 1,643,940,517.04Financial assets at fair value through profit or loss ⋅ ⋅ – –Derivative financial assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Notes receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Accounts receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,266,575,760.06 4,417,469,496.51 663,951,647.53 5,139,221,852.66 772,431,963.4858Prepayments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 620,100,979.32 568,970,243.54 85,516,998.11 321,240,924.32 48,282,945.9546Interest receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 36,430,920.00 68,394,743.39 10,279,822.55 57,222,135.69 8,600,564.4853Dividends receivable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Other receivables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,747,159,751.59 4,984,599,894.51 749,192,114.37 8,451,548,231.45 1,270,279,144.4020Inventories ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 17,990,084,837.58 20,852,128,092.13 3,134,103,090.52 23,371,810,639.57 3,512,814,789.5886Including: Raw materials ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 419,695.49 620,223.89 93,220.49 447,335.89 67,235.1901

Commodities in stock(finished products) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,550,556.82 1,547,146.11 232,538.16 1,732,595.72 260,411.4830

Assets held-for-sale ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Non-current assets due within one year ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,000,000.00 150,301.3542Other current assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,260,873.10 219,991.00 33,064.95 – –Total current assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 34,693,189,811.35 41,629,862,201.43 6,257,024,665.57 48,279,673,225.69 7,256,500,266.8886Non-current assetsAvailable-for-sale financial assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 869,940,383.42 1,679,940,383.42 252,497,314.63 2,189,940,383.42 329,151,005.2786Held-to-maturity investments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Long-term receivables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Long-term equity investments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 45,179,951.14 161,254,349.69 24,236,747.13 127,904,031.49 19,224,149.1425Investment properties ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 327,304,678.44 49,194,336.41 321,332,730.08 48,296,744.4847Fixed assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6,797,878,441.32 7,363,027,235.14 1,106,672,964.56 7,370,211,607.23 1,107,752,785.4193Construction in progress ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,449,507.15 32,074,845.87 4,820,892.77 36,083,709.01 5,423,430.3293Construction materials ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 3,762,448.00 3,762,448.00 565,501.03 3,762,448.00 565,951.9336Fixed assets pending for disposal ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Biological assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Oil & gas assets⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Intangible assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 50,435,954.37 47,458,936.36 7,133,142.40 45,304,947.93 6,809,395.0265Development expenditures ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Goodwill ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Long-term prepaid expenses ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 718,155.13 1,328,990.69 199,749.10 1,719,737.49 258,478.8736Deferred tax assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 7,104,837.25 11,309,933.23 1,699,898.28 14,253,060.51 2,142,254.2964Other non-current assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,000,000.00 150,301.35Including: Specially approved reserving materials ⋅ ⋅ ⋅Total non-current assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 7,777,469,677.78 9,628,461,800.84 1,447,170,847.68 10,110,512,655.16 1,519,623,743.8805TOTAL ASSETS ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 42,470,659,489.13 51,258,324,002.27 7,704,195,512.34 58,390,185,880.85 8,776,124,010.7691

– 10 –

As at 31 December As at 30 September

2015(1) 2016 2017

(RMB) (RMB) (US$) (RMB) (US$)(unaudited) (unaudited) (unaudited)

Current liabilities:Short-term borrowings ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 899,200,000.00 530,000,000.00 79,659,717.73 200,000,000.00 30,060,270.84Financial liabilities at fair value through

profit or loss ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Derivative financial liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Notes payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 80,000,000.00 – –Accounts payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 247,519,180.39 456,796,958.28 68,657,201.43 302,484,325.73 45,463,803.79Advances from customers ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 69,670,691.72 104,886,057.74 15,764,516.52 105,059,593.35 1,511,970.50Employee benefits payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,042,859.92 2,197,337.40 330,272.11 659,795.74 99,168.19Including: Wages payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,042,859.92 2,204,850.50 331,392.02 609,664.70 91,633.43

Welfare payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –#Including: Staff bonus and

welfare fund ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Taxes and dues payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 130,202,084.11 264,053,914.40 39,687,660.92 272,769,378.43 40,997,606.97Including: Taxes payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 130,200,642.83 263,789,840.27 39,647,970.22 – –Interest payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Dividends payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Other payables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,154,920,304.55 1,855,572,482.64 278,895,056.99 2,069,564,357.15 311,058,325.52Available-for-sale assets ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Non-current liabilities due within one year ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,772,000,000.00 2,827,000,000.00 424,901,928.37 6,604,000,000.00 992,590,143.24Other current liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total current liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 5,354,555,120.69 6,040,506,750.46 907,896,344.74 9,554,537,450.40 1,436,059,917.69Non-current liabilitiesLong-term borrowings ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 10,269,180,000.00 12,436,500,000.00 1,869,222,791.70 14,779,500,000.00 2,221,378,864.62Bonds payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 5,190,931,858.84 7,050,331,858.84 1,059,674,426.05 5,101,251,744.54 766,725,045.40Long-term payables ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 182,677,752.55 145,956,506.91 21,937,009.74 567,037,172.97 85,226,454.99Long-term employee benefits payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Special accounts payable⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 40,000,000.00 40,000,000.00 6,012,054.17 40,000,000.00 6,012,054.17Provisions ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Deferred income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 13,391,750.00 10,682,750.00 1,605,631.79 26,191,142.77 39,370,108.48Deferred tax liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Other non-current liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Including: Specially approved reserve fund ⋅ ⋅ ⋅ ⋅ ⋅ ⋅Total non-current liabilities ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 15,696,181,361.39 19,683,471,115.75 2,958,452,364.35 20,513,980,060.28 3,083,278,983.40TOTAL LIABILITIES ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 21,050,736,482.08 25,723,977,866.21 3,866,348,709.09 30,068,517,510.68 4,519,338,901.10

– 11 –

As at 31 December As at 30 September

2015(1) 2016 2017

(RMB) (RMB) (US$) (RMB) (US$)(unaudited) (unaudited) (unaudited)

Owner’s (shareholder’s) equity:Paid-in capital (share capital) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 620,000,000.00 620,000,000.00 93,186,839.61 1,000,000,000.00 150,301,354.22State-owned capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 620,000,000.00 620,000,000.00 93,186,839.61 1,000,000,000.00 150,301,354.22Including: State-owned legal person’s capital ⋅ ⋅ ⋅ ⋅ ⋅ 620,000,000.00 620,000,000.00 93,186,839.61 1,000,000,000.00 150,301,354.22Collective capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Private capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Including: Personal capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Foreign capital ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –#Less: Returned investment ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Net paid-in capital (share capital) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 620,000,000.00 620,000,000.00 93,186,839.61 1,000,000,000.00 150,301,354.22Other equity instruments ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Including: Preferred stock ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –

Perpetual bonds ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Capital reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 19,305,920,620.86 20,437,263,786.81 3,071,748,423.61 22,208,363,786.81 3,337,947,152.06Less: Treasury stock ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Other comprehensive income ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 19,763,520.00 2,970,483.82 – –Including: Translation difference of foreign

currency statements ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Special reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – –Surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 167,118,258.11 206,490,656.80 31,035,825.35 238,882,818.61 35,904,411.14Including: Statutory surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 167,118,258.11 206,490,656.80 31,035,825.35 238,882,818.61 35,904,411.14

Discretionary surplus reserve ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅#Reserve fund ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅#Enterprise expansion fund ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅#Profit reinvestment⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Undistributed profits ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,088,155,935.41 1,293,381,512.36 194,396,992.82 1,562,819,546.61 234,893,894.25Total owner’s equity attributable to the parent

company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 21,181,194,814.38 22,576,899,475.97 3,393,338,565.22 25,248,948,970.64 3,794,951,222.80Minority interests⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 238,728,192.67 2,957,446,660.09 444,508,238.03 3,311,602,218.14 497,738,298.01Total owner’s equity ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 21,419,923,007.05 25,534,346,136.06 3,837,846,803.25 28,321,668,370.17 4,256,785,109.67TOTAL LIABILITIES AND EQUITY ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 42,470,659,489.13 51,258,324,002.27 7,704,195,512.34 58,390,185,880.85 8,776,124,010.77

Note:

(1) The financial figures as at 31 December 2015 are extracted from the consolidated balance sheet of theCompany as at 31 December 2016 and was prepared according to the requirements of the AccountingStandards for Business Enterprises.

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SUMMARY OF THE OFFERING

The following is a brief summary of the terms of this Offering and is qualified in its entirety

by the remainder of this offering memorandum. For a detailed description of the Bonds, see the

section entitled “Terms and Conditions of the Bonds.” The terms and conditions of the Bonds

prevail to the extent of any inconsistency set forth in this section. This summary is not intended

to be complete and does not contain all of the information that is important to an investor.

Phrases used in this section “The Offering — The Bonds” and not otherwise defined shall have

the meanings given to them in “Terms and Conditions of the Bonds.”

Issuer ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ Shangrao City Construction Investment DevelopmentGroup Company Limited.

Issue ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ US$300,000,000 5.7 per cent. senior bonds due 2020.

Issue Price ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 100.0 per cent.

Form and Denomination ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Bonds will be issued in registered form in thespecified denomination of US$200,000 and integralmultiples of US$1,000 in excess thereof.

Interest ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Bonds will bear interest from and including theIssue Date at the rate of 5.7 per cent. per annum,payable semi-annually in arrear on 28 June and 28December in each year.

Issue Date ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 28 December 2017.

Maturity Date ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 28 December 2020.

Status of the Notes ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Bonds constitute direct, unsubordinated,unconditional and (subject to Condition 4(a))unsecured obligations of the Issuer and shall at alltimes rank pari passu and without any preferenceamong themselves, as further described in Condition 3of the Terms and Conditions of the Bonds. Thepayment obligations of the Issuer under the Bondsshall, save for such exceptions as may be provided byapplicable legislation and subject to Condition 4(a), atall times rank pari passu with all the Issuer’s otherpresent and future unsecured and unsubordinatedobligations.

Negative Pledge ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Bonds contain a negative pledge provision asfurther described in Condition 4(a) of the Terms andConditions of the Bonds.

Events of Default ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Bonds contain certain events of defaultprovisions, as further described in Condition 9 of theTerms and Conditions of the Notes.

– 13 –

Taxation ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ All payments of principal, premium (if any) andinterest by or on behalf of the Issuer in respect of theBonds shall be made free and clear of, and withoutwithholding or deduction for, any present or futuretaxes, duties, assessments or governmental charges ofwhatever nature imposed, levied, collected, withheldor assessed by or within the PRC or any politicalsubdivision or any authority therein or thereof havingpower to tax, unless such withholding or deduction isrequired by law, as further described in Condition 8 ofthe Terms and Conditions of the Bonds. In such event,the Issuer or, as the case may be, the Company shall,subject to the limited exceptions specified in the Termsand Conditions of the Bonds, pay such additionalamounts as will result in receipt by the Bondholders ofsuch amounts as would have been received by themhad no such withholding or deduction been required.

Final Redemption ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ Unless previously redeemed or purchased andcancelled, the Bonds will be redeemed at theirprincipal amount on 28 December 2020.

Redemption for Tax Reasons ⋅ ⋅ The Bonds may be redeemed at the option of theIssuer in whole, but not in part, at any time, on givingnot less than 30 nor more than 60 days’ written noticeto the Bondholders (which notice shall be irrevocable)and to the Trustee, at their principal amount togetherwith any interest accrued up to, but excluding the datefixed for redemption, in the event of certain changesaffecting taxes of certain jurisdictions, as furtherdescribed in Condition 6(b) of the Terms andConditions of the Bonds.

Redemption for Change ofControl ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

At any time following the occurrence of a Change ofControl (as described in Condition 6(c) of the Termsand Conditions of the Bonds), the holder of any Bondwill have the right, at such holder’s option, to requirethe Issuer to redeem all, but not some only of thatholder’s Bonds on the Put Settlement Date, at 101 percent. of their principal amount, together with anyaccrued interest, as further described in Condition 6(c)of the Terms and Conditions of the Bonds.

– 14 –

Redemption for NoRegistration Event ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

At any time following the occurrence of a NoRegistration Event (as described in Condition 6(c) ofthe Terms and Conditions of the Bonds), the holder ofany Bond will have the right, at such holder’s option,to require the Issuer to redeem all, but not some onlyof that holder’s Bonds on the Put Settlement Date, attheir principal amount, together with any accruedinterest, as further described in Condition 6(c) of theTerms and Conditions of the Bonds.

Clearing Systems ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Bonds will be represented initially by interests inthe Global Certificate, which will be registered in thename of a nominee of, and deposited on the IssueDate with, a common depositary for, Euroclear andClearstream. Interests in the Global Certificate will beshown on, and transfers thereof will be effected onlythrough, records maintained by Euroclear andClearstream. Except as described in this offeringmemorandum, certificates for the Bonds will not beissued in exchange for interests in the GlobalCertificate.

ISIN ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ XS1742767657.

Common Code ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 174276765.

Governing Law andJurisdiction⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

The Bonds and the Trust Deed and the AgencyAgreement relating to the Bonds will be governed byand will be construed in accordance with Hong Konglaw.

Trustee ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ Bank of Communications Trustee Limited.

Principal Paying Agent,Registrar and TransferAgent ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Bank of Communications Co., Ltd. Hong KongBranch.

– 15 –

Listing ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ Approval in-principle has been received from theSGX-ST for the listing and quotation of the Bonds onthe SGX-ST. The SGX-ST assumes no responsibilityfor the correctness of any of the statements made,opinions expressed or reports contained herein.Approval in-principle from, admission to the OfficialList of, and listing and quotation of the Bonds on, theSGX-ST are not to be taken as an indication of themerits of the Company or any other subsidiary orassociated company of the Company or the Bonds. Forso long as the Bonds are listed on the SGX-ST and therules of the SGX-ST so require, the Bonds, if tradedon the SGX-ST, will be traded in a minimum board lotsize of S$200,000 (or its equivalent in foreigncurrencies). Accordingly, the Bonds, if traded on theSGX-ST, will be traded in a minimum board lot size ofUS$200,000.

Further Issues ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The Issuer may from time to time without the consentof the Bondholders create and issue further securitieshaving the same terms and conditions as the Bonds inall respects (or in all respects except for the issue date,the first payment of interest on them, the timing forthe Post-Issuance Filing with the NDRC and thetiming for completion of the Foreign DebtRegistration) and so that such further issue shall beconsolidated and form a single series with theoutstanding securities of any series (including theBonds), as further described in Condition 15 of theTerms and Conditions of the Bonds.

Use of Proceeds ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ The gross proceeds from this offering, beforededucting the underwriting discounts andcommissions and other estimated expenses payable byus in connection with this offering, will be US$300million, which we plan to use for project constructions.See section entitled “Use of proceeds.”

Risk Factors ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ For a discussion of certain factors that should beconsidered in evaluating an investment in the Bonds,see “Risk factors.”

– 16 –

RISK FACTORS

You should carefully consider the risks and uncertainties described below and other

information contained in this Offering Circular before investing in the Bonds. The risks and

uncertainties described below may not be the only ones that we face. Additional risks and

uncertainties that we are not aware of or that we currently believe are immaterial may also

materially and adversely affect our business, financial condition or results of operations. If any

of the possible events described below occurs, our business, financial condition or results of

operations could be materially and adversely affected. In such case, we may not be able to satisfy

our obligations under the Bonds, and you could lose all or part of your investment.

RISKS RELATING TO THE COMPANY AND THE GROUP

The Group’s performance and financial condition are largely dependent on fiscal policies and

public spending on infrastructure of the Shangrao government.

The Company is the primary financing, investment, asset management and capital

operation platform of the under Shangrao government. Since its establishment in 2002, the

Company has played an important role in implementing the Shangrao government’s blueprint

for infrastructure construction and real property development, and has received strong

financial and operational support from the Shangrao government. SOEs are among the

Group’s major customers. Due to the nature of the Group’s businesses, its business and

financial performance may be materially affected by changes in the budgets of the Shangrao

government, especially by any significant reduction in the Shangrao government’s spending on

infrastructure.

The nature, scale, location and timing of the Shangrao government’s investment plans in

public infrastructure are affected by a number of factors. These factors include the PRC

government’s policies and priorities concerning the development of different regions of China,

the Jiangxi government’s policies and priorities concerning the development of different cities

in Jiangxi Province, and the Shangrao government’s fiscal and monetary policies, including

the availability of credit and funding for projects. These factors in turn may be directly

affected by changes in the economic conditions in the PRC and Jiangxi province generally and

in Shangrao particularly. While the PRC economy has demonstrated rapid growth in the past

30 years, development of the Chinese economy since the global financial crisis in 2008 has

been uneven. The growth rate of China’s GDP has decreased in recent years and remained

relatively slow. Any sustained slowdown or material deterioration in China’s overall economic

conditions may increase the vulnerability of the economic conditions of Jiangxi province and

the fiscal conditions of the Shangrao government, which could in turn materially and

adversely affect the Shangrao government’s investment plans in public infrastructure. If the

Shangrao government decreases or intends to decrease spending on such public investment

plans, the Group’s business, financial condition, results of operations and prospects may be

materially and adversely affected. Any adverse change in the economic development, social

conditions, government policies or natural conditions of Shangrao province could materially

and adversely affect the Group’s business, financial condition, results of operations and

prospects.

– 17 –

For 2014, 2015 and 2016 and the nine months ended 30 September 30 2017, the Group’s

revenue were derived from its business operations in Shangrao City, and will continue to be

substantially derived from its operations in Shangrao in the near future. In light of the

concentration of the Group’s businesses in Shangrao, the Group is exposed to risks associated

with such concentration. Any economic slowdown in Shangrao could reduce the demand for

the services rendered by the Group. Furthermore, while the Shangrao government has adopted

preferential policies for infrastructure construction industry in which the Group conducts a

significant part of its business and has granted governmental support to the Group in various

forms, there can be no assurance that the Shangrao government will not change or terminate

such preferential policies or governmental support. Any adverse change in the economic

development, social conditions or government policies in Shangrao could materially and

adversely affect the Group’s business, financial conditions, results of operations and

prospects.

The Shangrao government can exert significant influence over the Group, and could cause theGroup to make decisions or modify the scope of its activities, or impose new obligations on theGroup that may not be in the Group’s best interests.

The Group is primarily owned by Shangrao SASAC and, accordingly, the Shangrao

government is able to significantly influence the Group’s major business decisions and

strategies, including the scope of its activities, investment decisions and dividend policy. There

can be no assurance that Shangrao SASAC would always take actions that are in the Group’s

best interests or that aim to maximise the Group’s profits. For example, Shangrao SASAC

could use its ability to influence the Group’s business and strategy in a manner beneficial to

Shangrao as a whole, which may not necessarily be in the Group’s best interests. The Shangrao

government could also change its policies, plans, preferences, views, expectations, projections,

forecasts and opinions, as a result of changes in the PRC’s and Jiangxi Province’s economic,

political and social environment, their respective projections of population and employment

growth and any such change may have a material effect on the Group’s business and prospects.

The Group’s business is subject to general economic and business cycles and difficult conditionsin the global economy could adversely affect the Group’s business.

The Group’s activities and results are substantially affected by general global economic

conditions. The outlook for the global economy and financial markets remains uncertain. In

Asia and other emerging markets, some countries are expecting increased inflationary pressure

as a result of liberal monetary policy or excessive foreign fund inflow, or both. Economic

conditions in the PRC are sensitive to global economic conditions. It is impossible to predict

the future development of the PRC economy and whether any global crisis could lead to an

economic downturn or financial crisis in the PRC.

Instability in the global economy could materially and adversely affect markets in which

the Group operates, which may lead to a decline in the general demand for the Group’s

services. In addition, a reduction in liquidity in the global financial markets and in the PRC

may negatively affect the Group’s liquidity. Therefore, instabilities in the global economy

could materially and adversely affect the Group’s business, financial condition and results of

operations.

– 18 –

The Group faces risks associated with contracting with public bodies.

As the primary asset management and capital operation platform for state-owned assets

under Shangrao SASAC, the Group collaborates with various governmental authorities and

their controlled entities in Shangrao and other regions in the PRC. Although the Group

believes that the Group currently maintains close working relationships with those

governmental authorities and entities, there can be no assurance that these relationships will

continue to be maintained on good terms in the future. Local governments and government-

controlled entities with which the Group collaborates may (i) have economic or business

interests or consideration that are inconsistent with the Group’s; (ii) take actions contrary to

the Group’s requests, policies or objectives; (iii) be unable or unwilling to fulfil their

contractual obligations; (iv) have financial difficulties; or (v) have disputes with the Group as

to the contractual terms or other matters. If there are any material disagreements between the

Group and any local government or any of the government-controlled entities, there can be no

assurance that the Group is able to successfully resolve them in a timely manner, or at all.

In addition, disputes with public bodies may last for considerably longer periods of time

than for those with private sector counterparties, and payments from public bodies may be

delayed as a result. Any of these could materially and adversely affect the business

relationships between the Group and the local governments and the governmental entities,

which may in turn materially and adversely affect the Group’s business, financial condition,

results of operations and prospects.

The Group’s business operations are subject to extensive regulation at various levels ofgovernment, and any failure to comply with applicable laws, rules and regulations, includingobtaining any necessary qualifications, permits or approvals for its operations could adverselyaffect the Group.

The Group’s business activities are extensively regulated by laws and regulations of the

PRC government at various levels. Infrastructure development, hotel and restaurant operation

and certain other businesses of the Group require approvals, licences and permits from a

number of governmental authorities. Below are a few examples of approvals, permits and

licences needed for the major business segments of the Group:

• For infrastructure instruction and land development businesses, the Group needs toobtain, including without limitation approval of the feasibility study report of theconstruction project, approval of the environmental impact report, constructionland use permit;

• For hotel management business, the Group needs to obtain, including withoutlimitation, special trade license, hygiene license, catering service license andcertificate of fire safety inspection;

• For sewage treatment business, the Group needs to obtain, including withoutlimitation, pollutant discharge license;

• For public transportation operation business, the Group needs to obtain, includingwithout limitation, approvals of public transportation service and the roadtransport business license;

– 19 –

• In addition, certain subsidiaries of the Group must obtain all necessarycapitalisation and shareholding registration certificates relating to its registeredcapital and shareholder capital contribution to avoid any penalties or interruptionsof its operations.

Historically, the Group failed to obtain certain requisite approvals and licenses for itsprojects timely or at all. Failure to obtain any of the necessary approvals, licences or permitsin a timely manner could result in delay or suspension of the relevant business activities, andoperations without these necessary approvals, licences or permits may subject the relevantmember companies of the Group to regulatory or administrative penalties. There is noassurance that the Group may be able to obtain all required approvals, licences or permits in atimely manner, or at all, or remain in compliance with relevant laws and regulations at alltimes. As a result of these lapses or other noncompliance events, the Group may be subject tofines and other penalties, or certain activities currently undertaken by the Group may besuspended by governmental authorities until the relevant noncompliance event is remediedand/or fines as assessed by authorities are paid in full, which may adversely affect the business,financial conditions and results of operations of the relevant member company of the Group.

In addition, the PRC is undergoing rapid economic development, and governmentregulations and policies are regularly promulgated to address such development. New laws,regulations or policies may come into effect from time to time with respect to the industriesrelated to the group in general, development plans for any of the specific projects which theGroup is undertaking or the particular processes with respect to the granting of approvals,licences or permits. Complying with such laws, regulations or policies may require substantialexpense and may delay the completion of the Group’s relevant projects. In case of anynon-compliance, the Group may have to incur significant expense and divert substantialmanagement time to resolve any deficiencies.

Changes in government grants or other incentives currently received by the Group from localgovernments may adversely affect the Group’s business, results of operations and financialconditions.

Certain of the Group’s operations projects are currently entitled to government grants orother incentives from local governments. In 2014, 2015, 2016 and the nine months ended 30September 2017, the Group recorded RMB72.0 million, RMB232.5 million, RMB370.6million and RMB344.2 million (US$51.7 million) of grants, respectively, from various localgovernments in Shangrao and other regions in the PRC. There can be no assurance that suchgovernment grants or incentives will not be reduced or revoked, or that these projects of theGroup, upon the expiration of the current preferential treatment or grant periods, will beentitled to other government grants or incentives. A reduction or discontinuance of suchgovernment subsidies or support may materially and adversely affect the Group’s financialcondition and results of operations.

– 20 –

The Group’s business operations are restricted by the terms of other debt arrangements, whichcould limit the Group’s ability to plan for or to react to market conditions or meet its capitalneeds.

The Group’s debt documents include a number of significant restrictive covenants. Thesecovenants may restrict, among other things, the Group’s ability and the ability of itssubsidiaries to:

• incur or guarantee additional indebtedness;

• make investments;

• transfer assets or shares;

• create liens, mortgages, or pledges;

• enter into transactions with shareholders or affiliates; and

• effect a consolidation, merger, restructuring, joint venture, joint operation, capitalreduction or listing.

These covenants could limit the Group’s ability to plan for or react to market conditionsor to meet its capital needs. The Group’s ability to comply with these covenants may beaffected by events beyond its control, and the Group may have to curtail some of itsoperations and growth plans to maintain compliance.

The Group’s business operations require substantial capital and failure to raise such capital maymaterially and adversely affect the Group’s business, financial conditions, results of operationsand prospects.

The Group’s business operations and investment plans require substantial capital. Aportion of the capital demand of the Group is satisfied with fiscal funding from the Shangraogovernment. The Group generally formulates and updates its capital expenditure andinvestment plans on an annual basis and reports its plans to Shangrao SASAC. The Shangraogovernment takes into consideration these plans when determining the government budget forthe subsequent financial year. There can be no assurance, however, that the capitalexpenditure and investment plans submitted by the Group will be approved. The Group mayneed to adjust its plans to align with the overall urban strategies and plans of the Shangraogovernment. Otherwise, it will need to resort to alternative funding to meet its capital needs.

In addition, the Group’s capital expenditure and investment plans are affected by anumber of factors, such as the requirements for the projects, the Group’s ability to generatesufficient cash flows from its operations and the availability and costs of external financing.Any material changes in these factors, which may be out of the Group’s control, could lead toa capital shortfall. Delays and cost overruns inherent in the businesses which the Groupoperates may also cause such a shortfall. In these cases, the Group may increase its reliance onexternal financing and internal capital resources.

– 21 –

The Group’s ability to access and raise sufficient capital through different sourcesdepends upon a number of factors, such as China’s economic condition, prevailing conditionsin capital markets, regulatory requirements and policies, the Group’s financial condition, andcosts of financing, including changes in interest rates. Some of these factors are beyond theGroup’s control. If the Group fails to raise sufficient funds in a timely manner or fails toobtain external financing on commercially acceptable terms, it may not be able to fund in fullthe capital expenditure necessary to expand its production facilities, upgrade or purchaseadditional facilities and equipment or implement its business strategies, which may in turnhave a material and adverse impact on the Group’s business, financial condition, results ofoperations and prospects.

Significant indebtedness may restrict the Group’s business activities and increase the Group’sexposure to various operational risks.

The Group relies on external borrowings to satisfy a portion of its capital requirementsand, therefore, the Group has significant outstanding indebtedness. As at 30 September 2017,the Group had total long-term indebtedness of approximately RMB20,447.8 million(US$3,073.3 million), representing 68.0 per cent. of its total liabilities. As at 30 September2017, the Group had total short-term indebtedness of approximately RMB6,804.0 million(US$1,022.7 million). In the future, the Group may from time to time incur substantialadditional indebtedness and contingent liabilities in the ordinary course of business.Substantial indebtedness could significantly impact the Group’s businesses. For example, itcould:

• require the Group to dedicate part of its operating cash flow to service itsindebtedness before it receives the government funding;

• increase the Group’s finance costs, thus affecting the overall profitability of theGroup;

• limit the Group’s ability to satisfy its obligations under its existing indebtedness;

• limit the Group’s ability to pay dividends to its shareholders;

• limit the Group’s flexibility in planning for or responding to changes in the Group’sbusinesses and the industries in which it operates;

• together with the financial and other restrictive covenants of the Group’sindebtedness, among other things, limit the Group’s ability to borrow additionalfunds; and

• increase the Group’s vulnerability to adverse general economic and industryconditions.

For the years ended 31 December 2014, 2015 and 2016 and the nine months ended 30September 2017, the finance costs of the Group, which primarily consist of the Group’sinterest expenses and capitalised interest, totalled RMB814.0 million, RMB1,210.3 million,RMB1,491.5 million and RMB1,515.0 million (US$227.7 million), respectively. The Group’sborrowings are secured by encumbrances created over a number of its assets such as real estateproperties. As at 30 September 2017, the Group’s secured indebtedness totaled RMB27,251.8

– 22 –

million (US$4,096.0 million). These third-party security rights may limit the Group’s use ofthese assets and adversely affect its operational efficiency. In the future, as the Group’soperations continue to expand and its capital requirements continue to grow, the Group mayfrom time to time incur additional substantial indebtedness, which may, in turn, intensify therisks that the Group faces because of its already significant outstanding indebtedness. In theevent that the Group fails to keep its indebtedness under a certain level, the funds available forvarious other business purposes may be limited, and its business, financial condition andresults of operations may be materially and adversely affected.

In addition, the Group enters into guarantee arrangements for the benefit of itssubsidiaries and third parties from time to time and incurs contingent liabilities as a result. Asat 30 September 2017, the total guaranteed indebtedness for the benefit of the Group’ssubsidiaries was RMB6,776.0 million and the total guaranteed indebtedness for the benefit ofthird parties amounted to RMB4,120.2 million (US$619.3 million). Such contingent liabilitiesmay materially and adversely affect the Group’s business, financial condition and results ofoperations if the creditors for a material part of such liabilities demand payment from theGroup, straining the Group’s cash flow and resulting in deterioration of the Group’s liquidity.Furthermore, under certain of these guarantee arrangements, the Group may exert pressureon primary obligors to repay the relevant indebtedness when due and makes payment uponreceipt of demand from the creditors. This is consistent with customary practice but there areno explicit grace periods in the guarantee agreements. As at the date of this Offering Circular,the Group has not received any notice from creditors under these guarantee arrangementsdeclaring any default or demanding acceleration of payments under such guarantees due tothis practice. However, there is no assurance that the Group will not receive such declarationsor demands in the future. Should such declarations or demands take place, the Group’sbusiness, financial condition and results of operations may be materially and adverselyaffected.

Certain loan agreements to which the Group’s subsidiaries are parties contain restrictivecovenants, which prevent or limit such subsidiaries’ ability from engaging in certain activities,such as incurring additional indebtedness or declaring and making distributions. A failure byany of the relevant subsidiaries to comply with the restrictions and covenants could lead to adefault under the terms of those agreements and financial liabilities. See “— The Group’sbusiness operations are restricted by the terms of other debt arrangements, which could limitthe Group’s ability to plan for or to react to market conditions or meet its capital needs”. Inaddition, some of the Group’s loan agreements contain cross-acceleration or cross-defaultprovisions. A default under one loan may cause the acceleration of repayment of other debt,or result in a default under the other loan agreements of the subsidiaries. Certain subsidiariesof the Group have voluntarily scheduled and may in the future voluntarily schedule deferralsor arrangements with creditors with respect to their indebtedness, which deferrals orarrangements may contain additional restrictive covenants, impose more stringent capital andcovenant compliance requirements or trigger cross-acceleration or cross-default provisionsunder other financial agreements. If any of these events occur, there can be no assurance thatits assets and cash flow would be sufficient to repay in full all of its indebtedness which hasbecome due and payable, or that it would be able to find alternative financing.

– 23 –

The Group’s business and results of operations may be susceptible to the material fluctuations ofinterest rates.

The Group has significant outstanding indebtedness. The interest of much of theindebtedness accrues based on interest rates that benchmark the one-year lending ratepublished by the PBOC. Any material fluctuation in the benchmark lending rate could have amaterial impact on the Group’s interest payables under its bank loans and in turn affect itsresults of operations and financial conditions. In recent years, the PRC government from timeto time adjusted interest rates to control the level of liquidity in the market and the PRCeconomy.

Since the outbreak of the global financial crisis in 2008, the PRC government has loweredthe benchmark lending rate to encourage borrowings and steam the recovery of the country’seconomy. This easing policy was changed in 2012 in light of the overheating property marketin the PRC. The one-year benchmark interest rate decreased by 25 basis points in June 2012and again by 31 basis points in July 2012. In November 2014, the PBOC further decreased thebenchmark one-year lending rate by 40 basis points to 5.6 per cent. and decreased thebenchmark one-year saving rate by 25 basis points to 2.8 per cent. offshore loan. In 2016, thebenchmark one-year lending rate and saving rate was further decreased to 4.4 per cent. and 1.5per cent., respectively. However, there can be no assurance that the benchmark interest rateswill maintain at such low levels. The Group’s interest expenses for the years ended 31December 2014, 2015 and 2016, and the nine months ended 30 September 2017, wereRMB41.8 million, RMB88.6 million, RMB198.2 million and RMB100.4 million (US$15.1million), respectively. Any increase could affect the Group’s borrowing cost and negativelyaffect its results of operations.

The Group may not be able to successfully manage its growth.

The Group is comprised of a large number of companies operating in a variety ofindustries. As the Group continues to grow, its operations will become more widespread andcomplex. For example, the financial investment businesses are relatively new businessesundertaken by the Group. The Group must continue to improve its managerial, technical,operational and other resources, and to implement an effective management and internalcontrol system that emphasises proper authorisations, reliability and accountability offinancial reporting, imposes financial and internal control disciplines on subsidiary andassociate companies, and creates value-focused incentives for the management.

In addition, in order to fund the Group’s ongoing operations and its future growth, theGroup must have sufficient internal sources of liquidity or access to additional financing fromexternal sources. Further, the Group will be required to manage relationships with a greaternumber of customers, suppliers, contractors, service providers, lenders and other third parties.There can be no assurance that the Group will not experience issues such as capacity andcapital constraints, construction delays, operational difficulties at new facilities or difficultiesin upgrading or expanding existing facilities and training an increasing number of personnelto manage and operate those facilities. In particular, failure of the Group to implement itsexpansion plans in a timely manner could adversely affect its ability to maintain, expand anddiversify its revenue base and to maintain the profitability of the Group. There can be noassurance that such expansion plans will not adversely affect the Group’s existing operationsand thereby will have a material adverse effect on its business, operating results and financialcondition and future prospects and could cause the price of the Bonds to fall.

– 24 –

The Group depends on key management members and qualified personnel in a competitive marketfor skilled personnel, and the Group’s inability to attract and retain key personnel as well asShangrao SASAC’s approval and removal rights could adversely affect the Group’s ability tomanage its business.

The Group depends on the expertise of the principal members of its management team.The loss of key management personnel would adversely affect the Group’s ability to manageits business. The Group also relies on its ability to identify, hire and retain qualified personnelfor its different business lines. For a description of the Group’s key supervisors and seniormanagement, see “Directors, Supervisors and Senior Management”.

The Group faces intense competition for qualified personnel from large SOEs, privatelocal companies and international companies. While the Group attempts to providecompetitive compensation packages to attract and retain key management members andqualified personnel, many of its competitors are likely to have greater resources and moreexperience than the Group, making it difficult for the Group to compete successfully forpersonnel retention and new hires. In addition, all key management personnel appointmentsare subject to approval by the Shangrao government, and Shangrao SASAC has the right toremove the Group’s key personnel at its discretion.

The Group’s failure to retain key management members and qualified personnel andmaintain an adequate workforce could materially adversely affect its results of operations andprospects.

The Group faces competition in some of the markets in which it operates, which may adverselyaffect its financial condition, results of operations and business prospects.

The Group believes that the financial investment market in China is generallymarket-oriented. The Group’s competition comes from various sources, including large SOEsof the PRC, privately-owned domestic companies, and leading international companies thatoperate in Shangrao. As a result of the PRC’s accession to the World Trade Organisation, thePRC government has opened up domestic markets to foreign competition, and foreign investedcompanies are now allowed to participate in various types of infrastructure projects. TheGroup also competes with both local and international companies in capturing new businessopportunities in the PRC. Some of these companies have significant financial resources,marketing and other capabilities. In the PRC, local companies may have extensive localknowledge and business relationships and a longer operational track record in the relevantlocal markets than the Group. International companies are able to capitalise on their overseasexperience to compete in the PRC markets. The Group’s market position depends on its abilityto anticipate and respond to various competitive factors, including availability of capital andfinancing resources and the introduction of new or improved products and services. There canbe no assurance that the Group’s current or potential competitors will not offer services orproducts comparable or superior to those that it offers at the same or lower prices or adaptmore quickly than the Group does to evolving industry trends or changing market conditions.The Group may lose its customers to its competitors if, among other things, it fails to keep itsprices at competitive levels or to sustain and upgrade its capacity and technology. Increasedcompetition may result in price reductions, reduced profit margins and loss of market share.

– 25 –

If the Group fails to maintain effective internal controls and corporate governance or fails toprevent misconduct committed by its employees, representatives, agents or other third parties, itsbusiness, financial condition, results of operations and reputation could be materially andadversely affected.

The Group has implemented various measures to improve and optimise its internalcontrols and corporate governance. The Group has a supervisory committee, the majoritymembers of which are appointed by Shangrao SASAC. The Group has established an internalsystem to enhance protection of confidential information and education of employees. Thedisciplinary compliance departments of the Shangrao government also conduct reviews on theGroup’s operation from time to time and some of the key factors for consideration includeimplementation of corporate governance and disciplinary compliance. As at the date of thisOffering Circular, the Group has not received any notification of non-compliance followingsuch reviews or any notification from the Shangrao Audit Office and the disciplinarycompliance departments of the Shangrao government to the effect that the Group hasineffective internal controls or corporate governance systems. However, there can be noassurance that all such measures will be proved effective in the future or that any existing orpotential material deficiencies in the Group’s internal controls or any misconduct committedby its employees, representatives, agents or other third parties will not be discovered. TheGroup’s efforts to improve and optimise its internal controls have required, and in the futuremay require, increased costs and significant management time and commitment. If the Groupfails to maintain effective internal controls, its business, financial condition, results ofoperations or reputation could be materially and adversely affected.

The Group may have difficulties in implementing and monitoring corporate policies across itssubsidiaries and portfolio companies.

The Group strives to implement its corporate governance and operational and safetystandards across each of its subsidiaries and portfolio companies in a uniform manner. Due tothe large number of the Group’s subsidiaries and portfolio companies, implementing andmonitoring corporate governance and operation and safety standards may prove difficult anda failure to do so may result in violations of local regulations. There can be no assurance thatthe Group can effectively monitor each subsidiary and affiliated company and preventnon-compliance. This may result in violations that could adversely affect the Group’sreputation and business prospects, which could materially and adversely affect its business,financial condition and results of operations.

The Group’s insurance coverage may not adequately protect it against all operating risks.

The Group faces various operational risks in connection with its business, including butnot limited to:

• production interruptions caused by operational errors, electricity outages, rawmaterial shortages, equipment failure and other production risks;

• operating limitations imposed by environmental or other regulatory requirements;

• work-related personal injuries;

• on-site production accidents;

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• credit risks relating to the performance of customers or other contractual thirdparties;

• disruptions in the global capital markets and the economy in general;

• loss on investments;

• environmental or industrial accidents; and

• catastrophic events such as fires, earthquakes, explosions, floods or other naturaldisasters.

To manage operating risks, the Group maintains insurance policies that provide differenttypes of risk coverage, which the Group believes are consistent with industry and businesspractice in China. However, claims under the insurance policies may not be fully or timelyhonoured, and the insurance coverage may not be sufficient to cover costs associated withaccidents incurred in the Group’s operations due to the above-mentioned operational risks. Tothe extent that any of the Group companies suffers loss or damage that is not covered byinsurance or that exceeds the limit of its insurance coverage, the Group’s results of operationsand cash flow may be materially and adversely affected.

The Group’s operations are subject to hazards customary to various industries in whichthe Group operates and the Group’s insurance policies may not be adequate and do not coverdamage and losses arising from acts of terrorism, act of God and related events.

The Group participates in operations in various industries through its subsidiaries, andits operations involve many potential risks, including breakdown, equipment failures,substandard performance of equipment, improper installation or operation of equipment,natural disasters, environmental or industrial accidents, labour disturbances, disputes withcontractors and other business interruptions. The occurrence of any of the above maymaterially and adversely affect the Group’s business or results of operations.

The Group maintains insurance policies covering both its assets and employees in linewith general business practices in the PRC in the relevant industries, with policy specificationsand insured limits which the Group believes are adequate. There are, however, certain types oflosses (such as from wars, acts of terrorism or acts of God, business interruption, propertyrisks and third party (public) liability) that generally are not insured because they are eitheruninsurable or not economically insurable. Should an uninsured loss or a loss in excess ofinsured limits occur, the Group could lose capital invested in the relevant asset, as well asanticipated future revenue and, in the case of debt that is with recourse to the Group, theGroup may remain liable for financial obligations related to the relevant asset. Any such losscould adversely affect the operating results and financial condition of the Group.

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The Group is subject to various environmental, safety and health regulations in China and anyfailure to comply with such regulations may result in penalties, fines, governmental sanctions,proceedings or suspension or revocation of its licences or permits.

The Group is required to comply with extensive environmental, safety and healthregulations in China, including obtaining all required approvals, licences and permits fromcompetent governmental authorities on a timely basis. Historically, the Group failed to obtaincertain requisite approvals, licences or permits timely or at all. Failure to comply with suchregulations, including failure to obtain any required approvals, licences or permits, may resultin project delays, fines or suspension or revocation of the Group’s licences or permits toconduct its business. Given the volume and complexity of these regulations, compliance maybe difficult or involve significant financial and other resources to establish efficientcompliance and monitoring systems. There is no assurance that the Group will be able tocomply with all applicable requirements or obtain these approvals and permits on a timelybasis or at all. In addition, PRC laws and regulations are constantly evolving. There can be noassurance that the PRC government or the local government will not impose additional orstricter laws or regulations, which may increase compliance costs of the Group.

Disputes with joint venture partners may adversely affect the Group’s business.

Some of the Group’s businesses are being operated by joint venture enterprises formed bythe Group and third-party partners. The economic or business interests or goals of thosepartners may not always be consistent with those of the Group. Joint venture partners may beunable or unwilling to fulfil their obligations under the relevant joint venture or may havefinancial difficulties. Additionally, a disagreement with any joint venture partner could resultin postponement or suspension of the relevant projects, early termination of joint venture orcooperation arrangements, or litigation or other legal proceedings, which could adverselyaffect the Group’s business, financial condition and results of operations.

The Group is subject to litigation risks and may face significant liabilities as a result.

The Group may from time to time be involved in disputes with its governmental entities,contractors, suppliers, employees and other third party service providers during the course ofits daily operations. Claims may be brought against the Group companies for defective orincomplete work, personal injuries, damage to or destruction of property, breaches ofwarranty, delay in delivery and late completion of the project. If the Group companies werefound to be liable for any of the project claims against it, its business, financial condition andresults of operations could be negatively impacted to the extent the claims were notsufficiently covered by its insurance coverage.

Claims brought by the Group against project contractors may include claims foradditional costs incurred in excess of current contract provisions arising out of project delaysand changes in the initial scope of work. In addition, both claims brought against the Groupand by it, if not resolved through negotiation, may be subject to lengthy and expensivelitigation or arbitration proceedings. Amounts ultimately realised from claims by the Groupcould differ materially from the balances included in its financial statements, resulting in acharge against earnings to the extent profit has already been accrued on a project contract.Charges associated with claims brought against the Group and write-downs associated withclaims brought by the Group could have a material adverse impact on its financial condition,results of operations and cash flow. For example, as at the date of this Offering Circular, the

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Company is involved in three litigation or arbitration proceedings before final judgment andfaces potential maximum monetary liabilities of approximately RMB45.0 million (US$6.8million). See “Description of the Company — Legal Proceeding and Regulatory Compliance”.The Group cannot assure investors that other claims will not arise against or be brought bythe Group in future which, if determined adversely against the Group, may have an adverseeffect on its financial condition and results of operations.

The Group may not be able to adequately protect its intellectual property and brand, which couldadversely affect its business operations.

The Group relies on a combination of patents, trademarks and contractual rights toprotect its intellectual property and brand. There can be no assurance that these measures willbe sufficient to prevent any misappropriation of the Group’s intellectual property or brand, orthat the Group’s competitors will not independently develop alternative technology that areequivalent or superior to technology based on the Group’s intellectual property. The legalregime governing intellectual property in the PRC is still evolving and the level of protectionof intellectual property rights in the PRC differs from those in other jurisdictions. In the eventthat the steps that the Group has taken and the protection afforded by law do not adequatelysafeguard its proprietary technology or brand, the Group could suffer losses due to the salesof competing products that exploit its intellectual property or brand. In addition, the Groupmay experience lapses or other noncompliance events with respect to registration orcertification of its intellectual property rights, and any such noncompliance event maymaterially and adversely affect the Group’s business, financial condition and results ofoperations.

There can be no assurance of the accuracy or comparability of facts, forecasts and statisticscontained in this Offering Circular with respect to the PRC, its economy or the relevant industry.

Facts, forecasts and other statistics in this offering relating to the PRC, its economy orthe industries in which the Group operates have been directly or indirectly derived fromofficial government publications and certain other public industry sources and the Group canguarantee neither the quality nor the reliability of such source materials. They have not beenprepared or independently verified by the Issuer, the Group, the Joint Lead Managers, theTrustee, the Agents or any of its or their respective affiliates, employees, directors, agents oradvisors, and, therefore, the Issuer, the Group, the Joint Lead Managers, the Trustee, theAgents or any of its or their respective affiliates, employees, directors, agents or advisorsmakes no representation as to the completeness, accuracy or fairness of such facts, forecastsor other statistics, which may not be consistent with other information compiled within oroutside the PRC. Due to possibly flawed or ineffective collection methods or discrepanciesbetween published information and market practice and other problems, the statistics hereinmay be incomplete, inaccurate or unfair or may not be comparable to statistics produced forother economies or the same or similar industries in other countries and should not be undulyrelied upon. Furthermore, there is no assurance that they are stated or compiled on the samebasis or with the same degree of accuracy as may be the case elsewhere. In all cases, investorsshould give consideration as to how much weight or importance they should attach to or placeon such facts, forecasts or other statistics.

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The Group may incur significant costs or liability relating to its environmental responsibilities.

The Group is subject to extensive and increasingly stringent environmental protectionlaws, regulations and decrees that impose fines for violation of such laws, regulations ordecrees and provide for the suspension of any pollution treatment facilities that fail to satisfycertain regulatory requirements. There is growing awareness of environmental issues and theGroup may sometimes be expected to meet a standard which is higher than the requirementunder the prevailing environmental laws and regulations. The Group may incur significantexpense in order to comply with existing or future environmental laws and regulations.

The Group has adopted environmental protection measures, including conductingenvironmental assessments on its sewage treatment facilities. However, there is no assurancethat more stringent environmental protection requirements will not be imposed by relevantgovernmental authorities in the future. The Group may be required to pay penalties or fines ortake remedial actions or suspend operations if it fails to comply with relevant environmentallaws and regulations and causes damages to the environment or third parties. In addition, ifthe Group fails to meet public expectations in relation to environmental matters, its reputationmay be damaged. Any of the above events could have a material adverse effect on the business,financial position and results of operations of the Group’s business.

The Group’s infrastructure projects require significant investments but may not generateexpected returns.

A significant portion of the revenue from the Group’s business is derived from theGroup’s infrastructure construction projects, such as road building and bridge building, whichcontain a number of construction subject to the risk of cost overruns. Many of the factorscausing cost overruns are beyond the control of the Group, such as increases in raw materialprices or the failure of equipment vendors to perform their contractual obligations. If theactual costs are significantly higher than the Group’s estimates and if the Group is not able toobtain sufficient compensation to offset the cost overruns, the Group’s financial condition,results of operation and business prospects could be materially and adversely affected. Inaddition, transportation infrastructure projects are also subject to operational risks giventheir long concession terms, as the Group is responsible for all repairs and maintenance of thefacilities. However, if the facilities fail to function as long or as efficiently as estimated, theGroup may need to pay more for replacement parts or repairs and maintenance of thefacilities or may experience longer shut-down periods than it originally anticipated.

There cannot be any assurance that the revenue derived from the operation of itsinfrastructure construction business will cover its initial investment and/or generate theexpected profits. As a result, the Group may experience reduced profitability or losses withrespect to its business.

The Group’s business operations involve inherent industrial risk and occupational hazards.

The Group’s sewage treatment business is exposed to inherent industrial risks as itsoperations involve the operation of heavy machinery, extreme heat and hazardous chemicalsubstances that could lead to industrial accidents and personal injuries which the Group’sinsurance coverage may also not be sufficient to protect against. See “— Risks Relating to theGroup — The Group’s insurance coverage may not adequately protect it against all operatingrisks”.

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The Group from time to time reviews its internal guidance and implements new measuresto enhance the awareness of employee safety. However, there can be no assurance thataccidents will not occur in the future. The Group may be liable for loss of life and propertydamages, medical expenses, medical leave payments and fines and penalties for violation ofapplicable PRC laws and regulations if any material industrial accident happens. The Groupmay also experience interruptions in its operations and may be required to change the mannerin which it operates as a result of governmental investigations or the implementation of safetymeasures due to accidents. Any of the foregoing could adversely affect the business and resultsof operations of the Group’s business.

Failure to appropriately treat wastewater or supply reclaimed or running water due to excessivepollution levels or for any other reason may adversely affect our earnings and may damage ourfacilities and reputation.

Our sewage treatment, reclaimed water supply and running water supply facilities arebuilt to treat wastewater and raw water to specified quality standards. The quality of ourtreated wastewater depends on the normal operation of our facilities. We are subject to risksof unknown or undiscovered defects or compatibility problems with our equipment. Wecannot assure you that our staff will always be able to timely discover and repairmalfunctioning equipment or any other problems with our treatment process or facilities. Inthese instances, our facilities may not be able to treat wastewater or raw water in compliancewith the relevant regulatory and contractual standards, which could result in us being subjectto claims from our customers or governmental sanctions, and could lead to the suspension ofour operations pending rectification as well as reputational damage.

In addition, the incoming wastewater or raw water to be treated by our facilities maycontain pollutants exceeding the types and quantity we contemplated during the design andconstruction of the facilities, due to, among other things, excessive discharge of pollutants, oilspills or other events beyond our control. Any excessive pollution levels of the wastewater orraw water coming into our facilities may adversely affect the operating costs and earnings ofsuch facilities due to the higher costs of treating the wastewater or raw water to meet thequality standards specified in the agreements with our customers. Moreover, should the typesor amounts of pollutants in the wastewater or raw water increase significantly, the excessivepollution could damage or accelerate the deterioration of our facilities, and might force us tostop the treatment of wastewater. Any of the foregoing could subject us to liability anddamage our reputation, which could adversely affect our business, financial condition, resultsof operations and prospects.

Our sewage treatment business relies on technologies and techniques that are subject tocontinuous changes; we cannot assure you that our research and development initiatives willcontinue to enable us to remain competitive in the industries where we conduct business.

Our continued success and competitiveness in obtaining new concession rights andprojects depend on our ability to develop and improve our techniques. These techniques aresubject to continuous evolution and changes. Our techniques must pass rigorous testing andfield trials, which can be time-consuming and expensive. The commencement and completionof tests and field trials are subject to many risks such as delays in producing or failure toproduce test results, data or analysis, inadequate or inconclusive results, changes in regulatorypolicies or industry standards or delays by government or regulatory authorities. We cannotassure you that we will be able to keep up with changes in technology and techniques in a

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timely manner or at a reasonable cost. If we are unable to continue developing our techniquesor if there are fundamental technological changes in the industry to which we cannot adapt,we may not be able to remain competitive in our industries, and our business, results ofoperations and financial condition could be materially and adversely impacted.

Furthermore, changes in regulations or standards for sewage treatment, reclaimed watersupply, running water supply and other environmental regulations may necessitate the use ofnew technologies or the improvement of our existing techniques. We may need to develop newtechnologies, upgrade existing techniques or upgrade existing facilities to meet the standardsimposed by the relevant regulatory authorities, which could require more financial, human orother resources. Our ability to keep up with such new regulatory standards will significantlyaffect our ability to grow and to remain competitive. In the event that we are unable to developor source new and enhanced sewage treatment, reclaimed water supply and running watersupply solutions to keep up with such technological changes in a timely manner or atreasonable costs, we may not be able to maintain our competitive edge and our market shareand profits may be adversely affected.

The Group’s financial investment business is subject to extensive regulation and supervision ofthe government authorities at various levels and failure to comply with applicable regulationsmay have a material adverse impact on the related business and results of operations.

The Group expanded its businesses into financial investment and management ofstate-owned assets in the form of private placement in 2002. Over the years, the Group hasbeen permitted to conduct broader investment activities in the capital market using the statefund or state-owned assets. These financial activities are subject to extensive national,provincial and municipal laws, rules, regulations, policies and measures issued and enforced bythe governmental authorities at different levels. Local authorities have broad discretion inimplementing and enforcing the applicable rules and regulations. For this reason, there aresignificant uncertainties in the interpretation and implementation of such laws, rules,regulations, policies and measures. In certain occasions, verbal clarifications given by thegovernment authorities may be inconsistent with the regulations concerned, increasing theGroup’s compliance risk. If the Group fails to fully comply with the applicable laws, rules,regulations, policies and measures or fails to respond to any changes in the regulatoryenvironment in a timely manner, non-compliance and any delay may result in sanctions byregulatory authorities, monetary penalties, or restrictions on its activities or revocation oflicences, which could have a material adverse impact on its business and results of operationsin the financial industry.

The Group’s diversification into the financial service industry may increase its exposure to creditrisks.

The Group’s businesses in the financial industry involve many inherent risks, includingthe risk that the loans the Group guarantees or grants are not repaid on time or at all. TheGroup’s credit guarantee and small loan business currently focuses on small and microenterprise customers in Shangrao. Many of its customers have limited financial resources orrelatively weaker credit profile, making it difficult for them to obtain capitals from the largestate-owned financial institutions. For the same reason, they are more vulnerable to adversecompetitive, economic or regulatory conditions, and create greater credit risks relating to theGroup’s loan and guarantee business than larger or more established businesses with longeroperating histories.

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Since late 2012, the PRC economy has shown signs of slowdown, raising the marketconcern that its historical rapid growth may not be sustainable. If the PRC economyexperiences slowdown or enters into recession, the operation and financial performance of thePRC companies may be heavily affected and customer default may rise, increasing the Group’sexposure to credit and liquidity risks. Although the Group seeks to manage its credit riskexposure through internal customer due diligence, credit approvals, establishing credit limitsand portfolio monitoring and other risk management measures, there can be no assurance thatthese measures will be effective given the limited operating history of the Group’s financialservice business. There can be no assurance that the Group is able to manage its credit riskeffectively with its existing risk management system.

The hotel that we operate may encounter temporary closures, reduced turnover or loweroccupancy rates as a result of repairs, refurbishments and/or the redevelopment or renovation ofthe properties or neighboring properties.

Our hotel may require repairs and refurbishments which may require significant capitalexpenditures. Our hotel may also need to undergo redevelopment or renovation works fromtime to time to retain their attractiveness and may also require maintenance or repairs. Suchrepairs, refurbishments, redevelopments or renovations of our hotel may impact on our abilityto attract guests and customers for our restaurants and event facilities at our hotel. In somecircumstances, such repairs, refurbishments, redevelopments or renovations may require thetemporary closure of our hotel or the restaurants or other facilities within our hotel. As aresult, during the period of any such repairs, refurbishments, redevelopments or renovations,we may experience a reduction in average room rates of our hotel and/or the number ofcustomers using our restaurants and catering facilities. Furthermore, buildings neighboringany of our hotel may be demolished or redeveloped for alternative uses, which may causedisruption to our hotel. This may in turn negatively impact the revenue, attractiveness andvaluation of our hotel. Furthermore, any development or redevelopment of neighboringproperties could add properties that compete with our hotel. The occurrence of any of theabove circumstances could have a material and adverse effect on our business, financialcondition and results of operations.

If our suppliers do not deliver high quality food, beverage and other supplies to our restaurants atcompetitive prices or in a timely manner, we may experience supply shortages and increased foodcosts.

The ability to source quality food ingredients and beverages at competitive prices in atimely manner is important to our hotel business. Our ability to maintain consistent qualityand maintain our menu offerings throughout our restaurants depends in part upon our abilityto acquire fresh food products and beverages and related supplies from reliable sources thatmeet our quality specifications and in sufficient quantities. We are exposed to the risks that wewill not be able to obtain supplies in sufficient quantities or of a sufficient quality and that theprice of our supplies will rise significantly. A disruption of our food or beverage suppliescould occur for a variety of reasons, many of which are beyond our control and this couldincrease our food and beverage costs and/or cause shortages of food, beverages and othersupplies at our restaurants. These factors could have a material and adverse effect on thebusiness, financial condition, results of operations and reputation of our hotel business.

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We face risks related to instances of food-borne illnesses, food contamination and the associatedliability claims.

As we provide food and beverage and banquet services at our hotel and restaurant, weface an inherent risk of our food and beverages being found to be unfit for consumption or tocause illness due to contamination or degeneration, tempering by third parties or otherproblems arising during the various stages of procurement, transportation, preparation andstorage, as well as the associated liability claims. Our food quality depends partly on thequality of the food ingredients and raw materials provided by our suppliers. We may not beable to detect all defects in our supplies and food contamination could be caused by thirdparty food suppliers or other factors which are outside of our control. Any failure to detectdefective food supplies or observe proper hygiene, cleanliness and other quality controlrequirements or standards in our operations could adversely affect the quality of the food weoffer, which could lead to liability claims, complaints and the related adverse publicity,reduced customer traffic at our hotels and restaurants, damage to our reputation and brandand the imposition against us of penalties by relevant authorities and compensation awards bycourts. Additionally, we are subject to extensive and stringent health and sanitation laws andregulations that impose fines and/or suspension or revocation of licenses for violation of suchlaws and regulations. Furthermore, these laws and regulations are constantly evolving, and wecannot assure you that the PRC government will not impose additional or stricter laws orregulations, the compliance with which may cause us to incur significant costs which we maynot be able to pass on to our customers. If we fail to comply with existing or future health andsanitation laws and regulations or fail to meet public expectations in relation to health andsanitation, our business, financial condition, results of operations and reputation may bematerially and adverse affected.

RISKS RELATING TO THE PRC

Changes in the economic, political and social conditions in the PRC or Jiangxi province andgovernment policies could affect the Group’s business and prospects.

Substantially all of the Group’s assets are located in Shangrao, Jiangxi province, the PRCand all of the Group’s revenue is sourced from the PRC. Accordingly, the Group’s results ofoperations, financial position and prospects are subject, to a significant degree, to economic,political and legal developments in the PRC. The PRC economy differs from the economies ofmost developed countries in many respects, including the extent of government involvement,the level of development, growth rate, uniformity in the implementation and enforcement oflaws in relation to control of foreign exchange and control over capital investment andallocation of resources.

The PRC economy is in the process of transitioning from a centrally planned economy toa more market-oriented economy. For more than three decades, the PRC government hasimplemented economic reform measures to utilise market forces in the development of thePRC economy. In addition, the PRC Government continues to play a significant role inregulating industries and the economy through policy measures. The Group cannot predictwhether changes in the PRC economic, political or social conditions and in the PRC laws,regulations and policies will adversely affect its business, financial condition or results ofoperations. In addition, many of the economic reforms carried out by the PRC Government

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are unprecedented or experimental and are expected to be refined and improved over time.Other political, economic and social factors may also lead to further adjustments of thereform measures.

Uncertainty with respect to the PRC legal system could have a material adverse effect on theGroup.

As all of the Group’s businesses are conducted, and substantially all of the Group’sassets are located, in the PRC, the Group’s operations are governed principally by the PRClaws and regulations. The PRC legal system is based on written statutes while prior courtdecisions can only be cited as reference. Since 1979, the PRC government has promulgatedlaws and regulations in relation to economic matters such as foreign investment, corporateorganisation and governance, commerce, taxation, foreign exchange and trade, with a view todeveloping a comprehensive system of commercial law. However, China has not developed afully integrated legal system and recently enacted laws and regulations that may notsufficiently cover all aspects of economic activities in China. In particular, because these lawsand regulations are relatively new, and because of the limited volume of published decisionsand their non-binding nature, the interpretation and enforcement of these laws andregulations involve uncertainties. See “PRC Laws and Regulations-NDRC Filing” for moredetails. As the NDRC Notice is a new regulation, there are still uncertainties regarding itsinterpretation, implementation and enforcement by the NDRC. If the Company fails tocomplete such filing in accordance with the relevant requirements, the Company may besubject to penalties such as disclosing such non-compliance on the national credit informationsystem. In addition, the PRC legal system is based, in part, on government policies andinternal rules (some of which are not published on a timely basis or at all) that may have aretroactive effect. As a result, the Group may not be aware of the Group’s violation of thesepolicies and rules until sometime after the violation. In addition, any litigation in China maybe protracted and result in substantial costs and diversion of resources and management’sattention.

Investors may experience difficulties in effecting service of legal process and enforcing judgmentsagainst the Group and its management.

The Company and all of its subsidiaries and portfolio companies are incorporated in thePRC. Substantially all of the Group’s assets are located in the PRC. In addition, most of theGroup’s directors, supervisors and executive officers reside within the PRC and the assets ofthe Group’s directors and officers may be located within the PRC. As a result, it may not bepossible to effect service of process outside the PRC upon most of the Group’s directors,supervisors and senior management, including for matters arising under applicable securitieslaw. A judgment of a court of another jurisdiction may be reciprocally recognised or enforcedif the jurisdiction has a treaty with China or if judgments of the PRC courts have beenrecognised before in that jurisdiction, subject to the satisfaction of other requirements.However, China does not have treaties providing for the reciprocal recognition andenforcement of judgments of courts with many countries, including the United States and theUnited Kingdom. Therefore, it may be difficult for investors to enforce any judgmentsobtained from foreign courts against the Company, its subsidiaries, any of their respectivedirectors, supervisors or senior management in the PRC.

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The PRC government’s control of currency conversion may adversely affect the value ofinvestors’ investments.

All of the Group’s revenue is denominated in Renminbi, which is also the reportingcurrency of the Group. Renminbi is not a freely convertible currency. A portion of theGroup’s cash may be required to be converted into other currencies in order to meet theGroup’s foreign currency needs. The PRC government may restrict future access to foreigncurrencies for current account transactions at its discretion. Foreign exchange transactionsunder capital account in the PRC may continue to be not freely convertible and require theapproval of the SAFE. These limitations could affect the Group’s ability to obtain foreigncurrencies through equity financing, or to obtain foreign currencies for capital expenditures.In addition, significant future cash flows in Renminbi may limit the Group’s ability topurchase goods outside the PRC or fund business activities outside the PRC.

Future fluctuations in the value of the Renminbi could have a material adverse effect on theGroup’s financial condition and results of operations.

The Group’s revenue, expenses and bank borrowings is or may be denominated in HongKong dollars, U.S. dollars and other foreign currencies, although the Group’s functionalcurrency is the Renminbi. As a result, fluctuations in exchange rates, particularly between theRenminbi, the Hong Kong dollar or the U.S. dollar, d may result in foreign currency exchangelosses of the Group’s foreign currency- denominated assets and liabilities.

The exchange rate of the Renminbi against the U.S. dollar and other currencies fluctuatesand is affected by, among other things, changes in the PRC’s and international political andeconomic conditions and the PRC government’s fiscal and currency policies. Since 1994, theconversion of the Renminbi into foreign currencies, including the Hong Kong dollar and U.S.dollar, has been based on rates set daily by the PBOC based on the previous business day’sinter-bank foreign exchange market rates and exchange rates in global financial markets. From1994 to 20 July 2005, the official exchange rate for the conversion of the Renminbi to U.S.dollars was generally stable. On 21 July 2005, the PRC government adopted a more flexiblemanaged floating exchange rate system to allow the value of the Renminbi to fluctuate withina regulated band that is based on market supply and demand with reference to a basket ofcurrencies. From 21 July 2005 to 30 September 2011, the value of the Renminbi appreciated byapproximately 30.2 per cent. against the U.S. dollar. On 19 June 2010, the PBOC announcedthat the PRC government would reform the Renminbi exchange rate regime and increase theflexibility of the exchange rate. The floating band for the trading prices in the inter-bankforeign exchange market of Renminbi against the U.S. dollar was widened to 2.0 per cent. on17 March 2014. On July 21, 2005, the PRC government reformed the exchange rate regime bymoving to a managed floating exchange regime based on market supply and demand withreference to a basket of currencies. As a result, the Renminbi appreciated against the HongKong and U.S. dollars by approximately 2 per cent. on the same date. Changes in currencypolicies resulted in the Renminbi appreciating against the U.S. dollar by approximately 33.5per cent. from 21 July 2005 to 30 June 2015. Subsequently, the Renminbi depreciated 4.3 percent. from 30 June 2015 to 31 December 2015. The exchange rate between the Renminbi andthe U.S. dollar experienced further fluctuation between 1 January 2016 and the date of thisOffering Circular. There remains significant international pressure on the PRC government toadopt an even more flexible currency policy, which could result in further and more significantappreciation of the Renminbi against the U.S. dollar. The Group cannot assure investors thatthe Renminbi will not experience significant appreciation against the dollar in the future.

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The payment of dividends by the Company’s operating subsidiaries in the PRC is subject torestrictions under the PRC law.

The Company and all of its subsidiaries operate in the PRC. The PRC laws require thatdividends be paid only out of net profit, calculated according to the PRC accountingprinciples, which differ from generally accepted accounting principles in other jurisdictions. Inaddition, the PRC law requires enterprises set aside part of their net profit as statutoryreserves before distributing the net profit for the current financial year. These statutoryreserves are not available for distribution as cash dividends. Since the availability of funds tofund the Company’s operations and to service its indebtedness partly depends upon dividendsreceived from these subsidiaries, any legal restrictions on the availability and usage ofdividend payments from the Issuer’s subsidiaries may impact the Company’s ability to fund itsoperations and to service its indebtedness.

The enforcement of the Labour Contract Law and other labour-related regulations in the PRCmay adversely affect the Group’s business and results of operations.

On 29 June 2007, the Standing Committee of the National People’s Congress of the PRCenacted the Labour Contract Law (勞動合同法), which became effective on 1 January 2008 andlater amended on 28 December 2012. The Labour Contract Law establishes additionalrestrictions and increases the cost to employers upon termination of employees, includingspecific provisions related to fixed-term employment contracts, temporary employment,probation, consultation with the labour union and employee general assembly, employmentwithout a contract, dismissal of employees, compensation upon termination and overtimework, and collective bargaining. According to the Labour Contract Law, an employer isobligated to sign an unlimited term labour contract with an employee if the employercontinues to employ the employee after two consecutive fixed term labour contracts. Theemployer must also pay compensation to employees if the employer terminates an unlimitedterm labour contract. Unless an employee refuses to extend the labour contract with theemployee under the same terms or better terms than those in the original contract. Further,under the Regulations on Paid Annual Leave for Employees (職工帶薪休假條例) which becameeffective on 1 January 2008, employees who have served more than one year with an employerare entitled to a paid vacation ranging from five to 15 days, depending on their length ofservice. Employees who waive such vacation time at the request of employers shall becompensated at three times their normal salaries for each waived vacation day. As a result ofthese protective labour measures or any additional future measures, the Group’s labour costsmay increase. There can be no assurance that any disputes, work stoppages or strikes will notarise in the future.

RISKS RELATING TO THE BONDS

Any failure to complete the relevant filings under the NDRC Notice and the relevant registrationunder SAFE within the prescribed time frame following the completion of the issue of the Bondsmay have adverse consequences for the Company and/or the investors of the Bonds.

The NDRC issued the NDRC Circular on 14 September 2015, which came into effect onthe same day. According to the NDRC Circular, domestic enterprises and their overseascontrolled entities shall procure the registration of any debt securities issued outside the PRCwith the NDRC prior to the issue of the securities and notify the particulars of the relevantissues within 10 working days after the completion of the issue of the securities. The NDRC

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Circular is silent on the legal consequences of noncompliance with the pre-issue registrationrequirement. The Company has obtained the NDRC pre-issuance registration on 7 November2017. Similarly, there is no clarity on the legal consequences of non-compliance with thepost-issue notification requirement under the NDRC Circular. In the worst case scenario, suchnon-compliance with the post-issue notification requirement under the NDRC Circular mayresult in it being unlawful for the Company to perform or comply with any of its obligationsunder the Bonds and the Bonds might be subject to enforcement as provided in Condition 9(Events of Default) of the Terms and Conditions. Potential investors of the Bonds are advisedto exercise due caution when making their investment decisions. The Company has undertakento notify the NDRC of the particulars of the issue of the Bonds within 10 PRC Business Daysafter the Issue Date.

In accordance with the Administrative Measures for Foreign Debt Registration (外債登記管理辦法) (the “Foreign Debt Registration Measures”) issued by the SAFE on 28 April 2013,which came into effect on 13 May 2013, the Company shall complete foreign debt registrationin respect of the issue of the Bonds with the local branches of SAFE in accordance with lawsand regulations. According to the Operation Guidelines for Administration of Foreign DebtRegistration (外債登記管理操作指引) promulgated together with the Foreign DebtRegistration Measures, the Company is required to register the Bonds within 15 PRC BusinessDays after the Issue Date and complete such registration in accordance with the Foreign DebtRegistration Measures. In accordance with the Notice of People’s Bank of China on MattersConcerning Macro-prudential Management on All-round Cross-border Financing (《中國人民銀行關於全口經跨境融資宏現審慎管理有關事宜的通知》) (Yin Fa No.9 [2017]) issued by thePeople’s Bank of China on 12 January 2017 and came into effect on the same date, anenterprise shall file the information of its cross-border financing in the capital projectinformation system with the SAFE after signing the contract and no later than three workingdays before the withdrawal of money. In accordance with the Notice of the StateAdministration of Foreign Exchange on the Issuance of “Guidelines for Operation of ForeignExchange Operations on Capital Projects (2017 Edition)” (國家外匯管理局綜合司關於印發《資本項目外匯業務操作指引(2017年版)》的通知) (Hui Zong Fa No.105[2017]) issued by theSAFE in November 2017 and came into effect on the same date, the company shall completeforeign debt registration with the local branches of SAFE within five working days afterbonds delivery. Before such registration of the Bonds is completed, it is uncertain whether theBonds are enforceable as a matter of PRC law and it may be difficult for Bondholders torecover amounts due from the Company, and the Company may not be able to remit theproceeds of the offering into the PRC or remit money out of the PRC in order to meet itspayment obligations under the Bonds. Pursuant to article 27(5) of the Foreign DebtRegistration Measures, a failure to comply with registration requirements may result in awarning and fine as set forth under article 48 of the Foreign Exchange AdministrativeRegulations (外匯管理條例) promulgated by the State Council in 2008. However, pursuant toarticle 40 of the Foreign Debt Administration Provisional Rules (外債管理暫行辦法)promulgated by MOF, the NDRC and SAFE, a failure by a domestic entity to register aforeign debt contract will render the contract not legally binding and unenforceable. Underthe Conditions, the Company has undertaken to use its best endeavours, and it intends, tocomplete the registration of the Bonds with SAFE within 5 PRC Business Days after thedelivery of the bonds. If the Company is unable to complete such registration within theabovementioned time period, investors will have the right to require the Company to redeemtheir holding of Bonds in accordance with the Terms and Conditions. However,notwithstanding such right, the Company may have difficulty in remitting funds offshore toservice payments in respect of the Bonds and investors may encounter difficulties in enforcingjudgments obtained in the Hong Kong courts with respect to the Bonds and the Trust Deed inthe PRC. In such circumstances, the value and secondary market price of the Bonds may alsobe materially and adversely affected.

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The Bonds are unsecured obligations and with no guarantees.

As the Bonds are unsecured obligations of the Company and not guaranteed by theCompany’s controlling shareholder, the repayment of the Bonds may be compromised if:

• the Company enters into bankruptcy, liquidation, reorganisation or otherwinding-up proceedings;

• there is a default in payment under the Company’s secured indebtedness or otherunsecured indebtedness; or

• there is an acceleration of any of the Company’s indebtedness.

If any of these events were to occur, the Company’s assets and any amounts received fromthe sale of such assets may not be sufficient to pay amounts due on the Bonds.

The Bonds may not be a suitable investment for all investors.

The Bonds may be purchased as a way to reduce risk or enhance yield with a measuredand appropriate addition of risk to the investor’s overall portfolios. A potential investorshould not invest in the Bonds unless they have the expertise (either alone or with the help of afinancial adviser) to evaluate how the Bonds will perform under changing conditions, theresulting effects on the value of such Bonds and the impact this investment will have on thepotential investor’s overall investment portfolio.

Additionally, the investment activities of certain investors are subject to legal investmentlaws and regulations, or review or regulation by certain authorities. Each potential investorshould consult its legal advisers to determine whether and to what extent (a) Bonds are legalinvestments for it, (b) Bonds can be used as collateral for various types of borrowing and (c)other restrictions apply to its purchase of any Bonds. Financial institutions should consulttheir legal advisers or the appropriate regulators to determine the appropriate treatment ofBonds under any applicable risk-based capital or similar rules.

Each potential investor in the Bonds must determine the suitability of that investment inlight of its own circumstances. In particular, each potential investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of theBonds, the merits and risks of investing in the Bonds and the information containedor incorporated by reference in this Offering Circular or any applicable supplement;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in thecontext of its particular financial situation, an investment in the Bonds and theimpact such investment will have on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of aninvestment in the Bonds;

• understand thoroughly the terms of the Bonds and be familiar with the behaviour ofany relevant indices and financial markets; and

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• be able to evaluate (either alone or with the help of a financial adviser) possibleeconomic scenarios, such as interest rate and other factors which may affect itsinvestment and the ability to bear the applicable risks.

An active trading market for the Bonds may not develop.

The Bonds are a new issue of securities for which there is currently no trading market.Although approval in-principle has been received from the SGX-ST for the listing andquotation of the Bonds on the SGX-ST, no assurance can be given as to the ability of holdersto sell their Bonds or the price at which holders will be able to sell their Bonds or that a liquidmarket will develop. The liquidity of the Bonds will be adversely affected if the Bonds are heldor allocated to limited investors. The Joint Lead Managers are not obligated to make a marketin the Bonds, and if they do so, they may discontinue such market making activity at any timeat their sole discretion. In addition, the Bonds are being offered pursuant to exemptions fromregistration under the Securities Act and, as a result, holders will only be able to resell theirBonds in transactions that have been registered under the Securities Act or in transactions notsubject to or exempt from registration under the Securities Act.

Investors in the Bonds may be subject to foreign exchange risks.

The Bonds are denominated and payable in U.S. dollars. An investor who measuresinvestment returns by reference to a currency other than U.S. dollars would be subject toforeign exchange risks by virtue of an investment in the Bonds, due to, among other things,economic, political and other factors over which the Company has no control. Depreciation ofthe U.S. dollar against such currency could cause a decrease in the effective yield of the Bondsbelow their stated coupon rates and could result in a loss when the return on the Bonds istranslated into such currency. In addition, there may be tax consequences for investors as aresult of any foreign currency gains resulting from any investment in the Bonds.

The liquidity and price of the Bonds following the offering may be volatile.

The price and trading volume of the Bonds may be highly volatile. Factors such asvariations in the Company’s turnover, earnings and cash flows, proposals for new investments,strategic alliances and/or acquisitions, changes in interest rates, fluctuations in price forcomparable companies, changes in government regulations and changes in general economicconditions nationally or internationally could cause the price of the Bonds to change. Anysuch developments may result in large and sudden changes in the trading volume and price ofthe Bonds. There is no assurance that these developments will not occur in the future.

The Company may be unable to obtain and remit funds in foreign currencies.

The Company’s ability to satisfy its obligations under the Bonds depends in part upon itsability to obtain and remit sufficient funds in foreign currencies. The Company must presentcertain documents to the SAFE, its authorized branch or the designated foreign exchangebank, for approval before it can obtain and remit foreign currencies out of China (includingevidence of the registration of the foreign obligations with the SAFE).

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Developments in other markets may adversely affect the market price of the Bonds.

The market price of the Bonds may be adversely affected by declines in the internationalfinancial markets and world economic conditions. The market for the Bonds is, to varyingdegrees, influenced by economic and market conditions in other markets, especially those inAsia. Although economic conditions are different in each country, investors’ reactions todevelopments in one country can affect the securities markets and the securities of issuers inother countries, including the PRC. Since the global financial crisis in 2008 and 2009, theinternational financial markets have experienced significant volatility. If similar developmentsoccur in the international financial markets in the future, the market price of the Bonds couldbe adversely affected.

The Company may be unable to redeem the Bonds upon the due date for redemption thereof.

On the Maturity Date (as defined in the Terms and Conditions), the Bonds will beredeemed at their principal amount, or following the occurrence of a Relevant Event (asdefined in the Terms and Conditions), the Company may, at the option of any Bondholder, berequired to redeem all, but not some only, of such Bondholder’s Bonds at 101 per cent. (in thecase of a redemption for a Change of Control) or 100 per cent. (in the case of a redemptionfor a No Registration Event) of their principal amount, together in each case with accruedinterest. On the Maturity Date or if such an event were to occur, the Company may not havesufficient cash in hand and may not be able to arrange financing to redeem the Bonds in time,or on acceptable terms, or at all. The ability to redeem the Bonds on the Maturity Date or insuch event may also be limited by the terms of other debt instruments. The Company’s failureto repay, repurchase or redeem tendered Bonds could constitute an event of default under theBonds, which may also constitute a default under the terms of the Company’s otherindebtedness.

The Bonds will be structurally subordinated to the existing and future indebtedness and otherliabilities and commitments of the Company’s existing and future subsidiaries and effectivelysubordinated to the Company’s secured debt to the extent of the value of the collateral securingsuch indebtedness.

The Bonds will be structurally subordinated to any debt and other liabilities andcommitments, including trade payables and lease obligations, of the Company’s existing orfuture subsidiaries, whether or not secured. The Bonds will not be guaranteed by any of theCompany’s subsidiaries, and the Company may not have direct access to the assets of suchsubsidiaries unless these assets are transferred by dividend or otherwise to the Company. Theability of such subsidiaries to pay dividends or otherwise transfer assets to the Company issubject to various restrictions under applicable laws. The Company’s subsidiaries will beseparate legal entities that have no obligation to pay any amounts due under the Bonds ormake any funds available therefore, whether by dividends, loans or other payments. TheCompany’s right to receive assets of any of the Company’s subsidiaries, respectively, upon thatsubsidiary’s liquidation or reorganisation will be effectively subordinated to the claim of thatsubsidiary’s creditors (except to the extent that the Company is creditor of that subsidiary).Consequently, the Bonds will be effectively subordinated to all liabilities, including tradepayables and lease obligations, of any subsidiaries that the Company may in the future acquireor establish.

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The Bonds are the Company’s unsecured obligations and will (i) rank at least equally inright of payment with all the Company’s other present and future unsecured andunsubordinated obligations; (ii) be effectively subordinated to all of the Company’s presentand future secured indebtedness to the extent of the value of the collateral securing suchobligations; and (iii) be senior to all of the Company’s present and future subordinatedobligations, subject in all cases to exceptions as may be provided by applicable legislation. Asa result, claims of secured lenders, whether senior or junior, with respect to assets securingtheir loans will be prior with respect to those assets. In the event of the Company’sbankruptcy, insolvency, liquidation, reorganisation, dissolution or other winding up, or uponany acceleration of the Bonds, these assets will be available to pay obligations on the Bondsonly after all other debt secured by these assets has been repaid in full. Any remaining assetswill be available to the Bondholders rateably with all of the Company’s other unsecured andunsubordinated creditors, including trade creditors. If there are insufficient assets remainingto pay all these creditors, then all or a portion of the Bonds then outstanding would remainunpaid.

The insolvency laws of the PRC may differ from those of another jurisdiction with which theholders of the Bonds are familiar.

The Company is incorporated under the laws of the PRC. Any bankruptcy proceedingrelating to the Company would likely involve PRC bankruptcy laws, the procedural andsubstantive provisions of which may differ from comparable provisions of the local insolvencylaws of jurisdictions with which the holders of the Bonds are familiar. If the Company isunable to comply with the restrictions and covenants in its debt agreements (if any), or theBonds, there could be a default under the terms of these agreements, or the Bonds, whichcould cause repayment of the Company’s debt to be accelerated. If the Company is unable tocomply with the restrictions and covenants in the Bonds, or current or future debt obligationsand other agreements (if any), there could be a default under the terms of these agreements. Inthe event of a default under these agreements, the holders of the debt could terminate theircommitments to lend to the Company, accelerate repayment of the debt, declare all amountsborrowed due and payable or terminate the agreements, as the case may be. Furthermore, someof the debt agreements of the Company, contain cross-acceleration or cross-defaultprovisions. As a result, the default by the Company under one debt agreement may cause theacceleration of repayment of debt, including the Bonds, or result in a default under its otherdebt agreements, including the Bonds. If any of these events occur, there can be no assurancethat the Company’s assets and cash flows would be sufficient to repay all of the Company’sindebtedness in full, or that it would be able to find alternative financing. Even if theCompany could obtain alternative financing, there can be no assurance that it would be onterms that are favourable or acceptable to the Company.

The Company’s financial statements were prepared in conformity with PRC GAAP, which differsfrom IFRS in certain aspects.

The audited consolidated financial statements of the Company included elsewhere in thisOffering Circular were prepared in conformity with PRC GAAP which differs in certainaspects from IFRS. As such, investors who are more familiar with IFRS should consult theirown professional advisers for an understanding of any difference and how they may affect thefinancial information of the Company included elsewhere in this Offering Circular.

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A change in Hong Kong law which governs the Bonds may adversely affect holders of the Bonds.

The Terms and Conditions are governed by Hong Kong law. No assurance can be given asto the impact of any possible judicial decision or change Hong Kong law or administrativepractice after the date of issue of the Bonds.

Modifications and waivers may be made in respect of the Terms and Conditions and the TrustDeed by the Trustee or less than all of the holders of the Bonds, and decisions may be made onbehalf of all holders of the Bonds that may be adverse to the interests of the individual holders ofthe Bonds.

The Terms and Conditions contain provisions for calling meetings of the holders of theBonds to consider matters affecting their interests generally. These provisions permit definedmajorities to bind all Bondholders including those Bondholders who did not attend and voteat the relevant meeting and those Bondholders who voted in a manner contrary to themajority. There is a risk that the decision of the majority of holders of the Bonds may beadverse to the interests of the individual holders of the Bonds.

The Terms and Conditions also provide that the Trustee may, without the consent of theholders of the Bonds, agree to any modification of the Trust Deed, the Terms and Conditionsand/or the Agency Agreement (other than in respect of a reserved matter) which in theopinion of the Trustee will not be materially prejudicial to the interests of the holders of theBonds and to any modification of the Bonds, the Trust Deed or the Agency Agreement whichin the opinion of the Trustee is of a formal, minor or technical nature or is to correct amanifest error or to comply with any mandatory provision of applicable law.

In addition, the Trustee may, without the consent of the holders of the Bonds, authoriseor waive any proposed breach or breach of the Bonds, the Trust Deed or the AgencyAgreement (other than a proposed breach, or a breach relating to the subject of certainreserved matters) if, in the opinion of the Trustee, the interests of the holders of the Bondswill not be materially prejudiced thereby.

The Trustee may request holders of the Bonds to provide an indemnity and/or security and/orpre-funding to its satisfaction.

In certain circumstances (including without limitation the giving of notice pursuant toCondition 9 (Events of Default) of the Terms and Conditions and the taking of enforcementsteps pursuant to Condition 13 (Enforcement) of the Terms and Conditions), the Trustee may(in its sole discretion) request the Bondholders to provide an indemnity and/or security and/orpre-funding to its satisfaction before it takes any action on behalf of Bondholders. TheTrustee shall not be obliged to take any such actions if not first indemnified and/or securedand/or pre-funded to its satisfaction. Negotiating and agreeing to any indemnity and/orsecurity and/or pre-funding can be a lengthy process and may impact on when such actionscan be taken. The Trustee may not be able to take actions, notwithstanding the provision of anindemnity or security or pre-funding to it, in breach of the terms of the Trust Deed and insuch circumstances, or where there is uncertainty or dispute as to the applicable laws orregulations, to the extent permitted by the agreements and the applicable laws or regulation, itwill be for the Bondholders to take such actions directly.

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Gains on the transfer of the Bonds and interest payable by the Company to overseas Bondholdersmay be subject to income tax and value-added tax under PRC tax laws.

Under the Enterprise Income Tax Law of the PRC (the “EIT Law”) which took effect on1 January 2008, amended on 24 February 2017 and its implementation rules, any gains realisedon the transfer of the Bonds by holders who are deemed under the EIT Law as non-residententerprises may be subject to PRC enterprise income tax if such gains are regarded as incomederived from sources within the PRC. Under the EIT Law, a “non-resident enterprise” meansan enterprise established under the laws of a jurisdiction other than the PRC and whose actualadministrative organisation is not in the PRC, which has established offices or premises in thePRC, or which has not established any offices or premises in the PRC but has obtained incomederived from sources within the PRC. There remains uncertainty as to whether the gainsrealized on the transfer of the Bonds by enterprise holders would be treated as incomesderived from sources within the PRC and be subject to PRC enterprise income tax. Inaddition, there is uncertainty as to whether gains realised on the transfer of the Bonds byindividual holders who are not PRC citizens or residents will be subject to PRC individualincome tax. If such gains are subject to PRC income tax, the 10 per cent. enterprise incometax rate and 20 per cent. individual income tax rate will apply respectively unless there is anapplicable tax treaty or arrangement that reduces or exempts such income tax. The taxableincome will be the balance of the total income obtained from the transfer of the Bonds minusall costs and expenses that are permitted under PRC tax laws to be deducted from the income.According to the Arrangement between the Mainland of China and the Hong Kong SpecialAdministrative Region for the Avoidance of Double Taxation and the Prevention of FiscalEvasion with Respect to Taxes on Income (the “Arrangement”) which was promulgated on 21August 2006, Bondholders who are Hong Kong residents, including both enterprise holdersand individual holders, will be exempted from PRC income tax on capital gains derived from asale or exchange of the Bonds if such capital gains are not connected with an office orestablishment that the Bondholders have in the PRC and all the other relevant conditions aresatisfied.

Pursuant to the EIT Law, the PRC Individual Income Tax Law (the “IIT Law”) whichwas issued on 10 September 1980 and amended as at 30 June 2011, and the implementationregulations in relation to both the EIT Law and IIT Law, PRC income tax at a rate of 10 percent. or 20 per cent. is normally applicable to PRC-source income derived by non-residententerprises or individuals respectively, subject to adjustment by applicable treaty. As theCompany is a PRC resident enterprise for tax purposes, interest paid to non-residentBondholders may be regarded as PRC-sourced, and therefore be subject to PRC income tax ata rate of 10 per cent. for nonresident enterprise Bondholders and at a rate of 20 per cent. fornon-resident individual Bondholders (or a lower treaty rate, if any).

Pursuant to the Ministry of Finance and the State Administration of Taxation issued theCircular of Full Implementation of Replacing Business Tax with Value-Added Tax Reform(Caishui [2016] No. 36) (“Circular 36”) issued on 23 March 2016 and amended on 1 July 2017,which introduced a new value-added tax (“VAT”) from 1 May 2016. VAT is applicable whereentities or individuals provide services within the PRC. The services are treated as beingprovided within China where either the service provider or the service recipient is located inChina. The services subject to VAT include the provision of financial services such as theprovision of loans. Given that the Company is located in the PRC, the holders of the Bondswould be regarded as providing the financial services within China and consequently, theCompany will be obligated to withhold VAT of 6 per cent (and certain surcharges as describedbelow) on payments of interest and certain other amounts on the Bonds paid by the Company

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to Bondholders that are non-resident enterprises or individuals. Such surcharges, includingurban maintenance and construction tax (7 per cent.), education surcharges (3 per cent.) andlocal education surcharges (2 per cent.), when aggregated, amount to 12 per cent. of the VATpayment and consequently, the combined rate of VAT and surcharges would be 6.72 per cent.VAT is unlikely to be applicable to any transfer of Bonds between entities or individualslocated outside of the PRC and therefore unlikely to be applicable to gains realised upon suchtransfers of Bonds, but there is uncertainty as to the applicability of VAT if either the seller orbuyer of Bonds is located inside the PRC. Circular 36 together with other laws and regulationspertaining to VAT are relatively new, the interpretation and enforcement of such laws andregulations involve uncertainties.

If a Bondholder, being a non-resident enterprise or non-resident individual, is requiredto pay any PRC income tax on interest or gains on the transfer of the Bonds, the value of therelevant Bondholder’s investment in the Bonds may be materially and adversely affected.

The Bonds will be represented by a Global Certificate and holders of a beneficial interest in aGlobal Certificate must rely on the procedures of the Clearing Systems.

The Bonds will be represented by beneficial interests in a Global Certificate. Such GlobalCertificate will be registered in the name of a nominee for, and deposited with, a commondepositary for Euroclear and Clearstream (the “Clearing Systems”). Except in thecircumstances described in the Global Certificate, investors will not be entitled to receivedefinitive Certificates. The Clearing System will maintain records of the beneficial interests inthe Global Certificate. While the Bonds are represented by the Global Certificate, investorswill be able to trade their beneficial interests only through the Clearing Systems.

While the Bonds are represented by the Global Certificate, the Company will dischargeits payment obligations under the Bonds by making payments to the relevant Clearing Systemfor distribution to their account Bondholders.

A holder of a beneficial interest in a Global Certificate must rely on the procedures ofthe relevant Clearing System to receive payments under the Bonds. The Company has noresponsibility or liability for the records relating to, or payments made in respect of, beneficialinterests in the Global Certificate.

Bondholders of beneficial interests in the Global Certificate will not have a direct rightto vote in respect of the Bonds. Instead, such Bondholders will be permitted to act only to theextent that they are enabled by the relevant Clearing System to appoint appropriate proxies.

Bondholders should be aware that a Definitive Certificate which has a principal amount that isnot an integral multiple of the minimum specified denomination may be illiquid and difficult totrade.

In relation to any Bond which has a principal amount consisting of a minimum specifieddenomination plus a higher integral multiple of another smaller amount, it is possible that theBonds may be traded in amounts in excess of the minimum specified denomination that arenot integral multiples of such minimum specified denomination. In such a case a Bondholderwho, as a result of trading such amounts, holds a principal amount of less than the minimumspecified denomination will not receive a Definitive Certificate in respect of such holding(should definitive Bonds be printed) and would need to purchase a principal amount of Bondssuch that it holds an amount equal to one or more specified denominations. If definitive

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Bonds are issued, holders should be aware that a Definitive Certificate which has a principalamount that is not an integral multiple of the minimum specified denomination may beilliquid and difficult to trade.

The Bonds may be redeemed by the Company prior to maturity.

The Company may redeem the Bonds at its option, in whole but not in part, at aredemption price equal to their principal amount, together with interest accrued to the datefixed for redemption if, subject to certain conditions, as a result of a change in tax law, theCompany has or will become obliged to pay Additional Tax Amounts (as defined in the Termsand Conditions), as further described in Condition 6(b) (Redemption for Taxation Reasons)of the Terms and Conditions. If the Company redeems the Bonds prior to their maturity dates,investors may not receive the same economic benefits they would have received had they heldthe Bonds to maturity, and they may not be able to reinvest the proceeds they receive in aredemption in similar securities. In addition, the Company’s ability to redeem the Bonds mayreduce the market price of the Bonds.

The rating expected to be assigned to the Bonds may be downgraded or withdrawn in the future.

The Bonds are expected to be assigned a rating of “BB+” by Fitch. The rating representsonly the opinion of the rating agency and its assessment of the ability of the Company toperform its obligations under the Bonds, the Trust Deed and the Agency Agreement and creditrisks in determining the likelihood that payments will be made when due under the Bonds. Arating is not recommendations to buy, sell or hold the Bonds and may be subject to revision,qualification, suspension, reduction or withdrawn at any time. The Company cannot assureinvestors that a rating will remain for any given period of time or that a rating will not belowered or withdrawn entirely by the rating agency if in its judgment circumstances in thefuture so warrant. The Company is not obligated to inform holders of the Bonds of any suchrevision, downgrade or withdrawal. The rating should be evaluated independently of any otherrating of the Bonds or other securities of the Company (if any). A revision, qualification,suspension or withdrawal at any time of any rating assigned to the Bonds may adversely affectthe market price of the Bonds.

The Company may issue additional Bonds in the future.

The Company may, from time to time, and without prior consultation of theBondholders, create and issue further securities having the same terms and conditions as theBonds in all material respects (or in all material respects save for the first payment of intereston them and the timing for compliance with the Registration Conditions and the making ofthe NDRC Post-issue Filing (see “Terms and Conditions of the Bonds — Further Issues”) orotherwise raise additional capital through such means and in such manner as it may considernecessary. There can be no assurance that such future issuance or capital raising activity willnot adversely affect the market price of the Bonds.

Changes in market interest rates may adversely affect the value of the Bonds.

The Bonds will carry fixed interest rates. Consequently, investment in the Bonds involvesthe risk that subsequent changes in market interest rates may adversely affect the value of theBonds. If Bondholders sell the Bonds they hold before the maturity of such Bonds, they mayreceive an offer less than their investment.

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TERMS AND CONDITIONS OF THE BONDS

The following, subject to modification and other than the words in italics, is the text of theTerms and Conditions of the Bonds which will appear on the reverse of each of the definitivecertificates evidencing the Bonds:

The issue of the US$300,000,000 in aggregate principal amount of 5.7 per cent. bondsdue 2020 (the “Bonds”, which term shall include, unless the context requires otherwise, anyfurther bonds issued in accordance with Condition 15 and consolidated and forming a singleseries therewith) was authorised by a resolution of the board of directors of Shangrao CityConstruction Investment Development Group Company Limited (the “Issuer”) passed on21 June 2017. The Bonds are constituted by a trust deed (as amended or supplemented fromtime to time, the “Trust Deed”) dated 28 December 2017 between the Issuer and Bank ofCommunications Trustee Limited (the “Trustee”, which expression shall include all personsfor the time being the trustee or trustees under the Trust Deed) as trustee for the holders ofthe Bonds. These terms and conditions include summaries of, and are subject to, the detailedprovisions of the Trust Deed, which includes the form of the Bonds. An agency agreementdated 28 December 2017 (as amended or supplemented from time to time, the “AgencyAgreement”) relating to the Bonds has been entered into between the Issuer the Trustee, Bankof Communications Co., Ltd. Hong Kong Branch as principal paying agent (the “PrincipalPaying Agent”), as registrar (the “Registrar”) and as transfer agent (the “Transfer Agent”) andany other agents named therein. Copies of the Trust Deed and the Agency Agreement areavailable for inspection with prior written notice during normal business hours at the specifiedoffice of the Principal Paying Agent (being as at the date of issue of the Bonds at 20 PedderStreet, Central, Hong Kong). “Agents” means the Principal Paying Agent, the Registrar, theTransfer Agent and any other agent or agents appointed from time to time pursuant to theAgency Agreement with respect to the Bonds. The Bondholders are entitled to the benefit of,are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and aredeemed to have notice of those provisions applicable to them of the Agency Agreement.

All capitalised terms that are not defined in these terms and conditions (the“Conditions”) will have, unless the context otherwise requires, the meanings given to them inthe Trust Deed.

1. FORM, SPECIFIED DENOMINATION AND TITLE

The Bonds are issued in the specified denomination of US$200,000 and integral multiplesof US$1,000 in excess thereof.

The Bonds are represented by registered certificates (“Certificates”) and, save as providedin Condition 2(a), each Certificate shall represent the entire holding of Bonds by the sameholder.

Title to the Bonds shall pass by registration in the register that the Issuer shall procure tobe kept by the Registrar in accordance with the provisions of the Agency Agreement (the“Register”). Except as ordered by a court of competent jurisdiction or as required by law, theholder (as defined below) of any Bond shall be deemed to be and may be treated as its absoluteowner for all purposes whether or not it is overdue and regardless of any notice of ownership,trust or an interest in it, any writing on the Certificate representing it or the theft or loss ofsuch Certificate and no person shall be liable for so treating the holder.

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In these Conditions, “Bondholder” and, in relation to a Bond, “holder” mean the personin whose name a Bond is registered.

Upon issue, the Bonds will be represented by a global certificate (the “Global Certificate”)registered in the name of a nominee of, and deposited with, a common depositary for EuroclearBank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). The Conditionsare modified by certain provisions contained in the Global Certificate. See “Summary ofProvisions Relating to the Bonds in Global Form”.

Except in the limited circumstances described in the Global Certificate, owners of interestsin Bonds represented by the Global Certificate will not be entitled to receive definitiveCertificates in respect of their individual holdings of Bonds. The Bonds are not issuable in bearerform.

2. TRANSFERS OF BONDS AND DELIVERY OF NEW CERTIFICATES

(a) Transfer: A holding of Bonds may, subject to Conditions 2(d) and 2(e), betransferred in whole or in part upon the surrender (at the specified office of theRegistrar or any Transfer Agent) of the Certificate(s) representing such Bonds to betransferred, together with the form of transfer endorsed on such Certificate(s) (oranother form of transfer substantially in the same form and containing the samerepresentations and certifications (if any), unless otherwise agreed by the Issuer),duly completed and executed and any other evidence as the Registrar or the relevantTransfer Agent may require. In the case of a transfer of part only of a holding ofBonds represented by one Certificate, a new Certificate shall be issued to thetransferee in respect of the part transferred and a further new Certificate in respectof the balance of the holding not transferred shall be issued to the transferor. In thecase of a transfer of Bonds to a person who is already a holder of Bonds, a newCertificate representing the enlarged holding shall only be issued against surrenderof the Certificate representing the existing holding.

Transfers of interests in the Bonds evidenced by the Global Certificate will be effectedthrough the records of Euroclear and Clearstream or any other clearing system(“Alternative Clearing System”) and their respective participants in accordance withthe rules of Euroclear and Clearstream (of any Alternative Clearing System) andtheir respective direct and indirect participants.

(b) Delivery of New Certificates: Each new Certificate to be issued pursuant toCondition 2(a) shall be available for delivery within seven business days of receipt ofa duly completed form of transfer or Put Exercise Notice (as defined in Condition6(c)) and surrender of the existing Certificate(s). Delivery of the new Certificate(s)shall be made at the specified office of the Transfer Agent or of the Registrar (as thecase may be) to whom delivery or surrender of such form of transfer or Put ExerciseNotice and Certificate shall have been made or, at the option of the holder makingsuch delivery or surrender as aforesaid and as specified in the relevant form oftransfer or Put Exercise Notice or otherwise in writing, be mailed by uninsured postat the risk of the holder entitled to the new Certificate to such address as may be sospecified, unless such holder requests otherwise and pays in advance to the relevantTransfer Agent or the Registrar (as the case may be) the costs of such other methodof delivery and/or such insurance as it may specify. In this Condition 2(b), “business

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day” means a day, other than a Saturday or Sunday or public holiday, on whichbanks are open for business in the place of the specified office of the relevantTransfer Agent or the Registrar (as the case may be).

(c) Transfer or Exercise Free of Charge: Certificates, on transfer, shall be issued andregistered without charge to the relevant Bondholder by or on behalf of the Issuer,the Registrar or any Transfer Agent, but upon payment by the relevant Bondholderof any and all tax or other governmental charges that may be imposed in relation tothem (or the giving of such indemnity and/or security and/or pre-funding as theRegistrar or the relevant Transfer Agent may require in respect thereof).

(d) Closed Periods: No Bondholder may require the transfer of a Bond to be registered(i) during the period of 15 days ending on (and including) the due date forredemption of that Bond, (ii) after a Put Exercise Notice has been deposited inrespect of such Bond pursuant to Condition 6(c), (iii) during the period of sevendays ending on (and including) any Record Date (as defined in Condition 7(a)), or(iv) during the period of 15 days prior to (and including) any date on which Bondsmay be called for redemption by the Issuer pursuant to Condition 6(b).

(e) Regulations: All transfers of Bonds and entries on the Register will be made inaccordance with the detailed regulations concerning transfer and registration ofBonds scheduled to the Agency Agreement. Each of the Issuer and the Registrarmay change the regulations from time to time, with the prior written approval of theTrustee and (in the case of any regulation proposed by the Issuer) of the Registrar.A copy of the current regulations will be mailed (free of charge to the Bondholderand at the Issuer’s expense) by the Registrar to any Bondholder upon written requestand is available at the specified office of the Registrar.

3. STATUS

The Bonds constitute direct, unsubordinated, unconditional and (subject to Condition4(a)) unsecured obligations of the Issuer and shall at all times rank pari passu and without anypreference among themselves. The payment obligations of the Issuer under the Bonds shall,save for such exceptions as may be provided by applicable legislation and subject to Condition4(a), at all times rank pari passu with all the Issuer’s other present and future unsecured andunsubordinated obligations.

4. NEGATIVE PLEDGE; UNDERTAKINGS RELATING TO THE BONDS; FINANCIALSTATEMENTS

(a) Negative Pledge: So long as any Bond remains outstanding (as defined in the TrustDeed), the Issuer will not, and will ensure that none of its Subsidiaries will, create,or have outstanding, any mortgage, charge, lien, pledge or other security interest,upon the whole or any part of its present or future undertaking, assets or revenues(including any uncalled capital) to secure any Relevant Indebtedness, or to secureany guarantee or indemnity in respect of any such Relevant Indebtedness, without atthe same time or prior thereto according to the Bonds (a) the same security as iscreated or subsisting to secure any such Relevant Indebtedness, guarantee orindemnity or (b) such other security as either (i) the Trustee shall in its absolute

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discretion deem not materially less beneficial to the interest of the Bondholders or(ii) shall be approved by an Extraordinary Resolution (as defined in the Trust Deed)of the Bondholders.

(b) Undertakings relating to the Bonds: The Issuer undertakes:

(i) that it will (A) within five PRC Business Days after the Issue Date, register orcause to be registered with the State Administration of Foreign Exchange or itslocal counterpart (“SAFE”) pursuant to the 2017 Operating Guidelines onSAFE Registration of Capital Market Projects (Hui Zong Fa [2017] No. 105)(“Foreign Debt Registration”), (B) use its best endeavours to complete theForeign Debt Registration and obtain a registration record from SAFE on orbefore the Registration Deadline and (iii) comply with all applicable PRC lawsand regulations in relation to the Bonds;

(ii) to file or cause to be filed with the National Development and ReformCommission of the PRC (the “NDRC”) the requisite information anddocuments, within 10 PRC Business Days after the Issue Date and inaccordance with the Notice on Promoting the Reform of the Filing andRegistration System for Issuance of Foreign Debt by Corporates (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知) promulgated by theNDRC on 14 September 2015 which came into effect immediately and anyimplementation rules as issued by the NDRC from time to time (the “Post-Issuance Filing”) and to comply with all applicable PRC laws and regulations inrelation to the issue of the Bonds; and

(iii) before the Registration Deadline and within five PRC Business Days aftersubmission of the NDRC Post-issue Filing and receipt of the registrationcertificate from SAFE (or any other document evidencing the completion ofregistration issued by SAFE), to provide the Trustee with (A) a certificate inEnglish in the form attached as Schedule 4 to the Trust Deed by an authorisedsignatory of the Issuer confirming (I) the completion of the NDRC Post-issueFiling and the Foreign Debt Registration and (II) no Change of Control, Eventof Default or any event or circumstance which could, with the giving of notice,lapse of time, the issuing of a certificate and/or fulfilment of any otherrequirement provided for in Condition 9 become an Event of Default hasoccurred and instructing the Trustee to disseminate a notice to theBondholders (the final form to be attached to such certificate) confirming thecompletion of the NDRC Post-Issue Filing and the Foreign Debt Registration(in accordance with Condition 16); and (B) copies (each certified as true copiesof the originals by an authorised signatory of the Issuer) of the relevantdocuments evidencing due filing with the NDRC and SAFE registrationcertificates, any other document evidencing the completion of filing confirmedby NDRC and the registration issued by SAFE and the particulars of filing andregistration (the items specified in (A) and (B) together, the “RegistrationDocuments”).

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The Trustee shall have no obligation or duty to:

(i) monitor, assist with or ensure the completion of the Foreign Debt Registrationwith SAFE on or before the Registration Deadline and the Post-Issuance Filingwith the NDRC within 10 PRC Business Days after the Issue Date;

(ii) verify the accuracy, validity and/or genuineness of any documents in relation toor in connection with the Post-Issuance Filing and/or the Foreign DebtRegistration and/or the Registration Documents; or

(iii) give notice to the Bondholders confirming the completion of the Post-IssuanceFiling and the Foreign Debt Registration, and shall not be liable toBondholders or any other person for not doing so.

(c) Financial Statements: So long as any Bond remains outstanding, the Issuer shallfurnish the Trustee with:

(i) a Compliance Certificate of the Issuer and a copy of the relevant IssuerAudited Financial Reports within 150 days of the end of each Relevant Periodprepared in accordance with PRC GAAP (audited by the Issuer’s then existingexternal auditor or a nationally recognised firm of independent accountants)and if such statements shall not be in the English language, together with anEnglish translation of the same translated by (A) a nationally recognised firmof independent accountants or (B) a professional translation service providerand checked by a nationally recognised firm of independent accountants,together with a certificate signed by an authorised signatory of the Issuercertifying that such translation is complete and accurate; and

(ii) a copy of the Issuer Unaudited Financial Reports within 120 days of the end ofeach Relevant Period prepared on a basis consistent with the auditedconsolidated financial statements of the Issuer and its Subsidiaries (if any)(reviewed by the Issuer’s then existing external auditor or a nationallyrecognised firm of independent accountants) and if such statements shall notbe in the English language, together with an English translation of the sameand translated by (A) a nationally recognised firm of independent accountantsor (B) a professional translation service provider and checked by a nationallyrecognised firm of independent accountants, together with a certificate signedby an authorised signatory of the Issuer certifying that such translation iscomplete and accurate.

(d) Ratings: So long as any Bond remains outstanding, save with the approval of anExtraordinary Resolution of the Bondholders, the Issuer will maintain ratings onthe Bonds by at least one Rating Agency.

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In these Conditions:

“Compliance Certificate” means a certificate of the Issuer in English signed by anyof its directors, chief executive officer or chief financial officer who are also authorisedsignatories of the Issuer that, having made all reasonable enquiries, to the bestknowledge, information and belief of the Issuer as at a date (the “Certification Date”)not more than five calendar days before the date of the certificate that:

(i) no Relevant Event (as defined in Condition 6(c)), Event of Default (as definedin Condition 9) or Potential Event of Default has occurred since theCertification Date of the last such certificate or (if none) the date of the TrustDeed or, if such an event had occurred, giving details of it; and

(ii) the Issuer has complied with all its covenants and obligations under the TrustDeed and the Bonds.

“Control” means (where applicable): (i) the ownership, acquisition or control ofmore than 50 per cent. of the Voting Rights of the issued share capital of a person or (ii)the right to appoint and/or remove all or the majority of the members of a person’s boardof directors or other governing body, whether obtained directly or indirectly, andwhether obtained by ownership of share capital, the possession of Voting Rights,contract or otherwise and the terms “controlling” and “controlled” have meaningscorrelative to the foregoing;

“Issue Date” means 28 December 2017;

“Issuer Audited Financial Reports” means, for a Relevant Period the annual auditedconsolidated financial statements of the Issuer together with any statements, reports(including any directors’ and auditors’ reports) and notes attached to or intended to beread with any of them, prepared in accordance with the applicable PRC GAAP;

“Issuer Unaudited Financial Reports” means, for a Relevant Period, the semi-annual(or any other interim reporting period required by applicable law or regulations)unaudited consolidated financial statements of the Issuer together with any statements,reports (including any directors’ and auditors’ review reports, if any) and notes attachedto or intended to be read with any of them;

a “person” includes any individual, company, corporation, firm, partnership, jointventure, undertaking, association, organisation, trust, state, agency of a state (in eachcase whether or not being a separate legal entity);

“Potential Event of Default” means an event or circumstance which could with thegiving of notice, lapse of time, issue of a certificate and/or fulfilment of any otherrequirement provided for in Condition 9 become an Event of Default;

“PRC” means the People’s Republic of China, and for the purpose of theseConditions only, excluding the Hong Kong Special Administrative Region of the PRC,the Macau Special Administrative Region of the PRC and Taiwan;

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“PRC Business Day” means a day (other than a Saturday, Sunday or public holiday)on which commercial banks are generally open for business in Beijing;

“PRC GAAP” means the Accounting Standards for Business Enterprises in Chinaissued by the Ministry of Finance of the PRC from time to time;

“Rating Agency” means (i) Fitch Ratings and its successors; (ii) S&P GlobalRatings, and its successors; (iii) Moody’s Investors Service, Inc., a subsidiary of Moody’sCorporation, and its successors or (iv) any other reputable credit rating agency ofinternational standing;

“Registration Deadline” means the day falling 90 calendar days after the Issue Date;

“Relevant Indebtedness” means any indebtedness incurred outside the PRC which isin the form of, or represented or evidenced by, bonds, notes, or other securities which forthe time being are, or are intended to be or capable of being, quoted, listed or dealt in ortraded on any stock exchange or over-the-counter or other securities market. For theavoidance of doubt, Relevant Indebtedness shall not include any indebtedness under anytransferrable loan facility, bilateral bank loan or syndicated bank loan (including anydrawing down of any existing credit line or facility of the Issuer or any of itsSubsidiaries);

“Relevant Period” means (i) in relation to the Issuer Audited Financial Reports, eachperiod of twelve months ending on the last day of the Issuer’s financial year (being 31December of that financial year); (ii) in relation to the Issuer Unaudited FinancialReports, each period of six months ending on the last day of the Issuer’s first halffinancial year (being 30 June of that financial year);

a “Subsidiary” of any person means (i) any company or other business entity ofwhich that person owns or Controls (either directly or through one or more otherSubsidiaries) more than 50 per cent. of the issued share capital or other ownershipinterest having ordinary voting power to elect directors, managers or trustees of suchcompany or other business entity, or (ii) any company or other business entity which atany time has its accounts consolidated with those of that person or which, under thelaws, regulations or generally accepted accounting principles of the jurisdiction ofincorporation of such person from time to time, should have its accounts consolidatedwith those of that person; and

“Voting Rights” means the right generally to vote at a general meeting ofshareholders of a person (irrespective of whether or not, at the time, stock of any otherclass or classes shall have, or might have, voting power by reason of the happening of anycontingency, and any such voting power shall therefore be excluded for the purpose ofthis definition).

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5. INTEREST

The Bonds bear interest on their outstanding principal amount from and including 28December 2017 at the rate of 5.7 per cent. per annum, payable semi-annually in arrear in equalinstalments of US$57 per Calculation Amount (as defined below) on 28 June and 28December in each year (each an “Interest Payment Date”) commencing on 28 June 2018.

Each Bond will cease to bear interest from the due date for redemption unless, uponsurrender of the Certificate representing such Bond, payment of principal is improperlywithheld or refused. In such event it shall continue to bear interest at such rate (both beforeand after judgment) until whichever is the earlier of (a) the date on which all sums due inrespect of such Bond up to that day are received by or on behalf of the relevant Bondholder,and (b) the date falling seven days after the Trustee or the Principal Paying Agent has notifiedBondholders of receipt of all sums due in respect of all the Bonds up to that seventh day(except to the extent that there is failure in the subsequent payment to the relevantBondholder under these Conditions).

If interest is required to be calculated for a period of less than a complete Interest Period(as defined below), the relevant day-count fraction will be determined on the basis of a360-day year consisting of 12 months of 30 days each and, in the case of an incompletemonth, the number of days elapsed.

In these Conditions, the period beginning on and including 28 December 2017 andending on but excluding the first Interest Payment Date and each successive period beginningon and including an Interest Payment Date and ending on but excluding the next succeedingInterest Payment Date is called an “Interest Period”.

Interest in respect of any Bond shall be calculated per US$1,000 in principal amount ofthe Bonds (the “Calculation Amount”). The amount of interest payable per CalculationAmount for any period shall (save as provided above in relation to equal instalments) be equalto the product of the rate of interest specified above, the Calculation Amount and theday-count fraction for the relevant period, rounding the resulting figure to the nearest cent(half a cent being rounded upwards).

Neither the Trustee nor any of the Agents shall be responsible for calculating or verifyingthe calculations of any amount payable under any notice of redemption and shall not be liableto the Bondholders or any other person for not doing so.

6. REDEMPTION AND PURCHASE

(a) Final Redemption: Unless previously redeemed, or purchased and cancelled, theBonds will be redeemed at their principal amount on 28 December 2020. The Bondsmay not be redeemed at the option of the Issuer other than in accordance with thisCondition 6.

(b) Redemption for Taxation Reasons: The Bonds may be redeemed at the option of theIssuer in whole, but not in part, at any time, on giving not less than 30 nor morethan 60 days’ written notice to the Bondholders (which notice shall be irrevocable)and the Trustee, at their principal amount together with any interest accrued up to,but excluding the date fixed for redemption, if the Issuer satisfies the Trustee

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immediately prior to the giving of such notice (i) that the Issuer has or will becomeobliged to pay Additional Tax Amounts (as defined in Condition 8) as provided orreferred to in Condition 8 as a result of any change in, or amendment to, the laws orregulations of the PRC or any political subdivision or any authority thereof ortherein having power to tax, or any change in the application or officialinterpretation of such laws or regulations, which change or amendment becomeseffective on or after 28 December 2017; and (ii) such obligation cannot be avoidedby the Issuer taking reasonable measures available to it, provided that no such noticeof redemption shall be given earlier than 90 days prior to the earliest date on whichthe Issuer would be obliged to pay such Additional Tax Amounts were a payment inrespect of the Bonds then due.

Prior to the publication of any notice of redemption pursuant to this Condition6(b), the Issuer shall deliver to the Trustee (A) a certificate signed by two directorsof the Issuer who are also authorised signatories of the Issuer stating that theobligation referred to in (i) above of this Condition 6(b) cannot be avoided by theIssuer taking reasonable measures available to it and (B) an opinion, addressed toand in form and substance satisfactory to the Trustee, of independent tax or legaladvisers of recognised standing to the effect that the Issuer has or will becomeobliged to pay such Additional Tax Amounts as a result of such change oramendments, and the Trustee shall be entitled to accept such certificate and opinionas sufficient evidence of the satisfaction of the condition precedent set out in (ii)above of this Condition 6(b), in which event the same shall be conclusive andbinding on the Bondholders. All Bonds in respect of which any notice of redemptionis given under Condition 6(b) shall be redeemed on the date specified in such noticein accordance with this Condition 6(b).

(c) Redemption for Relevant Events: At any time following the occurrence of a RelevantEvent, the holder of any Bond will have the right, at such holder’s option, to requirethe Issuer to redeem all but not some only of that holder’s Bonds on the PutSettlement Date (as defined below) at 101 per cent. (in the case of a redemption fora Change of Control) or 100 per cent. (in the case of a redemption for a NoRegistration Event) of their principal amount, together with any interest accrued upto but excluding such Put Settlement Date. In order to exercise such right, the holderof the relevant Bond must deposit at the specified office of the Principal PayingAgent or any other Paying Agent a duly completed and signed notice of redemption,in the form for the time being then current, obtainable from the specified office ofthe Principal Paying Agent or any other Paying Agent (a “Put Exercise Notice”),together with the Certificate evidencing the Bonds to be redeemed by not later than30 days following a Relevant Event, or, if later, 30 days following the date uponwhich notice thereof is given to Bondholders by the Issuer in accordance withCondition 16.

The “Put Settlement Date” shall be the fourteenth day (in the case of a redemptionfor a Change of Control) or the fifth day (in the case of a redemption for a NoRegistration Event) after the expiry of such period of 30 days as referred to above.A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shallredeem the Bonds the subject of the Put Exercise Notices delivered as aforesaid onthe Put Settlement Date.

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The Issuer shall give notice in writing to Bondholders in accordance with Condition16 and to the Trustee and the Principal Paying Agent in writing by not later than 14days (in the case of a redemption for a Change of Control) or five PRC BusinessDays (in the case of a redemption for a No Registration Event) following the firstday on which it becomes aware of the occurrence of a Relevant Event, which noticeshall specify the procedure for exercise by holders of their rights to requireredemption of the Bonds pursuant to this Condition 6(c).

In this Condition 6(c):

a “Change of Control” occurs when:

(i) Shangrao State Administration of State-owned Assets Commission (“SASAC”)or any person Controlled by the central government of the PRC (such personsand Shangrao SASAC, “PRC Government Persons”) ceases to, directly orindirectly, own or control at least 70 per cent. of the issued share capital of theIssuer; or

(ii) the Issuer consolidates with or merges into or sells or transfers all orsubstantially all of its assets to any other person or persons, acting together,except where such person(s) is/are Controlled, directly or indirectly by PRCGovernment Persons; or

a “No Registration Event” occurs when the Registration Conditions have not beensatisfied in full on or before the Registration Deadline;

“Registration Conditions” means the receipt by the Trustee of (i) a certificate inEnglish substantially in the form set out in the Trust Deed signed by a director of theIssuer who is also an authorised signatory of the Issuer confirming the completion of theForeign Debt Registration; and (ii) copies of the SAFE registration certificate, any otherdocument evidencing the registration issued by SAFE and the particulars of registration,each certified in English by a director of the Issuer who is also an authorised signatory ofthe Issuer as being a true and complete copy of the original; and

a “Relevant Event” means a Change of Control or a No Registration Event.

(d) Notices of Redemption: All Bonds in respect of which any notice of redemption isgiven under this Condition 6 shall be redeemed on the date specified in such noticein accordance with this Condition 6. If there is more than one notice of redemptiongiven in respect of any Bond (which shall include any notice given by the Issuerpursuant to Condition 6(b) and any Put Exercise Notice given by a Bondholderpursuant to Condition 6(c)), the notice given first in time shall prevail and in theevent of two notices being given on the same date, the first to be given shall prevail.

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(e) Purchase: The Issuer and its Subsidiaries may at any time purchase Bonds in theopen market or otherwise at any price. The Bonds so purchased, while held by or onbehalf of the Issuer or any such Subsidiary, shall not entitle the holder to vote atany meetings of the Bondholders and shall not be deemed to be outstanding for,among other things, the purposes of calculating quorums at meetings of theBondholders or for the purposes of Conditions 9, 12(a) and 13.

(f) Cancellation: All Certificates representing Bonds purchased by or on behalf of theIssuer and its Subsidiaries shall be surrendered for cancellation to the Registrar and,upon surrender thereof, all such Bonds shall be cancelled forthwith. Any Certificatesso surrendered for cancellation may not be reissued or resold and the obligations ofthe Issuer in respect of any such Bonds shall be discharged.

7. PAYMENTS

(a) Method of Payment:

(i) Payments of principal and premium (if any) shall be made (subject to surrenderof the relevant Certificates at the specified office of any Transfer Agent or ofthe Registrar if no further payment falls to be made in respect of the Bondsrepresented by such Certificates) in the manner provided in Condition 7(a)(ii)below.

(ii) Interest on each Bond shall be paid on the due date to the person shown on theRegister at the close of business on the fifth Payment Business Day before thedue date for payment thereof (the “Record Date”). Payments of interest oneach Bond shall be made in U.S. dollars by cheque drawn on a bank and mailedto the holder (or to the first named of joint holders) of such Bond at its addressappearing in the Register. Upon application by the holder to the specifiedoffice of the Registrar or any Transfer Agent before the Record Date, or at theoption of the relevant Paying Agent, such payment of interest may be made bytransfer to an account in U.S. dollars maintained by the payee with a bank.

So long as the Global Certificate is held on behalf of Euroclear and Clearstreamor any other clearing system, each payment in respect of the Global Certificatewill be made to the person shown as the holder in the Register at the close ofbusiness of the relevant clearing system on the Clearing System Business Daybefore the due date for such payments, where “Clearing System Business Day”means a weekday (Monday to Friday, inclusive) except 25 December and 1January.

(iii) If the amount of principal being paid upon surrender of the relevantCertificate is less than the outstanding principal amount of such Certificate,the Registrar will annotate the Register with the amount of principal so paidand will (if so requested by the Issuer or a Bondholder) issue a new Certificatewith a principal amount equal to the remaining unpaid outstanding principalamount. If the amount of premium (if any) or interest being paid is less thanthe amount then due, the Registrar will annotate the Register with the amountof premium (if any) or interest so paid.

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(b) Payments subject to Fiscal Laws: All payments are subject in all cases to (i) anyapplicable fiscal or other laws, regulations and directives in the place of payment butwithout prejudice to the provisions of Condition 8 and (ii) any withholding ordeduction required pursuant to an agreement described in Section 1471(b) of theU.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant toSections 1471 through 1474 of the Code, any regulations or agreement thereunder,any official interpretations thereof, or (without prejudice to provisions of Condition8) any law implementing an intergovernmental approach thereto. No commission orexpenses shall be charged to the Bondholders in respect of such payments.

(c) Payment Initiation: Where payment is to be made by transfer to an account in U.S.dollars, payment instructions (for value on the due date or, if that is not a PaymentBusiness Day, for value the first following day which is a Payment Business Day) willbe initiated, and where payment is to be made by cheque, the cheque will be mailed,on the due date for payment (or, if that date is not a Payment Business Day, on thefirst following day which is a Payment Business Day), or, in the case of payments ofprincipal or premium (if any) where the relevant Certificate has not beensurrendered at the specified office of any Transfer Agent or of the Registrar, on aPayment Business Day on which the Principal Paying Agent is open for business andon which the relevant Certificate is surrendered.

(d) Appointment of Agents: The Principal Paying Agent, the Registrar and the TransferAgent initially appointed by the Issuer and their respective specified offices arelisted below. The Principal Paying Agent, the Registrar and the Transfer Agent actsolely as agents of the Issuer and do not assume any obligation or relationship ofagency or trust for or with any Bondholder. The Issuer reserves the right at any timewith the prior written approval of the Trustee to vary or terminate the appointmentof the Principal Paying Agent, the Registrar or the Transfer Agent and to appointadditional or other Paying Agents and/or Transfer Agents, provided that the Issuershall at all times maintain (i) a Principal Paying Agent, (ii) a Registrar, (iii) aTransfer Agent, and (iv) such other agents as may be required by the stock exchangeon which the Bonds may be listed, in each case, as approved in writing by theTrustee. Notice of any such change or any change of any specified office shallpromptly be given by the Issuer to the Bondholders in accordance with Condition16.

(e) Delay in Payment: Bondholders will not be entitled to any interest or other paymentfor any delay in receiving the amount due on a Bond if the due date is not a PaymentBusiness Day, or if the Bondholder is late in surrendering or cannot surrender itsCertificate (if required to do so).

(f) Non-Payment Business Days: If any date for payment in respect of any Bond is not aPayment Business Day, the holder shall not be entitled to payment until the nextfollowing Payment Business Day, nor to any interest or other sum in respect of suchpostponed payment or if a cheque mailed in accordance with Condition 7(a)(ii)arrives after the due date. In this Condition 7, “Payment Business Day” means a day(other than a Saturday, a Sunday or a public holiday) on which banks and foreignexchange markets are generally open for business and settlement of U.S. dollarspayments in Hong Kong and New York City and (if surrender of the relevantCertificate is required) the relevant place of presentation.

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8. TAXATION

All payments of principal, premium (if any) and interest by or on behalf of the Issuer inrespect of the Bonds shall be made free and clear of, and without withholding or deductionfor, any present or future taxes, duties, assessments or governmental charges of whatevernature imposed, levied, collected, withheld or assessed by or within the PRC or any politicalsubdivision or any authority therein or thereof having power to tax, unless such withholdingor deduction is required by law.

Where such withholding or deduction is made by the Issuer by or within the PRC at therate applicable on 19 December 2017 (the “Applicable Rate”), the Issuer will increase theamounts paid by it to the extent required, so that the net amount received by Bondholdersequals the amount which would otherwise have been receivable by them had no suchwithholding or deduction been required.

If the Issuer is required to make a deduction or withholding by or within the PRC inexcess of the Applicable Rate, then the Issuer shall pay such additional amounts (“AdditionalTax Amounts”) as will result in receipt by the Bondholders of such amounts as would havebeen received by them had no such withholding or deduction been required, except that noAdditional Tax Amounts shall be payable in respect of any Bond:

(a) Other Connection: to a holder (or to a third party on behalf of a holder) who isliable to such taxes, duties, assessments or governmental charges in respect of suchBond by reason of his having some connection with the PRC other than the mereholding of the Bond; or

(b) Lawful avoidance of withholding: to a holder, or to a third party on behalf of, aholder who could lawfully avoid (but has not so avoided) such deduction orwithholding by complying or procuring that any third party complies with anystatutory requirements or by making or procuring that any third party makes adeclaration of non-residence or other similar claim for exemption to any taxauthority in the place where the Certificate representing the Bond is presented forpayment; or

(c) Surrender more than 30 days after the Relevant Date: in respect of which theCertificate representing it is presented for payment more than 30 days after theRelevant Date except to the extent that the holder of it would have been entitled tosuch Additional Tax Amounts on surrendering the Certificate representing suchBond for payment on the last day of such period of 30 days (as if such last day werea Payment Business Day); or

(d) Treasury regulations: with respect to any withholding or deduction that is imposedin connection with Sections 1471–1474 of the US Internal Revenue Code and theU.S. Treasury regulations, thereunder (“FATCA”), any intergovernmental agreementbetween the United States and any other jurisdiction implementing, or relating to,FATCA or any law or regulation enacted or issued in any jurisdiction with respectthereto.

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References in these Conditions to principal, premium and interest shall be deemed also torefer to any Additional Tax Amounts which may be payable under this Condition 8 or anyundertaking or covenant given in addition thereto or in substitution therefor pursuant to theTrust Deed.

In this Condition 8, “Relevant Date” in respect of any Bond means the date on whichpayment in respect of it first becomes due or (if any amount of the money payable isimproperly withheld or refused) the date on which payment in full of the amount outstandingis made or (if earlier) the date falling seven days after that on which notice is duly given to theBondholders that, upon further surrender of the Certificate representing such Bond beingmade in accordance with the Conditions, such payment will be made, provided that payment isin fact made upon such surrender.

Neither the Trustee nor any Agent shall be responsible for paying any tax, duty, charges,withholding or other payment referred to in this Condition 8 or for determining whether suchamounts are payable or the amount thereof, and none of them shall be responsible or liable forany failure by the Issuer, any Bondholder or any third party to pay such tax, duty, charges,withholding or other payment in any jurisdiction or to provide any notice or information tothe Trustee or any Agent that would permit, enable or facilitate the payment of any principal,premium (if any), interest or other amount under or in respect of the Bonds withoutdeduction or withholding for or on account of any tax, duty, charge, withholding or otherpayment imposed by or in any jurisdiction.

9. EVENTS OF DEFAULT

If any of the following events (each an “Event of Default”) occurs the Trustee at itsdiscretion may, and if so requested in writing by holders of at least 25 per cent. in principalamount of the Bonds then outstanding or if so directed by an Extraordinary Resolution shall(provided in any such case that the Trustee shall have been indemnified and/or secured and/orpre-funded to its satisfaction), give written notice to the Issuer that the Bonds are, and theyshall immediately become, due and payable at their principal amount together (if applicable)with any accrued and unpaid interest:

(a) Non-Payment: there has been a failure to pay (i) the principal of or any premium (ifany); or (ii) interest on any of the Bonds when due within 14 days of the due date forpayment thereof; or

(b) Breach of Other Obligations: the Issuer does not perform or comply with any one ormore of its other obligations under the Bonds or the Trust Deed (other than wheresuch default gives rise to a Bondholder right to require the redemption of the Bondspursuant to Condition 6(c)), which default is incapable of remedy or, if such defaultis capable of remedy, such default is not remedied within 30 calendar days afterwritten notice of such default shall have been given to the Issuer by the Trustee; or

(c) Cross-Default: (i) any other present or future indebtedness of the Issuer or any of itsrespective Subsidiaries for or in respect of moneys borrowed or raised becomes (orbecomes capable of being declared) due and payable prior to its stated maturity byreason of any actual or potential default, event of default or the like (howsoeverdescribed), or (ii) any such indebtedness is not paid when due or, as the case may be,within any originally applicable grace period, or (iii) the Issuer or any of its

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Subsidiaries fails to pay when due any amount payable by it under any present orfuture guarantee for, or indemnity in respect of, any moneys borrowed or raised (asextended by any originally applicable grace period), provided that the aggregateamount of the relevant indebtedness, guarantees and indemnities in respect of whichone or more of the events mentioned above in this Condition 9(c) have occurredequals or exceeds US$20.0 million or its equivalent (on the basis of the middle spotrate for the relevant currency against the U.S. dollar as quoted by any leading bankon the day on which this Condition 9(c) operates); or

(d) Enforcement Proceedings: a distress, attachment, execution or other legal process islevied, enforced or sued out on or against any material part of the property, assetsor revenues of the Issuer or any of its Principal Subsidiaries and is not discharged orstayed within 60 calendar days; or

(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, presentor future, created or assumed by the Issuer or any of its Principal Subsidiaries on allor any material part of its assets becomes enforceable and any step is taken toenforce it (including the taking of possession or the appointment of a receiver,manager or other similar person) and is not discharged or stayed within 60 calendardays; or

(f) Insolvency: the Issuer or any of its Principal Subsidiaries (i) is (or is deemed by lawor a court of competent jurisdiction to be) insolvent or bankrupt, or unable to payits debts as they fall due, stops, suspends or threatens to stop or suspend payment ofall or any material part of its debts as they fall due, or (ii) proposes or makes ageneral assignment or an arrangement or composition with or for the benefit of therelevant creditors in respect of any of such debts or a moratorium is agreed ordeclared in respect of or affecting all or any material part of the debts of the Issueror any of its Principal Subsidiaries provided, for the avoidance of doubt, thissub-clause (ii) shall not apply to an assignment, arrangement or composition withcreditors entered into by the Issuer or any Principal Subsidiary on a solvent basiswith respect to the indebtedness of any Principal Subsidiary (or any guaranteethereof granted by the Issuer) and on terms as notified to the Trustee through anotice to be delivered on or before the commencement of such assignment,arrangement or composition, which notice should confirm that such assignment,arrangement or composition is conducted on a solvent basis and will not affect theIssuer’s ability to perform its obligations under the Bonds and the Trust Deed; or

(g) Winding-up: an order is made by a court of competent jurisdiction or an effectiveresolution is passed for the winding-up or dissolution of the Issuer or any of itsPrincipal Subsidiaries, or the Issuer or any of its Principal Subsidiaries ceases orthreatens to cease to carry on all or substantially all of its business or operations,except for the purpose of and followed by a reconstruction, amalgamation,reorganisation, merger or consolidation (i) on terms approved by an ExtraordinaryResolution of the Bondholders, or (ii) in the case of a Principal Subsidiary of theIssuer, whereby the undertaking and assets of such Principal Subsidiary aretransferred to or otherwise vested in the Issuer or another of its PrincipalSubsidiaries; or

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(h) Government Intervention: (i) all or any substantial part of the assets or undertakingof the Issuer and any of its Principal Subsidiaries (taken as a whole) is seized,compulsory acquired or expropriated by any person acting under the authority ofany national, regional or local government (ii) the Issuer or any of its Subsidiaries isprevented by any such person from exercising normal control over all or anysubstantial part of its undertaking, assets and revenues; or

(i) Authorisation and Consents: any action, condition or thing (including the obtainingor effecting of any necessary consent, approval, authorisation, exemption, filing,licence, order, recording or registration) at any time required to be taken, fulfilled ordone in order (i) to enable the Issuer lawfully to enter into, exercise its rights andperform and comply with its obligations under the Bonds, the Trust Deed and theAgency Agreement, (ii) to ensure that those obligations are legally binding andenforceable and (iii) to make the Bonds, the Trust Deed and the Agency Agreementand admissible in evidence in the courts of Hong Kong is not taken, fulfilled ordone; or

(j) Illegality: it is or will become unlawful for the Issuer to perform or comply with anyone or more of its obligations under any of the Bonds and/or the Trust Deed; or

(k) Analogous Events: any event occurs which under the laws of any relevant jurisdictionhas an analogous effect to any of the events referred to in any of Conditions 9(d) to9(g) (both inclusive).

In this Condition 9:

“Principal Subsidiary” means, at any time, any Subsidiary of the Issuer:

(i) whose total revenue (consolidated in the case of a Subsidiary which itself hasSubsidiaries) attributable to the Issuer as shown by its latest audited incomestatement, is at least five per cent. of the consolidated total revenues as shown by thelatest published audited consolidated income statement of the Issuer and itsconsolidated Subsidiaries;

(ii) whose gross profit (consolidated in the case of a Subsidiary which itself hasSubsidiaries) attributable to the Issuer as shown by its latest audited incomestatement, is at least five per cent. of the consolidated gross profit as shown by thelatest published audited consolidated income statement of the Issuer and itsconsolidated Subsidiaries; or

(iii) whose total assets (consolidated in the case of a Subsidiary which itself hasSubsidiaries) attributable to the Issuer as shown by its latest audited balance sheet,is at least five per cent. of the consolidated total assets as shown by the latestpublished audited consolidated balance sheet of the Issuer and its consolidatedSubsidiaries; or

(iv) to which is transferred the whole or substantially the whole of the assets of aSubsidiary which immediately prior to such transfer was a Principal Subsidiary,provided that (xx) the Principal Subsidiary which so transfers its assets shallforthwith upon such transfer cease to be a Principal Subsidiary and the Subsidiary

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to which the assets are so transferred shall forthwith become a Principal Subsidiaryand (yy) on or after the date on which the first published audited accounts(consolidated, if appropriate) of the Issuer, prepared as of a date later than suchtransfer are issued, whether such transferor Subsidiary or such transferee Subsidiaryis or is not a Principal Subsidiary shall be determined on the basis of such accountsby virtue of the provisions of paragraphs (i), (ii) or (iii) above of this definition,

provided that, in relation to paragraphs (i), (ii) and (iii) above of this definition:

(a) in the case of a corporation or other business entity becoming a Subsidiary after theend of the financial period to which the latest consolidated audited accounts of theIssuer relate, the reference to the then latest consolidated audited accounts of theIssuer for the purposes of the calculation above shall, until consolidated auditedaccounts of the Issuer for the financial period in which the relevant corporation orother business entity becomes a Subsidiary are published, be deemed to be areference to the then latest consolidated audited accounts of the Issuer, adjusted toconsolidate the latest accounts (consolidated in the case of a Subsidiary which itselfhas Subsidiaries) of such Subsidiary in such accounts;

(b) if at any relevant time in relation to the Issuer or any Subsidiary no financialstatements are prepared and audited, the total revenue, net profit or total assets ofthe Issuer and/or any such Subsidiary (consolidated, if appropriate) shall bedetermined on the basis of pro forma financial statements (consolidated, ifappropriate) prepared for this purpose; and

(c) if the accounts of any Subsidiary (not being a Subsidiary referred to in proviso (a)above of this definition) are not consolidated with those of the Issuer, then thedetermination of whether or not such subsidiary is a Principal Subsidiary shall bebased on a pro forma consolidation of its accounts (consolidated, if appropriate)with the consolidated accounts (determined on the basis of the foregoing) of theIssuer.

A certificate prepared by an authorised signatory of the Issuer stating that, in hisopinion, a Subsidiary of the Issuer is or is not, or was or was not, a Principal Subsidiary ofthe Issuer shall, in the absence of manifest error, be conclusive and binding on theBondholders and all parties. If there is a dispute as to whether any Subsidiary of the Issuer isor is not a Principal Subsidiary of the Issuer, such certificate shall be accompanied by a reportby a nationally recognised firm of independent public accountants addressed to the Issuer asto proper extraction of the figures used by the Issuer in determining the Principal Subsidiariesof the Issuer, and mathematical accuracy of the calculation.

10. PRESCRIPTION

Claims against the Issuer for payment in respect of the Bonds shall be prescribed andbecome void unless made within ten years (in the case of principal or premium (if any)) or fiveyears (in the case of interest) from the appropriate Relevant Date (as defined in Condition 8)in respect of them.

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11. REPLACEMENT OF CERTIFICATES

If any Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced,subject to applicable laws, regulations or other relevant regulatory authority regulations, atthe specified office of the Registrar or such Transfer Agent as may from time to time bedesignated by the Issuer for that purpose and notice of whose designation is given toBondholders, in each case on payment by the claimant of the fees and costs incurred inconnection therewith and on such terms as to evidence, security, indemnity and otherwise asthe Issuer, the Registrar or the relevant Transfer Agent may require. Mutilated or defacedCertificates must be surrendered before replacements will be issued.

12. MEETINGS OF BONDHOLDERS, MODIFICATION AND WAIVER

(a) Meetings of Bondholders: The Trust Deed contains provisions for conveningmeetings of Bondholders to consider matters affecting their interests, including thesanctioning by Extraordinary Resolution of a modification of any of theseConditions or any provisions of the Trust Deed. Such a meeting may be convened bythe Issuer and the Trustee and shall be convened by the Trustee if requested inwriting by Bondholders holding not less than 10 per cent. in principal amount of theBonds for the time being outstanding and subject to the Trustee being indemnifiedand/or secured and/or pre-funded to its satisfaction against all costs and expenses.The quorum for any meeting convened to consider an Extraordinary Resolution willbe two or more persons holding or representing more than 50 per cent. in principalamount of the Bonds for the time being outstanding, or at any adjourned meetingtwo or more persons being or representing Bondholders whatever the principalamount of the Bonds held or represented, unless the business of such meetingincludes consideration of proposals, inter alia, (i) to modify the maturity of theBonds or the dates on which interest is payable in respect of the Bonds, (ii) to reduceor cancel the principal amount of, any premium payable on redemption of, orinterest on, the Bonds, (iii) to change the currency of payment of the Bonds, or (iv)to modify the provisions concerning the quorum required at any meeting ofBondholders or the majority required to pass an Extraordinary Resolution, in whichcase the necessary quorum will be two or more persons holding or representing notless than 75 per cent., or at any adjourned meeting not less than 25 per cent., inaggregate principal amount of the Bonds for the time being outstanding. AnyExtraordinary Resolution duly passed shall be binding on Bondholders (whether ornot they were present at the meeting at which such resolution was passed).

The Trust Deed provides that a resolution in writing signed by or on behalf of theholders of not less than 90 per cent. of the aggregate principal amount of the Bondsoutstanding (a “Written Resolution”) and consent given by way of electronicconsents through the relevant clearing system(s) by or on behalf of the Bondholdersof not less than 90 per cent. of the aggregate principal amount of the Bondsoutstanding (an “Electronic Consent”) shall in each case for all purposes be as validand effective as an Extraordinary Resolution. A Written Resolution may becontained in one document or several documents in like form, each signed by or onbehalf of one or more Bondholders. A Written Resolution and/or ElectronicConsent will be binding on all Bondholders whether or not they participated in suchWritten Resolution and/or Electronic Consent, as the case may be.

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(b) Modification and Waiver: The Trustee may (but shall not be obliged to) agree,without the consent of the Bondholders, to (i) any modification of any of theseConditions or any of the provisions of the Trust Deed, the Bonds or the AgencyAgreement that is in its opinion of a formal, minor or technical nature or is made tocorrect a manifest error or to comply with any mandatory provision of law, and (ii)any other modification (except as mentioned in the Trust Deed), and any waiver orauthorisation of any breach or proposed breach, of any of these Conditions or anyof the provisions of the Trust Deed, the Bonds and/or the Agency Agreement that isin the opinion of the Trustee not materially prejudicial to the interests of theBondholders. Any such modification, authorisation or waiver shall be binding onthe Bondholders and such modification, authorisation or waiver shall be notified bythe Issuer to the Bondholders as soon as practicable.

(c) Entitlement of the Trustee: In connection with the exercise of its functions, rightspowers and discretions (including but not limited to those referred to in thisCondition 12) the Trustee shall have regard to the interests of the Bondholders as aclass and shall not have regard to the consequences of such exercise for individualBondholders and the Trustee shall not be entitled to require on behalf of anyBondholder, nor shall any Bondholder be entitled to claim, from the Issuer or theTrustee any indemnification or payment in respect of any tax consequence of anysuch exercise upon individual Bondholders.

13. ENFORCEMENT

At any time after the Bonds become due and payable, the Trustee may, at its discretionand without further notice, institute such proceedings against the Issuer as it may think fit toenforce the terms of the Trust Deed and/or the Bonds (as the case may be), but it need not takeany such proceedings unless (a) it shall have been so directed by an Extraordinary Resolutionor so requested in writing by Bondholders holding at least 25 per cent. in principal amount ofthe Bonds outstanding, and (b) it shall have been indemnified and/or secured and/orpre-funded to its satisfaction. No Bondholder may proceed directly against the Issuer unlessthe Trustee, having become bound so to proceed, fails to do so within a reasonable time andsuch failure is continuing.

14. INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for itsrelief from responsibility including, without limitation, provisions relieving it from takingproceedings to enforce payment or taking other actions unless first indemnified and/orsecured and/or pre-funded to its satisfaction. The Trustee is entitled to enter into businesstransactions with the Issuer and any entity related to the Issuer without accounting for anyprofit.

The Trustee may rely without liability to Bondholders, the Issuer or any other person onany report, confirmation, certificate or information from or any advice or opinion of any legalcounsel, accountants, financial advisers, financial institution, the Issuer or any other expert,whether or not obtained by or addressed to it and whether their liability in relation thereto islimited (by its terms or by any engagement letter relating thereto entered into by the Trustee orany other person in any other manner) by reference to a monetary cap, methodology orotherwise. The Trustee may accept and shall be entitled to rely on any such report,

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confirmation, certificate, information, advice or opinion, in which event such report,confirmation, certificate, information, advice or opinion shall be binding on the Issuer and theBondholders.

Whenever the Trustee is required or entitled by the terms of the Trust Deed, the AgencyAgreement or these Conditions to exercise any discretion or power, take any action, make anydecision or give any direction or certification, the Trustee is entitled, prior to exercising anysuch discretion or power, taking any such action, making any such decision or giving any suchdirection or certification, to seek directions from the Bondholders by way of ExtraordinaryResolution and shall have been indemnified and/or secured and/or pre-funded to itssatisfaction against all action, proceedings, claims and demands to which it may be or becomeliable and all costs, charges, damages, expenses (including legal expenses) and liabilities whichmaybe incurred by it in connection therewith, and the Trustee shall not be responsible for anyloss or liability incurred by the Issuer, the Bondholders or any other person as a result of anydelay in it exercising such discretion or power, taking such action, making such decision orgiving such direction or certification as a result of seeking such direction from theBondholders or in the event that no direction is given to the Trustee by the Bondholders.

None of the Trustee or any of the Agents shall be responsible for the performance by theIssuer and any other person appointed by the Issuer in relation to the Bonds of the duties andobligations on their part expressed in respect of the same and, unless it has written noticefrom the Issuer to the contrary, the Trustee and each Agent shall be entitled to assume that thesame are being duly performed. None of the Trustee or any Agent shall be liable to anyBondholder, the Issuer or any other person for any action taken by the Trustee or such Agentin accordance with the instructions of the Bondholders. The Trustee shall be entitled to relyon any direction, request or resolution of Bondholders given by holders of the requisiteprincipal amount of Bonds outstanding or passed at a meeting of Bondholders convened andheld in accordance with the Trust Deed. Neither the Trustee nor any of the Agents shall beunder any obligation to ascertain whether any Event of Default, Potential Event of Default orRelevant Event has occurred or to monitor compliance by the Issuer with the provisions of theTrust Deed, the Agency Agreement or these Conditions, and shall not be liable to anyBondholder, the Issuer or any other person for not doing so.

Each Bondholder shall be solely responsible for making and continuing to make its ownindependent appraisal and investigation into the financial condition, creditworthiness,condition, affairs, status and nature of the Issuer and its Subsidiaries, and the Trustee shallnot at any time have any responsibility for the same and each Bondholder shall not rely on theTrustee in respect thereof.

15. FURTHER ISSUES

The Issuer may from time to time without the consent of the Bondholders create andissue further securities having the same terms and conditions as the Bonds in all respects (or inall respects except for the issue date, the first payment of interest on them, the timing for thePost-Issuance Filing with the NDRC and the timing for completion of the Foreign DebtRegistration) and so that such further issue shall be consolidated and form a single series withthe outstanding securities of any series (including the Bonds). Any further securities forming asingle series with the Bonds may be constituted by a deed supplemental to the Trust Deed.

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16. NOTICES

Notices to the holders of Bonds shall be mailed to them at their respective addresses inthe Register and deemed to have been given on the fourth weekday (being a day other than aSaturday or a Sunday) after the date of mailing. The Issuer shall also ensure that notices areduly published in a manner that complies with the rules and regulations of any stock exchangeor other relevant authority on which the Bonds are for the time being listed. Any such noticeshall be deemed to have been given on the date of such publication or, if published more thanonce, on the first date on which publication is made.

So long as the Global Certificate is held by or on behalf of Euroclear and Clearstream or anAlternative Clearing System, any notice to the holders of the Bonds shall be validly given by thedelivery of the relevant notice to Euroclear and Clearstream or such Alternative ClearingSystem, for communication by the relevant clearing system to entitled accountholders insubstitution for notification as required by the Conditions and shall be deemed to have been givenon the date of delivery to such clearing system.

17. CONTRACTS (RIGHTS OF THIRD PARTIES) ORDINANCE (CAP. 623)

No person shall have any right to enforce any term or condition of the Bonds under theContracts (Rights of Third Parties) Ordinance (Cap. 623), except and to the extent (if any)that the Bonds expressly provide for such Ordinance to apply to any of their terms.

18. GOVERNING LAW AND JURISDICTION

(a) Governing Law: The Trust Deed, the Agency Agreement and the Bonds are governedby, and shall be construed in accordance with Hong Kong law.

(b) Jurisdiction: The courts of Hong Kong are to have exclusive jurisdiction to settleany disputes that may arise out of or in connection with the Bonds, the Trust Deedor the Agency Agreement and accordingly any legal action or proceedings arisingout of or in connection with any Bonds, the Trust Deed or the Agency Agreement(“Proceedings”) may be brought in such courts. The Issuer has irrevocably submittedto the exclusive jurisdiction of such courts.

(c) Agent for Service of Process: The Issuer irrevocably appoints Cogency Global (HK)Limited of Unit B, 1/F, Lippo Leighton Tower, 103 Leighton Road, Causeway Bay,Hong Kong as its authorised agent in Hong Kong to accept service of process in anyProceedings based on any of the Bonds, the Trust Deed or the Agency Agreement. Iffor any reason the Issuer ceases to have such an agent in Hong Kong, it willpromptly appoint a substitute process agent and notify the Bondholders of suchappointment within 30 days of such cessation. Nothing herein shall affect the rightto serve process in any other manner permitted by law.

(d) Waiver of Immunity: The Issuer has waived any right to claim sovereign or otherimmunity from jurisdiction or execution and any similar defence, and hasirrevocably consented to the giving of any relief or the issue of any process,including, without limitation, the making, enforcement or execution against anyproperty whatsoever (irrespective of its use or intended use) of any order orjudgment made or given in connection with any Proceedings.

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SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM

The Global Certificates contains provisions which apply to the Bonds while they are inglobal form, some of which modify the effect of the Terms and Conditions of the Bonds set out inthis Offering Circular. The following is a summary of certain of those provisions.

Terms defined in the Terms and Conditions of the Bonds set out in this Offering Circularhave the meaning in the paragraphs below.

The Bonds will be represented by a Global Certificate deposited with a commondepositary for, and representing the Bonds registered in the name of a nominee of, Euroclearand Clearstream.

Owners of interests in the Bonds in respect of which a Global Certificate is issued will beentitled to have title to the Bonds registered in their names and to receive individual definitiveCertificates if either Euroclear or Clearstream or any other clearing system (an “AlternativeClearing System”) is closed for business for a continuous period of 14 days (other than byreason of holidays, statutory or otherwise) or announces an intention permanently to ceasebusiness or does in fact do so. In such circumstances, the Company will cause sufficientindividual definitive Certificates to be executed and delivered to the Registrar for completion,authentication and dispatch to the relevant holders of the Bonds. A person with an interest inthe Bonds in respect of which a Global Certificate is issued must provide the Registrar not lessthan 30 days’ notice at its specified office of such holder’s intention to effect such exchangeand a written order containing instructions and such other information as the Company andthe Registrar may require to complete, execute and deliver such individual definitiveCertificates.

In addition, the Global Certificates will contain provisions that modify the Terms andConditions of the Bonds as they apply to the Bonds evidenced by Global Certificate. Thefollowing is a summary of certain of those provisions:

Notices: So long as the Bonds are represented by a Global Certificate and such GlobalCertificate is held on behalf of Euroclear or Clearstream or any Alternative Clearing system,notices to holders of the Bonds shall be given by delivery of the relevant notice to Euroclearor Clearstream or such Alternative Clearing System, for communication by it toaccountholders entitled to an interest in the Bonds in substitution for notification as requiredby the Terms and Conditions of the Bonds and shall be deemed to have been given on the dateof delivery to such clearing system.

Meetings: For the purposes of any meeting of holders of the Bonds, the holder of theBonds represented by a Global Certificate shall (unless such Global Certificate represents onlyone Bond) be treated as two persons for the purposes of any quorum requirements of ameeting of holders of Bonds and as being entitled to one vote in respect of each integralcurrency unit of the currency of the Bonds.

Holder of Bonds Redemption: A holder’s redemption options in the applicable provisionsof the Bonds may be exercised by the holder of the applicable Global Certificate giving noticeto the applicable Principal Paying Agent of the principal amount of Bonds in respect of whichthe option is exercised within the time limits specified in the applicable Conditions.

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Company’s Redemption: The option of the Company provided for in applicable provisionsof the Bonds shall be exercised by the Company giving notice to the applicable holders ofBonds within the time limits set out in and containing the information required by theapplicable Conditions except that the notice shall not be required to contain the certificatenumbers of Bonds drawn for redemption in the case of a partial redemption of Bonds andaccordingly no drawing of Bonds for redemption shall be required.

Transfers: Transfers of interests in the Bonds will be effected through the records ofEuroclear and Clearstream (or any Alternative Clearing System) and their respectiveparticipants in accordance with the rules and procedures of Euroclear and Clearstream (orany Alternative Clearing System) and their respective direct and indirect participants.

Cancellation: Cancellation of any Bond represented by a Global Certificate which isrequired by the applicable Conditions will be effected by a reduction in the principal amountof the Bonds in the applicable register of holders of Bonds and the applicable GlobalCertificate on its presentation to or to the order of the applicable Registrar for annotation (forinformation only) in such Global Certificate.

Trustee’s Powers: In considering the interests of holders of Bonds while the applicableGlobal Certificate is registered in the name of a nominee for a clearing system, the applicableTrustee may, to the extent it considers it appropriate to do so in the circumstances, but withoutbeing obligated to do so, (a) have regard to any information as may have been made availableto it by or on behalf of the relevant clearing system or its operator as to the identity of itsaccountholders (either individually or by way of category) with entitlements in respect of theBonds and (b) consider such interests on the basis that such accountholders were the holdersof the Bonds in respect of which such Global Certificate is issued.

Payments: So long as the Global Certificate is held on behalf of Euroclear andClearstream or any other clearing system, each payment in respect of the Global Certificatewill be made to the person shown as the holder in the Register at the close of business of therelevant clearing system on the Clearing System Business Day before the due date for suchpayments, where “Clearing System Business Day” means a weekday (Monday to Friday,inclusive) except 25 December and 1 January.

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USE OF PROCEEDS

The gross proceeds will be US$300 million before deducting the fees and commissionsand other estimated expenses payable in connection with this offering. The Company intendsto use the net proceeds from this offering for project constructions.

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EXCHANGE RATE INFORMATION

RENMINBI

The PBOC sets and publishes daily a base exchange rate with reference primarily to thesupply and demand of Renminbi against a basket of currencies in the market during the priorday. The PBOC also takes into account other factors, such as the general conditions existing inthe international foreign exchange markets. On 21 July 2005, the PRC government introduceda managed floating exchange rate system to allow the value of the Renminbi to fluctuatewithin a regulated band based on market supply and demand and by reference to a basket ofcurrencies. On the same day, the value of the Renminbi appreciated by 2 per cent. against theU.S. dollar. The PRC government has since made and in the future may make furtheradjustments to the exchange rate system. On 18 May 2007, the PBOC enlarged, effective on 21May 2007, the floating band for the trading prices in the inter-bank spot exchange market ofRenminbi against the U.S. dollar from 0.3 per cent. to 0.5 per cent. around the central parityrate. This allows the Renminbi to fluctuate against the U.S. dollar by up to 0.5 per cent. aboveor below the central parity rate published by the PBOC. The floating band was furtherwidened to 1.0 per cent. On 16 April 2012. These changes in currency policy resulted in theRenminbi appreciating against the U.S. dollar by approximately 26.9 per cent. from 21 July2005 to 31 December 2013. On 14 March 2014, the PBOC further widened the floating bandagainst the U.S. dollar to 2.0 per cent. On 11 August 2015, the PBOC announced to improvethe central parity quotations of Renminbi against the U.S. dollar by authorisingmarket-makers to provide central parity quotations to the China Foreign Exchange TradingCentre daily before the opening of the interbank foreign exchange market with reference tothe interbank foreign exchange market closing rate of the previous day, the supply anddemand for foreign exchange as well as changes in major international currency exchangerates. Following the announcement by the PBOC on 11 August 2015, Renminbi depreciatedsignificantly against the U.S. dollar. From January till May 2016, Renminbi experiencedfurther fluctuation in value against the U.S. dollar. The PRC government may adopt furtherreforms of its exchange rate system, including making the Renminbi freely convertible in thefuture.

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The following table sets forth information concerning exchange rates between theRenminbi and the U.S. dollar for the periods presented:

Renminbi per U.S. Dollar Noon Buying Rate(1)

Period End Average(2) High Low

(RMB per U.S.$1.00)2012 ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.2301 6.2990 6.3879 6.22212013 ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.0537 6.1412 6.2438 6.05372014 ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.2046 6.1704 6.2591 6.04022015 ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.4778 6.2869 6.4896 6.18702016 ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.9430 6.6549 6.9580 6.44802017

June ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.7793 6.8066 6.8382 6.7793July ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.7240 6.7694 6.8039 6.7240August ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.5888 6.6670 6.7272 6.5888September ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.6533 6.5690 6.6591 6.4773October ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.6328 6.6254 6.6533 6.5712November ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6.6090 6.6200 6.6385 6.5967

Notes:

(1) Exchange rates between Renminbi and U.S. dollar represent the noon buying rates as set forth in theH.10 statistical release of the Federal Reserve Board.

(2) Annual and semi-annual averages have been calculated from month-end rate. Monthly averages havebeen calculated using the average of the daily rates during the relevant period.

– 72 –

CAPITALISATION AND INDEBTEDNESS OF THE COMPANY

The following table sets forth the consolidated capitalisation and indebtedness of theCompany as at 30 September 2017 and adjusted to give effect to the issue of the Bonds beforededucting the fees and commissions and other estimated expenses payable in connection withthis offering. The following table should be read in conjunction with the Company’sconsolidated financial information and related notes included elsewhere in this OfferingCircular.

As at 30 September 2017

Actual As adjusted

RMB US$(1) RMB US$(1)

(in millions)Short-term Indebtedness– Short-term borrowings(2) ⋅ ⋅ ⋅ ⋅ 200.0 30.1 200.0 30.1– Non-current indebtedness

due within one year(3) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6,604.9 992.6 6,604.0 992.6

Total short-termindebtedness(4) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 6,804.0 1,022.7 6,804.0 1,022.7

Long-term Indebtedness– Long-term borrowings ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 14,779.5 2,221.4 14,779.5 2,221.4– Bonds payable ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 5,101.3 766.7 5,101.3 766.7– Long-term payables-financing

lease ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 567.0 85.2 567.0 85.2– Bonds to be issued ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ – – 14,039.3 300.0

Total long-term indebtedness(4) ⋅ 20,447.8 3,073.3 34,487.1 3,373.3

Total Equity ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 28,321.7 4,256.8 28,321.7 4,256.8

Total Capitalisation(5) ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 48,769.5 7,330.1 62,808.8 7,630.1

Notes:

(1) The translation of U.S. dollar amounts into Renminbi, for convenience purpose, at a rate of US$1.00 toRMB6.6533.

(2) Short-term borrowings include pledged borrowings, collateralised borrowings and credit borrowings.

(3) Non-current indebtedness due within one year include long-term borrowings maturing within one yearand bonds payable maturing within one year.

(4) Subsequent to 30 September 2017, the Company has, in the ordinary course of business, entered intoadditional financing arrangements to finance the Company’s business development and for generalcorporate business. These additional borrowings are not reflected in the table above.

(5) Total capitalisation represents total long-term indebtedness and total equity.

Except as otherwise disclosed above, there has been no material adverse change in theCompany’s capitalisation and indebtedness since 30 September 2017.

– 73 –

DESCRIPTION OF THE COMPANY

OVERVIEW

The Company is the primary financing, investment, asset management and capitaloperation platform of the Shangrao government, Jiangxi Province, China, and is controlled byShangrao SASAC. Since its establishment in 2002, the Company has played an essential andactive role in implementing the Shangrao government’s major strategic initiatives for urbanplanning and municipal construction, and has received strong financial and operationalsupport from the Shangrao government. The Company’s business primarily focuses oninfrastructure projects in Shangrao and the provision of financing services and assetmanagement for Shangrao public services. As at the date of this Offering Circular, theCompany has 12 wholly owned subsidiaries, six majority owned subsidiaries and 12 jointventures and associate companies, with a diversified business portfolio, includinginfrastructure and resettlement housing construction, land development and other businessessuch as hotel management, public transportation, sewage treatment and building materialstrading. As at 30 September 2017, the Company had total assets of RMB58,390.2 million andnet assets of RMB28,321.7 million, with a debt to asset ratio of 51.5 per cent. The Company’senterprise credit rating was “AA+” in 2017 by China Cheng Xin International Credit RatingCo., Ltd.

Set forth below is an overview of the principal business segments of the Company as atthe date of this Offering Circular:

• Infrastructure and resettlement housing construction. As the primary infrastructureand resettlement housing construction management platform of the Shangraogovernment, the Company has undertaken most of the infrastructure constructionprojects in Shangrao, including road, bridge and transportation hub construction,and park renovation. In addition, the Company has also undertaken most ofresettlement housing constructions for relocated households due to the urbandevelopment of Shangrao. For the years ended 31 December 2014, 2015 and 2016,and the nine months ended 30 September 2017, the Company’s revenue frominfrastructure and resettlement housing construction was nil, RMB994.3 million,RMB1,308.6 million and RMB1,334.9 million (US$200.6 million), respectively,representing 0 per cent., 62.4 per cent., 62.0 per cent. and 82.1 per cent.,respectively, of the Company’s total revenue.

• Land development. Besides infrastructure and resettlement housing construction, theCompany also conducts land development projects, including land transfer and landconsolidation. As at 30 September 2017, the Company has completed six landtransfer projects with an aggregate site area of approximately 447,090 million sq.m.and obtained the total land transfer fees of approximately RMB1,984 million. As atthe same date, the Company was undertaking two land consolidation projects withan aggregate site area of approximately 3,779,413 million sq.m. For the years ended31 December 2014, 2015 and 2016, and the nine months ended 30 September 2017,the Company’s revenue from land development was RMB820.0 million, RMB452.0million, RMB603.8 million and RMB143.2 million (US$21.5 million), respectively,representing 90.0 per cent., 28.4 per cent., 28.6 per cent. and 8.7 per cent.,respectively, of the Company’s total revenue.

– 74 –

• Others. To diversify the Company’s business portfolio, the Company has alsoinvested in hotel management, public transportation services, sewage treatment andbuilding materials trading, either through its subsidiaries or joint ventures. Inaddition, as the primary financing platform of Shangrao SASAC, the Company hasestablished cooperation relationship with more than 50 financial institutions tofinance the infrastructure projects in Shangrao since its establishment. As at 30September 2017, the aggregated paid-in investment for such projects wasapproximately RMB49.6 billion. For the years ended 31 December 2014, 2015 and2016, and the nine months ended 30 September 2017, the Company’s revenue fromother businesses was RMB92.0 million, RMB147.3 million, RMB199.3 million andRMB150.2 million (US$22.6 million), respectively, representing 10.1 per cent., 9.2per cent., 9.4 per cent. and 9.2 per cent., respectively, of the Company’s totalrevenue.

For the years ended 31 December 2014, 2015 and 2016, and the nine months ended 30September 2017, the Company’s total revenue amounted to approximately RMB912.0 million,RMB1,593.6 million, RMB2,111.6 million and RMB1,638.2 million (US$246.2 million),respectively. For the same periods, the Company’s profit was approximated RMB158.9 million,RMB247.0 million, RMB376.1 million and RMB316.8 million (US$47.6 million), respectively.

– 75 –

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Shangrao Shangwu Expressway Management Co., Ltd.

上 饒 市 上 武 高 速 公 路 經 營 管 理 有 限 責 任 公 司

Shangrao Sewage Treatment Co., Ltd.

上 饒 市 生 活 污 水 處 理 有 限 公 司

Shangrao Offical Car Services Co., Ltd.

上 饒 市 公 務 用 車 服 務 有 限 公 司

Shangrao Investment Property Services Co., Ltd.

上 饒 市 城 投 物 業 服 務 有 限 公 司

Shangrao Public Transport Co., Ltd.

上 饒 市 公 共 交 通 有 限 責 任 公 司

Shangrao Longtan Lake Investment Co., Ltd.

上 饒 市 龍 潭 湖 投 資 有 限 公 司

Shangrao Shun Tong Auto Rental Services Co., Ltd.

上 饒 市 順 通 汽 車 租 賃 服 務 有 限 公 司

Shangrao Longtan Lake Hotel Co., Ltd.

上 饒 龍 潭 湖 賓 館 有 限 責 任 公 司

Shangrao Purple Court Construction and Development Co., Ltd.

上 饒 市 紫 庭 建 設 發 展 有 限 公 司

Shangrao Da Au Diversion Operation Development Co., Ltd.

上 饒 市 大 坳 引 水 運 營 發 展 有 限 公 司

Shangrao Centre Zone Investment and Development Co., Ltd.

上 饒 市 中 心 區 投 資 建 設 發 展 有 限 公 司

Shangrao Investment and Land Development Co., Ltd.

上 饒 市 城 投 土 地 開 發 有 限 公 司

Shangrao Guangtian Construction Components Co., Ltd.

上 饒 廣 天 建 築 構 件 有 限 公 司

Shangrao Sanjiang Channel Management Co., Ltd.

上 饒 市 三 江 導 託 渠 管 理 有 限 公 司

Shangrao Chengdong Investment and Development Co., Ltd.

上 饒 市 城 東 投 資 發 展 有 限 公 司

Shangrao Harbor Investment Co., Ltd.

上 饒 市 港 口 投 資 有 限 責 任 公 司

Shangrao Investment and Construction Management Consulting Co., Ltd.

上 饒 市 城 投 工 程 管 理 諮 詢 有 限 公 司

Shangrao Investment Industrial Co., Ltd.

上 饒 市 城 投 實 業 有 限 公 司

Jiangxi Shangrao Harbor Logistics Co., Ltd.

江 西 上 饒 海 港 物 流 有 限 公 司

Jiangxi City Union Card Technology Co., Ltd.

江 西 城 聯 一 卡 通 科 技 股 份 有 限 公 司

Shangrao Medical Investment Co., Ltd.

上 饒 市 醫 療 投 資 有 限 公 司

Shangrao Chengtou No.1 Development Fund Center

上 饒 市 城 投 一 號 城 鎮 發 展 基 金 中 心

Shangrao Micro-Enterprises Help Mutual Fund Ltd.

上 饒 市 中 小 微 企 業 轉 貸 互 助 幫 扶 基 金 有 限 公 司

Shangrao Ziyang Real Estate Development Co., Ltd.

上 饒 市 紫 陽 房 地 開 發 有 限 公 司

Shangrao Affordable Housing Investment And Construction Co., Ltd.

上 饒 市 保 障 性 住 房 投 資 建 設 有 限 公 司

Shangrao Transportation Investment Co., Ltd.

上 饒 市 交 通 投 資 股 份 有 限 公 司

Shangrao Huachao Advertising Decoration Co., Ltd.

上 饒 市 華 超 廣 告 裝 飾 有 限 公 司

Shangrao Green Industry Investment Group Co., Ltd.

上 饒 市 綠 色 產 業 投 資 集 團 有 限 公 司

Shangrao Investment Fund Management Center (Limited Partnership)

上 饒 市 上 投 一 號 基 金 管 理 中 心 ︵ 有 限 合 夥 ︶

Shangrao Comprehensive Transportation Hub Operation Management Co., Ltd.

上 饒 市 綜 合 交 通 樞 紐 運 營 管 理 有 限 公 司

– 76 –

HISTORY AND DEVELOPMENT

The following sets out a number of the key events that occurred in the business andcorporate development of the Company:

June 2002 • The Company was established with registered capital ofRMB50 million with the approval of the Shangraogovernment under the name of Shangrao CityConstruction Investment Development CompanyLimited (上饒市城市建設投資開發有限公司)

November 2008 • Shangrao SASAC acquired 100 per cent. equity interestof the Company

January 2009 • The Company changed its name to Shangrao CityConstruction Investment Development Group CompanyLimited (上饒市城市建設投資開發集團有限公司)

September 2015 • Shangrao SASAC transferred 100 per cent. equityinterest that it hold on the Company to ShangraoInvestment Holding Group Co., Ltd.

July 2017 • The Company further increased its registered capital toRMB1.0 billion

COMPETITIVE STRENGTHS

The Group believes that its competitive strengths outlined below distinguish it from itscompetitors and are important to its success and future development:

Primary financing, investment, asset management and capital operation platform underShangrao SASAC, with strong support from Shangrao government

The Group is the primary financing, investment, asset management and capital operationplatform in Shangrao, Jiangxi Province, China, and is primarily owned by Shangrao SASAC.Since its establishment in 2002, the Group has played an essential and active role inimplementing the Shangrao government’s major strategic initiatives for urban planning andmunicipal construction, and has received strong financial and operational support from theShangrao government.

Equity Transfer

• The Shangrao government transferred the assets of Shangrao Shangwu ExpresswayManagement Co., Ltd. and the assets of Shangrao Comprehensive TransportationHub Operation Management Co., Ltd. to the Company in the amount ofRMB395,128 million and RMB231,804 million, respectively, in 2015.

Capital Injection

• The Group has received capital injection in an aggregate amount of RMB10.0billion (US$1.5 billion) from 2005 until 2017 (included in the capital reserve fund).

– 77 –

• As at 30 September 2017, the Shangrao Government has transferred theindebtedness of the Group at the amount of approximately RMB13.2 billion intogovernment debt which had been written off in the Group’s consolidated financialstatements.

In addition, in 2015 and 2016, Shangrao SASAC allocated approximately RMB73.2million and approximately RMB71.0 million, respectively, from the state-owned capitaloperating budget fund (國有資本經營預算資金) to the Group for its expenditures ininfrastructure constructions, land development and other businesses. We have submitted thebudget request of about RMB700 million from 2017 to Shangrao SASAC as at the date of thisOffering Circular and are expect to obtain the approval by the end of December 2017.According to the relevant local policies, we believe that we will be able to keep obtaining suchfund support from Shangrao SASAC in the next couple of years.

Furthermore, as the ultimate controlling shareholder of the Group, Shangrao SASACclosely participates in and affects the decision-making of key investments and appointment ofdirectors, supervisors and senior management of the Group. The Group and Shangrao SASACnormally conduct detailed discussions and follow requisite appraisal procedures to ensure thatinformed and viable investment decisions are made. As Shangrao SASAC will continue to bethe ultimate controlling shareholder of the Group, the Group believes that the role ofShangrao SASAC and its participation in the Group’s operations distinguish the Group fromother companies in the industries where it operates and will provide effective assurance forachieving its missions.

Diversified funding channels and strong financing capacity

The Group has access to various funding channels and the ability to tap these sources offunding, thereby increasing its ability to secure favourable financing terms and enhancing itsfunding efficiency. In addition to cash generated from its operations, the Group continues todiversify its financing channels to seek low-cost external funds:

• Banks. The Group has maintained long-term relationships with a number ofdomestic banks, including China Development Bank, Bank of China, Industrial andCommercial Bank of China, Agricultural Bank of China, Bank of Communications.As at 30 September 2017, the total outstanding amount of the bank borrowings wasapproximately RMB21.3 billion.

• Debt Financing. The Group issued seven-year corporate bonds in an aggregateamount of RMB1,300.0 million (US$195.4 million) at a coupon rate of 7.3 per cent.in 2012 (the “2012 Enterprise Bond”), five-year corporate bonds in an aggregateamount of RMB2,000.0 million (US$300.6 million) at a coupon rate of 5.97 percent. in 2015 (the “2015 Corporate Bond”), and five-year corporate bonds in anaggregate amount of RMB1,000.0 million (US$150.3 million) at a coupon rate of3.78 per cent. and five-year corporate bonds in an aggregate amount of RMB1,000.0million (US$150.3 million) at a coupon rate of 3.75 per cent.in 2016 (collectively the“2016 Corporate Bond”). In 2015, the Group issued three-year private notes in anaggregate amount of RMB600.0 million (US$90.2 million) at a coupon rate of 6.2per cent. (the “2015 Private Notes”).

– 78 –

• Government Support. Since its establishment in 2002, the Group has received strongfinancial and operational support from the Shangrao government. See “—Competitive Strengths — Primary financing, investment, asset management andcapital operation platform under Shangrao SASAC, with strong support from theShangrao government” above.

The Group’s strong financing capability has enabled it to capitalise on various businessopportunities to bid more infrastructure construction projects and to expand its business tonew industries, which could be highly capital intensive.

Experienced management and operational teams with sound corporate governance

The Group’s management team has extensive experience in the Group’s various business,including infrastructure construction, land development, other public service operations suchpublic transportation and waste water treatment. The management team has an average ofover 20 years of management experience in either the Group or other government agencies.The Group believes that its management team’s extensive experience in a broad range ofindustries and strong execution capabilities have been and will continue to be instrumental inexecuting its business strategies and capturing market opportunities as they arise, and havecontributed and will continue to contribute to the sustainable growth of the Group.

In addition, the Group’s operational teams in all of the Group’s businesses are led byprofessionals with extensive experience in operation and management of the relevantindustries and supported by a highly skilled and well-trained workforce. Throughout its yearsof operation and management of its various businesses, the Group has been able to maintaineffective and efficient management and operational control over its key subsidiaries. TheGroup has adopted a commercially driven approach to managing its business operations whileleveraging its established relationship with governmental authorities with a view tomaximising its growth potential.

BUSINESS STRATEGIES

The Group will continue to increase the value of its assets, optimise its capital structureand enhance its operational efficiency to become a top-tier state-owned capital operationalplatform in support of the “One Belt One Road Initiative”, supply-side reforms and industrialupgrade of the PRC government through implementing the following strategies:

Continue to enhance the Group’s position as the primary financing, investment, assetmanagement and capital operation platform in Shangrao and promote its functions to optimisestate-owned capital and assets

The Group will continue to enhance the Group’s functions as the primary financing,investment, asset management and capital operation platform in Shangrao and promote itsfunctions to optimise state capital and assets. Under the leadership of Shangrao SASAC, theGroup will aim to maximise the value of the state capital and assets it operates and providefinancing for key infrastructure and public service projects in Shangrao that have a majorinfluence on the economic growth, social development and public welfare. The Group believesthese strategies will further enhance its market place in the economic and social developmentof Shangrao and promote its role as the asset management operation platform for state-ownedassets.

– 79 –

Continue to adopt centralised management of the Group’s capital and a prudent financial policyto control cost and improve profitability

The Group will continue to adopt a centralised management system to manage theGroup’s capital to achieve efficient deployment of the Group’s capital. The Group will alsocontinue to adopt a prudent financial and risk management policy and further improve itsfinancial control system to control costs and improve profitability. The Group believes thatthese measures will further enhance its competitive advantage and help achieve sustainablegrowth.

Strengthen risk management and internal control systems

The Group will continue to improve and streamline its risk management structure andinternal control systems. The Group considers effective project risk management to be criticalto enhancing its overall operational efficiency. The Group will strictly follow the guidelinesand disciplines of the Shangrao government and Shangrao SASAC in its daily operatingactivities. The Group will continue to enhance its three-lines of defence in creating a healthyrisk management system, including the scrutiny conducted by the engineering and technologydepartment and subsidiaries as the first level, the supervision performed by the riskmanagement department and internal control committee on the second level, and the reviewconducted by internal auditors and audit committee on the third level. The Group will alsocontinue to improve its risk-based approach in operating activities and emphasise the efficientexecution of management procedures in its approval control, accounting system, propertyprotection, budget, operating analysis and performance review. The Group believe thosemeasures may limit the risk exposure in the Group’s operating activities and promote theGroup’s steady growth in long term.

RECENT DEVELOPMENTS

On 26 October 2017, China Development Bank Corporation, Jiangxi Branch, granted aRMB50.0 million loan with an annual interest rate of 4.4 per cent. and a term of 25 years. On2 November 2017, Industrial Bank, Nanchang Branch granted a RMB500.0 million loan withan annual interest rate of 6.2 per cent. and a term of two years.

DESCRIPTION OF THE COMPANY’S BUSINESSES

Over the years, the Company has developed two main business segments, namely theinfrastructure and resettlement housing construction and land development. The Companyalso invests in other business operations such as hotel management, public transportationservices, sewage treatment and building materials trading. The following table sets out abreakdown of the Company’s total revenue by business segment for the periods indicated:

For the year ended 31 December For the nine months ended 30 September

2014 2015 2016 2016 2017

(RMBin millions) per cent.

(RMBin millions) per cent.

(RMBin millions) per cent.

(RMBin millions) per cent.

(RMBin millions) per cent.

(unaudited) (unaudited)Infrastructure and

resettlement housingconstruction ⋅ ⋅ ⋅ ⋅ – – 994.3 62.4 1,308.6 62.0 658.4 44.3 1,344.8 82.1

Land development ⋅ ⋅ ⋅ 820.0 89.9 452.0 28.4 603.8 28.6 603.8 48.3 143.2 8.7Others ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 92.0 10.1 147.3 9.2 199.3 9.4 100.0 7.3 150.2 9.2

Total Revenue ⋅ ⋅ ⋅ ⋅ ⋅ 912.0 100.0 1,593.6 100.0 2,111.6 100.0 1,362.2 100.0 1,638.2 100.0

– 80 –

Infrastructure and Resettlement Housing Construction

The Company’s subsidiaries engaging in infrastructure and resettlement housing

construction businesses mainly include Shangrao Chengdong Investment and Development

Co., Ltd. (上饒市城東投資發展有限公司), Shangrao City East Investment and Development

Co., Ltd., Shangrao Investment and Land Development Co., Ltd. (上饒市城投土地開發有限公司), Shangrao Investment and Construction Management Consulting Co., Ltd.(上饒市城投工程管理諮詢有限公司) and Shangrao Ziyang Real Estate Development Co., Ltd. (上饒市紫陽房地產開發有限公司), Shangrao City Land Investment Development Co., Ltd., Shangrao City

Investment Management Consulting Co., Ltd., Shangrao City Public Transport Co., Ltd.,

Ziyang Shangrao Real Estate Development Co., Ltd. through which the Company has

undertaken the construction of, among others, three roads, two bridges, four public facility

building or renovation, four resettlement housing projects, nine government office buildings

and six parks as at 30 September 2017.

For infrastructure construction projects, the Company generally executes a development

agreement with the relevant government agency, according to which the Company will be

responsible for the financing and construction of such infrastructures, and resell such

infrastructures to the government at a price with about 10 per cent. to 15 per cent. profit

margin. Besides infrastructure construction, the Company also undertakes resettlement

housing construction. According to the relevant corporate development agreements, the

Company has to finance the project itself, usually by its own operating funds, bank loans or

funds through other financing methods, to pay compensation to the relocated households and

the cost for the construction. The land use rights should be granted by the Shangrao

government for zero consideration. Once the residential apartments are completed, the

residential units that should be sold to the relocated households according to the resettlement

agreements should be sold at the government designated price, which is much lower than the

market price. However, the sales of commercial units, additional residential units to be sold to

public customers, or additional areas beyond relocation compensation areas to the relocated

households shall be sold at the market price.

For the years ended 31 December 2014, 2015 and 2016, and the nine months ended 30

September 2017, the Company’s revenue from infrastructure and resettlement housing

construction was nil, RMB994.3 million, RMB1,308.6 million and RMB1,344.8 million

(US$202.1 million), respectively, representing 0 per cent., 62.4 per cent., 62.0 per cent. and

82.1 per cent., respectively, of the Company’s total revenue.

Completed Projects

As at 30 September 2017, the Group had completed 28 infrastructure or resettlement

housing construction projects. The following sets forth a brief introduction of the Company’s

representative completed construction projects as at 30 September 2017.

– 81 –

Project NameTotal

InvestmentCompletion

Time Description

(RMBmillion)

Resettlement Housing Project

Renovation of ShangraoFenglutang City Village(上饒市楓爐塘城中村改造)

875 2017 Renovation of a city village with a site areaof approximately 150,000 sq.m. and anaggregate GFA of approximately 160,000sq.m., including 305 houses.

Jinxiu Community(錦繡小區)

52 2017 Construction of officers’ housing with fourresidential buildings of 20 residential unitsand 40 underground parking lots, coveringa site area of approximately 4,347 sq.m.and an aggregate GFA of approximately7,900 sq.m.

Songshan Garden(松山花苑)

72 2013 Construction of resettlement housing with 10residential buildings of 320 residentialunits, covering a site area of approximately29,307 sq.m. and an aggregate GFA ofapproximately 46,000 sq.m.

Lvyuan Community(綠苑小區)

38 2013 Construction of resettlement housing witheight residential buildings of 158residential units, covering a site area ofapproximately 20,124 sq.m. and anaggregate GFA of approximately 24,670sq.m.

Office Building Projects

Shangrao ComprehensiveEmergency Rescue SupportBase(上饒市綜合性應急救援保障基地)

32 2016 Construction of a comprehensive officebuilding, a watchtower and a training towerfor comprehensive emergency rescuesupport, with a site area of approximately11,400 sq.m. and an aggregate GFA ofapproximately 48,667 sq.m.

Xinzhou District People’sCourt Building(信州區人民法院辦公大樓)

18 2015 Construction of the office building forXinzhou District People’s Court, with a sitearea of approximately 3,500 sq.m. and anaggregate GFA of approximately 13,300sq.m.

Shangrao City FinanceBuilding(上饒市財政大樓)

46 2014 Construction of the office building forShangrao City Provident Fund, with a sitearea of approximately 12,000 sq.m. and anaggregate GFA of approximately 17,000sq.m.

Shangrao City ProvidentFund Building(上饒市公積金大樓)

50 2013 Construction of the office building forShangrao City Provident Fund, with a sitearea of approximately 7,380 sq.m. and anaggregate GFA of approximately 15,000sq.m.

Shangrao City People’sProcuratorate TechnologyService Building(上饒市人民檢察院技術業務樓)

60 2012 Construction of the office building forShangrao City People’s Procuratorate, witha site area of approximately 6,666 sq.m.and an aggregate GFA of approximately12,000 sq.m.

– 82 –

Project NameTotal

InvestmentCompletion

Time Description

(RMBmillion)

Jiangxi Medical CollegeShangrao Branch (Phase I)(江西醫學院上饒分院一期)

238 2010 Construction of the new campus for JiangxiMedical College Shangrao Branch, with asite area of approximately 287,360 sq.m.including 48 class rooms with a maximumcapacity of 15,900 students and teachers touse simultaneously.

Shangrao Custom Building(上饒海關大樓)

15 2005 Construction of the office building forShangrao Custom, with a site area ofapproximately 7,500 sq.m. and anaggregate GFA of approximately 11,180sq.m.

Park Projects

Zhuxi River Wetland Park(櫧溪河濕地公園)

155 2012 Planning and construction of the wetlandpark located in east area of ShangraoCounty with a total site area ofapproximately 960,000 sq.m. The park is anurban ecological wetland incorporatingfour functions of ecological exhibition,landscaping enjoyment, popular scienceand entertainment.

Renovation of Longtan Lake(龍潭湖綜合改造)

420 2010 Comprehensive renovation of Longtan Lakearea, including the construction of theLongtan Lake park, surrounding roadnetwork and the Longtan Lake Hotel, witha total site area of approximately 435,667sq.m.

Ziyang Park(紫陽公園)

100 2009 Planning and construction of a city parklocates in northeast area of Shangrao City,with a site area of approximately 87,800sq.m.

Yunbifeng Forest Park(雲碧峰森林公園)

30 2005 Planning and construction of YunbifengForest Park, locates in southeast area ofShangrao City, Xinzhou District, with atotal site area of approximately 87,250,000sq.m. The park was established inDecember 2005 and began to open to thepublic in 2005.

Road and Bridge Projects

320 National Road’s MovingSouth Construction(320國道改建南移)

1,870 2017 Renovation of 320 National Road inaccordance with standards for first classhighway in China. The renovated partbecame a four-lane dual carriageway of59.7 kilometers long and 24.5 meters wide.

Shangrao Bridge(上饒大橋)

443 2013 This bridge is 798 meters long in total, witheight-lane dual carriageway.

– 83 –

Project NameTotal

InvestmentCompletion

Time Description

(RMBmillion)

Fengxi Bridge(豐溪大橋)

107 2011 The main part of the bridge combined thedesigns for both cable-stayed andbeam-arch bridges. The total length of thebridge is 422.0 meters (including theabutment).

Fifth Third Avenue EastExtension(五三大道東延)

146 2005 The extended part is a six-lane dualcarriageway of 2.1 kilometers long and 60meters wide.

Daihu Road Renovation(帶湖路改造)

42 2003 After the renovation, Daihu road became afour-lane dual carriageway of 2.5kilometers long and 40 meters wide.

Other Infrastructure Projects

West Moving of ShangraoSewage Treatment Plant(上饒市污水處理廠西遷)

505 2017 The new plant occupies a total site area ofapproximately 200,000 sq.m., with adesigned daily processing capacity of200,000 tons of sewage.

Shangrao City Supply WaterDiversion Project(上饒市城市供水水源引水工程)

483 2016 The water supply facilities include six tunnelsof 11.7 kilometers long and supply tubes of25.1 kilometers long in total. Uponcompletion, the water supply facilitiescould provide domestic water of 360,000tons per day, which is sufficient to meet thewater supply needs of about 1 millioncitizens.

ComprehensiveTransportation Hub(綜合交通樞紐)

7.8 2015 Planning and construction of thecomprehensive transportation hub thatcontains high-speed rail transportation,tour bus, car rental services. Uponcompletion, the hub is of 1,009 parkinglots, with a site area of approximately160,000 sq.m. and an aggregate GFA ofapproximately 110,000 sq.m.

Shangrao“Dry Port”(上饒 “無水港”)

80 2009 It is an international logistics center forShangrao City, with a site area ofapproximately 390,026 sq.m. Uponcompletion, it had three function zones,namely the international logistics area, thedomestic logistics area and public servicearea.

– 84 –

Projects Under Construction

As of 30 September 2017, the Company is undertaking 13 projects, covering medical care,water diversion, road, logistics, education and environment protection industries, with a totalestimated investment of RMB54.3 billion.

The following sets forth a brief introduction of the Company’s representative projectsunder construction.

Project NameEstimatedInvestment

ActualInvestment

ConstructionStarting Date

EstimatedCompletion

Date Description

(RMBmillion)

(RMBmillion)

Resettlement Housing Project

LongtanResettlementCommunity(龍潭安置小區)

214 258 2009-11 2017-12 The project occupies a parcelof land with a total site areaof approximately 74,260sq.m. Upon completion, theproject will have 24buildings composing of1,100 residential units and236 parking lots of anaggregate GFA ofapproximately 132,600sq.m.

Royal View Garden(禦景新苑)

3,407 1,345 2013-01 2018-01 The project occupies a parcelof land with a total site areaof approximately 200,000sq.m. Upon completion, theproject will have 46buildings composing of5,090 residential units and5,121 parking lots of anaggregate GFA ofapproximately 920,000sq.m.

Spring Garden(春天新苑)

765 204 2015-04 2018-04 The project occupies a parcelof land with a total site areaof approximately 87,867sq.m. Upon completion, theproject will have 30buildings composing of1,492 residential units of anaggregate GFA ofapproximately 132,600sq.m.

East City Garden(城東佳苑)

790 96 2015-08 2018-08 The project occupies a parcelof land with a total site areaof approximately 72,000sq.m. Upon completion, theproject will have 42buildings composing of1,926 residential units of anaggregate GFA ofapproximately 220,000sq.m.

– 85 –

Project NameEstimatedInvestment

ActualInvestment

ConstructionStarting Date

EstimatedCompletion

Date Description

(RMBmillion)

(RMBmillion)

Other Project

Renovation of theOld Train Station(老火車站綜合改造)

5,000 5,393 2013-01 2018-01 Renovation of the old trainstation and surroundingarea, road planting ofsurrounding roads.

Ningde PortShangrao WharfProject(寧德港碼頭)

489 11 2013-12 2017-12 The port is excepted to haveone 50,000-ton berth with adesigned annual cargohandling capacity of 2.0billion tons.

Relocation of theShangrao CityNormal CollegeCampus(上饒師範學校搬遷)

1,100 588 2014-09 2017-12 The new campus is expectedto be located in Shangraowith a site area ofapproximately 540,000sq.m., consisting of 21buildings with an aggregateGPA of approximately213,000 sq.m. Uponcompletion, the new campusis capable to server about9,000 students and teachers.

ShangraoCity-UrbanComprehensivePipelineConstruction(上饒市城鎮綜合管廊建設項目)

3,034 8 2015-09 2018-09 This project is expected tocover pipelines for watersupply, heat supply,electricity supply, etc. witha total length of about 22.7kilometers for Phase I andabout 15.4 kilometers forPhase II.

Shangrao BinjiangEast Road andFlood ControlLandscapeEngineeringProject(城東濱江路及防洪堤景觀工程)

2,800 586 2015-11 2018-11 This project is expected tooccupy a parcel of landwith a total site area ofapproximately 62,413 sq.m,last about 6.1 kilometerlong along the Bin River.

– 86 –

Future Development

In addition, the Company is also planning to carry out the construction of a municipal

elderly and health care service center, the construction of a comprehensive sky parking, the

expansion of Longtan Lake Hotel, the construction of the No. 1 Middle School new campus,

the construction of a waste incineration power plant, etc.

Land Development

As the primary authorized land developer in Shangrao by the Shangrao government, the

Company has undertaken more than 80 per cent. land development projects in Shangrao

through the Company itself and its subsidiaries including Shangrao Chengdong Investment

and Development Co., Ltd (上饒市城東投資發展有限公司), Shangrao Investment and Land

Development Co., Ltd. (上饒市城投土地開發有限公司) and Shangrao Ziyang Real Estate

Development Co., Ltd. (上饒市紫陽房地產開發有限公司). The Company generally conducts

land development projects by two models, which are land transfer and land consolidation. For

land transfer, the Company shall develop its own lands to the status of “three connections and

one leveling” assuring that a construction site is connected to water and electric power

supplies and roads, and that the ground is leveled before a project is begun. After the

completion of the above land consolidation work, the Company shall transfer the land to third

parties through land bidding process according to the Shangrao government’s planning on

such parcel of land. The land transfer fee will be recorded as the revenue generated from the

land transfer projects. For land consolidation, the Company shall develop relevant parcels of

land owned by the government to the status of “three connections and one leveling” for the

government. The government will pay the Company a land consolidation fee, which generally

equals to 110 per cent. of the Company’s total investment in the corresponding land

consolidation project.

From 1 January 2014 to 30 September 2017, the Company has completed six land transfer

projects with an aggregate site area of approximately 447,090 million sq.m. and had total

revenue generated from land transfer of approximately RMB1,984 million. As at 30 September

2017, the Company was undertaking two land consolidation projects with an aggregate site

area of approximately 5,669.1 million sq.m. For the years ended 31 December 2014, 2015 and

2016, and the nine months ended 30 September 2017, the Company’s revenue from land

development was RMB820.0 million, RMB452.0 million, RMB603.8 million and RMB143.2

million (US$21.5 million), respectively, representing 89.9 per cent., 28.4 per cent., 28.6 per

cent. and 8.7 per cent., respectively, of the Company’s total revenue.

– 87 –

The following table sets forth the detailed information of the land consolidation projects

undertaking as at 30 September 2017.

Project Name Site Area

EstimatedTotal

InvestmentActual

Investment

EstimatedCompletion

Date

(sq.m.)(RMB

million)(RMB

million)First Class Land Consolidation of

Lands in East Shangrao ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 2,643,413 3,035 2,293 2019Land Consolidation of the Old

Train Station and SurroundingShanty Areas ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ 1,136,000 3,897 7,031 2019

As at 30 September 2017, the Company had a land reserve of approximately 4.2 million

sq.m. with an estimated book value of approximately RMB8.5 billion. The Company will keep

develop such parcels of land and transfer to third parties for further development according to

the Shangrao government’s land planning in the future.

Others

• Hotel management.

In February 2013, the Company acquired a 100 per cent. equity interest in ShangraoLongtan Lake Investment Co., Ltd. and began to operate Longtan Lake Hotel. Longtan LakeHotel is a 5-star hotel in the northeast part of Jiangxi Province, with a total GFA ofapproximately 347,000 sq.m., consisting of 147 guest rooms, five conference rooms, oneballroom with a maximum capacity of 500 persons and one Chinese restaurant and onecafeteria with a maximum capacity of 80 persons, each. For the years ended 31 December2014, 2015 and 2016, and the nine months ended 30 September 2017, the Company’s revenuefrom Longtan Lake Hotel was RMB41.4 million, RMB43.8 million, RMB47.3 million andRMB32.7 million (US$4.9 million), respectively, representing 4.5 per cent., 2.8 per cent., 2.2per cent. and 2.0 per cent., respectively, of the Company’s total revenue.

• Public transportation.

In 2015, the Shangrao government transferred a 100 per cent. equity interest in ShangraoPublic Transportation Co., Ltd. to the Company for zero consideration. As at 30 September2017, Shangrao Public Transportation Co., Ltd. owned 334 buses and operated 39 bus lines.As the public transportation business recorded operating losses historically, the Shangraogovernment used to provide subsidy to Shangrao Public Transportation Co., Ltd. tocompensate its loss each year to support the operation of the public transportation ofShangrao. In 2017, the Shangrao government keeps providing subsidy to Shangrao PublicTransportation Co., Ltd. to support the operation of the public transportation of Shangraoand the provincial government of Jiangxi Province also provides subsidy to the Company tosupport the development of Shangrao.

– 88 –

• Sewage treatment.

In August 2013, wholly owned subsidiary of Shangrao Sewage Treatment Co., Ltd. (上饒市生活污水處理有限公司), Yilong Environment Protection Company acquired a privatesewage treatment plant and obtained the operating rights of such plant for 23 years from 2013.In 2015, the Finance Department of Shangrao Government agreed to pay RMB1.2 millioneach month to Shangrao Domestic Sewage Treatment Co., Ltd. for the sewage treatmentstarting from January 2015. For the years ended 31 December 2014, 2015 and 2016, and thenine months ended 30 September 2017, the Company’s revenue from sewage treatmentbusiness was RMB18.5 million, RMB14.4 million, RMB14.4 million and RMB10.8 million(US$1.6 million), respectively, representing 2.0 per cent., 0.9 per cent., 0.7 per cent. and 0.7per cent., respectively, of the Company’s total revenue.

• Building materials trading.

The Company also conducted building material trading business through Shangrao CityInvestment Co., Ltd., whose major business is to trade building materials.

To further expand the Company’s business, the Company has started to invest in newbusinesses. From 2016, the Company began to provide official car services to the localgovernment. From 2016 to 30 September 2017, the revenue generated from official car serviceswas approximately RMB7.4 million. The Company also invested in expressway operationbusiness and began to generate revenue from toll fee collections from 2017. From 1 January2017 to 30 September 2017, the revenue generated from the operation of Shangwu Expresswaywas approximately RMB28.3 million.

COMPETITION

The Company enjoys advantages as a state-owned business. As the primary financing,investment, asset management and capital operation platform for infrastructure constructionof state-owned assets in Shangrao, the Company receives strong government support thebusinesses in which the Company operates. However, the Company nonetheless faces certaincompetition from various sources, including other large SOEs of the PRC, privately-owneddomestic companies, and leading international companies that operate in Shangrao,particularly in areas and regions where the markets have been opened up to both state-ownedand private participants.

– 89 –

QUALITY, SAFETY AND ENVIRONMENTAL PROTECTION

The Company has established and implemented a Company-wide quality, safety andenvironmental protection control management system. The management system specifies thestandards to be met in terms of quality, safety and environmental protection control, clarifiesthe responsibility of various departments and personnel, identifies procedures, materials andother factors that are subject to the control of management, and provides for measures to beundertaken to ensure that various standards are met.

The Company imposes safety and anti-pollution measures, as well as regular internalsafety and environmental inspections at all stages of its operational process to minimise thepossibility of work- related accidents and injuries, occupational illness and environmentalcontamination. In addition, it provides safety education to employees and has establishedsafety standards in relation to matters such as power plant operation, pollution control,purchasing, installing and operating new equipment, constructing new facilities andimproving existing facilities. The Company’s portfolio companies are also devoted todeveloping and implementing clean and new technology in the process of power generationand transmission. The Company believes that its safety control systems, environmentalprotection systems and facilities are adequate to comply with applicable national and localregulations. As at the date of this Offering Circular, the Company is not aware of anypenalties associated with any material breach of or noncompliance with any safety andenvironmental laws and regulations.

EMPLOYEES

As at 30 September 2017, the Company had approximately 1,456 employees, amongwhich 210 employees have bachelor degrees or above and four have senior professional titles.

In accordance with the applicable regulations of Shangrao government, the Companymakes contributions to pension contribution, medical insurance, unemployment insurance,maternity insurance and personal injury insurance. The amount of contributions is based onthe specified percentages of employees’ aggregate salaries as required by relevant PRCauthorities. The Company also makes contributions to an employee housing fund according toapplicable PRC regulations.

The Company enters into an employment contract with each of its employees inaccordance with applicable laws. Such contracts include provisions on work content, worklocation, wages, vacation, social insurance, employee benefits, training programmes, healthand safety, confidentiality obligations, mediation and arbitration and grounds for change andtermination.

– 90 –

INSURANCE

The Company purchases pension insurance, unemployment insurance and medicalinsurance for its employees according to the relevant PRC laws and regulations. The Companymaintains insurance coverage in accordance with applicable laws and practice customary inthe industry.

Consistent with what the Company believes to be customary practice in the PRC, it doesnot carry any business interruption insurance, key-man insurance or insurance coveringpotential environmental damage claims.

LEGAL PROCEEDINGS AND REGULATORY COMPLIANCE

The Company is from time to time involved in disputes and legal proceedings arising inthe ordinary course of its business. As at the date of this Offering Circular, the Company issubject to three litigation or arbitration proceedings before final judgment for potentialmonetary liabilities of approximately RMB45 million (US$6.8 million). See “Risk Factors –Risks Relating to the Company – The Company is subject to litigation risks and may facesignificant liabilities as a result”. To the best of the Company’s knowledge after due andcareful enquiry within the Company, except as otherwise disclosed in this Offering Circular,there are no current litigation or arbitration proceedings against the Company or any of itsdirectors as at the date of this Offering Circular that could have a material adverse effect on itsfinancial condition or results of operations.

– 91 –

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

DIRECTORS

The board of directors (the “Board”) of the Company is comprised of five directors, allof which are appointees of Shangrao SASAC for a term of three years. The principal focus ofthe Board is on overall strategic development, internal controls system and risk managementsystem. The Board provides guidance on business plans and monitors the results of such plansimplemented by the management and reviews and approves its financial objectives and majorfinancial activities.

The members of the Board as at the date of this Offering Circular are as follow:

Name Age Title

ZHANG Ping (張平) 47 ChairmanLI Feng (李峰) 44 Director, the general managerHONG Degui (洪德貴) 58 Director, the vice general managerZHANG Hongyu (張宇宏) 46 Director, the chief accountantXU Sheng (許晟) 39 Director, the vice general manager

Mr. ZHANG Ping (張平), aged 47, was appointed as the Chairman of the Company inAugust 2014 and also serves as the Party secretary of Company. He also served as our vicemanager and director from February 2008 to May 2013 and our manager from May 2013 toJuly 2014. Prior to joining us, he worked as the manager of Jiangxi Qianshan CountyProperties Development Co., Ltd., the deputy head of Qianshan County Real EstateAuthority, the chief of Shangrao Housing Funds Management Center Qianshan Countybranch and the deputy director of Shangrao Housing Funds Management Center. Mr. Zhangholds a bachelor’s degree in law from Jiangxi Provincial Party School and he is a registeredreal estate appraiser.

Mr. LI Feng (李峰), aged 44, was appointed as the director of the Board in August 2014and also serves as the general manager of the Company. He joined our group since April 2011and served as the chief accountant of the Company till August 2014. Prior to joining us, heworked as the project manager of Shenzhen An Hui Industrial Co., Ltd., the analyst ofInstitute of Finance Industry of Northeast Securities and the project manager of Er TanHydropower Development Co., Ltd. Mr. Zhang holds a Ph.D. degree in and was graduatedfrom Shanghai Jiao Tong University.

Mr. HONG Degui (洪德貴), aged 58, was appointed as the director of the Board inAugust 2014 and also serves as the general manager and the member of the Party committee ofthe Company. He also served as the vice manager from August 2012 to July 2014, the memberof the Party committee from April 2013 to July 2014. Prior to joining us, he worked as thetechnician, engineer, vice president, president and Party secretary of Jiangxi ChaoyangPhosphate Mining Co., Ltd. Mr. Zhang holds a bachelor’s degree in and was graduated fromJiangxi University.

Mr. ZHANG Hongyu (張宇宏), aged 46, was appointed as the director of the Board inJuly 2017 and also serves as the chief accountant and the member of the Party committee ofthe Company. Prior to joining us, he worked as the chief of Shangrao Audit Bureau TrainingCenter and the chief of Shangrao Audit Bureau Information Center. Mr. Zhang holds abachelor’s degree in and was graduated from Jiangxi Finance and Accounting School.

– 92 –

Mr. XU Sheng (許晟), aged 39, was appointed as the director of the Board in August2014 and also serves as the vice general manager of the Company. Prior to joining us, Mr. Xuworked as the officer, the deputy chief, the chief of the engineering section of ShangraoPlanning Bureau. Mr. Xu holds a bachelor’s degree and was graduated from NanchangUniversity.

SUPERVISORS

The board of Supervisors of the Company (the “Supervisory Committee”) comprised offive Supervisors, all of which are appointees of Shangrao SASAC.

As at the date of this Offering Circular the Supervisors are as follows:

Name Age Title

XU Min (徐敏) 52 Supervisor, the chairman of the laborunion

YANG Shujun (楊淑軍) 52 Supervisor, the vice manager of thefinancing department

LIU Jinbo (劉金波) 52 Supervisor, the manager of thefinancing department

ZHOU Jingfeng (周景峰) 33 SupervisorWU ZhaoJing (吳趙晶) 33 Supervisor, the manager assistant of

the audit department

Ms. XU Min (徐敏), aged 52, was appointed as the supervisor of the SupervisoryCommittee of the Company in November 2008 and she also served as the chairman of thelabor union of the Company. Prior to joining us in 2003, she worked as a conductor atShangrao railway station. Ms. Xu holds a college degree from Jiangxi Radio and TVUniversity.

Ms. YANG Shujun (楊淑軍), aged 52, was appointed as the supervisor of the SupervisoryCommittee of the Company in November 2008 and also served as the vice manager of thefinancing department of the Company. Prior to joining us in 2002, she worked as the head offinance department of Shangrao Real Estate Co., Ltd. Ms. Yang holds a high school diplomafrom Shangrao No.4 High School.

Mr. LIU Jinbo (劉金波), aged 52, was appointed as the supervisor of the SupervisoryCommittee of the Company in July 2017 and also served as the manager of the financingdepartment of the Company. Prior to joining us in 2007, he worked as the vice manager offinance department of Hengfeng Power Supply Company. Mr. Xu holds a secondaryvocational school degree from Jiangxi Vocational College of Finance and Economics.

Mr. ZHOU Jingfeng (周景峰), aged 33, was appointed as the supervisor of theSupervisory Committee of the Company in July 2017 and also served as an executive directorof Shangrao Construction Investment Engineering Consulting Co., Ltd. Prior to joining us in2008, he worked for Guangzhou Health-Biotech Co., Ltd. Mr. Zhou holds a bachelor’s degreefrom Nanchang University.

Mr. WU ZhaoJing (吳趙晶), aged 33, was appointed as our supervisor of the SupervisoryCommittee of the Company in July 2017 and he also served as the manager assistant of theaudit department of the Company. Prior to joining us in 2016, he worked as the director ofexecutive office and the manager of audit department of Shangrao Tianjia New Material Co.,Ltd. Mr. Wu holds a bachelor’s degree from Jiangxi Agricultural University.

– 93 –

SENIOR MANAGEMENT

The table below sets forth certain information with respect to the Company’s seniormanagement members.

Name Age Title

ZHANG Ping (張平) 47 ChairmanLI Feng (李峰) 44 Director, the general managerHONG Degui (洪德貴) 58 Director, the vice general managerZHANG Hongyu (張宇宏) 46 Director, the chief accountantXU Sheng (許晟) 39 Director, the vice general managerHUANG Cheng (黃誠) 44 Secretary of discipline inspection

commissionZHANG Weisheng (張偉勝) 49 Vice general managerSHI Wenzhou (施文洲) 49 Vice general managerWANG Hanxiang (王漢祥) 47 Vice general managerZHAN Feng (占峰) 46 Vice general managerWANG Shiqing (汪世清) 52 Board secretary

Mr. ZHANG Ping — see “— Directors” above.

Mr. LI Feng — see “— Directors” above.

Mr. HONG Degui — see “— Directors” above.

Mr. ZHANG Hongyu — see “— Directors” above.

Mr. XU Sheng — see “— Directors” above.

Mr. HUANG Cheng (黃誠), aged 44, was appointed as the secretary of disciplineinspection commission and member of Party commission of the Company in August 2014. Heis in charge of discipline inspection and anti-corruption work of the Company. Prior tojoining us, he worked as a vice minister of Publicity Department of Shangrao Commission forDiscipline Inspection. Mr. Huang holds a bachelor’s degree and was graduated fromNanchang University.

Mr. ZHANG Weisheng (張偉勝), aged 49, was appointed as the vice general manager andmember of Party commission of the Company in April 2015. He is in charge of overall workof Shangrao Public Transportation Co., Ltd. and assisting the general manager on theoperations relating to public transportation business. Prior to joining us, he worked as thesecretary of Party Commission of Luoqiao Community, Shangrao County. Mr. Zhang wasgraduated from Party School of the Central Committee of the CPC.

Mr. SHI Wenzhou (施文洲), aged 49, was appointed as the vice general manager andmember of Party commission of the Company in March 2016. He is in charge of overall workof the Longtan Lake Hotel and assisting the general manager on the investment business withrespect to Shangrao Longtan Lake Investment Co., Ltd. Prior to joining us, he worked as thedeputy chief of Yugan County Committee. Mr. Shi was graduated from Party School of theCentral Committee of the CPC.

– 94 –

Mr. WANG Hanxiang (王漢祥), aged 47, was appointed as the vice general manager and

member of Party commission of the Company in November 2016. He is in charge of work

relating to Shangrao Construction Investment Engineering Management Consulting Co., Ltd.,

Shangrao Port Investment Co., Ltd. and Shangrao Construction Investment Industrial Co.,

Ltd. Prior to joining us, he worked as the director of Shangrao Engineering Quality

Inspection Center. Mr. Wang holds a college degree from Engineering University of CAPF.

Mr. ZHAN Feng (占峰), aged 46, was appointed as the vice general manager and member

of Party commission of the Company in June 2017. He is in charge of our enterprise culture

cultivation and record work. Prior to joining us, he worked as the secretary of Dongtuan Town

Party committee of Shangrao Economic Development Zone. Mr. Zhan holds a bachelor’s

degree from PLA Nanjing Army Command College.

Mr. WANG Shiqing (汪世清), aged 52, was appointed as the secretary of the Board in

November 2016. He is in charge of assisting directors on the Company’s daily operation. Prior

to joining us in 2010, he worked as the director of executive office, the director of human

resource department and the chairman of the labor union of Shangrao Construction

Engineering Co., Ltd. Mr. Wang holds a college degree from Shangrao School of Economics

and Management.

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PRC LAWS AND REGULATIONS

BONDS ISSUANCE APPROVAL

Pursuant to the Enterprise State-owned Assets Law of the People’s Republic of China

(《中華人民共和國企業國有資產法》) promulgated by the Standing Committee of the National

People’s Congress on 28 October 2008 and effective since 1 May 2009, and the Interim

Regulation on the Supervision and Administration of State-owned Assets of Enterprises (《企業國有資產監督管理暫行條例》) promulgated by the State Council on 27 May 2003 and revised

on 8 January 2011, where any of the events listed in Article 30 (major events involving

state-invested enterprises, including but not limited to mergers, divisions, restructurings,

listings, increases or reductions in registered capital, issuance of bonds, major investments,

providing major guarantees to external parties, transfers of major assets, large-scale

donations, profit distributions, dissolutions and applications for bankruptcy) occurs in

relation to a state-controlled company or partly state-owned company, the relevant decisions

shall be made by the shareholders’ meeting, the general meeting of shareholders or the board

of directors in accordance with laws, administrative regulations and the company’s articles of

association. Where such decisions are made by the shareholders’ meeting or the general

meeting of shareholders, shareholder representatives designated by the organ that performs

the duties of an investor shall exercise their rights in accordance with Article 13 of this Law.

State-owned assets supervision and administration authorities shall, in accordance with

the provisions of the Company Law, appoint shareholders’ representatives and directors to

attend the shareholders’ meetings and board meetings of State-controlled companies and

companies in which the State has an equity participation. When the shareholders’ meetings or

board meetings of State-controlled companies and companies in which the State has an equity

participation decide on major matters such as division, merger, bankruptcy, dissolution,

increase or decrease in capital, issue of corporate bonds, appointment or dismissal of

responsible persons of enterprises, etc., the shareholders’ representative and director

appointed by the State-owned assets supervision and administration authority shall express

opinions and exercise his voting rights as directed by the State-owned assets supervision and

administration authority. Shareholders’ representatives and directors appointed by

State-owned assets supervision and administration authorities shall report the details of their

performance of duties to the State-owned assets supervision and administration authority in a

timely manner.

NDRC FILING

On 14 September 2015, the NDRC issued the NDRC Notice, which became effective on

the same day. In order to encourage the use of low-cost capital in the international capital

markets in promoting investment and steady growth and to facilitate cross-border financing,

the NDRC Notice abolishes the case-by-case quota review and approval system for the

issuance of foreign debts by PRC enterprises and sets forth the following measures to promote

the administrative reform of the issuance of foreign debts by PRC enterprises or overseas

enterprises and branches controlled by PRC enterprises:

• steadily promote the administrative reform of the filing and registration system forthe issuance of foreign debts by enterprises;

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• increase the size of foreign debts issued by enterprises, and support thetransformation and upgrading of key sectors and industries;

• simplify the filing and registration of the issuance of foreign debts by enterprises;and

• strengthen the supervision during and after the process to prevent risks.

For the purposes of the NDRC Notice, “foreign debts” means RMB-denominated orforeign currency denominated debt instruments with a maturity of one year or above whichare issued offshore by PRC enterprises and their controlled offshore enterprises or branchesand for which the principal and interest are repaid as agreed, including offshore bonds andlong-term and medium-term international commercial loans, etc. According to this definition,offshore bonds issued by both PRC enterprises and their controlled offshore enterprises orbranches shall be regulated by the NDRC Notice.

Pursuant to the NDRC Notice, an enterprise shall: (i) apply to the NDRC for the filingand registration procedures prior to the issuance of the bonds; and (ii) shall report theinformation on the issuance of the bonds to NDRC within 10 working days after thecompletion of each issuance. The materials to be submitted by an enterprise shall include anapplication report and an issuance plan, setting out details such as the currency, volume,interest rate, term, use of proceeds and repatriation details. The NDRC shall decide whetherto accept an application within 5 working days of receipt and shall issue an enterprise foreigndebt pre-issuance registration certificate within 7 working days of accepting the application.

To issue foreign debts, an enterprise shall meet these basic conditions:

• have a good credit history with no default in its issued bonds or other debts;

• have sound corporate governance and risk prevention and control mechanisms forforeign debts; and

• have a good credit standing and relatively strong capability to repay its debts.

Pursuant to the NDRC Notice, the NDRC shall control the overall size of foreign debtsthat can be raised by PRC enterprises and their controlled overseas branches or enterprises.Based on trends in the international capital markets, the needs of the PRC economic andsocial development and the capacity to repay foreign debts, the NDRC shall reasonablydetermine the overall size of foreign debts and guide the funds towards key industries, keysectors, and key projects encouraged by the PRC, and effectively support the development ofthe real economy. When the limit of the overall size of foreign debts has been exceeded, theNDRC shall make a public announcement and shall no longer accept applications for filingand registration. According to the NDRC Notice, the proceeds raised may be used onshore oroffshore according to the actual needs of the enterprises, but priority shall be given tosupporting the investment in major construction projects and key sectors, such as “The Beltand Road”, the coordinated development of Beijing-Tianjin-Hebei, the Yangtze RiverEconomic Belt, international cooperation on production capacity, and the manufacturing ofequipment. As the NDRC Notice is newly published, certain detailed aspects of itsinterpretation and application remain subject to further clarification.

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According to the NDRC Notice, an enterprise shall report the information relating to theissuance of the bonds to the NDRC within 10 PRC working days in the PRC after thecompletion of the issuance (the “NDRC Post-issuance Report”). The NDRC Notice providesthat, in the case where the reported information relating to the issuance of foreign debtssignificantly varies from the information indicated in the filing and registration applicationfiled with the NDRC the enterprise shall provide an explanation regarding such variance inthe NDRC Post-issuance Report. In addition, if an enterprise maliciously and falsely reportsthe size of its issuance of foreign debts in the Post-issuance Report, the NDRC shall list theenterprise as an enterprise with poor credit in the national credit information platform.

VALUE ADDED TAX

Pursuant to the Circular of Full Implementation of Business Tax to Value Added TaxReform (關於全面推開營業稅改徵增值稅試點的通知) (Caishui [2016] No. 36, “Circular 36”)promulgated by The Ministry of Finance and SAT on 23 March 2016 and amended on 1 July2017, which confirms that business tax will be completely replaced by value added tax (“VAT”)from 1 May 2016. Since then, the income derived from the provision of financial serviceswhich attracted business tax will be entirely replaced by, and subject to, VAT.

According to Circular 36, the entities and individuals providing the services within Chinashall be subject to VAT. The services are treated as being provided within China where eitherthe service provider or the service recipient is located in China. The services subject to VATinclude the provision of financial services such as the provision of loans. It is further clarifiedunder Circular 36 that the “loans” refers to the activity of lending capital for another’s useand receiving the interest income thereon.

It is not clear from the interpretation of Circular 36, if the provision of loans to theCompany could be consider services provided within the PRC, which thus could be regardedas the provision of financial services that could be subject to VAT. Furthermore, there is noassurance that the Company will not be treated as “resident enterprises” under the EIT Law.PRC tax authorities could take the view that the holders of the Bonds are providing loanswithin the PRC because the Company is treated as PRC tax residents. In which case, theissuance of the Bonds could be regarded as the provision of financial services within the PRCthat is subject to VAT.

In addition, the holders of the Bonds shall be subject to the local levies at approximately12 per cent. of the VAT payment and consequently, the combined rate of VAT and local levieswould be around 6.7 per cent. Given that the Company pays interest income to Bondholderswho are located outside of the PRC, the Company, acting as the obligatory withholder inaccordance with applicable law, shall withhold VAT and local levies from the payment ofinterest income to Bondholders who are located outside of the PRC.

Where a holder of the Bonds who is an entity or individual located outside of the PRCresells the Bonds to an entity or individual located outside of the PRC and derives any gain,since neither the service provider nor the service recipient is located in the PRC, theoreticallythe Circular 36 does not apply and the Company does not have the obligation to withhold theVAT or the local levies. However, there is uncertainty as to the applicability of VAT if eitherthe seller or buyer of Bonds is located within the PRC.

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The Circular 36 has been issued quite recently and the above disclosure may be subject tofurther change upon the issuance of further clarification rules and/or different interpretationby the competent tax authority. There is uncertainty as to the application of the Circular 36.

MAJOR REGULATIONS IN INFRASTRUCTURE DEVELOPMENT INDUSTRIES

Construction Law of the People’s Republic of China (中華人民共和國建築法)

Pursuant to Construction Law of the People’s Republic of China (中華人民共和國建築法), which became effective on 1 March 1998 and was amended on 22 April 2011, constructionactivities and supervision of construction activities conducted within the territory of thePeople’s Republic of China shall abide by this law. Before the start of construction projects,construction units shall, in accordance with the relevant provisions of the State, apply to thecompetent construction administrative departments under the prefecture-county governmentsor above for construction licenses, except for small projects below the threshold value set bythe competent construction administrative department under the State Council.

Construction projects which have obtained approval of work start reports in accordancewith the power limits and procedure stipulated by the State Council are no longer required toapply for construction licenses.

The following conditions are required for the application of construction licenses:

(1) Having gone through the approval formalities for construction project land use;

(2) Construction projects within urban planned districts have obtained licenses ofplanning;

(3) Where demolition and relocation are necessary, the progress of demolition andrelocation comply with the requirements of construction;

(4) Constructing enterprises for the projects have been chosen;

(5) Working drawings and technical data are available to meet the need of construction;

(6) Specific measures are available for ensuring the quality and security of construction;

(7) Funds of construction are available; and

(8) Other conditions as stipulated by laws and administrative regulations.

Land Administration Law of the People’s Republic of China (中華人民共和國土地管理法)

Pursuant to Land Administration Law of the People’s Republic of China (中華人民共和國土地管理法), which became effective on 1 January 1987 and was amended for the first timeon 29 December 1988, was amended for the second time on 29 August 1998 and was amendedfor the third time on 28 August 2004, construction activities and supervision of constructionactivities conducted within the territory of the People’s Republic of China shall abide by thislaw, any unit or individual that need land for construction purposes should apply for the useof land owned by the State according to law, except land owned by peasant collectives used by

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collective economic organizations for building township enterprises or building houses forvillagers or land owned by peasant collectives approved according to law for use in buildingpublic facilities or public welfare facilities of townships (towns).

The term “apply for the use of land owned by the State according to law” used in thepreceding paragraph refers to land owned by the State and also land originally owned bypeasant collectives but having been expropriated by the State. Whereas a construction projectapproved needs land owned by the State for construction purposes, the construction unitshould file an application with land administrative department of the people’s government atand above the county level with the power of approval on the strength of related documentsrequired by law and administrative decrees. The land administrative department shall examinethe application and submit it to the people’s government at the same level for approval.

Regulation on the Implementation of the Land Administration Law of the Peoples Republic ofChina (中華人民共和國土地管理法實施條例)

Pursuant to Regulation on the Implementation of the Land Administration Law of thePeoples Republic of China (中華人民共和國土地管理法實施條例), which became effective on 1January 1999 and was amended for the first time on 8 January 2011, was amended for thesecond time on 29 July 2014, construction activities and supervision of construction activitiesconducted within the territory of the People’s Republic of China shall abide by this law, thestate practices the system of land registration and certificate issuance according to law. Landownership and land use right registered according to law are protected by law upon which nounit or individual shall infringe. Contents of land registration and format of land ownershipcertificate shall be uniformly prescribed by the competent department of land administrationunder the State Council.

For state-owned land to be used by units or individuals according to law, the land usersshall file an application for land registration with the competent department of landadministration of people’s government above the county level of the locality wherein the landis located, the people’s government above the county level shall enter a registration in theregister, verify and issue a certificate of state owned land use right in confirmation of the useright. Among which, the competent department of land administration under the StateCouncil shall be responsible for the registration and certificate issuance of use of state-ownedland by organs of the Central Committee of the Chinese Communist Party and the state.Specific measures for registration and certificate issuance shall be worked out by thecompetent department of land administration under the State Council in conjunction with theGeneral Affairs Administration for Organs under the State Council and other departmentsconcerned.

For state-owned land the use right of which is not determined, people’s governmentsabove the county level shall enter a registration in the register and be responsible for theprotection and administration.

Measures for the Administration of the Pre-examination on the Use of Land for ConstructionProjects (建設項目用地預審管理辦法)

Pursuant to Measures for the Administration of the Pre-examination on the Use of Landfor Construction Projects (建設項目用地預審管理辦法), which became effective on 25 July2001 and was revised for the first time on 29 October 2004, was amended on 12 November

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2008, and amended on 25 November 2016, the use of land for construction projects shall besubject to pre-examination at different levels.

A construction project subject to the examination and approval by a people’s governmentor by the development and reform department or any other department with the approvalpower of the people’s government shall be pre-examined by the department of land andresources of the people’s government. A construction project subject to verification andapproval or filing shall be pre-examined by the department of land and resources at the samelevel as the verification and approval organ or the organ with which the project shall be filed.

Urban and Rural Planning Law of the People’s Republic of China (中華人民共和國城鄉規劃法)

Pursuant to Urban and Rural Planning Law of the People’s Republic of China (中華人民共和國城鄉規劃法), which became effective on 1 January 2008 and was amended for the firsttime on 24 April 2015, if the right to use stateowned land for a construction project within acity or town planning area is appropriated, upon the approval or verification of the relateddepartment, or putting-on-archive of the project, the construction entity shall apply to thecompetent department of urban and rural planning under the people’s government of the cityor town for permitting the land use for construction, and the department shall issue aconstruction land use permit after checking and verifying the location and area of the landused for construction as well as the scope of areas where construction is permitted inaccordance with the regulatory detailed planning.

The construction entity may only apply to the competent department of land under thelocal people’s government at or above the county level for land use after obtaining the land usepermit. The competent department of land may appropriate land to it upon the approval ofthe people’s government at or above the county level.

If the right to use state-owned land within a city or town planning area is assigned, thecompetent department of urban and rural planning under the people’s government of the cityor county shall, before the assignment, raise such planning requirements as the location of theland to be assigned, nature of its use and development intensity as a component of thecontract for assignment of the right to use start-owned land on the basis of regulatorydetailed planning. As for any state-owned land, if the planning requirements are not specifiedyet, the right to use it may not be assigned.

If the right to use state-owned land for a construction project is obtained by assignment,the construction entity shall, after concluding the contract for assignment of the right to usestart-owned land, obtain the land use permit from the competent department of urban andrural planning of the people’s government of the city or county upon the strength of theapproval, or verification or archive-filing documents of the project as well as the contract forassignment of the right to use start-owned land.

The competent department of urban and rural planning of the people’s government ofthe city or county may not change the planning requirements which constitute a component ofthe contract for assignment of the right to use start-owned land in the land use permit withoutapproval.

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To build any structure, fixture, road, pipeline or other engineering project within a city ortown planning area, the construction entity or individual shall apply to the competentdepartment of urban and rural planning under the people’s government of the city or countyor the town people’s government specified by the people’s government of the province,autonomous region or municipality directly under the Central Government for a planningpermit on construction project.

To apply for a planning permit on construction project, the relevant documentaryevidence on land use, the engineering design plan of the project as well as other relateddocuments shall be submitted. If the project requires a site detailed planning, such planningshall also be submitted. If the project satisfies the regulatory detailed planning and theplanning requirements, the competent department of urban and rural planning under thepeople’s government of the city or county or the town people’s government specified by thepeople’s government of the province, autonomous region or municipality directly under theCentral Government shall issue a planning permit on construction project.

The competent department of urban and rural planning under the people’s governmentof the city or county or the town people’s government specified by the people’s government ofthe province, autonomous region or municipality directly under the Central Government shallpublicize the general site layout of the site detailed planning and the engineering design planwhich have been deliberated and adopted according to law.

Regulations on the Administration of Construction Project Environmental Protection (建設項目環境保護管理條例)

Pursuant to Regulations on the Administration of Construction Project EnvironmentalProtection (建設項目環境保護管理條例), which became effective on 29 November 1998 andwas amended on 16 July 2017, the state practices the construction project environmentalimpact evaluation system.

According to the regulations, the State shall, based on the extent of environment impactof construction projects, implement categorization for administration of environmentalprotection for construction projects pursuant to the following provisions. For a constructionproject which is required to prepare an environment impact report or environment impactstatement pursuant to the law, the builder shall, prior to commencement of construction,submit the environment impact report or environment impact statement to the competentenvironmental protection administrative authorities for examination and approval; Before theenvironmental impact assessment document of the construction project is examined, orapproved following examination, by the examination and approval authorities pursuant to thelaw, the builder shall not commence construction.

The environmental protection administrative authorities shall supervise and inspect thestatus of design, construction, acceptance inspection and putting into production or use of aconstruction project’s environmental protection facilities, as well as implementation of otherenvironmental protection measures determined in the relevant environmental impactassessment document.

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Law of the People’s Republic of China on Environmental Impact Assessment (中華人民共和國環境影響評價法)

Pursuant to Law of the People’s Republic of China on Environmental Impact Assessment(中華人民共和國環境影響評價法), which became effective on 1 September 2003 and wasamended on 2 July 2016, on the basis of the extent of the effects exerted on the environmentby construction projects, the State exercises, in a classified manner, control over the evaluationof the effects of construction projects on the environment.

A construction unit shall, in accordance with the following provisions, makearrangements for preparing a written report on the environmental effects or a statement onsuch effects or filling out a registration form of environmental effects (hereinafter referred toas the document for evaluation of environmental effects, in general):

(1) where considerable effects may be exerted on the environment, preparing a writtenreport on environmental effects, in which a comprehensive evaluation of the effectson the environment shall be made;

(2) where mild effects may be exerted on the environment, preparing a statement on theeffects, in which an analysis or special evaluation of the effects shall be made; or

(3) where the effects on the environment are very little and therefore it is not necessaryto make an evaluation of them, filling out a registration form of environmentaleffects.

A classified catalogue for control over the evaluation of the environmental effects ofconstruction projects shall be worked out and published by the competent administrativedepartment for environment protection under the State Council.

Environmental Protection Law of the People’s Republic of China (建設工程質量管理條例)

Pursuant to Environmental Protection Law of the People’s Republic of China (建設工程質量管理條例), which became effective on 30 January 2000 and was amended on 7 October2017, all those engaging in activities of the new construction, expansion, change ofconstruction projects as well as supervision and management of the quality of constructionprojects shall abide by this Regulation. Before a construction project owner fetches aconstruction license or report on construction start-up, it shall go through the formalities forthe supervision over the project quality in accordance with the relevant provisions of the state.After the construction project owner receives a project completion report, it shall organize theentities of design, construction, project supervision, etc. to conduct completion-based checkand acceptance.

MAJOR REGULATIONS IN HOTEL MANAGEMENT BUSINESS INDUSTRY

Special Trade License (特種行業許可證)

Pursuant to the State Council on Administrative Licensing for Necessarily RetainedItems Requiring Administrative Approval (國務院對確需保留的行政審批項目設定行政許可的決定), which became effective on 1 July 2004, and was amended on 29 January 2009 and 25

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August 2016, the Special trade license should be obtained before engaging in any hotelmanagement industry in the PRC.

According to the regulations, before the use or start of business operation of publicplaces, such as song and dance halls, cinemas, theaters, hotels, restaurants, department storesor markets, any company or individual in the PRC may not engage in any hotel managementindustry without obtaining a special trade license from the local people’s government abovethe country level public security organs.

The Fire Protection Law of the People’s Republic of China (中華人民共和國消防法)

Pursuant to The Fire Protection Law of the People’s Republic of China (中華人民共和國消防法), which became effective on 1 September 1998 and was amended on 28 October 2008,before a public gathering place is put into use or opens for business, the employer or userentity shall apply to the fire protection division of the public security organ of the localpeople’s government at or above the county level for a fire safety inspection.

Hygiene License (衛生許可證)

Pursuant to The Implementation of the Regulation on the Administration of Sanitationin Public Places (公共場所衛生管理條例), which became effective on 1 April 1987 and wasamended on 6 February 2016, in addition to parks, stadiums (pavilions) and public placesoutside public transport facilities, the operating units shall apply to the administrativedepartment of health for the “Hygiene License” in a timely manner. The “Hygiene License “(衛生許可證) shall be reviewed for two years.

Catering Service License (餐飲服務許可證)

Pursuant to The Administrative Measures for the Licensing of Catering Services (餐飲服務許可管理辦法), which became effective on 1 May 2010 and was amended on 6 February2016, these Measures shall apply to entities and individuals engaging in catering services(hereinafter referred to as catering service providers), but do not apply to food vendors orthose entities and individuals providing semi-finished food to catering service providers. Thecatering services shall be subject to the licensing system. A catering service provider shallobtain a Catering Service License (餐飲服務許可證) and assume the food safetyresponsibilities for catering services according to law.

MAJOR REGULATIONS IN PUBLIC TRANSPORT OPERATION INDUSTRY

The Registration Certificate (機動車登記證書)/The Motor Vehicle Driver’s License (機動車駕駛證書)

Pursuant to the Law of the People’s Republic of China on Road Traffic Safety (中華人民共和國道路交通安全法),which became effective on 28 October 2003, and was amended on 29December 2007 and 22 April 2011, the registration certificate should be obtained beforeengaging in any public transport business in the PRC.

According to the regulations, within the territory of the People’s Republic of China, thedrivers of vehicles, pedestrians, passengers and the units and individuals involved in roadtraffic activities shall observe this regulation. The PRC practices a registration system for

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motor vehicles. A motor vehicle shall be driven on roads only after it is registered with thetraffic control department of a public security organ. Where a motor vehicle is not yetregistered but needs to be driven on roads temporarily, a temporary pass shall be obtained.

A motor vehicle running on roads shall be hung with its number plate and stuck with theinspection certificate and the insurance label, accompanied by the motor vehicle license. Todrive a motor vehicle, one shall obtain a motor vehicle driver’s license according to theregulations. The driver shall drive the approved type of motor vehicle clearly stated in thedriver’s license; and when driving a motor vehicle, he shall keep the driver’s license handy. Amotor vehicle driver shall observe the provisions of the laws and regulations on road trafficsafety and, in accordance with the operating instructions, drive the vehicle safely and civilly.

The Road Transport Business License (道路運輸經營許可證)

Pursuant to the Law of the People’s Republic of China Road Transport Ordinance (中華人民共和國道路運輸條例), which became effective on 1 July 2004 and was amended on 9November 2012 and 6 February 2016, pursuant to the People’s Republic of China Road TrafficSafety Law Enforcement Ordinance (中華人民共和國道路交通安全法實施條例), which becameeffective on 1 May 2004 and was amended on 7 October 2017, and pursuant to the Provisionson the Administration of Road Passenger Transport and Passenger Stations (道路旅客運輸及客運站管理規定), which became effective on 1 August 2005, amended for the first time on 23July 2008, amended for the second time on 20 April 2009, amended for the third time on 14March 2012, amended for the fourth time on 11 December 2012, amended for the fifth time on11 April 016 and amended for the sixth time on 6 December 2016.the road transport businesslicense should be obtained before engaging in any public transport business in the PRC.

According to the regulations, road transport operators are required to have appropriateand qualified vehicles according to their business operations and to obtain correspondingmotor vehicle driver’s licenses. Passengers engaged in passenger operations shall apply to theindustrial and commercial administrative authorities for registration and obtain the roadtransport license certificate.

MAJOR REGULATIONS IN SEWAGE TREATMENT INDUSTRY

Water Pollution Prevention and Control Law of the People’s Republic of China (中華人民共和國水污染防治法)

Pursuant to Water Pollution Prevention and Control Law of the People’s Republic ofChina (中華人民共和國水污染防治法), which became effective on 11 May 1984, revised for thefirst time on 28 February 2008, amended for the second time on 27 June 2017, an enterprise orpublic institution which directly or indirectly discharges industrial waste water or medicalsewage to waters or waste water or sewage that may be discharged after a pollutant dischargelicense is obtained as required shall obtain a pollutant discharge license. An entity operatingfacilities for the centralized treatment of urban sewage shall also obtain a pollutant dischargelicense.

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The Environmental Protection Law of the People’s Republic of China (中華人民共和國環境保護法)

Pursuant to the Environmental Protection Law of the People’s Republic of China (中華人民共和國環境保護法), which became effective on 26 December 1989 and was amended on 24April 2014. Environmental protection is the basic national policy of the State. The Stateadopts economic and technological policies and measures which are beneficial to conservationand recycling of resources as well as environmental protection and improvement, promoteharmony between human and nature, enable coordinated economic and social developmentand environmental protection. All organizations and individuals shall bear the obligation forenvironmental protection.

According to the regulations, the State supports scientific and technological research,development and application in the environmental protection regime, encourage developmentof the environmental protection industry, promote information technology development forenvironmental protection, improve scientific and technological levels for environmentalprotection. The State shall implement a pollutant discharge permit administration systempursuant to the provisions of the law. Enterprises, institutions and other manufacturingoperators subject to pollutant discharge permit administration shall discharge pollutantspursuant to the requirements of the pollutant discharge permit; discharge of pollutants shallnot be allowed without a pollutant discharge permit.

Regulation on Urban Drainage and Sewage Treatment (城鎮排水與污水處理條例)

Pursuant to Regulation on Urban Drainage and Sewage Treatment (城鎮排水與污水處理條例), which became effective on 1 January 2014, the state encourages the implementation offranchise urban sewage treatment rules. In addition, the urban drainage and sewage treatmentfacility maintenance and operation entity shall meet the following conditions:

(1) have legal person status;

(2) have the funds and equipment suitable for engaging in the maintenance andoperation of urban drainage and sewage treatment facilities;

(3) have sound operation management and safety management rules;

(4) the person in charge of technology and personnel in key positions have receivedprofessional training and passed the examination;

(5) have corresponding good business performance and maintenance and operationexperience; and

(6) other conditions prescribed by laws and regulations.

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The Water Law of the People’s Republic of China (中華人民共和國水法)

Pursuant to the Water Law of the People’s Republic of China (中華人民共和國水法),which became effective on 1 July 1988, and was amended on 29 August 2002, 27 August 2009and 2 July 2016, the enterprise should save water in any production and management. Indeveloping, utilizing, conserving and protecting water resources and preventing andcontrolling water disasters, emphasis shall be placed on overall planning and all-roundconsideration, on both the root cause and symptoms, and on multipurpose use, efficiency, andthe multiple function of water resources, and attention shall be paid to coordinated use ofwater in people’s daily lives, in production and operation and in ecological environment.

According to the regulations, local governments at all levels shall make rationalarrangements for development and multipurpose use of water resources in light of the actualconditions of the local water resources on the principle of unified control over development ofsurface water and groundwater, combination of the tapping of new resources with waterconservation, giving priority to water conservation, and recycling sewage water.

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TAXATION

The following summary accurately describes the principal PRC tax consequences ofownership of the Bonds by beneficial owners who, or which, are not residents of mainland Chinafor PRC tax purposes. These beneficial owners are referred to as non-PRC Bondholders in this“Taxation” section. In considering whether to invest in the Bonds, investors should consult theirindividual tax advisors with regard to the application of PRC tax laws to their particularsituations as well as any tax consequences arising under the laws of any other tax jurisdiction.

Pursuant to the EIT Law which took effect on 1 January 2008 and amended on 24February 2017 as well as the implementation rules, and the Individual Income Tax Law of thePRC, as amended on 30 June 2011, and their implementation regulations, an income tax isimposed on payment of interest by way of withholding in respect of debt securities, issued byPRC enterprises to non-PRC Bondholders, including non-PRC resident enterprises andnon-PRC resident individuals. The current rates of such income tax are 20% for non-PRCresident individuals and 10% for non-PRC resident enterprises. However, the tax so chargedon interests paid on the Bonds to non-PRC Bondholders who, or which are residents of HongKong (including enterprise holders and individual holders) as defined in the Arrangement,will be 7% of the gross amount of the interest pursuant to the Arrangement and relevantinterpretation of the Arrangement formulated by the State Administration of Taxation ofChina. To enjoy this preferential tax rate of 7%, the Company could apply, on behalf of theBondholders, to the State Administration of Taxation of the PRC for the application of thetax rate of 7% in accordance with the Arrangement on the interest payable in respect of theBonds. The Company has agreed to pay additional amounts to holders of the Bonds so thatholders of the Bonds would receive the full amount of the scheduled payment, as further setout in the Terms and Conditions of the Bonds.

Under the EIT Law and its implementation rules, any gains realised on the transfer of theBonds by holders who are deemed under the EIT Law as non-PRC resident enterprises may besubject to the EIT Law if such gains are regarded as incomes derived from sources within thePRC. Under the EIT Law, a “non-PRC resident enterprise” means an enterprise establishedunder the laws of a jurisdiction other than the PRC and whose actual administrativeorganisation is not in the PRC, which has established offices or premises in the PRC, or whichhas not established any offices or premises in the PRC but has obtained incomes derived fromsources within the PRC. There remains uncertainty as to whether the gains realised from thetransfer of the Bonds would be treated as incomes derived from sources within the PRC and besubject to PRC tax. This will depend on how the PRC tax authorities interpret, apply orenforce the EIT Law and its implementation rules.

In addition, under the Individual Income Tax Law of the PRC, any individual who has nodomicile and does not live within the territory of the PRC or who has no domicile but haslived within the territory of China for less than one year shall pay individual income tax forany income obtained within the PRC. There remains uncertainty as to whether the gainsrealised from the transfer of the Bonds would be treated as income obtained within the PRCand be subject to PRC tax.

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If such gains are subject to PRC income tax, the 10% enterprise income tax rate and 20%individual income tax rate, respectively, will apply unless there is an applicable tax treaty orarrangement that reduces or exempts such income tax. The taxable income will be the balanceof the total income obtained from the transfer of the Bonds minus all costs and expenses thatare permitted under PRC tax laws to be deducted from the income. According to theArrangement, Bondholders who are Hong Kong residents, including both enterprise holdersand individual holders, will be exempted from PRC income tax on capital gains derived from asale or exchange of the Bonds.

In addition, in the event that the Company is required to discharge its obligations underthe Subscription Agreement, the Company will be obliged to withhold PRC enterprise incometax at the rate up to 10% on the payments of interest made by it to non-PRC residententerprise Bondholders as such payments of interest will be regarded as being derived fromsources within the PRC. To the extent that the PRC has entered into arrangements relating tothe avoidance of double taxation with any jurisdiction, such as Hong Kong, that allow a lowerrate of withholding tax, such lower rate may apply to qualified non-PRC resident enterpriseBondholders. Repayment of the principal will not be subject to PRC withholding tax.

On 23 March 2016, the Ministry of Finance and the State Administration of Taxationpromulgated the Circular of Taxation on Implementing the Pilot Program of ReplacingBusiness Tax with Value-Added Tax in an All-round Manner (《財政部、國家稅務總局關於全面推開營業稅改徵增值稅試點的通知》) (“Circular 36”), pursuant to which business tax hasbeen completely replaced by VAT on and from 1 May 2016. Circular 36 is a relatively newregulation and there remains uncertainty with respect to the application of Circular 36 tosecurities (including bonds). The provisions thereunder may be subject to change upon futureissuance of clarifying guidance and/or different interpretation by the PRC tax authorities.

Pursuant to Circular 36, income derived from the provision of financial services withinChina, which was previously subject to business tax, is instead subject to VAT. Financialservices include, among others, the provision of loans and “loans” refers to the activity oflending capital for the use of another and receiving the interest income therefrom. In practice,bonds will generally be treated as a type of loan by the PRC tax authorities and, therefore, theholders of the Bonds are likely to be treated as providing financial services to the Company.Services will be treated as being provided within China when either the service provider or theservice recipient is within the PRC. The Company, which is the service recipient, is a PRCcorporation. Therefore, the interest payable by the Company to a non-resident holder of theBonds would be subject to PRC withholding VAT at the rate of 6% plus related surcharges.

VAT is unlikely to be applicable to any transfer of the Bonds between entities orindividuals outside the PRC and therefore unlikely to be applicable to gains realized uponsuch transfer.

No PRC stamp tax will be chargeable upon the issue or transfer of a Bond (for so long asthe register of holders of the Bonds is maintained outside the PRC, as is expected to be thecase).

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SUBSCRIPTION AND SALE

The Company has entered into a subscription agreement with the Joint Lead Managersdated 19 December 2017 (the “Subscription Agreement”), pursuant to which and subject tocertain conditions contained therein, the Company has agreed to sell to the Joint LeadManagers, and the Joint Lead Managers have severally and not jointly agreed to subscribe andpay for, or to procure subscribers to subscribe and pay for, the Bonds in the followingprincipal amounts set out opposite their names respectively:

ManagersPrincipal Amount of theBonds to be Subscribed

GF SECURITIES (HONG KONG)BROKERAGE LIMITED ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ U.S.$134,200,000

CHINA MINSHENG BANKING CORP., LTD.,HONG KONG BRANCH ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ U.S.$120,000,000

OVERSEA-CHINESE BANKINGCORPORATION LIMITED ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ U.S.$14,000,000

ORIENT SECURITIES (HONG KONG) LIMITED ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ U.S.$30,000,000SHANGHAI PUDONG DEVELOPMENT BANK

CO., LTD. HONG KONG BRANCH ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ U.S.$1,800,000

Total ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ U.S.$300,000,000

The Subscription Agreement provides that the Joint Lead Managers and their respectiveaffiliates, and their respective directors, officers and employees will be indemnified againstcertain liabilities in connection with the offer and sale of the Bonds. The SubscriptionAgreement provides that the obligations of the Joint Lead Managers are subject to certainconditions precedent, and entitles the Joint Lead Managers to terminate it in certaincircumstances prior to payment being made to the Company.

The Joint Lead Managers and certain of their respective subsidiaries or affiliates haveperformed certain investment banking and advisory services for, and entered into certaincommercial banking transactions with, the Company and/or its subsidiaries, from time totime, for which they have received customary fees and expenses. The Joint Lead Managers andtheir respective subsidiaries or affiliates may, from time to time, engage in transactions withand perform services for the Company and/or its subsidiaries in the ordinary course ofbusiness.

In connection with the offering of the Bonds, the Joint Lead Managers and/or theirrespective affiliate(s) may act as an investor for its own account and may take up Bonds in theoffering and in that capacity may retain, purchase or sell for its own account such securitiesand any securities of the Company and may offer or sell such securities or other investmentsotherwise than in connection with the offering. Accordingly, references herein to the Bondsbeing “offered” should be read as including any offering of the Bonds to the Joint LeadManagers and/or their respective affiliates acting in such capacity. Such persons do not intendto disclose the extent of any such investment or transactions otherwise than in accordancewith any legal or regulatory obligation to do so. The Joint Lead Managers or their respectiveaffiliates may purchase the Bonds for their own account or for the accounts of their customersand enter into transactions, including credit derivative, such as asset swaps, repackaging andcredit default swaps relating to the Bonds and/or other securities of the Company or its

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subsidiaries or associates at the same time as the offer and sale of the Bonds or in secondarymarket transactions. Such transactions would be carried out as bilateral trades with selectedcounterparties and separately from any existing sale or resale of the Bonds to which thisOffering Circular relates (notwithstanding that such selected counterparties may also bepurchasers of the Bonds).

In connection with the issue of the Bonds, GF Securities (Hong Kong) BrokerageLimited acting in its capacity as Stabilising Manager or any person acting on behalf of theStabilising Manager may, to the extent permitted by applicable laws and regulations, over-allotthe Bonds or effect transactions with a view to supporting the market price of the Bonds at alevel higher than that which might otherwise prevail, but in so doing, the Stabilising Manageror any person acting on behalf of the Stabilising Manager shall act as principal and not asagent of the Company. However, there is no assurance that the Stabilising Manager or anyperson acting on behalf of the Stabilising Manager will undertake stabilisation action. Anystabilisation action may begin on or after the date on which adequate public disclosure of theterms of the Bonds is made and, if begun, may be ended at any time, but must end after alimited period. Any loss or profit sustained as a consequence of any such over-allotment orstabilisation shall be for the account of the Stabilising Manager.

Neither the Company nor any of its subsidiaries or other affiliates (as defined in Rule 405under the Securities Act) over which the Company exercises management or voting control norany person acting on its or their behalf will issue, sell, offer or agree to sell, grant any optionfor the sale of, or otherwise dispose of, or make any announcement relating thereto, any debtsecurities issued or guaranteed by the Company or any other securities of the Company thatare convertible into, or exchangeable for, any such debt securities (including the Bonds), in anysuch case without the prior written consent of the Joint Lead Managers between the datehereof and the date which is 90 days after the Issue Date (both dates inclusive).

General

The distribution of this Offering Circular or any offering material and the offering, saleor delivery of the Bonds is restricted by law in certain jurisdictions. Therefore, persons whomay come into possession of this Offering Circular or any offering material are advised toconsult their own legal advisers as to what restrictions may be applicable to them and toobserve such restrictions. This Offering Circular may not be used for the purpose of an offeror invitation in any circumstances in which such offer or invitation is not authorised.

No action has been or will be taken in any jurisdiction by the Company or the Joint LeadManagers that would permit a public offering, or any other offering under circumstances notpermitted by applicable law, of the Bonds, or possession or distribution of this OfferingCircular, any amendment or supplement thereto issued in connection with the proposed resaleof the Bonds or any other offering or publicity material relating to the Bonds, in any countryor jurisdiction where action for that purpose is required. Accordingly, the Bonds may not beoffered or sold, directly or indirectly, and neither this Offering Circular nor any other offeringmaterial or advertisements in connection with the Bonds may be distributed or published, bythe Company or the Joint Lead Managers, in or from any country or jurisdiction, except incircumstances which will result in compliance with all applicable rules and regulations of anysuch country or jurisdiction and will not impose any obligations on the Company or the JointLead Managers. If a jurisdiction requires that an offering of Bonds be made by a licensed

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broker or dealer and any Joint Lead Manager or any affiliate of a Joint Lead Manager is a

licensed broker or dealer in that jurisdiction, such offering shall be deemed to be made by such

Joint Lead Manager or such affiliate on behalf of the Company in such jurisdiction.

United States

The Bonds to be issued have not been and will not be registered under the Securities Act,

and may not be offered or sold within the United States except pursuant to an exemption from

the registration requirements of the Securities Act. Accordingly, the Bonds are being offered

and sold only outside the United States in compliance with Regulation S under the Securities

Act. Each Joint Lead Manager represents that it has not offered or sold, and agrees that it will

not offer or sell, any Bonds constituting part of its allotment within the United States except

in accordance with Rule 903 of Regulation S under the Securities Act. Accordingly, neither it,

any of its affiliates nor any person acting on its or their behalf has engaged or will engage in

any directed selling efforts with respect to the Bonds. Terms used in this paragraph have the

meaning given to them by Regulation S under the Securities Act.

United Kingdom

Each Joint Lead Manager represents, warrants and agrees that:

(a) it has only communicated or caused to be communicated and will only communicateor cause to be communicated any invitation or inducement to engage in investmentactivity (within the meaning of Section 21 of the Financial Services and MarketsAct 2000, as amended by the Financial Services Act 2012 and the Bank of Englandand Financial Services Act 2016, (the “FSMA”)) received by it in connection withthe issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMAdoes not apply to the Company; and

(b) it has complied and will comply with all applicable provisions of the FSMA withrespect to anything done by it in relation to the Bonds in, from or otherwiseinvolving the United Kingdom.

Hong Kong

No Bonds may be offered or sold in Hong Kong, by means of any document, other than:(a) to “professional investors” (as defined in the Securities and Futures Ordinance (Cap. 571)of Hong Kong (the “SFO”)) and any rules made thereunder; or (b) in other circumstanceswhich do not result in the document being a “prospectus” (as defined in the Companies(Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong) or which donot constitute an offer to the public within the meaning of that Ordinance.

No advertisement, invitation or document relating to the Bonds has been or will beissued, or has been or will be in the possession of any person for the purposes of issue,whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely tobe accessed or read by, the public of Hong Kong (except if permitted to do so under thesecurities laws of Hong Kong) other than with respect to the Bonds which are or are intendedto be disposed of only to persons outside Hong Kong or only to “professional investors” (asdefined in the SFO) and any rules made thereunder.

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Singapore

This Offering Circular has not been and will not be registered as a prospectus with theMonetary Authority of Singapore under the Securities and Futures Act, Chapter 289 ofSingapore (the “SFA”). Accordingly, this Offering Circular and any other document ormaterial in connection with the offer or sale, or invitation for subscription or purchase, of theBonds may not be circulated or distributed, nor may the Bonds be offered or sold, or be madethe subject of an invitation for subscription or purchase, whether directly or indirectly, to anyperson in Singapore other than: (i) to an institutional investor under Section 274 of the SFA;(ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section275(1A), and in accordance with the conditions specified in Section 275, of the SFA; or (iii)otherwise pursuant to, and in accordance with the conditions of, any other applicableprovision of the SFA.

Where the Bonds are subscribed or purchased under Section 275 of the SFA by a relevantperson which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of theSFA)) the sole business of which is to hold investments and the entire share capitalof which is owned by one or more individuals, each of whom is an accreditedinvestor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to holdinvestments and each beneficiary of the trust is an individual who is an accreditedinvestor,

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’rights and interest (howsoever described) in that trust shall not be transferred within sixmonths after that corporation or that trust has acquired the Bonds pursuant to an offer madeunder Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person defined in Section 275(2) of theSFA, or to any person arising from an offer referred to in Section 275(1A) or Section276(4)(i)(B) of the SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law;

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments)(Shares and Debentures) Regulations 2005 of Singapore.

PRC

Each Joint Lead Manager has represented, warranted and undertaken that the Bonds arenot being offered or sold and may not be offered or sold, directly or indirectly, in China (forsuch purposes, not including Hong Kong and Macau Special Administrative Regions of Chinaor Taiwan), except as permitted by the securities laws of China.

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GENERAL INFORMATION

(1) Clearing Systems: The Bonds have been accepted for clearance through Euroclear andClearstream. The ISIN and the Common Code for the Bonds are XS1742767657 and174276765, respectively.

(2) Authorisations: The Company has obtained all necessary consents, approvals andauthorisations in connection with the issue and performance of the Bonds. The issue ofthe Bonds was authorised by resolutions of the Board of Directors of the Companypassed on 21 June 2017.

(3) No Material Adverse Change: Save as disclosed in this Offering Circular, there has beenno material adverse change in the financial or trading position, prospects, properties,results of operations, business or general affairs of the Company since 30 September2017.

(4) Litigation: Save as disclosed in this Offering Circular, the Company is not involved in anygovernmental, litigation or arbitration proceedings nor is the Company aware that anysuch proceedings are pending or threatened. The Company may from time to timebecome a party to various legal, governmental or administrative proceedings arising inthe ordinary course of its business.

(5) Available Documents: Upon prior written request, copies of the Company’s auditedconsolidated financial statements as at and for the years ended 31 December 2014, 2015and 2016, and the Company’s reviewed consolidated financial statements as at or for thenine months ended 30 September 2016 and 2017, the Trust Deed and the AgencyAgreement will be available for inspection from the Issue Date at the specified office ofthe Principal Paying Agent (subject to the Principal Paying Agent having been providedwith the same by the Company) upon prior written request and satisfactory proof ofholding during normal business hours, so long as any Bond is outstanding.

(6) Independent Auditors of the Company: The Company’s audited consolidated financialstatements as at and for the years ended 31 December 2014, 2015 and 2016, and theCompany’s reviewed consolidated financial statements as at or for the nine months ended30 September 2017, which are included elsewhere in this Offering Circular, have beenaudited or reviewed by Zhongxinghua Certified Public Accountants LLP, theindependent auditor of the Company.

(7) Listing of the Bonds: Approval in-principle has been received from the SGX-ST for thelisting and quotation of the Bonds on the SGX-ST. The SGX-ST assumes noresponsibility for the correctness of any of the statements made, opinions expressed orreports contained herein. Approval in-principle from, admission to the Official List of,and listing and quotation of the Bonds on, the SGX-ST are not to be taken as anindication of the merits of the Company or any other subsidiary or associated companyof the Company or the Bonds. For so long as the Bonds are listed on the SGX-ST and therules of the SGX-ST so require, in the event that a Global Certificate is exchanged fordefinitive Certificates, the Company will appoint and maintain a paying agent inSingapore, where the definitive Certificates may be presented or surrendered for paymentor redemption. In addition, in the event that a Global Certificate is exchanged fordefinitive Certificates, an announcement of such exchange shall be made by or on behalfof the Company through the SGX-ST and such announcement will include all materialinformation with respect to the delivery of the definitive Certificates, including details ofthe paying agent in Singapore.

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INDEX TO FINANCIAL INFORMATION

F-pagenumber

Reviewed Financial Information as at and for the nine months ended 30 September 2017Review Statement ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-2Consolidated Balance Sheet ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-4Consolidated Income Statement ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-6Consolidated Statement of Cash Flows ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-7Consolidated Statement of Changes in Equity ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-8Balance Sheet of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-10Income Statement of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-13Cash Flow Statement of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-15Statement of Changes in Equity of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-16Notes to the Financial Statements ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-18

Audited Financial Information as at and for the year ended 31 December 2016Auditor’s Report ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-75Consolidated Balance Sheet ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-78Consolidated Income Statement ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-80Consolidated Statement of Cash Flows ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-81Consolidated Statement of Changes in Equity ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-82Balance Sheet of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-84Income Statement of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-86Cash Flow Statement of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-87Statement of Changes in Equity of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-88Notes to the Financial Statements ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-90

Audited Financial Information as at and for the year ended 31 December 2015Auditor’s Report ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-150Consolidated Balance Sheet ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-153Consolidated Income Statement and Profit Appropriation Statement ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-155Consolidated Statement of Cash Flows ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-156Balance Sheet of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-158Income Statement and Profit Appropriation Statement ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-160Cash Flow Statement of Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-161Supplementary Information for Cash Flow Statement of the Parent Company ⋅ ⋅ ⋅ ⋅ ⋅ F-162Notes to the Financial Statements ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ ⋅ F-163

– F-1 –

– F-2 –

– F-3 –

– F-4 –

– F-5 –

– F-6 –

– F-7 –

– F-8 –

– F-9 –

– F-10 –

– F-11 –

– F-12 –

– F-13 –

– F-14 –

– F-15 –

– F-16 –

– F-17 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 1 of 57

Shangrao City Construction Investment and Development

Group Co., Ltd.

Notes to the Financial Statements for the Nine Months Ended 30 September 2017

I. Company Profile

Shangrao City Urban Construction Investment and Development Group Co., Ltd. (hereinafter

referred to as “the Company”) was formerly named Shangrao Urban Construction Investment and

Development Co., Ltd., a wholly state-owned company established on June 18, 2002 with the

approval of the standing government meeting of Shangrao City. Its registered capital was RMB

50,000,000 Yuan, and the registration number of Corporate Business License is 3623001400246.

According to Shangrao Government Notification No. [2006]202 issued by Shangrao

Municipal People’s Government on October 16, 2006, the use right of 1,705 mu of land in the

urban area was injected into the Company as an investment. According to Shangrao Government

Notification No. [2007]310 issued by Shangrao Municipal People’s Government on 20 November

2007, the use right of 968.613 mu of construction land was injected into the Company as an

investment.

On December 19, 2008, according to Rao Guo Zi [2008] No.79 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Reply to <Report on Increasing

Registered Capital> of Shangrao City Urban Construction Investment and Development Co., Ltd.,

land use right of State-owned Land of Shangrao (SOLS) No.2008(195) and No.2008 (196), of

which the assessed value is 50,030,400 yuan, was used to increase the Company’s registered

capital by 50 million yuan,and the remaining was recorded into capital reserve. Therefore, the

Company’s registered capital amounted to 100 million yuan.

On March 9, 2009, the Company was renamed as Shangrao Urban Construction Investment

and Development Group Co., Ltd. with the Approval No. [2000]00029 from Shangrao City

Administration for Industry and Commerce.

– F-18 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 2 of 57

On January 06, 2011, according to Rao Guo Zi [2010] No.61 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Approval on Increasing

Registered Capital of Shangrao City Urban Construction Investment and Development Co., Ltd.,

land use right of State-owned Land of Shangrao (SOLS) No.2010(119), of which the assessed

value is 642,061,900 yuan, was used to increase the Company’s registered capital by 200 million

yuan,and the remaining was recorded into capital reserve. On March 22, 2011, according to Rao

Guo Zi [2010] No.61 Approval of Shangrao State-owned Assets Supervision and Administration

Commission--Approval on the Change of the Company's Registered Capital and Business Scope,

land use right of State-owned Land of Shangrao (SOLS) No.2007(182), of which the assessed

value is 342,866,600 yuan, was used to increase the Company’s registered capital by 320 million

yuan,and the remaining was recorded into capital reserve. After the capital increase, the registered

capital of the Company amounted to 620 million yuan.

On September 24, 2015, according to Rao Guo Zi [2015] No.56 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Approval on the Appropriation

of 100% Equity of Shangrao Urban Construction Investment and Development Group Co., Ltd.,

Shangrao State-owned Assets Management Co., Ltd., Shangrao City Water Corporation and

Shangrao Tourism Development Group Limited to Shangrao City Urban Construction Investment

and Development Group Co., Ltd., and upon verification by Shangrao City Administration for

Industry and Commerce, the investor of the Company was changed from Shangrao State-owned

Assets Supervision and Administration Commission to Shangrao Investment Holding Group Co.,

Ltd., The type of the Company was changed from state-solely-owned to legal person

wholly-owned. The actual controller of the Company is Shangrao State-owned Assets Supervision

and Administration Commission.

On May 10, 2017, approved by Shangrao Industry and Commerce Administration, the

registered capital was changed from 620 million yuan to 1 billion yuan.

Registration number / unified social credit code: 913611007391724174; legal representative:

Zhang Ping.

Business scope: infrastructure construction; land development; real estate development;

housing rental; highway construction and operation; business vehicle service and outsourcing

– F-19 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 3 of 57

operation; ordinary road freight transportation; warehousing services; building materials sales;

investment in medical industry, pension industry, energy industry, power industry, public

transportation industry, water industry and environmental protection industry; catering services

(limited to branches). (Businesses subject to approval shall be carried out upon approval by

relevant government department.)

II. Basis for Preparation of Financial Statements

(I) Preparation Basis

The financial statements have been prepared on a going concern basis, with all actual

transactions and events recognized and measured in accordance with Accounting Standards for

Business Enterprises - Basic Standard and the specific accounting standards and other relevant

provisions.

(II) Going Concern

The Company is capable of operating for at least twelve months since the end of the current

reporting period without any major issues affecting it.

III. Statement of Compliance with the Accounting Standards for Business

Enterprises(ASBE)

The financial statements of the Company have been prepared in accordance with the ASBEs,

and present truly and completely, the Company’s financial position, results of operations and cash

flows for the accounting period

IV. Significant Accounting Policies and Accounting Estimates, and Preparation of

Consolidated Financial statements

(I) Accounting standards implemented

The financial statements have been prepared on a going concern basis, with all actual

transactions and events recognized and measured in accordance with Accounting Standards for

Business Enterprises issued by the Ministry of Finance, including its guidelines on application of

accounting principles, interpretation of accounting principles and other relevant regulations

(collectively referred to as “Accounting Standards”).

(II) Accounting Period

The accounting period of the Company runs from 1 January to 31 December of each calendar

– F-20 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 4 of 57

year.

(III) Basis of Bookkeeping and Principle of Measurement

The Company adopts the accrual system as the basis of bookkeeping and follows the

historical cost principle.

(IV) Functional Currency and Accounting Treatment for Foreign Currency Transaction

The Company uses Renminbi (RMB) as its functional currency. The financial transactions

involving foreign currencies in the fiscal year are booked at the market exchange rate of RMB on

the day of occurrence. At the end of reporting period, the balance of foreign currency accounts is

adjusted to the functional currency based on the market exchange rate at the end of reporting

period. The difference between the original carrying amount and the adjusted functional currency

is recognized as foreign exchange gains or losses Foreign exchange gains or losses incurred during

the preparation period are included in long-term prepaid expenses; foreign exchange gains or

losses related to the purchase and construction of fixed assets are treated according to the principle

of borrowing costs; other exchange gains or losses are included in the financial expenses for the

current period.

(V) Standards for Cash Equivalents

Cash equivalents refer to the short-term, highly liquid investments that are readily

convertible into known amounts of cash and that are subject to an insignificant risk of change in

value.

(VI) Accounting Method for Bad Debts

The Company shall recognize bad debt loss for receivables under the following

circumstances: a) production halts of the debtor caused by the revocation of the supplier,

bankruptcy, insolvency, gravely insufficient cash flow or natural disasters and it is impossible to

repay the debts in the foreseeable future; b) the debtor company fails to meet its overdue

obligations for more than three years; c)there is concrete evidence stating the undue bill receivable

has no or few possibility to recover.

The Company adopts allowance method to account for possible bad debt loss, and at the end

of each period, an impairment test shall be conducted individually or collectively and bad debt

loss shall be provided for and recorded into profit or loss for the current period. In the event there

– F-21 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 5 of 57

is clear evidence showing no possibilities to recover any outstanding receivables, such receivables

are stated as loss from bad debts and written off from provision for bad debts.

When providing for bad debts, first, to determine whether individually significant

receivables need to be provided for, and make necessary provision according to the method

described in the following paragraph (1) if needed; second, for other receivables than those

individually significant, to determine whether the group by which the provision for bad debts will

be make can reflect the risk characteristics, and make necessary provision according to the group

and method described in paragraph (2) if needed, or make no provision at all if there is not such a

need.

（1） Receivables that are individually significant and provided for bad debts separately

Criterion or amount standard for significance

Receivables with the single balance of or exceeding 1 million

yuan are regarded as significant receivables.

Provision method for receivables that are

individually significant and provided for bad

debts separately

If estimated future cash inflow is lower than the carrying

amount, it shall be provided for bad debt.

(2) Accounts receivable that are collectively provided for bad debts based on credit risk

characteristics

In addition to groups based on aging analysis, bad debts provision can also be made

according to groups based on the relationship with transaction parties, the nature of the accounts,

the transaction security measures and the credibility of transaction parties, or no provision shall be

made if there is not such a need. Aging analysis method

Grouping basis

Age group Group of receivables with similar credit risk characteristics

(age)

Relate party group Group of receivables with similar credit risk characteristics

(relationship with transaction parties)

Group of government financial receivables Group of receivables with similar credit risk characteristics

(reputation of transaction parties)

Provision method for bad debts by group

Age group Provision for bad debts based on aging analysis

Relate party group The Company will assess a receivable with related parties

individually for impairment at the end of each reporting

period, and no provision for bad debts will be made unless

there is objective evidence that part or whole of the account

receivable cannot be recovered.

– F-22 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 6 of 57

Group of government financial receivables No provision for bad debts will be made.

The percentage of provision for bad debts using aging analysis method is as follows:

Age Percentage of provision for accounts

receivable（%）

Percentage of provision for other

receivables（%）

Less than 1 year 0 0

1-2 years 10 5

2-3 years 20 10

3-5 years 50 50

Over 5 years 100 100

(VII) Accounting Method for Inventories

Inventories of the Company include raw materials, commodities in stock, low value

consumables, materials for repetitive usage, products under development, land reserves, etc.

All kinds of inventories are carried out in perpetual inventory system, and the actual cost is

used in the acquisition. According to the nature and type of business, the weighted average method

or the FIFO method are used respectively. Low-value consumables and packaging materials are

written-off in full when issued for use.

Costs incurred for land acquisition and renovation carried out in order to optimize the land

resources within the scope of the authorized business shall be recorded into the cost of land

reserves; and interests from borrowings for land reserves are capitalized and included in the cost

of land reserves.

The specific accounting method for the cost of real estate development is to take the real

estate development project as the accounting object and separately calculate the development cost.

Before the completion of the project, the actual costs incurred are recorded by individual project.

At the end of reporting period, the development costs that have been actually incurred but not yet

booked shall be provisionally estimated by the finance department of the project and carried

forward to the products under development when the project is completed and the revenue is

recognized. Development costs at the end of reporting period is the actual cost of uncompleted

projects.

Inventories are measured at the lower of cost and net realizable value at the end of each

period. The Company will determine the net realizable value of inventories based on solid

evidence obtained and after taking into consideration the purpose for which the inventory is held,

– F-23 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 7 of 57

and the effect of events occurring after the balance sheet date. For materials held for use in

production, if the net realizable value of the finished products in which they will be incorporated

is higher than their cost, they will continue to be measured at cost; when a decline in the price of

the materials indicates that the cost of the finished products exceeds their net realizable value, they

will be measured at net realizable value. For inventories held to satisfy sales or service contracts,

the net realizable value is based on the contract price. If the quantities of inventories specified in

sales contracts are less than the quantities held by the Company, the net realizable value of the

excess portion of inventories will be based on general selling prices. For materials held for sale,

the net realizable value is based on market value. The Company will provide for decline in value

of inventories on an item-by-item basis. For large quantity and low value items of inventories,

provision will be made based on categories of inventories.

(VIII) Accounting Method for Long-term Equity Investments

1. Determination of equity investments with control, joint control or significant influences

on the invested entity

The Company’s long-term equity investments mainly includes equity investment that have

control or significant influence over the invested entities and equity investments in the joint

ventures.

Control refers to power over the investee. It means the investor is given the right to variable

returns by participating in relevant activities of the investee and the ability to affect those returns

through power over the investee.

Joint control is the contractually agreed sharing of control of an arrangement. Relevant

activities of the arrangement shall be conducted only if they are given consent by all parties in

control. A joint arrangement is an arrangement of which two or more parties have joint control. A

joint venture is a joint arrangement whereby the parties that have joint control of the arrangement

have rights to the net assets of the arrangement.

Significant influence is the power to participate in financial and operating policy decisions of

the investee but is not control or joint control over those policies. Whether the Group is able to

exert significant influence depends on its representation on the board of directors or equivalent

governing body of the investee. The Group exerts significant influence by holding voting power

over financial and operation policy making processes of the investee. Significant influence is

presumed not to exist if the Group holds a voting power more than or equal to 20% but less than

50% directly or indirectly through subsidiaries and if evidence indicates that under such

circumstance the Group is excluded from production and operation policy making of the investee.

– F-24 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 8 of 57

To confirm whether the Group can exercise significant influence, on one side, voting rights

directly or indirectly hold by the Group over the investee shall be considered, on the other side,

effect of currently exercisable potential voting rights arising through currently convertible

warrants, share options and convertible bonds issued by the investee that are convertible into

shares of the investee shall also be taken into account.

2. Determination of investment cost, subsequent measurement and recognition of

investment income of long-term equity investments

Where the consideration of the combination is satisfied by paying cash, transfer of non-cash

assets or assumption of liabilities, the initial investment cost of the long-term equity investment

will be the ultimate controlling party’s share of the owners’ equity of the party being absorbed at

combination date. The difference between the initial investment cost and the carrying amount of

consideration paid is adjusted to capital reserve, or to retained earnings if the balance of capital

reserve is insufficient.

Where the consideration of the combination is satisfied by the issue of equity securities, the

initial investment cost of the long-term equity investment will be the ultimate controlling party’s

share of the owners’ equity of the party being absorbed at combination date. The aggregate face

value of the shares issued will be accounted for as share capital. The difference between the initial

investment cost and the aggregate face value of the shares issued will be adjusted to capital

reserve, or to retained earnings if the balance of capital reserve is insufficient.

The cost of a long-term equity investment acquired through business combination not under

common control is the cost of acquisition determined at the acquisition date.

Expenses for such intermediary services as auditing, legal services, assessment and

consultation and other relevant management expenses resulting from business combination will be

included in profit or loss at the time of occurrence. Expenses arising from exchanges of equity

securities or debt securities issued as consideration will be included in initial determination

payment of equity or debt securities.

Except for long-term equity investment gained by business combination, investment cost of a

long-term equity investment obtained by making payment in cash will be the purchase price which

is actually paid. Investment cost of a long-term equity investment obtained on the basis of issuing

equity securities will be the fair value of the equity securities issued. Company’s investment cost

of a long-term equity investment shall be the value settled by investment contracts or agreement.

Investment cost of a long-term equity investment obtained by debt restructuring or exchange of

non-monetary assets shall be determined in accordance with relevant accounting standards.

The Group will use the cost method to account for a long-term equity investment where it can exercise control over the investee, and the equity method to account for an investment in joint ventures and associates.

– F-25 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 9 of 57

Under the cost method, a long-term equity investment will be measured at its initial

investment cost. When additional investment is made or the investment is recouped, the cost of the investment will be adjusted accordingly. Cash dividends or profit distributions declared by the investee will be recognized as investment income.

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, no adjustment will be made to the initial investment cost. Where the initial investment cost is less than the investor’s interest in the fair values of investee’s identifiable net assets at the acquisition date, the difference will be charged to profit or loss for the current period, and the cost of the long-term equity investment will be adjusted accordingly. After the Company has acquired a long-term equity investment, it will recognize its share of the net profits or losses made by the investee as investment income or losses, and adjust the carrying amount of the investment accordingly. The carrying amount of the investment will be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributed to the Company. For other changes in owners’ equity of the investee, other than net profits or losses, other comprehensive income and profit distribution, the Company will adjust the carrying amount of the long-term equity investment and include the corresponding adjustment in equity. The Group will recognize its share of the investee’s net profits or losses after making appropriate adjustments based on the values of the investee’s individual separately identifiable assets at the acquisition date and its own accounting policies and accounting period, and recognize investment income based on the adjusted financial statements.

3. Changes of long-term equity investments

When the Company becomes capable to exercise joint control or significant influence but not control over an investee due to additional investment or other reason, it will change to the equity method and use the sum of the fair value of the investment which was originally classified as available-for-sale financial assets and the additional investment as the initial investment cost. The difference between the fair value and the carrying amount, and the accumulated changes in fair value originally included in other comprehensive income shall be transferred to profit or loss for the period upon commencement of the equity method. Where the difference between initial investment cost of the long-term equity investment calculated above is more than the share of the fair value of the investee’s identifiable net assets attributable to the Company and is calculated on the basis of new shares it holds from on date of additional investment, carrying value of the long-term equity investment may not be adjusted. If less, carrying value of the long-term equity investment shall be adjusted and the difference shall be included in non-operating revenue.

– F-26 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 10 of 57

If the Company becomes capable of exercising control over an investee that is not under

common control due to additional investment or other reasons, in stand-alone financial statements, it shall change to the cost method and use the carrying amount of the previously-held equity investment, together with the additional investment cost, as the initial investment cost under the cost method. Other comprehensive income of the equity investment held before the purchase date, which is measured and recognized by the equity method, shall be subject to accounting treatment on the same basis with the investee’s direct disposal of relevant assets or liabilities when such investment is disposed of. If an equity investment held before the purchase date is classified as available-for-sale financial asset and is subject to its accounting treatment, the cumulative changes in fair value originally included in other comprehensive income shall be transferred to profit or loss for the period when it is measured by the cost method.

Where the Group can no longer exercise joint control of or significant influence over the investee due to partial disposal of equity investment or other reasons, and the remaining equity investment is classified as an available-for-sale financial asset, the difference between the fair value and the carrying amount at the date of the loss of joint control or significant influence shall be charged to profit or loss for the current period. Other comprehensive income of the original equity investment measured and recognized by the equity method shall be subject to accounting treatment on the same basis as would have been required if the Company had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method.

Where the Company can no longer exercise control over an investee due to partial disposal of equity investment or other reasons, and with the retained interest, still has joint control of or significant influence over the investee, when preparing the individual financial statements, the Company shall change to the equity method and adjust the remaining equity investment as if the equity method had been applied from the date of the first acquisition. If the Company can not exercise joint control of or significant influence over the investee after partial disposal of equity investment, and the remaining equity investment is classified as an available-for-sale financial asset, the difference between the fair value and the carrying amount at the date of loss of control shall be charged to profit or loss for the current period.

4. Disposal of long-term equity investments

On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount will be recognized in investment income for the current period. For a long-term equity investment accounted for using the equity method, any changes in the owners’ equity of the investee included in the owners’ equity of the Company will be transferred to profit or loss for the current period on a pro-rata basis according to the proportion disposed of.

– F-27 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 11 of 57

(IX) Accounting Method for Investment Properties

Investment properties of the Group include right to use land which has already been rented, right to use land which is held and prepared for transfer after appreciation and right to use buildings which has already been rented.

Investment properties are measured initially at cost. The cost of a purchased investment

property comprises its purchase price, related taxes and fee, and other directly attributable

expenditures. The cost of a self-constructed investment property comprises of those expenditures

necessarily incurred for bringing the assets to working condition for its intended use.

The Group uses the cost model for subsequent measurement of an investment property,

and provides for depreciation or amortization based on its expected useful life and estimate net residual value. The estimated depreciable life, the estimated net residual value rate and the

annual depreciation (amortization) rates of investment properties are as follows:

Category Depreciable life (year) Estimated net residual

value rate (%)

Annual

depreciation rate

(%)

Land use right 40.00 5.00 2.50

Houses and buildings 40.00 5.00 2.50

When a investment property is transferred to an owner-occupied property, it will be

regarded as a fixed asset or an intangible asset at the transfer date. When an owner-occupied property is used to earn rentals or for capital appreciation, it will be regarded as a investment property at the transfer date. The carrying amount before the transfer will be used as the recorded amount after the transfer.

An investment property will be derecognized on disposal or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. When an investment property is sold, transferred, retired or damaged, the Company will recognize the amount of any proceeds on disposal net of the carrying amount and related taxes and fees in profit or loss for the current period.

(X) Measurement and Depreciation of Fixed Assets

1. Criteria for fixed assets

Buildings, machinery and equipment, transportation equipment and other equipment,

appliances and tools related to production and operation with useful life of more than one year,

and other non-production and operation equipment and articles with unit price over 2,000 yuan

and useful life over 2 years are accounted for as fixed assets.

2. Measurement of fixed assets

– F-28 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 12 of 57

① The acquired fixed assets are measured at the actual payment of the price, packaging fee,

transportation fees, installation costs, and relevant taxes paid; ② The self-constructed fixed

assets are measured at all expenditures necessary for bringing the assets to their intended use. ③

Fixed assets invested by the investors are measured at the value stipulated by the investor. ④

Fixed assets under finance lease are measured at the lower of the original carrying amount of the

leased assets and the present value of the minimum lease payment at the lease starting date.

3. Depreciation of fixed assets

① Fixed assets are depreciated over its useful life using the straight-line method.

② Category, estimated residual value rate and depreciable life of fixed assets are as follows:

Category Useful life Residual rate (%) Annual depreciation

rate

Houses and buildings 5-40 years 5.00% 2.38%－19.00%

Machines 10 years 5.00% 9.50%

Transportation facilities 8 years 5.00% 11.88%

Other equipment 5-10 years 5.00% 9.5%-19.00%

4. Provision for fixed asset impairment

At the end of reporting period, fix assets are measured at the lower of its carrying amount

and recoverable amount. If the recoverable amount is less than its carrying amount, the difference

will be provided for impairment.

If the value of fixed assets that have been provided for impairment has been recovered, it is

reversed to the extent the provision for impairment has not been made. Fixed assets that have been

fully provided for impairment will no longer depreciated.

(XI) Accounting Method for Construction in Progress

(1) Construction in progress is measured at its actual cost. At the date when it reaches the

working condition for its intended use, it will be transferred into fixed assets based on project

budget, contracted construction price or actual project cost.

(2) At the end of reporting period, a comprehensive review of construction in progress will be

carried out, and impairment will be provided for if the construction project:

① has long been halted and is not expected to resume in the next 3 years;

② has already outdated in terms of performance or technology, and has great uncertainties

– F-29 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 13 of 57

for the economic benefits that it can bring to the company;

③ has been impaired based on other proofs.

(XII) Accounting Method for Borrowing Costs

Borrowing costs from the purchase or construction of fixed assets will be capitalized in the

cost of the assets if they are eligible for capitalization and incurred before the assets enter the

expected serviceable condition. Borrowing costs incurred after the assets enter the expected

serviceable condition will be recognized as financial expenses for the current period. Other

borrowing costs than those from the purchase or construction of fixed assets will be expensed

directly in the period when they are incurred.

(XIII) Measurement and Amortization of Intangible Assets

(1) Measurement of intangible assets

① Intangible assets acquired are measured at the full price actually paid; ② Intangible

assets invested by the investors are measured at the value stipulated by all the investors. ③

Intangible assets that are self-developed and obtained through legal procedures are measured at

the cost incurred for the legal application for obtaining the asset, such as registration fees and legal

fees.

(2) Amortization of intangible assets

The intangible assets are amortized evenly within the contract or the beneficiary or effective

period stipulated by the laws and regulations since the acquisition of the intangible assets. If the

contract, laws and regulations do not clearly stipulate the benefits or useful life, the intangible

assets shall be amortized over a period no more than 10 years.

(3) Land use right acquired by the Company or obtained through payment of land transfer

premium is accounted for as an intangible asset before the land is used for development or

construction of self-use properties, and is amortized in installments according to the prescribed

time limit. If the land is used for construction of self-use properties, all the carrying amount of

land use right will be transferred to the cost of construction in progress.

(4) At the end of reporting period, if the recoverable amount of an intangible assets is less

than its carrying amount, the difference will be provided for impairment.

(XIV) Amortization of Long-term Prepaid Expenses

– F-30 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 14 of 57

Long-term prepaid expenses are amortized over the life of the benefited period. Expenses

incurred during the preparation period (except for acquisition and construction of fixed assets) are

first collected in long-term prepaid expenses and then charged to profits or losses of the first

month of production and operation at the beginning of production and operation.

(XV) Accounting Method for Bonds Payable

On initial recognition, bonds payable are measured at their fair value. Relevant transaction

fees are included in initial recognition amounts. Subsequently, bonds payable are measured at

amortized costs.

Balance between the bonds’ face value and their actual prices are recognized as appreciation

or depreciation, which will be amortized when drawing the interests based on effective interest

method and handled according to principles in borrowing costs.

(XVI) Accounting Method for Employee Benefits Payable

Employee benefits of the Group refer to all kinds of remuneration or compensation, including

short-term benefits, post-employment benefits, termination benefits and other long-term employee

benefits granted by the Group for the services rendered by employees or termination of

employment. Employee benefits also includes other benefits offered to the employees’ spouse,

children, dependents, members of the decease's family and other beneficiaries.

1. Short-term benefits refer to the employee benefits which shall be all paid to employees

within 12 months after the end of the annual reporting period in which the employees provide the

related services, except for the compensation for canceling the labor relationship with the

employees. Short-term benefits include: wages and salaries, bonus, allowances and subsidies,

employee benefits, social securities such as medical insurance, unemployment insurance,

industrial injury insurance, childbirth insurance and etc., housing funds, employee union and

education expenses, short-term paid absence, short-term profit sharing plan, non-monetary

benefits and other short-term benefits.

The Group recognizes the short-term benefit as liabilities over the employees’ service periods

and includes them in current gains and losses or relevant asset costs according to the beneficiaries.

Non-monetary benefits are calculated based on their fair value.

2. Post-employment benefits refer to all kinds of benefits and welfare offered to employees

– F-31 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 15 of 57

for the service they have rendered after the employees retire or have terminated their labor

relationship with the Group except for short-term benefits and termination benefits.

Defined contribution plan of the Group refers to the basic pension insurance, unemployment

insurance and corporate pension paid by the Group on behalf of the employees over their service

periods based on relevant government provisions. The amounts paid are calculated according to

the payment base and proportions, recognized as liabilities and included in current gains and

losses or relevant asset costs.

3. Termination benefits are compensations provided when the Company decides to terminate

the employment relationship with employees before the end of the employment contracts, or

compensations provided as an offer for voluntarily acceptance of layoff. For employees who have

not terminated the labor contract with the Group, but no longer render any service or bring

economic benefits, the Group promises to offer economic release compensation, such as “early

retirement”. The employee could enjoy termination benefit before his official retirement date and

post-retirement benefit after he officially retires.

Release pay is recognized as employee benefit liabilities and included in current gains and

losses on whichever is earlier between the day when the Group couldn’t unilaterally revoke the

release pay caused by severing labor relations or redundancy and the day when the Group

confirms the costs relevant to release pay restructuring.

For release pay which cannot be fully paid within 12 months after annual report period and

release plan which involves releasing the employee within a year but paying the release

compensation for more than a year, proper discount rate is adopted by the Group and release pay

is included in current gains and losses according to the discounted value.

4. Other long-term employee benefits refer to employee benefit other than short-term benefit,

post-employment benefit and release pay, such as long-term paid absence, long-term disability

benefits, long-term profit sharing plan, etc.

(XVII) Recognition of provisions

The Company recognizes an obligation to a contingency as a provision when all of the

following conditions are satisfied:

(1) the obligation is a present obligation of the Company;

– F-32 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 16 of 57

(2) it is probable that an outflow of economic benefits will be required to settle the obligation;

(3) the amount of the obligation can be measured reliably.

(XVIII) Recognition Criteria for Revenue

(1)Revenue from sale of goods is recognized when the following conditions are met:

significant risks and rewards attached to the ownership of the goods sold are passed to the buyer;

neither continual involvement in the rights normally associated with the ownership of the goods

sold nor effective control over the goods controls are retained; revenue arising from the goods sold

has been received or evidence of receipt has been obtained; and cost incurred or to be incurred

associated with the goods sold is reliably measurable.

(2) Revenue from rendering of services is recognized when the following conditions are met:

the labor services have been rendered; the relevant income has been received, or evidence of

receipt has been obtained.

(3) Revenue from the use by others of enterprise assets: when it is probable that the economic

benefits related to the use by others of enterprise assets will flow to the Company and the amount

of the revenue can be reliably measured, the related interest income and usage revenue will be

recognized.

(XIX) Accounting Method for Construction Contracts

The Group recognizes the contract revenue and contract costs at the balance sheet date using

the percentage of completion method if: (1) total contract revenue can be measured reliably; (2)

economic benefits associated with the contract are likely to flow into the Group; (3) the actual

contract costs incurred can be clearly identified and measured reliably; (4) contract completion

and costs to complete the contract can be measured reliably. The actual percentage of completion

is determined by the ratio of contract costs actually incurred to the estimate total costs.

If the outcome of a construction contract cannot be reliably estimated, the Company confirm

contract revenue and contract costs according to following conditions: If the contract costs can be

recovered, contract revenue is recognized according to the extent of contract costs incurred, the

contract costs are recognized as contract expenses when incurred; If the contract costs cannot be

recovered, the contract cost are recognized as contract expenses immediately when incurred, and

no contract revenue is recognized.

– F-33 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 17 of 57

The Group will review contract revenue and cost estimates at the end of reporting period, and

if the estimated total contract costs exceeds the estimated total contract revenue, the Group will

make a loss provision and recognize the expected loss as expenses.

(XX) Accounting Method for Government Grants

Government grants refer to the monetary assets or non-monetary assets that the Group

receive from the government for free. Government grants will be recognized when the Group

satisfies the conditions attached by the government grants and has received the grants.

If the government grant is a monetary asset, it shall be measured at the receipt actually

received. As for the subsidy allocated by a fixed ration standard, or there is conclusive evidence in

the end that the Company can meet the relevant conditions specified by the financial support

policy and is expected to receive financial support fund, it shall be measured at account receivable.

If the government grant is a non-monetary asset, it shall be measured at the fair value. If the fair

value cannot be obtained in a reliable way, it shall be measured at its nominal amount (RMB 1

Yuan).

The government grant is divided into two kinds: asset-related government grant and

revenue-related grants. The asset-related government grants are used to construct or form

long-term assets by the Group; revenue-related government grants are other grants beyond the

asset-related government grant. If the government does not specify the object, the Group should

judge according to the above principle of distinction.

A government grant related to an asset will be recognized as deferred income, and evenly

amortized to profit or loss over the useful life of the related assets. For a government grant related

to income, if it is a compensation for related expenses or losses to be incurred by the Company in

the subsequent period, it will be recognized as deferred income, and charged to profit or loss over

the periods in which the related costs are recognized; if it is a compensation for related expenses

or losses already incurred, it will be recognized immediately in profit or loss for the current

period.

(XXI) Accounting Method for Deferred Tax Assets and Deferred Tax Liabilities

The income tax of the Group will be accounted for using balance sheet liability method.

1. Recognition of deferred tax assets or deferred tax liabilities

– F-34 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 18 of 57

The Company determines its tax basis upon acquisition of assets and liabilities. At the

balance sheet date, the Company will analyze and compare the carrying amount and tax basis of

assets and liabilities. If there is a temporary difference between the carrying amount of liabilities

and their tax basis and the temporary differences meet the recognition criteria, the Company will

recognize the taxable temporary differences as deferred tax liabilities and the deductible

temporary differences as deferred tax assets.

(1) Recognition of deferred tax assets

①The Company will recognize deferred tax assets arising from deductible temporary

differences by deductible temporary differences of taxable income in the future period. The

taxable income in the future period consist of the normal taxable income in business activities, as

well as the added taxable income due to the reversal of taxable temporary differences during the

reversal period of deductible temporary differences.

②As for the carry forward deductible tax losses and tax credits, the Company will recognize

the deferred tax assets according to the deductible tax losses and tax credits future taxable income.

③At the balance sheet date, the Company will review the carrying amount of a deferred tax

asset. If it is unlikely to obtain sufficient taxable income to offset the benefit of deferred tax assets,

the deferred tax asset carrying amount is reduced; if it is probable to obtain sufficient taxable

income, the reduced amount should be reversed.

(2) Recognition of deferred tax liabilities

The Company recognizes the unpaid taxable temporary difference of current and prior

periods as deferred tax liabilities. The temporary differences do not include goodwill, combination

transaction and the formed taxable income temporary differences when the transaction occurs.

2.Calculation of deferred tax assets or deferred tax liabilities

At the balance sheet date, current income tax liabilities (or assets) for the current period and

prior periods will be measured at the amount expected to be paid (or recovered) according to the

requirements of tax laws.

If the tax rate changes, the Company will re-measure the recognized deferred tax assets and

deferred tax liabilities. Apart from the deferred tax assets and deferred income tax liabilities in a

transaction or event, the change will be calculated in the tax expense recognized of the current

period.

– F-35 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 19 of 57

The Company adopts the same tax rate and tax basis of the recovered assets or debts to

calculate deferred tax assets and deferred tax liabilities.

The Company will not discount the deferred tax assets and deferred tax liabilities.

(XXII) Accounting Method for Income Taxes

The income tax of the Company will be accounted for using balance sheet liability method.

(XXIII) Profit Distribution

According to the provisions of the Company Law, the profits after tax of the Company is

distributed in the following order:

(1) making up for losses in prior years; (2) appropriating 10% of the profits to statutory

surplus reserve; (3) distributing dividends.

(XXIV) Preparation of Consolidated Financial Statements

(1) Principle and preparation method of the consolidated financial statements

The Company will prepare consolidated financial statements when it holds directly more

than 50% of the total capital with voting power of an investee; or it holds directly 50% or less of

the total capital with voting power of an investee but, in substance, has control over the investee.

Based on the financial statements of the Company and the subsidiaries included in the

consolidation scope and other relevant information, the Company consolidates the amounts of

each item and prepares consolidated financial statements after offsetting intragroup transactions

such as major transactions, capital transactions, claims and debts, etc.

(2) List of subsidiaries incorporated in the consolidated financial statements for this period

Name Registere

d address

Main operations

Registered capital (in

ten thousand)

September 30, 2017 Investme

nt amount (in ten

thousand)

Shareholding ratio (%)

Control method

Shangrao Chengdong Investment and Development Co., Ltd.

Shangrao, Jiangxi

Province

Investment and financing of infrastructure projects; investment and financing of railway northward movement construction project; asset management and operation; real estate development.

51,000.00 50,000.00 98.04% Direct control

Shangrao City Center Investment and

Shangrao,

Jiangxi Urban infrastructure projects, land development, real estate development

1,000.00 1,000.00 100% Direct

control

– F-36 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 20 of 57

Construction Development Co., Ltd.

Province

Shangrao City Investment Industry Co., Ltd.

Shangrao,

Jiangxi

Province

Building materials production and sales; infrastructure project investment and financing; urban infrastructure projects

41000.00 36,000.00 87.80% Direct

control

Shangrao City Investment Land Development Co., Ltd.

Shangrao,

Jiangxi

Province

Land development and leveling services; infrastructure investment

500.00 500.00 100% Direct

control

Shangrao City Investment Engineering Management Consulting Co., Ltd.

Shangrao,

Jiangxi

Province

Project management, project cost, engineering consulting services

200.00 200.00 100% Direct

control

Shangrao Ziyang Real Estate Development Co., Ltd.

Shangrao,

Jiangxi

Province

Real estate development and management; infrastructure investment

2,900.00 990.00 34.14% Direct

control

Shangrao Longtan Lake Investment Co., Ltd.

Shangrao,

Jiangxi

Province

Industrial investment; urban infrastructure construction; real estate development and management; catering, accommodation, tourism and leisure entertainment

10,000.00 10,000.00 100% Direct

control

Shangrao Longtan Lake Hotel Co., Ltd.

Shangrao,

Jiangxi

Province

Catering services; sales of cigarettes and cigars; accommodation, cafes, beauty salons

300.00 300.00 100% Direct

control

Shangrao City Sewage Treatment Co., Ltd.

Shangrao,

Jiangxi

Province

Sewage treatment 1,000.00 1,000.00 100% Direct

control

Shangrao City Investment Property Service Co., Ltd.

Shangrao,

Jiangxi

Province

Property management; clean service; discontinued operation management

50.00 50.00 100% Direct

control

Shangrao City Comprehensive Transportation Hub Operations Management Co., Ltd.

Shangrao,

Jiangxi

Province

Transport hub station, parking lot construction and operation management; property management; design, production, release, agency of various types of advertising at home and abroad; property rental services; shopping malls operations management; catering, accommodation services; car rental services; car decorating, maintenance services; business information consulting services; investment and

2,000.00 2,000.00 100% Direct

control

– F-37 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 21 of 57

asset management.

Shangrao City Public Transport Co., Ltd.

Shangrao,

Jiangxi

Province

Urban and rural bus passenger transport; tourist passenger; taxi passenger; new energy vehicle related parts; vehicle maintenance services; real estate development and management; marketing and planning; design, production, release, agency of various types of advertising at home and abroad.

6,000.00 6,000.00 100% Direct

control

Shangrao City Investment Trading Co., Ltd.

Shangrao,

Jiangxi

Province

Construction materials, metal materials, mechanical and electrical products, hardware and electrical equipment, auto parts, household appliances, daily necessities

1,000.00 1,000.00 100% Indirect

Shangrao Huakang Real Estate Development Co., Ltd.

Shangrao,

Jiangxi

Province

Real estate development, indoor and outdoor decoration, waterproof engineering services

229.54 229.54 100% Indirect

Shangrao Official Vehicle Service Co., Ltd.

Shangrao,

Jiangxi

Province

Official vehicle services; car rental; design, production, release, agent of various types of advertising at home and abroad; software development; vehicle maintenance; sales and installation of vehicle electronic equipment.

2,000.00 1,200.00 100% Direct

control

Shangrao Shun Tong Car Rental Service Co., Ltd.

Shangrao,

Jiangxi

Province

Car rental; relief driver; design, production, release, agent of various types of advertising at home and abroad; software development; vehicle maintenance; sales and installation of vehicle electronic equipment.

1,000.00 200.00 100% Direct

control

Shangrao Shangwu Highway Management Co., Ltd.

Shangrao,

Jiangxi

Province

Highway operation services; road maintenance services; production, processing, installation and sale of communications equipment, monitoring equipment and transportation supporting facilities; traffic engineering information consulting services; software development; seedling planting; landscape engineering and road construction; vehicle maintenance services; processing and sale of building materials; design, production, release, agent of various types of advertising at home and abroad.

2,000.00 2,000.00 100% Direct

control

– F-38 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 22 of 57

Shangrao Da Ao Water Diversion and Operations Development Co., Ltd.

Shangrao,

Jiangxi

Province

Management of water intake, water transport and water supply from Da Ao Reservoir; maintenance and management of buildings, structures and equipment tunnels along the diversion project of the Da Ao Reservoir; hydroelectric power generation and maintenance.

2,000.00 200.00 100% Direct control

Jiangxi Chunhe New Energy Co., Ltd.

Shangrao,

Jiangxi

Province

Natural gas filling service; providing clean energy and new energy related services.

2,000.00 450.00 48.38% Indirect

Shangrao Lianxing Automobile Service Co., Ltd.

Shangrao,

Jiangxi

Province

Car repair services; auto parts wholesale and retail.

1,000.00 1,000.00 100% Indirect

(3) Description of changes in consolidation scope

2 wholly-owned subsidiaries and 2 second-tier subsidiaries are added and 1 subsidiaries is

removed from the consolidation scope for the period from January to September 2017, which

include: On June 22, 2017, the Company invested 20 million yuan to set up a wholly-owned

subsidiary Shangrao Shangwu Expressway Operation and Management Co., Ltd. On April 1, 2017,

the Company invested 2 million yuan to set up a wholly-owned subsidiary Shangrao Da Ao

Diversion and Operation Development Co., Ltd; 2 subsidiaries of Shangrao City Public Transport

Co., Ltd. are added to the scope of consolidation, namely, Jiangxi Chunhe New Energy Co., Ltd.

and Shangrao Lianxing Automobile Service Co., Ltd. respectively; During January to September

2017, the Company lost control of Shangrao Small and Medium-Sized Enterprises Mutual Aid

Fund Co., Ltd. due to a decrease in the shareholding ratio which was caused by the increase of its

investor’s investment.

V. Explanations for changes in accounting policies and accounting estimates as

well as correction of errors

(I) Changes in accounting policies

The main accounting policies for the reporting period have not changed.

(II) Changes in accounting estimates

The main accounting estimates for the reporting period have not changed.

(III) Corrections of previous errors

There is no significant previous errors corrected during the reporting period.

– F-39 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 23 of 57

(IV) Explanations for retrospective adjustment

During the reporting period, due to the decrease of shareholding ratio in Shangrao Small and

Medium-Sized Enterprises Mutual Aid Fund Co., Ltd., the Company has lost control over it. As a

result, 517,047.85 yuan of long-term equity investment, 500,262.44 yuan of investment income in

2016 and 16,785.41 yuan of undistributed profit at the end of 2016 have been retrospectively

adjusted, which affected the beginning undistributed profit of 2017 by 517,047.85 yuan.

VI. Taxation

The main types of taxes and tax rates applicable to the Company are as follows:

(I) Business tax: levied at 5% of taxable operating income of the Company.

(II) Enterprise income tax: levied at 25% of taxable income.

(III) Urban maintenance and construction tax: levied at 7% of the total turnover tax paid.

(IV) Education surtax: levied at 3% of the total turnover tax paid.

(V) Local education surtax: levied at 2% of the total turnover tax paid.

(VI) Value-added tax: levied at 3%-17% of taxable operating income of the Company.

VII. Notes to Significant Items in Consolidated Financial Statements (as of 30

September 2017; monetary unit: RMB Yuan)

(I) Currency funds

Items September 30, 2017 December 31, 2016

Cash 219,510.67 350,202.68

Bank balances 9,937,409,931.33 9,737,194,537.67

Other currency funds 1,000,000,000.00 1,000,535,000.00

Total 10,937,629,442.00 10,738,079,740.35

Note: Other currency funds at the end of this period include: Shangrao City Investment

Industry Co., Ltd., a subsidiary of the Company, entered into a pledging deposit receipt contract

with Nanchang Bank Shangrao Branch. In May 2015, it deposited a 3-year fixed term deposit of 1

billion yuan at Nanchang Bank Shangrao Branch, to provide pledge for its 1 billion yuan loan with

Zhongjiang International Trust Co., Ltd.

(II) Accounts receivable

Category September 30, 2017 December 31, 2016

– F-40 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 24 of 57

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%)

Accounts receivable that

are individually

significant and provided

for bad debts separately

8,456,847.10 347,270.8

0 4.11

8,506,847.10

0.19

397,270.80

4.67

Accounts receivable that

are collectively provided

for bad debts

5,131,240,276.36 128,000.0

0 0.00

4,409,414,920.

21

99.81

55,000.00

0.01

Including: Age group 336,355.28 128,000.0

0 38.05

3,126,021.00

0.07

55,000.00

1.76

Group of government

financial receivables 5,130,903,921.08

4,406,288,899.

21

99.93

Accounts receivable that

are not individually

significant but provided

for bad debts separately

Total 5,139,697,123.46 100.0

0

475,270.8

0 -

4,417,921,767.

31

100.0

0

452,270.80

-

Accounts receivable that are provided for bad debts using aging analysis

Age

September 30, 2017 December 31, 2016

Amount Ratio (%)

Provision

for bad

debts Amount

Ratio

(%)

Provision for

bad debts

Less

than 1

year

46,355.28

13.78 -

3,016,021.00

96.48 -

1-2 years 180,000.00 53.51 18,000.00

2-3 years

3-5 years 110,000.00 3.52 55,000.00

Over 5

years

110,000.00 32.70

110,000.00

Total 336,355.28 100.00 128,000.00 3,126,021.00 100.00 55,000.00

Note1: There is no account receivable that shall be paid by shareholders holding over 5%

– F-41 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 25 of 57

(inclusive) of the Company’s shares.

Note 2: The balance of accounts receivable at the end of reporting period is mainly

attributable to the proceeds from the land transfer and repurchase agreements of Shangrao

Municipal Finance Bureau.

Note 3: Details of significant balance of accounts receivable at the end of reporting period are

as follows:

Name Nature of the account Amount

Shangrao Municipal Bureau of Finance Buy-back receivable for

agent construction

project

5,059,685,996.59

Jiangxi Construction Engineering Group Co.,

Ltd. Receivables for goods 32,588,750.70

Shangrao City Reception Office Housing and catering

expenses 5,158,478.65

Jiangxi Construction Engineering Group 3rd

Construction Co., Ltd. Receivables for goods 1,071,001.42

Office of Shangrao Municipal Party

Committee

Housing and catering

expenses 462,252.00

(III) Prepayments

Age September 30, 2017 December 31, 2016

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 51,213,713.05 21.32 355,235,402.03 62.43

1-2 years 67,822,369.76 19.76 43,500,970.97 7.65

2-3 years 39,077,297.65 11.39 57,463,736.16 10.10

Over 3 years 163,127,543.86 47.53 112,770,134.38 19.82

Total 321,240,924.32 100.00 568,970,243.54 100.00

Note1: There is no prepayments that have been prepaid by shareholders holding over 5%

(inclusive) of the Company’s shares.

Note 2: Prepayments of more than three years at the end of reporting period are mainly those

prepaid for the Shangrao municipal construction project undertaken by the Company.

Note 3: Details of significant prepayment balance at the end of this period are as follows:

Name Nature of the account Amount

Jiangxi Hongyi Group Wanlong Trading Co.,

Ltd. Receivables for goods 50,252,196.95

Jiangxi Qunli Construction Group Co., Ltd. Construction payment 29,470,000.00

– F-42 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 26 of 57

Guangzhou 1st Municipal Construction

Company Construction payment 22,920,000.00

China Construction Fifth Engineering Bureau

Co., Ltd. Construction payment 21,224,666.83

Shangrao Branch of Ningbo Xingwang

Municipal Landscape Engineering Group Co.,

Ltd.

Construction payment 14,951,592.00

(IV) Interest receivable

Items September 30, 2017 December 31, 2016

Industrial fund 57,222,135.69 68,394,743.39

Total 57,222,135.69 68,394,743.39

(V) Other receivables

Category

September 30, 2017 December 31, 2016

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%)

Other receivables that are

individually significant and

provided for bad debts

separately

- - - - - - - -

Other receivables that are

collectively provided for bad

debts

8,508,085,202.

67

100.0

0

56,536,971.2

2 0.67

5,029,377,542.

20

100.0

0

44,777,647.6

9 0.89

Including: Age group 580,566,495.69 6.87 56,536,971.2

2 9.74

339,170,577.54

7.00 44,777,647.6

9 13.20

Group of government

financial receivables

7,927,518,706.

98 93.13

4,690,206,964.

66

93.00

Other receivables that are not

individually significant but

provided for bad debts

separately

Total 8,508,085,202.

67

100.0

0

56,536,971.2

2

5,029,377,542.

20

100.0

0

44,777,647.6

9

Other receivables that are provided for bad debts using aging analysis

Age September 30, 2017 December 31, 2016

– F-43 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 27 of 57

Amount Ratio (%)

Provision for

bad debts Amount

Ratio

(%)

Provision for

bad debts

Less than

1 year 343,067,761.10 59.09

94,264,342.25 27.79

1-2 years 94,183,672.87 16.22 9,418,367.29 184,081,239.21 54.27 18,408,123.92

2-3 years 103,420,500.21 17.81 20,684,100.04 41,152,658.04 12.13 8,230,531.60

3-5 years 26,920,115.23 4.64 13,460,057.62 3,066,691.76 0.90 1,533,345.89

Over 5

years 12,974,446.28 2.23 12,974,446.28 16,605,646.28 4.90 16,605,646.28

Total 580,566,495.69 100.00 56,536,971.22 339,170,577.54 100.00 44,777,647.69

Note 1: As at September 30, 2017, there is no receivables that shall be paid by shareholders

holding over 5% (inclusive) of the Company’s shares.

Note 2: Details of significant balance of other receivables at the end of reporting period are as

follows:

Name Nature of the account Amount

Shangrao North Avenue Project Management

Office Dispatch fund

864,725,000.00

Expropriation headquarters of shantytowns

reconstruction project in Shangrao downtown

Sanjiang Area (Wangjia Garden Phase III)

Dispatch fund 631,404,160.83

Yugan County Construction Investment and

Development Group Co., Ltd. Dispatch fund

529,999,999.67

Project Department of Ziyang North Avenue

Comprehensive Transformation and

Upgrading Project Construction Leading

Group

Dispatch fund 443,142,800.00

Coordination Services Headquarters for

Construction of Eastern Area in Shangrao

Xinzhou District

Dispatch fund 321,356,250.00

(VI) Inventories

Items

September 30, 2017 December 31, 2016

Book balance

Provision

for

impairment

Carrying

amount Book balance

Provision

for

impairment

Carrying amount

Raw

material

447,335.89 447,335.89 620,223.89 620,223.89

Commoditie

s in stock

1,732,595.72 1,732,595.72 1,547,146.11 1,547,146.11

Developme

nt costs

14,854,381,469.74 14,785,696,484.74 12,265,504,395.80 12,265,504,395.80

– F-44 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 28 of 57

Land

reserve 8,514,197,317.24

8,514,197,317.24 8,583,976,805.33

8,583,976,805.33

Materials

for

repetitive

usage

1,025,640.98 1,025,640.98 479,521.00 479,521.00

Low-value

consumable

s 26,280.00

26,280.00

Total 23,371,810,639.57 23,303,125,654.57 20,852,128,092.13 20,852,128,092.13

Note: details of significant balance of development costs at the end of reporting period are:

Items

Project

commencing

date September 30, 2017

Including:

capitalized interest

Old train station shanty area October 2012 6,785,827,366.19 2,622,874,644.91

First grade land consolidation in

Chengdong March 2010 1,113,769,406.40 837,404,281.93

Chengdong Area Riverside Road and

Flood Control Project November 2015 715,847,292.00 130,312,505.76

Relocation of Shangrao Normal School May 2015 656,195,181.28 131,236,857.81

Integrated Transportation Hub Project

Department March 2014 629,417,901.24 387,790,704.87

(VII) Other current assets

Items September 30, 2017 December 31, 2016

Prepaid and deferred expenses 219,991.00

Total 219,991.00

(VIII) Available-for-sale financial assets

Items

September 30, 2017 December 31, 2016

Book balance

Provi

sion

for

asset

impai

rmen

t

Carrying

amount Book balance

Provi

sion

for

asset

impa

irme

nt

Carrying

amount

Available-for-sale

liability instruments 2,068,940,383.42 2,068,940,383.42 1,568,940,383.42

1,568,940,383.

42

Available-for-sale

equity instruments 121,000,000.00 121,000,000.00 111,000,000.00 111,000,000.00

– F-45 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 29 of 57

Items

September 30, 2017 December 31, 2016

Book balance

Provi

sion

for

asset

impai

rmen

t

Carrying

amount Book balance

Provi

sion

for

asset

impa

irme

nt

Carrying

amount

Measured at fair

value Measured at cost 121,000,000.00 121,000,000.00 111,000,000.00 111,000,000.00 Others

Total 2,189,940,383.42 2,189,940,383.42 1,679,940,383.42 1,679,940,383.

42 Available-for-sale financial assets measured at cost at end of the year

Name of Investee

Ending balance

Beginning of the

period

Increase in

this period

Decrease in

this period

End of the

period Shangrao Guangtian Building Components Co.,

Ltd. 1,000,000.00 1,000,000.00

CDB Jingcheng (Beijing) Investment Fund Co.,

Ltd. 100,000,000.00

100,000,000.0

0

Shangrao Green Industry Investment Group Co.,

Ltd. 10,000,000.00 10,000,000.00 20,000,000.00

Total 111,000,000.00 10,000,000.00 121,000,000.0

0 Note: Details of available-for-sale liability instruments are as follows:

1: The subsidiary Ziyang Real Estate Development Co., Ltd. transferred 70% equity of Zixin

Real Estate Development Co., Ltd. to Fuxin Investment Group (Shanghai) Co., Ltd. in December

2011; at the same time, both parties agreed that Ziyang Real Estate Development Co., Ltd. did not

participate in this company’s operation. The remaining 30% of equity would be paid by Fuxin

Investment Group (Shanghai) Co., Ltd. within three years. In each year, Fuxin Investment Group

(Shanghai) Co., Ltd. would pay a fixed return to Shangrao Ziyang Real Estate Development Co.,

Ltd. at 18.00% of 60 million yuan.

As of September 30, 2017, due to land block demolition, Ziyang Real Estate Development

Co., Ltd. has been handling the compensation for land acquisition and has 70% of the land under

– F-46 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 30 of 57

construction. The project is still under construction. 30% of this liability is expected to be deferred

back.

2: Ziyang Real Estate Development Co., Ltd. invested RMB 4.9 million yuan in September

2012 to set up Shangrao Haihua Real Estate Development Co., Ltd. together with natural person

Ruan Xianghua, holding 49% shares of this company. In 2013, the Company contributed RMB

63,847,000 yuan to participate in the real estate project of this company. The shareholders of both

parties agreed that Ziyang Real Estate Development Co., Ltd. will not participate in the operation

of this company. Ruan Xianghua will pay a fixed return at 18.00% of 68,747,000 yuan to Ziyang

Ziyang Real Estate Development Co., Ltd. every year.

3. In December 2016, Shangrao City Investment Industry Co., Ltd. and Anhui Guohou

Investment Management Co., Ltd. jointly established Shangrao Shinshu District Chengdong

Development 1st Investment Management Center (Limited Partnership). Shangrao City

Investment Industry Co., Ltd. invested 200 million in the partnership.

4. In December 2016, Shangrao City Investment Industry Co., Ltd. and Jiangxi Jinkong

Investment Management Center (Limited Partnership) jointly established Jiangxi Jinkong

Shangrao Urbanization Development Private Equity Fund, of which Shangrao City Investment

Industry Co., Ltd. subscribed 600 million yuan of inferior fund.

5. In March 2017, Shangrao City Construction Investment and Development Group Co., Ltd.,

Chengdu Dingxing Quantum Investment Management Co., Ltd. and Galaxy Jinhui Securities

Asset Management Co., Ltd. jointly established Shangrao City Investment No.1 Town

Development Fund Center (Limited Partnership). Shangrao City Construction Investment and

Development Group Co., Ltd. invested 500 million in the partnership.

(IX) Long-term equity investments

(1) Category of Long-term equity investments

Items

December 31, 2016

Increase in

this year

Decrease in

this year

September 30, 2017

Amount

Provision for asset

impairment

Amount

Provision for asset

impairment

Investment in

associates 145,305,973.90 -

34,106,801.0

6

14,500,000.00 164,912,774.96 -

– F-47 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 31 of 57

Investment in

subsidiaries 16,465,423.64 53,474,167.11 -37,008,743.47

Total 161,771,397.54 - 34,106,801.0

6

67,974,167.11

127,904,031.49 -

Note: The major change of investment in 2017 is that the parent company's investment in its

subsidiary Shangrao Small and Medium-sized and Micro Enterprises Mutual Aid Fund Co., Ltd. is

now measured by using the equity method because the parent company has lost control of the

subsidiary due to the increase of investment by the other companies.

(2) Investments in associates under equity method

Name of investee Investme

nt ratio

Amount of

initial

investment

(in ten

thousand)

December 31,

2016

Increase or

decrease in

the year

September

30, 2017

Jiangxi Shangrao Harbor Logistics Co., Ltd.

50% 1,600.00 13,476,779.07 323,927.39 13,800,706.46

Shangrao Affordable Housing Investment and Construction Co., Ltd.

30% 3,000.00 48,202,147.98 -21,495,949.01 26,706,198.97

Shangrao Sanjiang Daotuo

Drainage Co., Ltd. 49% 8,134.00 81,340,000.00 81,340,000.00

Shangrao Small and

Medium-Sized Enterprises

Mutual Aid Fund Co., Ltd.

33.33% 5,000.00 517,047.85 52,115,935.27 52,632,983.12

Jiangxi Chunhong New Energy

Co., Ltd. 51% 177.00 1,770,000.00 3,162,887.41 4,932,887.41

Jiangxi Chunhe New Energy Co.,

Ltd. 51% 450.00 -4,500,000.00 -4,500,000.00

Shangrao Lianxing Automobile

Service Co., Ltd. 100% 1,000.00 -10,000,000.00

-10,000,000.0

0

Total 17,911.00 145,305,973.9

0 35,465,032.90

164,912,774.9

6

(X) Investment properties

Investment properties measured at cost

Items Beginning balance

Increase in this year

Decrease in this year

Ending balance

Total original book value 335,267,276.2

5

335,267,276.25 1．Houses and buildings 335,267,276.2

5

335,267,276.25 2．Land use right

Total accumulated depreciation (amortization)

7,962,597.81 5,971,948.36 13,934,546.17

– F-48 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 32 of 57

Items Beginning balance

Increase in this year

Decrease in this year

Ending balance

1．Houses and buildings 7,962,597.81

5,971,948.36 13,934,546.17

2．Land use right

Total net carrying amount 327,304,678.4

4

321,332,730.08

1．Houses and buildings 327,304,678.4

4

321,332,730.08 2．Land use right

Total provision for asset impairment 1．Houses and buildings 2．Land use right

Total carrying amount 327,304,678.4

4

321,332,730.08

1．Houses and buildings 327,304,678.4

4

321,332,730.08 2．Land use right

(XI) Fixed assets and accumulated depreciation

Items Beginning balance Increase in this

period

Decrease in

this period Ending balance

Total original book value 7,514,805,746.24 604,941,177.01 556,682,912.5

3 7,563,172,637.72

Including: Houses and

buildings 2,383,358,565.95 557,324,509.23

556,190,770.0

0 2,384,492,305.18

Machines 214,425,748.15 6,086,175.18 220,511,923.33

Transportation facilities 145,232,755.63 34,287,890.07 261,381.00 179,259,264.70

Special purpose

equipment 138,200.00 7,190.00 145,390.00

Other equipment 12,807,720.41 4,933,617.30 122,134.53 17,619,203.18

Structures and other

ancillary facilities 4,758,842,756.10 2,301,795.23 4,761,144,551.33

Total accumulated

depreciation 151,778,511.10 41,532,757.48 376,846.41 192,961,030.49

Including: Houses and

buildings 46,623,530.91 8,644,406.98 55,267,937.89

Machines 34,998,108.66 12,613,884.74 47,611,993.40

Transportation facilities 59,047,376.41 17,942,613.62 251,381.00 76,738,609.03

Special purpose

equipment 22,121.32 605.46 22,726.78

Other equipment 11,087,373.81 2,155,997.56 98,857.10 13,144,514.27

Structures and other

ancillary facilities 175,249.12 175,249.12

Total net value of fixed

assets

7,363,027,235.14 7,370,211,607.23

– F-49 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 33 of 57

Including: Houses and

buildings

2,336,735,035.04 2,329,224,367.29

Machines 139,427,639.49 172,899,929.93

Transportation facilities 86,185,379.22 102,520,655.67

Special purpose

equipment

116,078.68 122,663.22

Other equipment 1,720,346.60 4,474,688.91

Structures and other

ancillary facilities

4,758,842,756.10 4,760,969,302.21

Total provision for fixed

asset impairment

Total carrying amount of

fixed assets

7,363,027,235.14 7,370,211,607.23

Including: Houses and

buildings

2,336,735,035.04 2,329,224,367.29

Machines 139,427,639.49 172,899,929.93

Transportation facilities 86,185,379.22 102,520,655.67

Special purpose

equipment

116,078.68 122,663.22

Other equipment 1,720,346.60 4,474,688.91

Structures and other

ancillary facilities

4,758,842,756.10 4,760,969,302.21

Note 1: As at September 30, 2017, the carrying amount of 12,036.65 M2 shops of Shangrao

Chengdong Investment and Development Co., Ltd. is RMB 29,562,100 yuan, and the carrying

amount of 1,716.39 M2 houses of Shangrao Life Sewage Treatment Co., Ltd. is 2,655,700 yuan.

Housing ownership certificate is still under application.

(XII) Construction in progress

Items

September 30, 2017 December 31, 2016

Book balance

Provis

ion

for

impai

rment

Carrying

amount Book balance

Pro

visio

n

for

imp

air

men

t

Carrying

amount

Longtan Lake Hotel

renovation and expansion

project

28,709,112.16 28,709,112.16 26,620,103.59 26,620,103.59

– F-50 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 34 of 57

Eastern Town Gas Filling

Station

1,403,422.29

1,403,422.29 1,403,422.29

1,403,422.29

Western Town

Comprehensive Service

Center

1,795,960.45 1,795,960.45 1,689,095.23 1,689,095.23

Waiting hall of railway

station hub

55,795.00

55,795.00 55,795.00

55,795.00

Renovation of Landscape

Engineering Project

Department Office

Building of Chengdong

Area Riverside Road and

Flood Control Project

Department

539,614.96 539,614.96

539,614.96

539,614.96

Chengnan public

transport complex 123,168.58

123,168.58 40,000.00

40,000.00

Material and Pipe Center 8,332.00 8,332.00 8,332.00 8,332.00

Canteen project 3,397,936.66

3,397,936.66

1,718,482.80

1,718,482.80

Chengbei public transport

complex 50,366.91

50,366.91

Total 36,083,709.01 36,083,709.01 32,074,845.87 32,074,845.87

(XIII) Construction materials

Items September 30, 2017 December 31, 2016

Special purpose materials 3,762,448.00 3,762,448.00

Total 3,762,448.00 3,762,448.00

(XIV) Intangible assets

Items Beginning balance Increase in this

period

Decrease in

this period Ending balance

Total original book

value

57,646,161.66 4,644,135.72 5,002,400.00

57,287,897.38

Including: Land use

right

57,341,407.30 2,298,856.04 5,002,400.00

54,637,863.34

Application

software 304,754.36 2,345,279.68 2,650,034.04

Total accumulated

amortization 10,187,225.30 1,795,724.15 11,982,949.45

Including: Land use

right

9,996,863.15 1,702,592.39

11,699,455.54

Application

software

190,362.15 93,131.76

283,493.91

– F-51 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 35 of 57

Total net value of

intangible assets 47,458,936.36 45,304,947.93

Including: Land use

right 47,344,544.15 42,938,407.80

Application

software 114,392.21 2,366,540.13

Provision for intangible

asset impairment

Total carrying amount

of intangible assets 47,458,936.36 45,304,947.93

Including: Land use

right 47,344,544.15 42,938,407.80

Application

software 114,392.21 2,366,540.13

(XV) Long-term prepaid expenses

Items Beginning balance

Amortization in this year

Increase in this year

Amortization in this

year Amortization in this

year

Other decrease Ending balance

Hotel indoor facilities

262,500.00 67,500.00 195,000.00

Software patent charge 6,000.00 3,375.00 2,625.00

Office renovation 1,060,490.69 1,095,060.08 633,438.28 1,515,362.49

Total 1,328,990.69 1,095,060.08 704,313.28 1,719,737.49

Note: The increased office renovation costs are from Jiangxi Chunhe New Energy Co., Ltd.

and Shangrao Lianxing Automobile Service Co., Ltd., two subsidiaries newly incorporated in the

consolidation scope.

(XVI) Deferred tax assets

Items

September 30, 2017 December 31, 2016

Deferred tax

assets

/liabilities

Deductible

temporary

difference

Temporary

difference

Deferred tax

assets

/liabilities

Deductible

temporary

difference

Temporary

difference

Provision for asset

impairment 14,253,060.51 57,012,242.04 11,309,933.23 45,239,732.92

Total 14,253,060.51 57,012,242.04 11,309,933.23 45,239,732.92

(XVII) Other non-current assets

Items September 30, 2017 December 31, 2016

– F-52 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 36 of 57

Items September 30, 2017 December 31, 2016

Huarong Shangrao city investment trust loan

collective fund trust plan 1,000,000.00

Total 1,000,000.00

Note: Other non-current assets are the 1 million trust products subscribed by Shangrao

Chengdong Investment and Development Co., Ltd.on May 20, 2015 from Huarong International

Trust Co., Ltd., with an expected annualized return rate of 10.5%.

(XVIII) Short-term borrowings

Items September 30, 2017 December 31, 2016

Pledge loans

Trust loans

Guaranteed loans 250,000,000.00

Mortgage loans

Other borrowings 200,000,000.00 280,000,000.00

Total 200,000,000.00 530,000,000.00

Note 2: Other borrowings at the end of this period are: 200 million yuan of loan contract

signed between Shangrao City Construction Investment and Development Group Co., Ltd. and

Jiangxi Provincial Branch of China Development Bank.

(XIX) Accounts payable

Age September 30, 2017 December 31, 2016

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 58,643,432.36 19.39 323,858,354.38 70.90

1-2 years 116,193,753.53 38.41 127,019,295.32 27.81

2-3 years 25,676,837.24 8.49 5,489,110.89 1.20

Over 3 years 1,970,302.60 33.71 430,197.69 0.09

Total 302,484,325.73 100.00 456,796,958.28 100.00

Note1: There is no payable that shall be paid to shareholders holding over 5% (inclusive) of

the Company’s shares.

Note 2: details of significant balance as at 30 September 2017:

Name Nature of the account Amount

Zhejiang Julong Pipe Industry Co., Ltd. Receivables for goods 12,568,720.64

Shangrao project headquarter of CECEP Water

Development Co., Ltd. Capital occupation fee 6,641,537.00

Jiangxi Boneng Shangrao Bus Co., Ltd. Payable for purchase of

buses 3,950,000.00

– F-53 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 37 of 57

Anhui Tongdu Valve Co., Ltd. Receivables for goods 3,781,840.00

BAIC FOTON Automobile Co., Ltd. Payable for purchase of

buses 3,659,000.00

(XX) Advances from customers

Age September 30, 2017 December 31, 2016

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 33,208,546.81 31.61 49,299,807.09 47.00

1-2 years 36,524,012.77 34.77 13,501,778.89 12.87

2-3 years 1,539,433.94 1.47 38,957,136.76 37.14

Over 3 years 33,787,599.83 32.15 3,127,335.00 2.98

Total 105,059,593.35 100.00 104,886,057.74 100.00

Note: There is no advances from shareholders holding over 5% (inclusive) of the Company’s

shares at the end of this period.

(XXI) Employee benefits payable

1. Details of employee benefits payable

Items Beginning

balance

Increase in

this period

Decrease in

this period

Ending balance

Short-term employee benefits 2,212,248.00 48,945,348.69 50,504,780.19 652,816.50

Post-employment

benefits-defined contribution

plan -14,910.60

3,370,398.41 3,348,508.57 6,979.24

Total 2,197,337.40 52,315,747.10 53,853,288.76 659,795.74

2. Short-term employee benefits

Items Beginning

balance

Increase in

this period

Decrease in

this period

Ending balance

Wages, bonus, allowance, subsidies 2,204,850.50 44,244,771.01 45,839,956.81 609,664.70

Staff welfare 1,642,444.80 1,642,444.80

Social security -4,064.00 1,546,112.90 1,535,008.10 7,040.80

Including: Medical insurance -4,064.00 1,252,494.25 1,241,389.45 7,040.80

Injury insurance 192,796.75 192,796.75

Maternity insurance 100,821.90 100,821.90

Housing accumulation fund -2,934.00 1,113,867.00 1,074,822.00 36,111.00

Union running fund and employee

education fund 14,395.50 398,152.98 412,548.48

– F-54 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 38 of 57

Items Beginning

balance

Increase in

this period

Decrease in

this period

Ending balance

Short-term paid absence

Short-term profit sharing plan

Total 2,212,248.00 48,945,348.69 50,504,780.19 652,816.50

3. Post-employment benefits-defined contribution plan

Items Beginning

balance

Increase in this

period

Decrease in this

period

Ending balance

Basic pension

insurance -14,913.84 3,336,564.24 3,314,674.40 6,976.00

Unemployment

insurance 3.24 33,834.17 33,834.17 3.24

Total -14,910.60 3,370,398.41 3,348,508.57 6,979.24

(XXII) Taxes and dues payable

Items September 30, 2017 December 31, 2016

Enterprise income tax 151,824,839.04 74,140,618.11

Value-added tax 78,876,080.49 5,563,964.73

Business tax 18,398,520.02 17,087,299.62

Resource tax 34,800.00 34,800.00

City maintenance tax 12,729,387.03 49,463,671.57

Property tax 27,095.32 24,650.88

Stamp tax 692,591.61 482,064.48

Personal income tax 887,436.78 221,405.12

Education surcharge 9,023,045.75 116,771,365.76

Other taxes (fund category) 264,074.13 264,074.13

Compensation for mineral resources

1,698.04

Land use tax 9,810.22

Total 272,769,378.43 264,053,914.40

(XXIII) Other payables

Age September 30, 2017 December 31, 2016

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 347,012,828.60 16.77 169,012,232.11 9.11

1-2 years 107,382,909.67 5.19 211,077,229.62 11.38

– F-55 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 39 of 57

2-3 years

204,201,642.94 9.87

1,226,740,458.0

2

66.11

Over 3 years 1,410,966,975.94 68.17 248,742,562.89 13.40

Total 2,069,564,357.15 100.00

1,855,572,482.6

4

100.00

Note1: There is no payable that shall be paid to shareholders holding over 5% (inclusive) of

the Company’s shares.

Note 2: details of significant balance as at 30 September 2017:

Name Nature of the account Amount

Shangrao Land Reserve Center Current account 968,000,000.00

Shangrao Real Estate Administration special

account for shanty town transformation

Special fund for shanty

town transformation

415,651,600.00

Shangrao Land Reserve Center Dispatch fund 132,020,443.00

China Agricultural Development Key Construction

Fund Co., Ltd. Construction fund

115,000,000.00

Shangrao City Center Infrastructure Development

Co., Ltd. Current account

62,528,107.58

(XXIV) Long term liabilities due within one year

Name Items September 30, 2017 December 31, 2016

long-term loans due within a year

Including: China Development Bank Jiangxi

Branch Pledge 71,000,000.00 57,000,000.00

China Development Bank Jiangxi

Branch Others 25,000,000.00 20,000,000.00

Agricultural Development Bank

Shangrao Branch Mortgage 637,500,000.00 545,000,000.00

Hua Xia Bank Nanchang Branch Assurance 550,000,000.00 300,000,000.00

Bocom International Trust Co., Ltd. Mortgage 173,500,000.00 97,000,000.00

Industrial Bank Nanchang Branch Assurance 400,000,000.00

Huarong International Trust Co., Ltd. Trust 425,000,000.00 25,000,000.00

China Everbright Bank Nanchang

Branch Mortgage 25,000,000.00 25,000,000.00

China Everbright Bank Nanchang

Branch Assurance 15,000,000.00 5,000,000.00

China Everbright Bank Nanchang

Branch Pledge 400,000,000.00

Ganzhou Bank Shangrao Branch Assurance 1,000,000.00 1,000,000.00

– F-56 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 40 of 57

Zhongjiang International Trust Co.,

Ltd. Trust 2,497,000,000.00 2000,000.00

China Construction Investment Trust

Co., Ltd. Trust 500,000,000.00 500,000,000.00

China Minsheng Bank Shangrao

Branch Assurance 450,000,000.00 450,000,000.00

ICBC Shangrao Zhongrong

Sub-branch Assurance 100,000,000.00

China CITIC Bank Nanchang Branch Assurance 19,000,000.00

Bank of Shangrao Daihu Road

Sub-branch Assurance 5,000,000.00

Everbright Xinglong Trust Co., Ltd. Trust 450,000,000.00

ICBC Shangrao Xinzhou Sub-branch Assurance 30,000,000.00

ICBC Shangrao Sanqingshan

Sub-branch Assurance 120,000,000.00

Avic Trust Co., Ltd. Mortgage 100,000,000.00

China Merchants Bank Shangrao

Branch Pledge 100,000,000.00

China Minsheng Bank Shangrao

Branch Pledge 50,000,000.00

Bonds payable due within a year

Including: 2012 Shangrao City Investment

Enterprise Bond 260,000,000.00

Total 6,604,000,000.00 2,827,000,000.00

(XXV) Long-term borrowings

Items September 30, 2017 December 31, 2016

Pledge loans 6,195,000,000.00 171,000,000.00

Mortgage loans 2,735,000,000.00 3,050,500,000.00

Trust loans 350,000,000.00 4,221000,000.00

Other borrowings 25,000,000.00 550,000,000.00

Guaranteed loans 5,474,500,000.00 4,444,000,000.00

Total 14,779,500,000.00 12,436,500,000.00

Note 1: Pledge loans at September 30, 2017 include: ①Ten-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under Agent Construction Agreement of New Construction Project of Shangrao Fengxi Bridge signed by Shangrao Urban Construction Investment and Development Group Co., Ltd. and Shangrao Municipal Government on June 12, 2009. The balance at the end of this period is 25 million yuan, of which, 10 million yuan is due within one year; ②Ten-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under Agent Construction Agreement of the First Phase Infrastructure Construction Project of the Processing Trade Undertaking Base in the Central and Western Regions Of

– F-57 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 41 of 57

Shangrao Economic Development Zone signed by Shangrao Urban Construction Investment and Development Group Co., Ltd. and Shangrao Municipal Government on June 05, 2009. The balance at the end of this period is 50 million yuan and no amount is due within one year; ③Twelve-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Road Network Reconstruction Project in Yugan County Industrial Park between Shangrao City Construction Development Group Co., Ltd. and Yugan County Finance Bureau on February 27, 2017. The balance at the end of this period is 290 million yuan and no amount is due within one year; ④Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Yugan County’s Participatory Poverty Village Infrastructure Construction Project between Shangrao City Construction Development Group Co., Ltd. and Yugan County Finance Bureau on November 03, 2016. The balance at the end of this period is 240 million yuan and no amount is due within one year; ⑤25-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Central Area Shanty Town Transformation Project between Shangrao City Construction Development Group Co., Ltd. and Shangrao Real Estate Administration on January 20, 2017. The balance at the end of this period is 2,450 million yuan and no amount is due within one year; ⑥ Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Guangfeng District Rural Infrastructure Improvement Project between Shangrao City Construction Development Group Co., Ltd. and Guangfeng District Government on May 26, 2017. The balance at the end of this period is 151 million yuan and no amount is due within one year; ⑦Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Shangrao County’s Participatory Poverty Village Infrastructure Construction Project between Shangrao City Construction Development Group Co., Ltd. and Shangrao County Finance Bureau on October 26, 2016. The balance at the end of this period is 300 million yuan and no amount is due within one year; ⑧Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Hengfeng County’s Participatory Poverty Village Infrastructure Construction Project between Shangrao City Construction Development Group Co., Ltd. and Hengfeng County Finance Bureau on December 28, 2016. The balance at the end of this period is 50 million yuan and no amount is due within one year; ⑨ Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Poyang County’s Participatory Poverty Village Infrastructure Construction Project between Shangrao City Construction Development Group Co., Ltd. and Poyang County Finance Bureau on December 28, 2016. The balance at the end of this period is 150 million yuan and no amount is due within one year; ⑩ Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Xinzhou District Rural Infrastructure Improvement Project between

– F-58 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 42 of 57

Shangrao City Construction Development Group Co., Ltd. and Xinzhou District Government on May 26, 2017. The balance at the end of this period is 110 million yuan and no amount is due within one year; ○11Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Dexing City Rural Infrastructure Improvement Project between Shangrao City Construction Development Group Co., Ltd. and Dexing City Government on June 13, 2017. The balance at the end of this period is 120 million yuan and no amount is due within one year; ○12Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Yushan County Rural Infrastructure Improvement Project between Shangrao City Construction Development Group Co., Ltd. and Yushan County Government on June 09, 2017. The balance at the end of this period is 101 million yuan and no amount is due within one year; ○13Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Wannian County Rural Infrastructure Improvement Project between Shangrao City Construction Development Group Co., Ltd. and Wannian County Government on June 06, 2017. The balance at the end of this period is 101 million yuan and no amount is due within one year; ○14Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Yiyang County Rural Infrastructure Improvement Project between Shangrao City Construction Development Group Co., Ltd. and Yiyang County Government on June 16, 2017. The balance at the end of this period is 151 million yuan and no amount is due within one year; ○15Fifteen-year loan borrowed by the Company from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under the government procurement service agreement signed for Wuyuang County Rural Infrastructure Improvement Project between Shangrao City Construction Development Group Co., Ltd. and Wuyuang County Government on June 13, 2017. The balance at the end of this period is 101 million yuan and no amount is due within one year; ○16Ten-year loan borrowed by the Company from China Merchants Bank Shangrao Branch pledged by the total equity and benefits under the government procurement service agreement signed for land consolidation project between Shangrao City Construction Development Group Co., Ltd. and Shangrao Land Reserve Center on March 30, 2017. The balance at the end of this period is 950 million yuan, of which 100 million yuan is due within one year; ○17117-month loan borrowed by the Company from China Minsheng Bank Shangrao Branch pledged by the total equity and benefits under the government procurement service agreement signed for the 2075 mu of land consolidation project between Shangrao City Construction Development Group Co., Ltd. and Shangrao Land Reserve Center on March 17, 2017. The balance at the end of this period is 1,000 million yuan, of which 50 million yuan is due within one year; ○18Nine-year loan borrowed by Shangrao Chengdong Investment and Development Co., Ltd. from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under Agent Construction Agreement of New Campus Construction Project of Shangrao Branch of Jiangxi Medical College signed by Shangrao Chengdong Investment and Development Group Co., Ltd. and Shangrao Municipal Government on October 10, 2008. The balance at the end of this period is 50 million yuan, of which, 40 million yuan is due within one year; ○19Nine-year loan borrowed by Shangrao

– F-59 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 43 of 57

Chengdong Investment and Development Co., Ltd. from Jiangxi Provincial Branch of China Development Bank pledged by the total equity and benefits under Agent Construction Agreement of Station Front Road Project of Shangrao New Railway Station Area signed by Shangrao Chengdong Investment and Development Co., Ltd. and Shangrao Municipal Government on April 15, 2009. The balance at the end of this period is 10 million yuan, of which, 5 million yuan is due within one year; Note 2: Mortgage loans at September 30, 2017 include: ① 5-year loan borrowed by the Company from Bank of Communications Shangrao Branch mortgaged by its self-owned land with an area of 359,309.60 ㎡. The balance at the end of this period is 423.50 million yuan, of which, 173.50 million yuan is due within one year; ② 8-year loan borrowed by the Company from Shangrao Branch of Agricultural Bank of China mortgaged by its self-owned land with an area of 351,925.67 ㎡. The balance at the end of this period is 262.50 million yuan, of which, 37.50 million yuan is due within one year; ③ 5-year loan borrowed by the Company from Shanghai Pudong Development Bank Nanchang Branch mortgaged by its self-owned land with an area of 148,06 ㎡. The balance at the end of this period is 500 million yuan, of which, 100 million yuan is due within one year; ④ 5-year loan borrowed by the Company from China Everbright Bank Nanchang Branch mortgaged by its self-owned land with an area of 18773.30 ㎡. The balance at the end of this period is 85 million yuan, of which, 25 million yuan is due within one year; ⑤ 15-year loan borrowed by the subsidiary Shangrao City Investment Industry Co., Ltd. from Shangrao Branch of Agricultural Bank of China mortgaged by the real estate with the area of 23,757.00 ㎡ owned by the parent company, and the receivables from agent construction with a total value of 214,214.05 million yuan and valid for 15 years. The balance at the end of this period is 1,200 million yuan, of which, 100 million yuan is due within one year; ⑥ 5-year loan borrowed by Shangrao Ziyang Real Estate Development Co., Ltd. from Shangrao Raodong Sub-branch of Agricultural Bank of China mortgaged by its self-owned land with an area of 29,626.50 ㎡. The balance at the end of this period is 700 million yuan and no amount is due within one year; Note 3: Trust loans at September 30, 2017 include: ① The Company signed a trust loan contract with Shanghai International Trust Co., Ltd. to establish Shanghai Trust • Shangrao City Investment Liability Investment Collective Fund Trust Plan., under which the Company borrows 350 million yuan. Note 4: other borrowings at September 30, 2017 include: ① other loan within the financial budget borrowed by the Company from Jiangxi Provincial Branch of China Development Bank and used for the construction of Longtan Lake Area Road Network in Shangrao City. There is no need for the Company to issue a guarantee for the loan. The term of the loan is from June 26, 2009 to June 25, 2019. The balance at the end of this period is 50 million yuan, of which 25 million yuan is due within one year. Note 5: Guaranteed loans at September 30, 2017 include: ① Three-year loan borrowed by the Company from China Minsheng Bank Shangrao Branch and guaranteed by Shangrao Investment Holding Group Co., Ltd. The balance at the end of this period is 405 million yuan, of which 255 million yuan is due within one year; ②Two-year loan borrowed by the Company from China Minsheng Bank Shangrao Branch and guaranteed by Shangrao Investment Holding Group Co., Ltd. The balance at the end of this period is 595 million yuan, of which 195 million yuan is due within one year; ③Three-year loan borrowed by the Company from Hua Xia Bank and

– F-60 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 44 of 57

guaranteed by Shangrao Investment Holding Group Co., Ltd. The balance at the end of this period is 800 million yuan, of which 550 million yuan is due within one year; ④Five-year loan borrowed by the Company from Hua Xia Bank and guaranteed by Shangrao City Investment Industry Co., Ltd. The balance at the end of this period is 400 million yuan and no amount is due within one year; ⑤ Three-year loan borrowed by the Company from ICBC and guaranteed by Shangrao Investment Holding Group Co., Ltd. The balance at the end of this period is 610 million yuan, of which 150 million yuan is due within one year; ⑥ Five-year loan borrowed by Shangrao City Investment Industry Co., Ltd. from ICBC Shangrao Zhongrong Sub-branch and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. The balance at the end of this period is 400 million yuan, of which 100 million yuan is due within one year; ⑦ Three-year loan borrowed by Shangrao City Investment Industry Co., Ltd. from China CITIC Bank Nanchang Branch and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. The balance at the end of this period is 180 million yuan, of which 19 million yuan is due within one year; ⑧ Ten-year loan borrowed by Shangrao Life Sewage Treatment Co., Ltd. from China Everbright Bank and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. The balance at the end of this period is 195 million yuan, of which 150 million yuan is due within one year; ⑨ Three-year loan borrowed by Shangrao Life Sewage Treatment Co., Ltd. from Ganzhou Bank Shangrao Branch and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. and Shangrao Chengdong Investment and Development Co., Ltd. The balance at the end of this period is 279.50 million yuan, of which 1 million yuan is due within one year; ⑩ Eight-year loan borrowed by Shangrao Ziyang Real Estate Development Co., Ltd. from Shangrao Raodong Sub-branch of Agricultural Bank of China and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. The balance at the end of this period is 1,600 million yuan and no amount is due within one year; ○11Five-year loan borrowed by Shangrao Ziyang Real Estate Development Co., Ltd. from Hua Xia Bank and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. The balance at the end of this period is 800 million yuan and no amount is due within one year; ○12Five-year loan borrowed by Shangrao Ziyang Real Estate Development Co., Ltd. from Bank of Shangrao Daihu Road Sub-branch and guaranteed by Shangrao City Construction Investment and Development Group Co., Ltd. The balance at the end of this period is 500 million yuan, of which 5 million yuan is due within one year.

(XXVI) Bonds payable

Items September 30, 2017 December 31, 2016

2010 Shangrao City Investment Enterprise

Bond

1,028,448,500.00

2012 Shangrao City Investment Enterprise

Bond

268,268,358.84 802,503,358.84

2015 Shangrao City Investment Corporate

Bond

2,208,950,000.00 2,119,400,000.00

2015 Shangrao City Construction Private

Placement Bond

624,033,385.70 1,099,980,000.00

2016 Shangrao City Investment Corporate

Bond 2,000,000,000.00 2,000,000,000.00

– F-61 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 45 of 57

Total 5,101,251,744.54 7,050,331,858.84

Note 1: On August 13, 2012, the Company issued 1.3 billion yuan of 7-year corporate

bond--2012 Raocheng Bond upon approval by No. [2012]2435 Approval of National

Development and Reform Commission. The interest rate is fixed at simple 7.30% per annum. On

September 11, 2013, the first installment of principal amount of 260 million yuan was redeemed.

As at September 30, 2017, the principal is 520 million yuan, of which 260 million yuan is due

within one year, and the interest is 8,268,400 yuan.

Note 2: On December 15, 2015, the Company privately issued 2 billion yuan of 5-year

corporate bond--2015 Raocheng Bond upon approval by No. [2015]2508 Letter of Shanghai Stock

Exchange. The interest rate is fixed at simple 5.97% per annum. As at September 30, 2017, the

principal is 2 billion yuan, and the interest is 208.95 million yuan.

Note 3: The Company completed the filing at Jiangxi Joint Stock Exchange Center on

December 23, 2015, privately issuing private placement bonds of no more than RMB 600 million

for a period of 36 months. The assisting issuing agency is Bank of Beijing Nanchang Branch.

Shangrao Longtan Lake Investment Co., Ltd. and Shangrao Chengdong Investment and

Development Co., Ltd. provide real estate mortgage as credit enhancement measure. The interest

rate is fixed, and the coupon rate is 6.2%. As at September 30, 2017, the principal is 6 million

yuan and the interest is 24,033,400 yuan.

Note 4: On September 07, 2016, the Company privately issued 2 billion yuan of 5-year

corporate bond--2016 Raocheng Bond at fixed interest rate upon approval by No. [2016]1734

Letter of Shanghai Stock Exchange. The bond was issued in two tranches. The first tranche was

listed on the Shanghai Stock Exchange on September 28, 2016 at a coupon rate of 3.78%. The

second tranche was listed on October 10, 2016 with a coupon rate of 3.75%. As at September 30,

2017, the principal is 2 billion yuan.

(XXVII) Long-term payables

Items September 30, 2017 December 31, 2016

Finance lease sale and leaseback 567,037,172.97 145,956,506.91

Total 567,037,172.97 145,956,506.91

Note: The long-term payable is the financing payable that shall be paid by the subsidiary

Shangrao Sewage Treatment Co., Ltd. to AVIC International Leasing Company, and the lease

– F-62 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 46 of 57

payable that shall be paid by Shangrao City Construction Investment and Development Group Co.,

Ltd. to Agricultural Bank of China Financial Leasing Co., Ltd.

(XXVIII) Special accounts payable

Items September 30, 2017 December 31, 2016

Shangrao Municipal Bureau of Finance 40,000,000.00 40,000,000.00

Total 40,000,000.00 40,000,000.00

Note: The ending balance is 40,000.00 million yuan of municipal finance loan received

from Shangrao Municipal Bureau of Finance for land acquisition of 2,000.00 mu of land in the

New Zone according to Shangrao Government Notice No. [2003]207 issued by Office of

Shangrao Municipal People's Government.

(XXIX) Deferred income

Items Beginning

balance

Increase in this

year

Decrease in this

year Ending balance

State subsidy for

hybrid power 10,682,750.00 2,031,750.00 8,651,000.00

Transferred

government official

car 20,681,527.00 3,141,384.23 17,540,142.77

Total 10,682,750.00 20,681,527.00 5,173,134.23 26,191,142.77

(XXX) Paid-in capital

Name of the investor

September 30, 2017 December 31, 2016

Investment amo

unt

Proportio

n

Investment amo

unt Proportion

Shangrao Investment Holding Group

Co., Ltd. 1,000,000,000.00 100.00% 620,000,000.00 100.00%

Total 1,000,000,000.00 100.00%- 620,000,000.00 100.00%-

(XXXI) Capital surplus

Items September 30, 2017 December 31, 2016

Premium on capital 7,602,615,186.87 5,532,615,186.87

Other capital reserve 14,605,748,599.94 14,904,648,599.94

Total 22,208,363,786.81 20,437,263,786.81

Note 1: Changes in premium on capital in 2016 mainly include: ① Shangrao Shinshu

District Chengdong Development 1st Investment Management Center (Limited Partnership)

increased its investment in Shangrao Chengdong Investment and Development Co., Ltd. Both

– F-63 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 47 of 57

parties signed the capital increase agreement, stipulating that Chengdong Development 1st

Investment Management Center (Limited Partnership) shall make a one-time payment of capital

increase of RMB 996.51 million yuan, of which 10 million was included in the registered capital

of Shangrao Chengdong Investment and Development Co., Ltd. and the remaining 986.51 million

was credited to capital reserve. ② Jiangxi Jinkong Investment Management Center (Limited

Partnership) increased its investment in Ziyang Real Estate Development Co., Ltd. Both parties

signed the capital increase agreement, stipulating that Jiangxi Jinkong Investment Management

Center (Limited Partnership) shall make a one-time payment of capital increase of RMB 1,800

million yuan, of which 18 million was included in the registered capital of Ziyang Real Estate

Development Co., Ltd. and the remaining 1,782 million was credited to capital reserve.

Note 2: Changes in other capital reserves in 2016 mainly include: ① The fixed assets are

recorded at their appraisal value. See Note VIII for details. ② China Agricultural Development

Key Construction Fund Co., Ltd. invested 50 million yuan to increase the capital of the parent

company.

Note 3: Changes in premium on capital in 2017 mainly include: ① Shangrao City

Investment No.1 Town Development Fund Center (Limited Partnership) increased its investment

in Shangrao City Investment Industry Co., Ltd. Both parties signed the capital increase agreement,

stipulating that Shangrao City Investment No.1 Town Development Fund Center (Limited

Partnership) shall make a one-time payment of capital increase of 2,500 million yuan, of which 50

million was included in the registered capital of Shangrao City Investment Industry Co., Ltd. and

the remaining 2,450 million was credited to capital reserve. ② The parent company’s capital

premium of 380 million yuan was transferred to paid-up capital.

(XXXII) Surplus reserve

Items September 30, 2017 December 31, 2016

Statutory surplus reserve 238,882,818.61 206,490,656.80

Total 238,882,818.61 206,490,656.80

(XXXIII) Undistributed profits

Items September 30, 2017 December 31, 2016

Ending balance of previous year 1,293,898,560.21 1,088,155,935.41

Add: Adjustment of undistributed profits at

the beginning of this year -1,772,203.84 -37,482,137.39

– F-64 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 48 of 57

Beginning balance of this year 1,292,126,356.37 1,050,673,798.02

Add: From net profit of this year 306,085,352.05 356,075,160.88

Decrease in this year 35,392,161.81 112,850,398.69

Including: Appropriation to statutory

surplus reserve 32,392,161.81 39,372,398.69

Dividend distribution 3,000,000.00 73,478,000.00

Ending balance of this year 1,562,819,546.61 1,293,898,560.21

(XXXIV) Operating income and operating costs

Items January-September, 2017 January-September, 2016

Income Cost Income Cost

(1) Subtotal of revenue from main

businesses

1,624,385,930.80 1,440,145,690.92 1,351,271,862.58 1,115,998,183.58

Land transfer 143,153,153.15 69,779,488.09 603,783,783.78 408,532,600.00

Agent construction project 1,344,847,713.40 1,259,266,495.27 658,398,058.25 616,500,000.00

Revenue from sales of goods 13,789,320.69 12,504,492.71 9,149,950.08 8,878,602.34

Catering income 21,642,450.37 9,427,039.95 20,531,735.27 10,217,471.48

Room service 11,095,429.71 202,379.76 13,249,614.08 665,991.28

Sewage treatment 10,800,000.00 7,861,933.22 10,800,000.00 11,249,165.86

Operations 25,975,858.08 62,116,192.15 25,860,821.43 56,970,512.82

Chartered bus 1,414,750.37 481,351.93

IC Card 5,701,898.29 5,929,991.72

Service charge 1,695,211.25

Official car service 4,383,854.29 8,128,665.41 1,391,344.79 2,983,839.80

Others 961.17

Toll income 28,245,709.00 3,550,385.35

Revenue from sale of natural

gas

13,334,832.28 7,308,619.01

(2) Subtotal of revenue from

other businesses

13,862,138.29 19,008,741.04 10,927,580.51 15,728,030.05

Financing income 2,645,285.61 150,943.40 3,528,079.26 1,492,265.62

House rent income 3,471,638.61 5,971,948.36 791,948.11 5,971,948.36

Property management fee 1,028.16 6,182,973.91 42,618.75 6,009,636.58

Parking service income 3,118,089.38 2,502,018.86 2,547,861.06 538,774.41

Advertising 42,735.04 3,379,777.49 62,490.00

Others 156,361.07 2,124,430.81 630,115.84 1,652,915.08

Maintenance service 683.76 7,180.00

Compensation for road

property

225,352.43

Canteen income 2,263,236.12 2,076,425.70

Labor service 1,369,811.32

Sale of electricity 567,916.79

Total 1,638,248,069.09 1,459,154,431.96 1,362,199,443.09 1,131,726,213.63

(XXXV) Financial expenses

– F-65 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 49 of 57

Items January-September, 2017 January-September, 2016

Interest expense 100,417,215.02 156,567,236.40

Less: Interest income 2,286,293.32 33,214,473.77

Poundage 104,325.30 173,825.66

Others 613,401.98 17,890,512.19

Total 98,848,648.98 141,417,100.48

(XXXVI) Asset impairment losses

Items January-September, 2017 January-September, 2016

Bad debt losses 11,782,323.53 21,231,034.97

Total 11,782,323.53 21,231,034.97

(XXXVII) Investment income

Items that generate investment income January-September, 2017 January-September, 2016

Income from long-term equity investment

accounted for using cost method

Income from long-term equity investments

accounted for using equity method -17,864,967.10 2,500,658.92

Investment income from disposal of long-term

equity investment

Investment income from financial assets at fair

value through profit or loss during the holding

period

Investment income from held-to-maturity

investments during the holding period

Investment income from available-for-sale

financial assets during the holding period 25,674,834.32 17,380,845.00

Investment income from disposal of financial

assets at fair value through profit or loss

Investment income from disposal of

held-to-maturity investments

Investment income from disposal of

available-for-sale financial assets

Other investment income

Total 7,809,867.22 19,881,503.92

(XXXVIII) Non-operating income

Items January-September, 2017 January-September, 2016

Government grants 344,177,639.06 284,945,005.19

Gains from fine 3,000.00

Others 185,535.68 203,417.20

– F-66 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 50 of 57

Gains from disposal of

non-current assets 10,435.00 75,502.98

Including: Gains from disposal

of fixed assets 10,435.00 75,502.98

Total 344,376,609.74 285,223,925.37

Note: The government grants mainly include the 312 million yuan of project construction

subsidy received by the parent company according to the Notice of Shangrao City Finance Bureau

for Granting Subsidy for the Construction of the Livelihood Projects in 2017 [Rao Caishu (2017)

No. 7],

(XXXIX) Non-operating costs

Items January-September, 2017 January-September, 2016

Total losses from the disposal

of non-current assets 5,992.65 373,568.75

Including: Losses from

disposal of fixed assets 5,992.65 373,568.75

External donations 1,582,274.36 1,245,576.84

Fine expenses 14,189.43

Tax overdue fine

Recognized losses caused by

external guaranties

Others 329,146.28 110,065.56

Total 1,917,413.29 1,743,400.58

(XL) Income tax expenses

Items January-September, 2017 January-September, 2016

Income tax expenses for this period 13,191,519.74

20,786,447.22

Deferred income tax expenses -2,943,127.28

-5,307,758.73

Total 10,248,392.46 15,478,688.49

(XLI) Reconciliation of net profits to cash flows from operating activities

Items January-Septembe

r, 2017

January-Septembe

r, 2016 1. Reconciliation of net profits to cash flows from operating

activities

Net profits 306,539,810.10 279,806,158.42

Add: Provision for asset impairment 11,782,323.53 21,231,034.97

Depreciation of fixed assets, depletion of oil and gas

assets, depreciation of bearer biological assets

41,155,911.07 30,736,526.62

Amortization of intangible assets 1,795,724.15 2,276,994.28

Amortisation of long-term prepaid expenses 704,313.28 583,637.84

– F-67 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 51 of 57

Items January-Septembe

r, 2017

January-Septembe

r, 2016 Losses from disposing fixed assets, intangible assets and

other long-term assets.

(“-” for gains)

-4,442.35 298,065.77

Losses from fixed asset discard (“-” for gains)

Losses from fair value change (“-” for gains)

Financial expenses (“-” for gains) 100,417,215.02 156,567,236.40

Investment losses (“-” for gains) -7,809,867.22 -19,881,503.92

Decrease in deferred tax assets (“-” for increase) -2,943,127.28 -5,307,758.74

Increase in deferred tax liabilities (“-” for decrease)

Decrease in inventories (“-” for increase) -2,519,682,547.44 -2,417,598,734.55

Decrease in operating receivables (“-” for increase) -1,277,496,503.05 673,684,192.98

Increase in operating payables (“-” for decrease) 67,030,699.94 32,751,454.25

Others

Net cash flows from operating activities -3,278,510,490.25 -1,244,852,695.68

2. Investing and financing activities that do not involve in cash

receipts and payments

Debts converted to capital

One year due convertible bonds

Fixed assets under finance lease

3. Net change in cash and cash equivalents

Ending balance of cash 9,942,444,442.00 7,773,262,617.30

7,773,262,617.30

Less: Beginning balance of cash 9,737,544,740.35 7,882,041,689.70

Add: Ending balance of cash equivalents

Less: Beginning balance of cash equivalents

Net increase in cash and cash equivalents 204,899,701.65 -108,779,072.40

VIII. Explanations on Significant Items in the Financial Statements of the Parent

Company

(I) Accounts receivable

Category

September 30, 2017 December 31, 2016

Book balance

Provision for bad

debts Book balance

Provision for

bad debts

Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%)

Amo

unt

Rati

o

(%)

Accounts receivable that are

individually significant and

provided for bad debts

separately

Accounts receivable that are

collectively provided for bad

5,064,121,999.3

3

100.0

0

18,000.0

0 0.00

4,385,772,851.7

9

100.0

0

– F-68 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 52 of 57

debts

Including: Age group 180,000.00 18,000.0

0 10.00 180,000.00 1.00

Group of government

financial receivables

5,063,941,999.3

3

100.0

0

4,385,592,851.7

9 99.00

Accounts receivable that are

not individually significant

but provided for bad debts

separately

Total 5,064,121,999.3

3

100.0

0

18,000.0

0

4,385,772,851.7

9

100.0

0

Note1: There is no receivables that shall be paid by shareholders holding over 5% (inclusive) of

the Company’s shares as at 30 September 2017.

Note 2: The balance of accounts receivable at the end of reporting period is the proceeds from the

land transfer and repurchase agreements of Shangrao Municipal Finance Bureau.

(II) Other receivables

Category

September 30, 2017 December 31, 2016

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Rati

o

(%) Amount

Ratio

(%) Amount

Rati

o

(%)

Other receivables that are

individually significant and

provided for bad debts

separately

- - - - - - - -

Other receivables that are

collectively provided for bad

debts

8,351,681,107.82 100.0

0 44,103,779.62 0.53

5,231,591,347.

81

100.0

0

40,706,270.3

8 0.75

Including: Age group 566,480,889.97 6.78 44,103,779.62 7.79 326,404,772.97 6.24 40,706,270.3

8

12.4

7

Group of government

financial receivables 6,446,936,101.04

77.19

3,352,075,638.

35

64.07

Relate party group 1,338,264,116.81

16.02

1,553,110,936.

49

29.69

Other receivables that are not

individually significant but

provided for bad debts

separately

Total 8,351,681,107.82 100.0 44,103,779.62 5,231,591,347. 100.0 40,706,270.3

– F-69 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 53 of 57

0 81 0 8

Other receivables that are provided for bad debts using aging analysis

Age

September 30, 2017 December 31, 2016

Amount

Ratio

(%)

Provision for

bad debts Amount

Ratio

(%)

Provision for

bad debts

Less than 1

year 334,000,767.68 64.26 88,463,101.44 27.10

1-2 years 86,101,443.48 15.20 8,610,144.35

184,060,739.21 56.39 18,406,073.92

2-3 years 110,497,409.22 14.21 16,099,481.84 38,186,232.32 11.70 7,637,246.46

3-5 years 32,974,232.32 5.82 16,487,116.16 2,063,500.00 0.63 1,031,750.00

Over 5

years 2,907,037.27 0.51 2,907,037.27 13,631,200.00 4.18 13,631,200.00

Total 566,480,889.97 100.00 44,103,779.62 326,404,772.97 100.00 40,706,270.38

Note1: As at September 30, 2017, there is no receivables that shall be paid by shareholders

holding over 5% (inclusive) of the Company’s shares.

Note 2: Details of significant balance of other receivables at the end of reporting period are as

follows:

Name Nature of the account Amount

Shangrao North Avenue Project Management

Office Dispatch fund 864,725,000.00

Expropriation headquarters of shantytowns

reconstruction project in Shangrao downtown

Sanjiang Area (Wangjia Garden Phase III) Dispatch fund 631,404,160.83

Yugan County Construction Investment and

Development Group Co., Ltd. Dispatch fund 529,999,999.67

Project Department of Ziyang North Avenue

Comprehensive Transformation and Upgrading

Project Construction Leading Group Dispatch fund 443,142,800.00

Shangrao City House Demolition and Resettlement

Office

Prepaid expropriation

expense 205,944,429.17

(III) Long-term equity investments

(1) Category of Long-term equity investments

Items December 31, 2016 Increase in this

year

Decrease in

this year

September 30, 2017

Amount Amount Investment in

subsidiaries 1,220,670,000.00 27,000,000.00 50,517,047.85 1,197,152,952.15

Investment in

associates 61,678,927.07 32,302,145.49 93,981,072.56

– F-70 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 54 of 57

Total 1,282,348,927.07 59,302,145.49 50,517,047.85 1,291,134,024.71

(2) Investment in associates under equity method

Name of investee Investmen

t ratio (%)

Amount of

initial

investment

(in ten

thousand)

December 31, 2016

Increase or

decrease in the

year

September 30,

2017

Jiangxi Shangrao Harbor

Logistics Co., Ltd. 50.00 1,000.00 13,476,779.09 323,927.39 13,800,706.48

Shangrao Affordable Housing

Investment and Construction

Co., Ltd.

30.00 3,000.00 48,202,147.98 -21,495,949.01 26,706,198.97

Shangrao Small and

Medium-Sized Enterprises

Mutual Aid Fund Co., Ltd.

33.33 50,000.00 53,474,167.11 53,474,167.11

Total 61,678,927.07

32,302,145.49 93,981,072.56

(IV) Operating income and costs

Items January-September, 2017 January-September, 2016

Income Cost Income Cost

(1) Subtotal of revenue

from main businesses

1,423,586,452.14 1,308,402,828.57 1,262,181,842.03 1,025,032,600.00

Land transfer 78,738,738.74 49,136,333.30 603,783,783.78 408,532,600.00

Agent construction

project

1,344,847,713.40 1,259,266,495.27 658,398,058.25 616,500,000.00

(2) Subtotal of revenue

from other businesses

8,054,652.33 6,122,891.76 4,320,027.37 7,464,213.98

Financing income 2,645,285.61 150,943.40 3,528,079.26 1,492,265.62

Renting income 3,471,638.61 791,948.11

Others

Amortisation of

investment properties

5,971,948.36 5,971,948.36

Labor service 1,369,811.32

Sale of electricity 567,916.79

Total 1,431,641,104.47 1,314,525,720.33 1,266,501,869.40 1,032,496,813.98

(V) Investment income

Items that generate investment income January-September,

2017 January-September, 2016

Income from long-term equity investment

accounted for using cost method 100,000.00

Income from long-term equity investments

accounted for using equity method 4,792,404.39 961,632.59

Investment income from disposal of long-term

equity investment

– F-71 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 55 of 57

Investment income from financial assets at fair

value through profit or loss during the holding

period

Investment income from held-to-maturity

investments during the holding period

Investment income from available-for-sale

financial assets during the holding period

Investment income from disposal of financial

assets at fair value through profit or loss

Investment income from disposal of

held-to-maturity investments

Investment income from disposal of

available-for-sale financial assets

Other investment income

Total 4,892,404.39 961,632.59

IX. Related parties and related party transactions

(I) Actual control party of the Company

Name of actual control party Relationship

Shareholding

proportion in

the Company

(%)

Voting power

proportion in

the Company

Ultimate

controlling party

of the Company

Shangrao State-owned Assets

Supervision and Administration

Commission

Actual

control

100%

100% Yes

(II) Other related parties

Items Relationship

Jiangxi Shangrao Harbor Logistics Co., Ltd. Joint venture

Shangrao Affordable Housing Investment and

Construction Co., Ltd. Holding company

Shangrao Haihua Real Estate Development Co., Ltd. Holding company

Shangrao Sanjiang Daotuo Drainage Co., Ltd. Holding company

Jiangxi Chunhong New Energy Co., Ltd. Holding company

(III) Receivables and payables with related parties

Items of

current

account

Name Substance September 30,

2017 December 31, 2016

Other

receivables

Jiangxi Shangrao Harbor Logistics Co.,

Ltd. Borrowings 8,000,000.00

– F-72 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 56 of 57

Other payables Shangrao Affordable Housing

Investment and Construction Co., Ltd.

Current

account 25,000,000.00 25,000,000.00

X. Contingencies

1. On December 30, 2013, the Company signed a maximum guarantee contract with

Shangrao Branch of China Merchants Bank to provide guarantee for Shangrao Investment

Holding Group Co., Ltd. to borrow 100 million yuan from Shangrao Branch of China Merchants

Bank with guarantee term from December 30, 2016 to December 29, 2019. On June 20, 2016,

the Company signed a guarantee contract with China Everbright Bank Nanchang Branch to

provide guarantee for Shangrao Investment Holding Group Co., Ltd. to borrow 2,500 million

yuan from China Everbright Bank Nanchang Branch with guarantee term from June 24, 2016 to

June 23, 2026. On April 25, 2017, the Company signed a guarantee contract with Bohai Bank

Fuzhou Branch to provide guarantee for Shangrao Investment Holding Group Co., Ltd. to borrow

100 million yuan from Bohai Bank Fuzhou Branch with guarantee term from May 03, 2017 to

May 02, 2018.

XI. Commitments

As of September 30, 2017, there is no major commitment shall be disclosed.

XII. Post-balance Sheet Events

1. On October 26, 2017, Jiangxi Provincial Branch of China Development Bank made a loan

of 50 million yuan, with annual rate of 4.445%, term of 25 years and the maturity date on October

25, 2042.

2. On November 02, 2017, Industrial Bank Nanchang Branch made a loan of 500 million

yuan, with annual rate of 6.2%, term of 2 years and the maturity date on November 01, 2019.

XIII. Other Material Statements

As of September 30, 2017, there is no other material event shall be disclosed.

– F-73 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Nine Months Ended 30 September 2017

Page 57 of 57

Shangrao City Construction Investment and Development Group Co., Ltd. December 2, 2017

– F-74 –

– F-75 –

– F-76 –

– F-77 –

– F-78 –

– F-79 –

– F-80 –

– F-81 –

– F-82 –

– F-83 –

– F-84 –

– F-85 –

– F-86 –

– F-87 –

– F-88 –

– F-89 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 1 of 60

Shangrao City Construction Investment and Development

Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

I. Company Profile

Shangrao City Urban Construction Investment and Development Group Co., Ltd. (hereinafter

referred to as “the Company”) was formerly named Shangrao Urban Construction Investment and

Development Co., Ltd., a wholly state-owned company established on June 18, 2002 with the

approval of the standing government meeting of Shangrao City. Its registered capital was RMB

50,000,000 Yuan, and the registration number of Corporate Business License is 3623001400246.

According to Shangrao Government Notification No. [2006]202 issued by Shangrao

Municipal People’s Government on October 16, 2006, the use right of 1,705 mu of land in the

urban area was injected into the Company as an investment. According to Shangrao Government

Notification No.[2007]310 issued by Shangrao Municipal People’s Government on 20 November

2007, the use right of 968.613 mu of construction land was injected into the Company as an

investment.

On December 19, 2008, according to Rao Guo Zi [2008] No.79 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Reply to <Report on Increasing

Registered Capital> of Shangrao City Urban Construction Investment and Development Co., Ltd.,

land use right of State-owned Land of Shangrao (SOLS) No.2008(195) and No.2008 (196), of

which the assessed value is 50,030,400 yuan, was used to increase the Company’s registered

capital by 50 million yuan,and the remaining was recorded into capital reserve. Therefore, the

Company’s registered capital amounted to 100 million yuan.

On March 9, 2009, the Company was renamed as Shangrao Urban Construction Investment

and Development Group Co., Ltd. with the Approval No.[2000]00029 from Shangrao City

Administration for Industry and Commerce.

On January 06, 2011, according to Rao Guo Zi [2010] No.61 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Approval on Increasing

– F-90 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 2 of 60

Registered Capital of Shangrao City Urban Construction Investment and Development Co., Ltd.,

land use right of State-owned Land of Shangrao (SOLS) No.2010(119), of which the assessed

value is 642,061,900 yuan, was used to increase the Company’s registered capital by 200 million

yuan,and the remaining was recorded into capital reserve. On March 22, 2011, according to Rao

Guo Zi [2010] No.61 Approval of Shangrao State-owned Assets Supervision and Administration

Commission--Approval on the Change of the Company's Registered Capital and Business Scope,

land use right of State-owned Land of Shangrao (SOLS) No.2007(182), of which the assessed

value is 342,866,600 yuan, was used to increase the Company’s registered capital by 320 million

yuan,and the remaining was recorded into capital reserve. After the capital increase, the registered

capital of the Company amounted to 620 million yuan.

On September 24, 2015, according to Rao Guo Zi [2015] No.56 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Approval on the Appropriation

of 100% Equity of Shangrao Urban Construction Investment and Development Group Co., Ltd.,

Shangrao State-owned Assets Management Co., Ltd., Shangrao City Water Corporation and

Shangrao Tourism Development Group Limited to Shangrao City Urban Construction Investment

and Development Group Co., Ltd., and upon verification by Shangrao City Administration for

Industry and Commerce, the investor of the Company was changed from Shangrao State-owned

Assets Supervision and Administration Commission to Shangrao Investment Holding Group Co.,

Ltd., The type of the Company was changed from state-solely-owned to legal person

wholly-owned. The actual controller of the Company is Shangrao State-owned Assets Supervision

and Administration Commission.

Registration number / unified social credit code: 913611007391724174; legal representative:

Zhang Ping.

Scope of business: infrastructure projects; land development; catering services (limited to

branch offices); highway construction. (Businesses subject to approval shall be carried out upon

approval by relevant government department.)

– F-91 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 3 of 60

II. Basis for Preparation of Financial Statements

(I) Preparation Basis

The financial statements have been prepared on a going concern basis, with all actual

transactions and events recognized and measured in accordance with Accounting Standards for

Business Enterprises - Basic Standard, Accounting System for Business Enterprises and the

specific accounting standards and other relevant provisions.

(II) Going Concern

The Company is capable of operating for at least twelve months since the end of the current

reporting period without any major issues affecting it.

III. Statement of Compliance with the Accounting Standards for Business Enterprises(ASBE)

The financial statements of the Company have been prepared in accordance with the ASBEs,

and present truly and completely, the Company’s financial position, results of operations and cash

flows for the accounting period

IV. Significant Accounting Policies and Accounting Estimates, and Preparation of Consolidated Financial statements

(I) Accounting Standards Implemented

The financial statements have been prepared on a going concern basis, with all actual

transactions and events recognized and measured in accordance with Accounting Standards for

Business Enterprises issued by the Ministry of Finance, including its guidelines on application of

accounting principles, interpretation of accounting principles and other relevant regulations

(collectively referred to as “Accounting Standards”).

(II) Accounting Period

The accounting period of the Company runs from 1 January to 31 December of each calendar

year.

(III) Basis of Bookkeeping and Principle of Measurement

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The Company adopts the accrual system as the basis of bookkeeping and follows the

historical cost principle.

(IV) Functional Currency and Accounting Treatment for Foreign Currency Transaction

The Company uses Renminbi (RMB) as its functional currency. The financial transactions

involving foreign currencies in the fiscal year are booked at the market exchange rate of RMB on

the day of occurrence. At the end of 2016, the balance of foreign currency accounts is adjusted to

the functional currency based on the market exchange rate at the end of 2016. The difference

between the original carrying amount and the adjusted functional currency is recognized as

foreign exchange gains or losses Foreign exchange gains or losses incurred during the preparation

period are included in long-term prepaid expenses; foreign exchange gains or losses related to the

purchase and construction of fixed assets are treated according to the principle of borrowing costs;

other exchange gains or losses are included in the financial expenses for the current period.

(V) Standards for Cash Equivalents

Cash equivalents refer to the short-term, highly liquid investments that are readily

convertible into known amounts of cash and that are subject to an insignificant risk of change in

value.

(VI) Accounting Method for Bad Debts

The Company adopts allowance method to account for the bad debt loss. Recognition

criteria of bad debt: ① the debtor is dead or bankrupt, and the debt cannot be paid under the legal

liquidation procedure; ② the debtor cannot pay off the debt in due time and there is significant

signs indicating that the debt cannot be recovered.

The Company analyzed the recoverability of each receivables (accounts receivable and other

receivables) at the end of 2016 and predicted the possible bad debt losses. Provisions for bad debts

will be made for possible bad debt losses. Provisions for bad debts are made by a combination of

general identification and individual identification.

The general recognition is based on the aging analysis of receivables by each unit and adopts

the aging analysis method to provide for bad debt. Provision for bad debts is made according to

the following proportions: 0% for 1 year; 10% for 1-2 years (including); 20% for 2-3 years

(including); 50% for 3-5 years (including); 100% for over 5 years.

– F-93 –

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Individual identification method is used under the following conditions:

(1) Receivables with an age of less than 5 years but full provision for bad debts are required.

There is no conclusive evidence that the receivable should be written off as a bad debt loss, but in

fact it is unlikely that the debt will be recovered. For example, if the debtor is in a non-recurring

state, insolvent, or experiencing a serious under-cash flow and serious natural disasters that caused

a production halt, and the debts cannot be paid off within a short period of time, and the losses are

likely to occur, the provision for bad debts shall be fully made. These circumstances include:

① the debtor is in a state of shutdown; ② the debtor is in the process of bankruptcy

application or execution; ③ the debtor is insolvent after being audited by an intermediary

institution; ④ the debtor is unable to pay off due to natural disasters such as fires, floods,

earthquakes and other force majeure; ⑤ other circumstances: the debtor is dead or has been

declared dead, disappeared or escaped, or actually does not exist, etc.; although the evidence

cannot be obtained from relevant departments, but facts have shown that it cannot be recovered.

(2) Provision for bad debts shall be made partially according to the recoverability determined

by age analysis under the following circumstances:

① receivables occurred in the current year, and undue receivables; ② planning to

reorganize the receivables; ③ receivables with related parties.

(3) No provision for bad debts will be made for the balance of accounts with the internal

departments of the Group (included in the scope of the consolidated financial statements).

(4) No provision for bad debts will be made for receivables generated from special lending

by the local government or China Development Bank, and those from undertaking government

construction projects.

(VII) Accounting Method for Inventories

Inventories of the Company include raw materials, products under development,

development costs, land reserves, etc.

All kinds of inventories are carried out in perpetual inventory system, and the actual cost is

used in the acquisition. According to the nature and type of business, the weighted average method

or the FIFO method are used respectively. Low-value consumables and packaging materials are

written-off in full when issued for use.

– F-94 –

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Costs incurred for land acquisition and renovation carried out in order to optimize the land

resources within the scope of the authorized business shall be recorded into the cost of land

reserves; and interests from borrowings for land reserves are capitalized and included in the cost

of land reserves.

The specific accounting method for the cost of real estate development is to take the real

estate development project as the accounting object and separately calculate the development cost.

Before the completion of the project, the actual costs incurred are recorded by individual project.

As of the end of 2016, the development costs that have been actually incurred but not yet booked

shall be provisionally estimated by the finance department of the project and carried forward to

the products under development when the project is completed and the revenue is recognized.

Development costs at December 31, 2016 is the actual cost of uncompleted projects.

Inventories are measured at the lower of cost and net realizable value at the end of 2016. The

Company will determine the net realizable value of inventories based on solid evidence obtained

and after taking into consideration the purpose for which the inventory is held, and the effect of

events occurring after the balance sheet date. For materials held for use in production, if the net

realizable value of the finished products in which they will be incorporated is higher than their

cost, they will continue to be measured at cost; when a decline in the price of the materials

indicates that the cost of the finished products exceeds their net realizable value, they will be

measured at net realizable value. For inventories held to satisfy sales or service contracts, the net

realizable value is based on the contract price. If the quantities of inventories specified in sales

contracts are less than the quantities held by the Company, the net realizable value of the excess

portion of inventories will be based on general selling prices. For materials held for sale, the net

realizable value is base on market value. The Company will provide for decline in value of

inventories on an item-by-item basis. For large quantity and low value items of inventories,

provision will be made based on categories of inventories.

(VIII) Accounting Method for Long-term Equity Investments

1. Determination of equity investments with control, joint control or significant influences

on the invested entity

The Company’s long-term equity investments mainly includes equity investment that have

control or significant influence over the invested entities and equity investments in the joint

– F-95 –

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ventures.

Control refers to power over the investee. It means the investor is given the right to variable

returns by participating in relevant activities of the investee and the ability to affect those returns

through power over the investee.

Joint control is the contractually agreed sharing of control of an arrangement. Relevant

activities of the arrangement shall be conducted only if they are given consent by all parties in

control. A joint arrangement is an arrangement of which two or more parties have joint control. A

joint venture is a joint arrangement whereby the parties that have joint control of the arrangement

have rights to the net assets of the arrangement.

Significant influence is the power to participate in financial and operating policy decisions of

the investee but is not control or joint control over those policies. Whether the Group is able to

exert significant influence depends on its representation on the board of directors or equivalent

governing body of the investee. The Group exerts significant influence by holding voting power

over financial and operation policy making processes of the investee. Significant influence is

presumed not to exist if the Group holds a voting power more than or equal to 20% but less than

50% directly or indirectly through subsidiaries and if evidence indicates that under such

circumstance the Group is excluded from production and operation policy making of the investee.

To confirm whether the Group can exercise significant influence, on one side, voting rights

directly or indirectly hold by the Group over the investee shall be considered, on the other side,

effect of currently exercisable potential voting rights arising through currently convertible

warrants, share options and convertible bonds issued by the investee that are convertible into

shares of the investee shall also be taken into account.

2. Determination of investment cost, subsequent measurement and recognition of

investment income of long-term equity investments

Where the consideration of the combination is satisfied by paying cash, transfer of non-cash

assets or assumption of liabilities, the initial investment cost of the long-term equity investment

will be the ultimate controlling party’s share of the owners’ equity of the party being absorbed at

combination date. The difference between the initial investment cost and the carrying amount of

consideration paid is adjusted to capital reserve, or to retained earnings if the balance of capital

reserve is insufficient.

Where the consideration of the combination is satisfied by the issue of equity securities, the

initial investment cost of the long-term equity investment will be the ultimate controlling party’s

share of the owners’ equity of the party being absorbed at combination date. The aggregate face

value of the shares issued will be accounted for as share capital. The difference between the initial

investment cost and the aggregate face value of the shares issued will be adjusted to capital

reserve, or to retained earnings if the balance of capital reserve is insufficient.

– F-96 –

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The cost of a long-term equity investment acquired through business combination not under

common control is the cost of acquisition determined at the acquisition date.

Expenses for such intermediary services as auditing, legal services, assessment and

consultation and other relevant management expenses resulting from business combination will be

included in profit or loss at the time of occurrence. Expenses arising from exchanges of equity

securities or debt securities issued as consideration will be included in initial determination

payment of equity or debt securities.

Except for long-term equity investment gained by business combination, investment cost of a

long-term equity investment obtained by making payment in cash will be the purchase price which

is actually paid. Investment cost of a long-term equity investment obtained on the basis of issuing

equity securities will be the fair value of the equity securities issued. Company’s investment cost

of a long-term equity investment shall be the value settled by investment contracts or agreement.

Investment cost of a long-term equity investment obtained by debt restructuring or exchange of

non-monetary assets shall be determined in accordance with relevant accounting standards.

The Group will use the cost method to account for a long-term equity investment where it can exercise control over the investee, and the equity method to account for an investment in joint ventures and associates.

Under the cost method, a long-term equity investment will be measured at its initial investment cost. When additional investment is made or the investment is recouped, the cost of the investment will be adjusted accordingly. Cash dividends or profit distributions declared by the investee will be recognized as investment income.

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, no adjustment will be made to the initial investment cost. Where the initial investment cost is less than the investor’s interest in the fair values of investee’s identifiable net assets at the acquisition date, the difference will be charged to profit or loss for the current period, and the cost of the long-term equity investment will be adjusted accordingly. After the Company has acquired a long-term equity investment, it will recognize its share of the net profits or losses made by the investee as investment income or losses, and adjust the carrying amount of the investment accordingly. The carrying amount of the investment will be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributed to the Company. For other changes in owners’ equity of the investee, other than net profits or losses, other comprehensive income and profit distribution, the Company will adjust the carrying amount of the long-term equity investment and include the corresponding adjustment in equity. The Group will recognize its share of the investee’s net profits or losses after making appropriate adjustments based on the values of the investee’s individual separately identifiable assets at the acquisition date and its own

– F-97 –

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accounting policies and accounting period, and recognize investment income based on the adjusted financial statements.

3. Changes of long-term equity investments

When the Company becomes capable to exercise joint control or significant influence but not control over an investee due to additional investment or other reason, it will change to the equity method and use the sum of the fair value of the investment which was originally classified as available-for-sale financial assets and the additional investment as the initial investment cost. The difference between the fair value and the carrying amount, and the accumulated changes in fair value originally included in other comprehensive income shall be transferred to profit or loss for the period upon commencement of the equity method. Where the difference between initial investment cost of the long-term equity investment calculated above is more than the share of the fair value of the investee’s identifiable net assets attributable to the Company and is calculated on the basis of new shares it holds from on date of additional investment, carrying value of the long-term equity investment may not be adjusted. If less, carrying value of the long-term equity investment shall be adjusted and the difference shall be included in non-operating revenue.

If the Company becomes capable of exercising control over an investee that is not under common control due to additional investment or other reasons, in stand-alone financial statements, it shall change to the cost method and use the carrying amount of the previously-held equity investment, together with the additional investment cost, as the initial investment cost under the cost method. Other comprehensive income of the equity investment held before the purchase date, which is measured and recognized by the equity method, shall be subject to accounting treatment on the same basis with the investee’s direct disposal of relevant assets or liabilities when such investment is disposed of. If an equity investment held before the purchase date is classified as available-for-sale financial asset and is subject to its accounting treatment, the cumulative changes in fair value originally included in other comprehensive income shall be transferred to profit or loss for the period when it is measured by the cost method.

Where the Group can no longer exercise joint control of or significant influence over the investee due to partial disposal of equity investment or other reasons, and the remaining equity investment is classified as an available-for-sale financial asset, the difference between the fair value and the carrying amount at the date of the loss of joint control or significant influence shall be charged to profit or loss for the current period. Other comprehensive income of the original equity investment measured and recognized by the equity method shall be subject to accounting treatment on the same basis as would have been required if the Company had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method.

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Where the Company can no longer exercise control over an investee due to partial

disposal of equity investment or other reasons, and with the retained interest, still has joint control of or significant influence over the investee, when preparing the individual financial statements, the Company shall change to the equity method and adjust the remaining equity investment as if the equity method had been applied from the date of the first acquisition. If the Company can not exercise joint control of or significant influence over the investee after partial disposal of equity investment, and the remaining equity investment is classified as an available-for-sale financial asset, the difference between the fair value and the carrying amount at the date of loss of control shall be charged to profit or loss for the current period.

4. Disposal of long-term equity investments

On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount will be recognized in investment income for the current period. For a long-term equity investment accounted for using the equity method, any changes in the owners’ equity of the investee included in the owners’ equity of the Company will be transferred to profit or loss for the current period on a pro-rata basis according to the proportion disposed of.

(IX) Accounting Method for Investment Properties

Investment properties of the Group include right to use land which has already been

rented, right to use land which is held and prepared for transfer after appreciation and right to use buildings which has already been rented.

Investment properties are measured initially at cost. The cost of a purchased investment

property comprises its purchase price, related taxes and fee, and other directly attributable

expenditures. The cost of a self-constructed investment property comprises of those expenditures

necessarily incurred for bringing the assets to working condition for its intended use.

The Group uses the cost model for subsequent measurement of an investment property, and provides for depreciation or amortization based on its expected useful life and estimate net residual value. The estimated depreciable life, the estimated net residual value rate and the

annual depreciation (amortization) rates of investment properties are as follows:

Category Depreciable life (year) Estimated net residual

value rate (%)

Annual

depreciation rate

(%)

Land use right 40.00 5.00 2.50

Houses and buildings 40.00 5.00 2.50

When a investment property is transferred to an owner-occupied property, it will be regarded as a fixed asset or an intangible asset at the transfer date. When an owner-occupied property is used to earn rentals or for capital appreciation, it will be regarded as a investment

– F-99 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

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property at the transfer date. The carrying amount before the transfer will be used as the recorded amount after the transfer.

An investment property will be derecognized on disposal or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. When an investment property is sold, transferred, retired or damaged, the Company will recognize the amount of any proceeds on disposal net of the carrying amount and related taxes and fees in profit or loss for the current period.

(X) Measurement and Depreciation of Fixed Assets

1. Criteria for fixed assets

Buildings, machinery and equipment, transportation equipment and other equipment,

appliances and tools related to production and operation with useful life of more than one year,

and other non-production and operation equipment and articles with unit price over 2,000 yuan

and useful life over 2 years are accounted for as fixed assets.

2. Measurement of fixed assets

① The acquired fixed assets are measured at the actual payment of the price, packaging fee,

transportation fees, installation costs, and relevant taxes paid; ② The self-constructed fixed

assets are measured at all expenditures necessary for bringing the assets to their intended use. ③

Fixed assets invested by the investors are measured at the value stipulated by the investor. ④

Fixed assets under finance lease are measured at the lower of the original carrying amount of the

leased assets and the present value of the minimum lease payment at the lease starting date.

3. Depreciation of fixed assets

① Fixed assets are depreciated over its useful life using the straight-line method.

② Category, estimated residual value rate and depreciable life of fixed assets are as follows:

Category of fixed assets Useful life Residual rate (%) Annual depreciation

rate

Houses and buildings 5-40 years 5.00% 2.38%－19.00%

Machines 10 years 5.00% 9.50%

Transportation facilities 8 years 5.00% 11.88%

Other equipment 5-10 years 5.00% 9.5%-19.00%

4. Provision for fixed asset impairment

At the end of 2016, fix assets are measured at the lower of its carrying amount and

recoverable amount. If the recoverable amount is less than its carrying amount, the difference will

– F-100 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

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be provided for impairment.

If the value of fixed assets that have been provided for impairment has been recovered, it is

reversed to the extent the provision for impairment has not been made. Fixed assets that have been

fully provided for impairment will no longer depreciated.

(XI) Accounting Method for Construction in Progress

(1) Construction in progress is measured at its actual cost. At the date when it reaches the

working condition for its intended use, it will be transferred into fixed assets based on project

budget, contracted construction price or actual project cost.

(2)At the end of 2016, a comprehensive review of construction in progress will be carried out,

and impairment will be provided for if the construction project:

① has long been halted and is not expected to resume in the next 3 years;

② has already outdated in terms of performance or technology, and has great uncertainties

for the economic benefits that it can bring to the company;

③ has been impaired based on other proofs.

(XII) Accounting Method for Borrowing Costs

Borrowing costs from the purchase or construction of fixed assets will be capitalized in the

cost of the assets if they are eligible for capitalization and incurred before the assets enter the

expected serviceable condition. Borrowing costs incurred after the assets enter the expected

serviceable condition will be recognized as financial expenses for the current period. Other

borrowing costs than those from the purchase or construction of fixed assets will be expensed

directly in the period when they are incurred.

(XIII) Measurement and Amortization of Intangible Assets

(1) Measurement of intangible assets

① Intangible assets acquired are measured at the full price actually paid; ② Intangible

assets invested by the investors are measured at the value stipulated by all the investors. ③

Intangible assets that are self-developed and obtained through legal procedures are measured at

the cost incurred for the legal application for obtaining the asset, such as registration fees and legal

fees.

(2) Amortization of intangible assets

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The intangible assets are amortized evenly within the contract or the beneficiary or effective

period stipulated by the laws and regulations since the acquisition of the intangible assets. If the

contract, laws and regulations do not clearly stipulate the benefits or useful life, the intangible

assets shall be amortized over a period no more than 10 years.

(3) Land use right acquired by the Company or obtained through payment of land transfer

premium is accounted for as an intangible asset before the land is used for development or

construction of self-use properties, and is amortized in installments according to the prescribed

time limit. If the land is used for construction of self-use properties, all the carrying amount of

land use right will be transferred to the cost of construction in progress.

(4) At the end of 2016, if the recoverable amount of an intangible assets is less than its

carrying amount, the difference will be provided for impairment.

(XIV) Amortization of Long-term Prepaid Expenses

Long-term prepaid expenses are amortized over the life of the benefited period. Expenses

incurred during the preparation period (except for acquisition and construction of fixed assets) are

first collected in long-term prepaid expenses and then charged to profits or losses of the first

month of production and operation at the beginning of production and operation .

(XV) Accounting Method for Bonds Payable

Bonds payable of the Company shall be recorded according to the actually received price at

the time of issuance. The premium or discount of the bonds shall be amortized in a straight line

method during the existence of the bonds.

(XVI) Accounting Method for Employee Benefits Payable

Employee benefits of the Group refer to all kinds of remuneration or compensation, including

short-term benefits, post-employment benefits, termination benefits and other long-term employee

benefits granted by the Group for the services rendered by employees or termination of

employment. Employee benefits also includes other benefits offered to the employees’ spouse,

children, dependents, members of the decease's family and other beneficiaries.

1. Short-term benefits refer to the employee benefits which shall be all paid to employees

within 12 months after the end of the annual reporting period in which the employees provide the

related services, except for the compensation for canceling the labor relationship with the

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employees. Short-term benefits include: wages and salaries, bonus, allowances and subsidies,

employee benefits, social securities such as medical insurance, unemployment insurance,

industrial injury insurance, childbirth insurance and etc., housing funds, employee union and

education expenses, short-term paid absence, short-term profit sharing plan, non-monetary

benefits and other short-term benefits.

The Group recognizes the short-term benefit as liabilities over the employees’ service periods

and includes them in current gains and losses or relevant asset costs according to the beneficiaries.

Non-monetary benefits are calculated based on their fair value.

2. Post-employment benefits refer to all kinds of benefits and welfare offered to employees

for the service they have rendered after the employees retire or have terminated their labor

relationship with the Group except for short-term benefits and termination benefits.

Defined contribution plan of the Group refers to the basic pension insurance, unemployment

insurance and corporate pension paid by the Group on behalf of the employees over their service

periods based on relevant government provisions. The amounts paid are calculated according to

the payment base and proportions, recognized as liabilities and included in current gains and

losses or relevant asset costs.

The Group establishes corporate annuity, which is contributed by both the Group and

individuals. The Group's contribution is withdrawn from X% of the total salary of the previous

year. The contribution is charged from the cost of the Group. The individual part is paid according

to X% of the basic old-age insurance contribution base of the employee's current year, which is

withheld and paid by the Group in the employees' salaries.

Based on expected accrued benefits method, the Group attributes the welfare obligations of

the defined benefit plan to employees’ service life and includes them in current gains and losses or

relevant asset costs. Deficit or surplus the present value of the defined benefit plan exceeding its

fair value is recognized as net liabilities or net assets. For defined benefit plan which has surplus,

the Group recognizes whichever is lower between the surplus and asset upper limit as the net asset

of the defined benefit plan.

For all obligations in the defined benefit plan, including the obligation to pay within 12

months after the annual report about rendering service, discounting is performed according to

national debts matched with defined benefit plan period and currency or market returns of

– F-103 –

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high-quality corporate bonds in the active market on balance sheet day.

For the defined benefit plan, service costs, net liabilities or net interest revenues of net asset

are recognized as current gains and losses or relevant asset costs. Alterations in net liabilities or

net assets are included in other comprehensive gains and they are not allowed to be reversed to

gains and losses in subsequent periods.

In defined benefit plan settlement, the balance between obligation present value and

settlement price is recognized as gains or losses.

3. Termination benefits are compensations provided when the Company decides to terminate

the employment relationship with employees before the end of the employment contracts, or

compensations provided as an offer for voluntarily acceptance of layoff. For employees who have

not terminated the labor contract with the Group , but no longer render any service or bring

economic benefits, the Group promises to offer economic release compensation, such as “early

retirement”. The employee could enjoy termination benefit before his official retirement date and

post-retirement benefit after he officially retires.

Release pay is recognized as employee benefit liabilities and included in current gains and

losses on whichever is earlier between the day when the Group couldn’t unilaterally revoke the

release pay caused by severing labor relations or redundancy and the day when the Group

confirms the costs relevant to release pay restructuring.

For release pay which cannot be fully paid within 12 months after annual report period and

release plan which involves releasing the employee within a year but paying the release

compensation for more than a year, proper discount rate is adopted by the Group and release pay

is included in current gains and losses according to the discounted value.

4. Other long-term employee benefits refer to employee benefit other than short-term benefit,

post-employment benefit and release pay, such as long-term paid absence, long-term disability

benefits, long-term profit sharing plan, etc.

For other long-term employee benefits which conform to the conditions of defined

contribution plan, accounting treatment shall be conducted according to relevant provisions of the

defined contribution plan. For other long-term employee benefits which conform to the conditions

of defined benefit plan, the Group confirms and calculates net liabilities or net assets of other

long-term employee benefits according to relevant provisions of defined benefit plan. At the end

– F-104 –

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of the report period, the Group divides costs generated by other long-term employee benefits into

the following categories: service cost, net interests of net liabilities or net assets, alterations in net

liabilities or net assets. Aggregate net amount is included in current gains and losses or relevant

asset costs.

(XVII) Recognition of provisions

The Company recognizes an obligation to a contingency as a provision when all of the

following conditions are satisfied:

(1) the obligation is a present obligation of the Company;

(2) it is probable that an outflow of economic benefits will be required to settle the obligation;

(3) the amount of the obligation can be measured reliably.

(XVIII) Recognition Criteria for Revenue

(1)Revenue from sale of goods is recognized when the following conditions are met:

significant risks and rewards attached to the ownership of the goods sold are passed to the buyer;

neither continual involvement in the rights normally associated with the ownership of the goods

sold nor effective control over the goods controls are retained; revenue arising from the goods sold

has been received or evidence of receipt has been obtained; and cost incurred or to be incurred

associated with the goods sold is reliably measurable.

(2) Revenue from rendering of services is recognized when the following conditions are met:

the labor services have been rendered; the relevant income has been received, or evidence of

receipt has been obtained.

(3) Revenue from the use by others of enterprise assets: when it is probable that the economic

benefits related to the use by others of enterprise assets will flow to the Company and the amount

of the revenue can be reliably measured, the related interest income and usage revenue will be

recognized.

(XIX) Accounting Method for Construction Contracts

The Group recognizes the contract revenue and contract costs at the balance sheet date using

the percentage of completion method if: (1) total contract revenue can be measured reliably; (2)

economic benefits associated with the contract are likely to flow into the Group; (3) the actual

contract costs incurred can be clearly identified and measured reliably; (4) contract completion

– F-105 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

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and costs to complete the contract can be measured reliably. The actual percentage of completion

is determined by the ratio of contract costs actually incurred to the estimate total costs.

If the outcome of a construction contract cannot be reliably estimated, the Company confirm

contract revenue and contract costs according to following conditions: If the contract costs can be

recovered, contract revenue is recognized according to the extent of contract costs incurred, the

contract costs are recognized as contract expenses when incurred; If the contract costs cannot be

recovered, the contract cost are recognized as contract expenses immediately when incurred, and

no contract revenue is recognized.

The Group will review contract revenue and cost estimates at the end of reporting period, and

if the estimated total contract costs exceeds the estimated total contract revenue, the Group will

make a loss provision and recognize the expected loss as expenses.

(XX) Accounting Method for Government Grants

Government grants refer to the monetary assets or non-monetary assets that the Group

receive from the government for free. Government grants will be recognized when the Group

satisfies the conditions attached by the government grants and has received the grants.

If the government grant is a monetary asset, it shall be measured at the receipt actually

received. As for the subsidy allocated by a fixed ration standard, or there is conclusive evidence in

the end that the Company can meet the relevant conditions specified by the financial support

policy and is expected to receive financial support fund, it shall be measured at account receivable.

If the government grant is a non-monetary asset, it shall be measured at the fair value. If the fair

value cannot be obtained in a reliable way, it shall be measured at its nominal amount (RMB 1

Yuan).

The government grant is divided into two kinds: asset-related government grant and

revenue-related grants. The asset-related government grants are used to construct or form

long-term assets by the Group; revenue-related government grants are other grants beyond the

asset-related government grant. If the government does not specify the object, the Group should

judge according to the above principle of distinction.

A government grant related to an asset will be recognized as deferred income, and evenly

amortized to profit or loss over the useful life of the related assets. For a government grant related

– F-106 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 18 of 60

to income, if it is a compensation for related expenses or losses to be incurred by the Company in

the subsequent period, it will be recognized as deferred income, and charged to profit or loss over

the periods in which the related costs are recognized; if it is a compensation for related expenses

or losses already incurred, it will be recognized immediately in profit or loss for the current

period.

(XXI) Accounting Method for Deferred Tax Assets and Deferred Tax Liabilities

The income tax of the Group will be accounted for using balance sheet liability method.

1. Recognition of deferred tax assets or deferred tax liabilities

The Company determines its tax basis upon acquisition of assets and liabilities. At the

balance sheet date, the Company will analyze and compare the carrying amount and tax basis of

assets and liabilities. If there is a temporary difference between the carrying amount of liabilities

and their tax basis and the temporary differences meet the recognition criteria, the Company will

recognize the taxable temporary differences as deferred tax liabilities and the deductible

temporary differences as deferred tax assets.

(1) Recognition of deferred tax assets

①The Company will recognize deferred tax assets arising from deductible temporary

differences by deductible temporary differences of taxable income in the future period. The

taxable income in the future period consist of the normal taxable income in business activities, as

well as the added taxable income due to the reversal of taxable temporary differences during the

reversal period of deductible temporary differences.

②As for the carry forward deductible tax losses and tax credits, the Company will recognize

the deferred tax assets according to the deductible tax losses and tax credits future taxable income.

③At the balance sheet date, the Company will review the carrying amount of a deferred tax

asset. If it is unlikely to obtain sufficient taxable income to offset the benefit of deferred tax assets,

the deferred tax asset carrying amount is reduced; if it is probable to obtain sufficient taxable

income, the reduced amount should be reversed.

(2) Recognition of deferred tax liabilities

The Company recognizes the unpaid taxable temporary difference of current and prior

periods as deferred tax liabilities. . The temporary differences do not include goodwill,

– F-107 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 19 of 60

combination transaction and the formed taxable income temporary differences when the

transaction occurs.

2.Calculation of deferred tax assets or deferred tax liabilities

At the balance sheet date, current income tax liabilities (or assets) for the current period and

prior periods will be measured at the amount expected to be paid (or recovered) according to the

requirements of tax laws.

If the tax rate changes, the Company will re-measure the recognized deferred tax assets and

deferred tax liabilities. Apart from the deferred tax assets and deferred income tax liabilities in a

transaction or event, the change will be calculated in the tax expense recognized of the current

period.

The Company adopts the same tax rate and tax basis of the recovered assets or debts to

calculate deferred tax assets and deferred tax liabilities.

The Company will not discount the deferred tax assets and deferred tax liabilities.

(XXII) Accounting Method for Income Taxes

Income taxes are accounted for by using the tax payable method.

(XXIII) Profit Distribution

According to the provisions of the Company Law, the profits after tax of the Company is

distributed in the following order:

(1) making up for losses in prior years; (2) appropriating 10% of the profits to statutory

surplus reserve; (3) appropriating to discretionary surplus reserve; (4) distributing dividends.

(XXIV) Preparation of Consolidated Financial Statements

(1) Principle and preparation method of the consolidated financial statements

The Company will prepare consolidated financial statements when it holds directly more

than 50% of the total capital with voting power of an investee; or it holds directly 50% or less of

the total capital with voting power of an investee but, in substance, has control over the investee.

Based on the financial statements of the Company and the subsidiaries included in the

consolidation scope and other relevant information, the Company consolidates the amounts of

each item and prepares consolidated financial statements after offsetting intragroup transactions

such as major transactions, capital transactions, claims and debts, etc.

– F-108 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 20 of 60

(2) List of subsidiaries incorporated in the consolidated financial statements for 2016

NameRegistered

addressMain operations

Registered capital (in

ten thousand)

Actual investment

at the end of 2016 (in ten thousand)

Shareholding ratio (%)

Control method

Shangrao Chengdong Investment and Development Co., Ltd.

Shangrao, Jiangxi

Province

Investment and financing of infrastructure projects; investment and financing of railway northward movement construction project; asset management and operation; real estate development.

51,000.00 51,000.00 98.04%Direct control

Shangrao City Center Investment and Construction Development Co., Ltd.

Shangrao,

Jiangxi

Province

Urban infrastructure projects, land development, real estate development

1,000.00 1,000.00 100%Direct

control

Shangrao City Investment Industry Co., Ltd.

Shangrao,

Jiangxi

Province

Building materials production and sales; infrastructure project investment and financing; urban infrastructure projects

36,000.00 36,000.00 100%Direct

control

Shangrao City Investment Land Development Co., Ltd.

Shangrao,

Jiangxi

Province

Land development and leveling services; infrastructure investment

500.00 500.00 100%Direct

control

Shangrao City Investment Engineering Management Consulting Co., Ltd.

Shangrao,

Jiangxi

Province

Project management, project cost, engineering consulting services

200.00 200.00 100%Direct

control

Shangrao Ziyang Real Estate Development Co., Ltd.

Shangrao,

Jiangxi

Province

Real estate development and management; infrastructure investment

2,900.00 2,900.00 34.48%Direct

control

Shangrao Longtan Lake Investment Co., Ltd.

Shangrao,

Jiangxi

Province

Industrial investment; urban infrastructure construction; real estate development and management; catering, accommodation, tourism and leisure entertainment

10,000.00 10,000.00 100%Direct

control

Shangrao Longtan Lake Hotel Co., Ltd.

Shangrao,

Jiangxi

Province

Catering services; sales of cigarettes and cigars; accommodation, cafes, beauty salons

300.00 300.00 100%Direct

control

Shangrao City Sewage Treatment Co., Ltd.

Shangrao,

Jiangxi

Province

Sewage treatment 1,000.00 1,000.00 100%Direct

control

– F-109 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 21 of 60

Shangrao City Investment Property Service Co., Ltd.

Shangrao,

Jiangxi

Province

Property management; clean service; discontinued operation management

50.00 50.00 100%Direct

control

Shangrao City Comprehensive Transportation Hub Operations Management Co., Ltd.

Shangrao,

Jiangxi

Province

Transport hub station, parking lot construction and operation management; property management; design, production, release, agency of various types of advertising at home and abroad; property rental services; shopping malls operations management; catering, accommodation services; car rental services; car decorating, maintenance services; business information consulting services; investment and asset management.

2,000.00 2,000.00 100%Direct

control

Shangrao Small and Medium-Sized Enterprises Mutual Aid Fund Co., Ltd.

Shangrao,

Jiangxi

Province

Approved by Financial Office of Shangrao Municipal People's Government: to provide reloan service for small and medium-sized micro-enterprises and individuals that normally operate in Shangrao with cooperative banks; entrusted to carry out equity investment in small, medium and micro-enterprises; investment and financing management and related consulting services; other lawful items not required to be reported for approval

5,000.00 5,000.00 100%Direct

control

Shangrao City Public Transport Co., Ltd.

Shangrao,

Jiangxi

Province

Urban and rural bus passenger transport; tourist passenger; taxi passenger; new energy vehicle related parts; vehicle maintenance services; real estate development and management; marketing and planning; design, production, release, agency of various types of advertising at home and abroad.

6,000.00 6,000.00 100%Direct

control

Shangrao City Investment Trading Co., Ltd.

Shangrao,

Jiangxi

Province

Construction materials, metal materials, mechanical and electrical products, hardware and electrical equipment, auto parts, household appliances, daily necessities

1,000.00 1,000.00 100% Indirect

Shangrao Huakang Real Estate Development Co.,

Shangrao,

Jiangxi

Real estate development, indoor and outdoor decoration, waterproof engineering services

229.54 229.54 100% Indirect

– F-110 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 22 of 60

Ltd. Province

Shangrao Official Vehicle Service Co., Ltd.

Shangrao,

Jiangxi

Province

Official vehicle services; car rental; design, production, release, agent of various types of advertising at home and abroad; software development; vehicle maintenance; sales and installation of vehicle electronic equipment.

2,000.00 2,000.00 100%Direct

control

Shangrao Shun Tong Car Rental Service Co., Ltd.

Shangrao,

Jiangxi

Province

Car rental; relief driver; design, production, release, agent of various types of advertising at home and abroad; software development; vehicle maintenance; sales and installation of vehicle electronic equipment.

1,000.00 200.00 100%Direct

control

(3) Description of the change of consolidation scope

In 2016, two new wholly-owned subsidiaries were added to the scope of consolidation,

specifically as follows: On December 31, 2016, the Company invested RMB 20 million to set up a

wholly-owned subsidiary Shangrao City Official Vehicle Service Co., Ltd.; On December 31,

2016, the Company invested RMB 2 million to set up a wholly-owned subsidiary Shangrao Shun

Tong Car Rental Service Co., Ltd.

V. Explanations for Changes in Accounting Policies and Accounting Estimates asWell as Correction of Errors

(I) Changes in accounting policies

Enterprise Accounting System, which was issued by Ministry of Finance and implemented on

January 1, 2002, was used since the Company set up accounts. Effective from January 01, 2016,

the Company implemented the Accounting Standards for Business Enterprises-Basic Standard and

other specific standards issued by the Ministry of Finance on February 15, 2006. For the purposes

of these financial statements, changes in the corresponding accounting policies of the Company

resulted from the above changes in accounting basis have been dealt with in accordance with the

relevant convergence provisions. The retrospective adjustments have been made for the

adjustment of comparative data.

The main effects of changes in accounting policies on the items in the initial statements are

summarized as follows:

– F-111 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 23 of 60

Report items Beginning balance before change

Beginning balance after change

Effects of financial statements as at 31

December 2015 Available-for-sale

financial assets

0.00 869,940,383.42 869,940,383.42

Long-term equity

investments

146,179,951.14 45,179,951.14 -101,000,000.00

Deferred tax assets 0.00 7,104,837.25 7,104,837.25

Undistributed profits 1,074,288,021.26 1,086,769,144.00 12,481,122.74

Undistributed profits at

beginning of last year

959,247,549.14 1,088,155,935.41 128,908,386.27

Operating income 1,550,549,346.34 1,593,602,260.34 43,052,914.00

General and administrative

expenses

73,822,215.66 69,209,058.64 -4,613,157.02

Asset impairment losses 0.00 3,287,511.02 3,287,511.02

Income tax 24,324,821.17 25,204,993.37 880,172.20

Net profits 210,608,047.16 221,761,037.26 11,152,990.10

(II) Changes in accounting estimates

The main accounting estimates for the reporting period have not changed.

(III) Corrections of previous errors

There is no significant previous errors corrected during the reporting period.

VI. Taxation

The main types of taxes and tax rates applicable to the Company are as follows:

1. Business tax: levied at 5% of taxable operating income of the Company.

2. Enterprise income tax: levied at 25% of taxable income.

3. Urban maintenance and construction tax: levied at 7% of the total turnover tax paid.

4. Education surtax: levied at 3% of the total turnover tax paid.

5. Local education surtax: levied at 2% of the total turnover tax paid.

– F-112 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 24 of 60

VII.Notes to Significant Items in Consolidated Financial Statements (as of 31December 2016; monetary unit: RMB Yuan)

(I) Cash and bank balances

Items Ending balance Beginning balance

Cash 350,202.68 213,852.23

Bank balances 9,737,194,537.67 7,881,827,837.47

Other monetary capital 1,000,535,000.00 1,148,535,000.00

Total 10,738,079,740.35 9,030,576,689.70

Note 1: The balance at the end of 2016 increased by 18.91% as compared with the end of the

previous year, mainly due to the increase of bank borrowings in this period.

Note 2: ① Shangrao City Investment Industry Co., Ltd., a subsidiary of the Company,

entered into a pledging deposit receipt contract with Nanchang Bank Shangrao Branch. In May

2015, it deposited a 3-year fixed term deposit of 1 billion yuan at Nanchang Bank Shangrao

Branch, to provide pledge for its 1 billion yuan loan from Zhongjiang International Trust Co., Ltd.;

② Ziyang Real Estate Development Co., Ltd., a subsidiary of the Company, entered into a

guarantee agreement with Shangrao Branch of China Merchants Bank to deposit 535,000 yuan for

the period from 23 March 2015 to 31 July 2017 to provide pledge for the construction supervision

contract with a total amount of 5.35 million yuan signed with Jiangxi Hengshi Construction

Supervision Consulting Co., Ltd.

(II) Accounts receivable

Category

Ending balance Beginning balance

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Rati

o

(%) Amount

Ratio

(%) Amount

Ratio

(%)

Accounts receivable that

are individually significant

and provided for bad debts

separately

8,506,847.10 0.19397,270.8

04.67 - - - -

Accounts receivable that

are collectively provided

for bad debts

4,409,414,920.2

199.81 55,000.00 0.01

3,266,956,150.

44

100.0

0380,390.38 0.01

Including: Age group 0.07 1.76 38,529,602.01 1.18 380,390.38 0.45

– F-113 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 25 of 60

3,126,021.00 55,000.00

Group of government

financial receivables

4,406,288,899.2

199.93

3,228,426,548.

4398.82

Accounts receivable that

are not individually

significant but provided for

bad debts separately

Total 4,417,921,767.31 100.00 452,270.80 0.01 3,266,956,150.44 100.00 380,390.38 0.01

Accounts receivable that are provided for bad debts using aging analysis

Age

Ending balance Beginning balance

Amount Ratio (%)

Provision

for bad

debts Amount

Ratio

(%)

Provision for

bad debts

Less

than 1

year

3,016,021.00

96.48 -

35,414,180.21 91.91

1-2 years 2,771,939.80 7.19 277,193.98

2-3 years 228,482.00 0.59 45,696.40

3-5 years

110,000.00 3.52

55,000.00115,000.00 0.30

57,500.0

0

Total 3,126,021.00 100.00 55,000.00 38,529,602.01 100.00 380,390.38

Note1: There is no account receivable that shall be paid by shareholders holding over 5%

(inclusive) of the Company’s shares.

Note 2: The balance of accounts receivable at the end of 2016 is mainly attributable to the

proceeds from the land transfer and repurchase agreements of Shangrao Municipal Finance

Bureau.

(III) Prepayments

AgeEnding balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 355,235,402.03 62.43 456,888,597.33 73.68

1-2 years 43,500,970.97 7.65 39,401,606.01 6.35

2-3 years 57,463,736.16 10.10 91,796,433.99 14.80

Over 3 years 112,770,134.38 19.82 32,014,341.99 5.16

– F-114 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 26 of 60

Total 568,970,243.54 100.00 620,100,979.32 100.00

Note1: There is no payables that shall be paid to shareholders holding over 5% (inclusive) of

the Company’s shares.

Note 2: Prepayments of more than three years at the end of 2016 are mainly those prepaid for

the Shangrao municipal construction project undertaken by the Company.

Note 3: Details of significant prepayment balance at the end of 2016 are as follows:

Name Nature of the account Amount

Jiangxi SDIC Jingdong Commercial Real

Estate Co., Ltd.Construction payment 161,010,919.88

Shanghai Tianyi Industrial Development Co.,

Ltd.Construction payment 97,625,744.00

Jiangxi Hongyi Group Wanlong Trading Co.,

Ltd.Construction payment 48,024,660.65

Jiangxi Qunli Construction Group Co., Ltd. Construction payment 29,470,000.00

Shangrao Qinglin Industrial Co., Ltd. Construction payment 27,222,203.09

(IV) Interest receivable

Items Ending balance Beginning balance

Industrial fund 68,394,743.39 36,430,920.00

Total 68,394,743.39 36,430,920.00

(V) 5. Other receivables

Category

Ending balance Beginning balance

Book balance Provision for bad debts Book balance

Provision for bad

debts

AmountRatio

(%) Amount

Ratio

(%)Amount

Ratio

(%) Amount

Ratio

(%)

Other receivables that are

individually significant

and provided for bad

debts separately

- - - - - - - -

Other receivables that are

collectively provided for

bad debts

5,029,377,542.20 100.0

044,777,647.69 0.89 3,775,117,344.46

100.0

027,957,592.87 0.74

Including: Age group 339,170,577.54 7.00 44,777,647.69 13.20 251,738,468.52 6.67 27,957,592.87 11.11

Group of government

financial receivables4,690,206,964.66 93.00 3,523,378,875.94 93.33

– F-115 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 27 of 60

Other receivables that are

not individually

significant but provided

for bad debts separately

Total 5,029,377,542.20100.0

044,777,647.69 3,775,117,344.46

100.0

027,957,592.87 0.72

Other receivables that are provided for bad debts using aging analysis

Age

Ending balance Beginning balance

Amount Ratio (%)

Provision for

bad debts Amount

Ratio

(%)

Provision for

bad debts

Less than

1 year94,264,342.25 27.79

152,817,248.93 65.92

1-2 years 184,081,239.21 54.27 18,408,123.92 72,158,536.70 21.54 7,215,853.67

2-3 years 41,152,658.04 12.13 8,230,531.60 3,183,396.65 4.89 636,679.33

3-5 years 3,066,691.76 0.90 1,533,345.89 6,948,452.74 3.04 3,474,226.37

Over 5

years16,605,646.28 4.90 16,605,646.28

16,630,833.50 4.61

16,630,833.50

Total 339,170,577.54 100.00 44,777,647.69 251,738,468.52 100.00 27,957,592.87

Note1: There is no receivable that shall be paid by shareholders holding over 5% (inclusive)

of the Company’s shares.

Note 2: Details of significant balance of other receivables at the end of 2016 are as follows:

Name Nature of the account Amount

Shangrao Municipal Bureau of Finance Current account 1,259,119,273.00

Shangrao North Avenue Project Management

OfficeConstruction fund

803,725,000.00

Project Department of Ziyang North Avenue

Comprehensive Transformation and

Upgrading Project Construction Leading

Group

Construction fund 407,290,000.00

Shangrao City House Demolition and

Resettlement Office

Demolition and

relocation cost

205,944,429.17

Shangrao Central District Infrastructure

Construction CompanyRelocation compensation

192,975,500.00

(VI) Inventories

Items Ending balance Beginning balance

– F-116 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 28 of 60

Book balance

Provi

sion

for

impa

irme

nt

Carrying

amountBook balance

Provi

sion

for

impa

irme

nt

Carrying

amount

Raw

material

620,223.89 620,223.89419,695.49 419,695.49

Commoditie

s in stock

1,547,146.11 1,547,146.11

2,550,556.82 2,550,556.82

Developmen

t costs

12,265,504,395.8

0

12,265,504,395.80

9,205,801,851.65 9,205,801,851.65

Land

reserve 8,583,976,805.33 8,583,976,805.33 8,781,208,379.49 8,781,208,379.49

Materials

for

repetitive

usage

479,521.00 479,521.00 95,369.00 95,369.00

Low-value

consumable

s 8,985.13 8,985.13

Total

20,852,128,092.1

3 20,852,128,092.13

17,990,084,837.5

8

17,990,084,837.5

8

Note: details of significant balance of development costs at the end of 2016

Items

Project

commencing

date December 31, 2016

Including:

capitalised interest

Old train station shanty area October 2012 6,117,489,538.62 2,323,474,820.25

320 National Road Project Department August 2015 1,129,807,340.74 230,161,472.15

First grade land consolidation in

ChengdongMarch 2010

942,929,785.97 766,757,124.00

Integrated Transportation Hub Project

DepartmentMarch 2014

566,575,155.49 366,907,197.99

Relocation of Shangrao Normal School May 2015 351,011,613.61 55,660,411.12

(VII) Other current assets

Items Ending balance Beginning balancePrepaid and deferred expenses 219,991.00 2,260,873.10

Total 219,991.00 2,260,873.10

(VIII) Available-for-sale financial assets

Items Ending balance Beginning balance

– F-117 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 29 of 60

Book balance

Provision

for asset

impairme

nt

Carrying

amount

Book

balance

Provision

for asset

impairme

nt

Carrying

amount

Available-for-sale

liability instruments

1,568,940,383.4

2

1,568,940,383.4

2

768,940,383.4

2 768,940,383.42

Available-for-sale

equity instruments 111,000,000.00 111,000,000.00

101,000,000.0

0 101,000,000.00

Measured at fair

value

Measured at cost 111,000,000.00 111,000,000.00

101,000,000.0

0 101,000,000.00

Others

Total 1,679,940,383.4

2

1,679,940,383.4

2

869,940,383.4

2

869,940,383.42

Available-for-sale financial assets measured at cost at end of the year

Name of Investee

Ending balance

Beginning of the

period

Increase in

this period

Decrease in

this period

End of the

period Shangrao Guangtian Building Components Co.,

Ltd. 1,000,000.00 1,000,000.00

CDB Jingcheng (Beijing) Investment Fund Co.,

Ltd. 100,000,000.00

100,000,000.0

0

Shangrao Green Industry Investment Group Co.,

Ltd. 10,000,000.00 10,000,000.00

Total 101,000,000.00 10,000,000.00 111,000,000.0

0 Note: Details of available-for-sale liability instruments are as follows:

1: The subsidiary Ziyang Real Estate Development Co., Ltd. transferred 70% equity of Zixin

Real Estate Development Co., Ltd. to Fuxin Investment Group (Shanghai) Co., Ltd. in December

2011; at the same time, both parties agreed that Ziyang Real Estate Development Co., Ltd. did not

participate in this company’s operation. The remaining 30% of equity would be paid by Fuxin

Investment Group (Shanghai) Co., Ltd. within three years. In each year, Fuxin Investment Group

(Shanghai) Co., Ltd. would pay a fixed return to Shangrao Ziyang Real Estate Development Co.,

Ltd. at 18.00% of 60 million yuan.

As of December 31, 2016, due to land block demolition, Ziyang Real Estate Development

Co., Ltd. has been handling the compensation for land acquisition and has 70% of the land under

construction. The project is still under construction. 30% of this liability is expected to be deferred

– F-118 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 30 of 60

back.

2: Ziyang Real Estate Development Co., Ltd. invested RMB 4.9 million yuan in September

2012 to set up Shangrao Haihua Real Estate Development Co., Ltd. together with natural person

Ruan Xianghua, holding 49% shares of this company. In 2013, the Company contributed RMB

63,847,000 yuan to participate in the real estate project of this company. The shareholders of both

parties agreed that Ziyang Real Estate Development Co., Ltd. will not participate in the operation

of this company. Ruan Xianghua will pay a fixed return at 18.00% of 68,747,000 yuan to Ziyang

Ziyang Real Estate Development Co., Ltd. every year.

3. In December 2016, Shangrao City Investment Industry Co., Ltd. and Anhui Guohou

Investment Management Co., Ltd. jointly established Shangrao Shinshu District Chengdong

Development 1st Investment Management Center (Limited Partnership). Shangrao City

Investment Industry Co., Ltd. invested 200 million in the partnership with rate of return at 6.2%.

4. In December 2016, Shangrao City Investment Industry Co., Ltd. and Jiangxi Jinkong

Investment Management Center (Limited Partnership) jointly established Jiangxi Jinkong

Shangrao Urbanization Development Private Equity Fund, of which Shangrao City Investment

Industry Co., Ltd. subscribed 600 million yuan of inferior fund with rate of return at 6%.

(IX) Long-term equity investments

(1) Category of Long-term equity investments

Items

Beginning balance

Increase in

this year

Decrease

in this

year

Ending balance

Amount

Provision for asset

impairment

Amount

Provision for asset

impairment

Investment in

associates 40,766,562.60 - 104,022,363.45

-

144,788,926.0

5 -

Investment in

subsidiaries 4,413,388.54 12,052,035.10

16,465,423.64

Total 45,179,951.14 - 116,074,398.55 161,254,349.6

9 -

Note 1: The newly increased investment in associates in 2016 mainly include: the parent

company invested 81.34 million yuan in Shangrao Sanjiang Daotuo Drainage Co., Ltd., holding

49% of the total shares; the subsidiary Shangrao City Public Transport Company increased its

– F-119 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 31 of 60

investment in Jiangxi Chunhong New Energy Co., Ltd. by 1,770,000 yuan, upping its

shareholding ratio to 51%.

Note 2: The newly increased investment in subsidiaries in 2016 is the investment of 10

million yuan from Shangrao Public Transport Company, a wholly-owned subsidiary, to Shangrao

Lianxing Automobile Service Co., Ltd.

(2) Investment in associates under equity method

Name of Investee

Inve

stme

nt

ratio

Amount of

initial

investment (in

ten thousand)

December 31,

2015

Increase or

decrease in

the year

Increase or

decrease of

equity in this

period

Accumulated

increase or

decrease of

equity

December

31, 2016

Jiangxi Shangrao Harbor Logistics Co., Ltd.

50% 1,600.00 13,197,910.30 - 278,867.77 3,476,779.07 13,476,779.0

7

Shangrao Affordable Housing Investment and Construction Co., Ltd.

30% 3,000.00 27,568,652.30 - 20,633,495.68 18,202,147.98 48,202,147.9

8

Shangrao Sanjiang

Daotuo Drainage Co.,

Ltd.

49% 8,134.00 81,340,000.0081,340,000.0

0

Jiangxi Chunhong New

Energy Co., Ltd.51% 177.00 1,770,000.00 1,770,000.00

Total 12,911.00 40,766,562.60 83,110,000.00 20,912,363.45 21,678,927.05144,788,926.

05

(X) Investment properties

Investment properties measured at cost

Items Beginning balance

Increase in this year

Decrease in this year

Ending balance

Total original book value 335,267,276.25 335,267,276.25

1． Houses and buildings 335,267,276.25 335,267,276.25

2． Land use right

Total accumulated depreciation (amortization)

7,962,597.81 7,962,597.81

1． Houses and buildings 7,962,597.81 7,962,597.81

2． Land use right

Total net carrying amount 327,304,678.44 327,304,678.44

1． Houses and buildings 327,304,678.44 327,304,678.44

2． Land use right

Total provision for asset impairment

1． Houses and buildings

2． Land use right

– F-120 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 32 of 60

Items Beginning balance

Increase in this year

Decrease in this year

Ending balance

Total carrying amount 327,304,678.44 327,304,678.44

1． Houses and buildings 327,304,678.44 327,304,678.44

2． Land use right

(XI) Fixed assets and accumulated depreciation

Items Beginning balanceIncrease in this

period

Decrease in

this periodEnding balance

Total original book value 6,908,674,916.93948,836,648.43 342,705,819.1

17,514,805,746.24

Including: Houses and

buildings2,706,832,454.32

11,813,476.37 335,287,364.7

42,383,358,565.95

Machines 93,067,443.19 81,360,783.96 2,479.00 214,425,748.15

Transportation facilities 110,367,164.40 42,228,232.19 7,362,640.96 145,232,755.63

Special purpose

equipment

138,200.00 138,200.00

Other equipment 49,047,224.92 3,813,829.91 53,334.40 52,807,720.41

Structures and other

ancillary facilities3,949,360,630.10

809,482,126.004,758,842,756.10

Total accumulated

depreciation

110,796,475.61 48,025,590.87

7,043,555.38 151,778,511.10

Including: Houses and

buildings36,684,906.14

9,938,624.7746,623,530.91

Machines 23,819,573.52 11,184,495.14 5,960.00 34,998,108.66

Transportation facilities 44,939,776.24 20,900,420.83 6,792,820.67 59,047,376.41

Special purpose

equipment

22,121.3222,121.32

Other equipment 5,352,219.71 5,979,928.81 244,774.71 11,087,373.81

Structures and other

ancillary facilities

Total net value of fixed

assets

6,797,878,441.327,363,027,235.14

Including: Houses and

buildings

2,670,147,548.182,336,735,035.04

Machines 69,247,869.67 139,427,639.49

Transportation facilities 65,427,388.15 86,185,379.23

Special purpose

equipment116,078.68

Other equipment 33,695,005.21 41,720,346.61

Structures and other

ancillary facilities

3,949,360,630.10 4,758,842,756.10

– F-121 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 33 of 60

Total provision for fixed

asset impairment

Total carrying amount of

fixed assets

6,797,878,441.32 7,363,027,235.14

Including: Houses and

buildings

2,670,147,548.182,336,735,035.04

Machines 69,247,869.67 139,427,639.49

Transportation facilities 65,427,388.15 86,185,379.23

Special purpose

equipment116,078.68

Other equipment 43,695,005.21 41,720,346.61

Structures and other

ancillary facilities

3,949,360,630.10 4,758,842,756.10

Note 1: As at December 31, 2016, the carrying amount of 12,036.65 M2 shops of Shangrao

Chengdong Investment and Development Co., Ltd. is RMB 29,562,100 yuan, and the carrying

amount of 1,716.39 M2 houses of Shangrao Life Sewage Treatment Co., Ltd. is 2,655,700 yuan.

Housing ownership certificate is still under application.

Note 2: Significant increase of fixed assets in 2016 was due to Water Diversion Project of

Urban Water Supply Source and Sewage Westward Relocation and Expansion Project, which were

recorded as fixed assets at their appraisal value determined in ZhongMing Appraisal

No.[2017]2003 and ZhongMing Appraisal No.[2017]2004 after being approved by Shangrao

Government Approval No.[2016]218.

(XII) Construction in progress

Items

Ending balance Beginning balance

Book balance

Provis

ion

for

impai

rment

Carrying

amount

Book

balance

Pro

visio

n

for

imp

air

men

t

Carrying

amount

Longtan Lake Hotel

renovation and expansion

project

26,620,103.59 26,620,103.59 829,813.99 829,813.99

Eastern Town Gas Filling

Station

1,403,422.29 1,403,422.29663,294.39 663,294.39

– F-122 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 34 of 60

Western Town

Comprehensive Service

Center

1,689,095.23 1,689,095.23 920,603.77 920,603.77

Waiting hall of railway

station hub

55,795.00 55,795.0035,795.00 35,795.00

Renovation of Landscape

Engineering Project

Department Office

Building of Chengdong

Area Riverside Road and

Flood Control Project

Department

539,614.96 539,614.96

Chengnan public transport

complex 40,000.00 40,000.00

Material and Pipe Center 8,332.00 8,332.00

Canteen project 1,718,482.80 1,718,482.80

Total32,074,845.87 32,074,845.87

2,449,507.1

5-

2,449,507.15

(XIII) Construction materials

Items Ending balance Beginning balance

Special purpose materials 3,762,448.00 3,762,448.00

Total 3,762,448.00 3,762,448.00

(XIV) Intangible assets

Items Beginning balanceIncrease in this

period

Decrease in

this periodEnding balance

Total original book

value

57,587,187.30 58,974.36 -

57,646,161.66

Including: Land use

right

57,341,407.30 57,341,407.30

Application

software245,780.00 58,974.36 304,754.36

Total accumulated

amortization7,151,232.93 3,035,992.37 10,187,225.30

Including: Land use

right

7,007,486.782,989,376.37

9,996,863.15

Application

software

143,746.1546,616.00

190,362.15

Total net value of

intangible assets50,435,954.37 47,458,936.36

– F-123 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 35 of 60

Including: Land use

right50,333,920.52 47,344,544.15

Application

software102,033.85 114,392.21

Provision for intangible

asset impairment

Total carrying amount

of intangible assets50,435,954.37 47,458,936.36

Including: Land use

right50,333,920.52 47,344,544.15

Application

software102,033.85 114,392.21

(XV) Long-term prepaid expenses

Items Beginning balanceIncrease in this

yearAmortiza

tion in this year

Otherdecrea

seEnding balance

Hotel indoor facilities 707,655.13 270,000.00 715,155.13

262,500.00

Software patent charge 10,500.00 4,500.00 6,000.00

Office renovation 1,119,019.35 58,528.66 1,060,490.69

Total 718,155.13 1,389,019.35

778,183.79

1,328,990.69

Note: In 2016, the newly added office decoration fee is generated by the newly established

subsidiary Shangrao Official Service Vehicle Co., Ltd. in that year.

(XVI) Deferred tax assets

Items

Ending balance Beginning balance

Deferred tax

assets

/liabilities

Deductible

temporary

difference

Temporary

difference

Deferred tax

assets

/liabilities

Deductible

temporary

difference

Temporary

difference

Provision for asset

impairment 11,309,933.23 45,239,732.92 7,104,837.25 28,419,349.00

Start-up cost

Deductible tax losses

Total 11,309,933.23 45,239,732.92 7,104,837.25 45,239,732.92

(XVII) Other non-current assets

Items Ending balance Beginning balanceHuarong Shangrao city investment trust loan

collective fund trust plan 1,000,000.00

Total 1,000,000.00

– F-124 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 36 of 60

Note: Other non-current assets are the 1 million trust products subscribed by Shangrao

Chengdong Investment and Development Co., Ltd.on May 20, 2015 from Huarong International

Trust Co., Ltd., with an expected annualized return rate of 10.5%.

(XVIII) Short-term borrowings

Items Ending balance Beginning balance

Pledge loans 61,200,000.00

Trust loans 438,000,000.00

Guaranteed loans 250,000,000.00 200,000,000.00

Mortgage loans 200,000,000.00

Other borrowings 280,000,000.00

Total 530,000,000.00 899,200,000.00

Note 1: The guaranteed loans at the end of 2016 include: 140 million yuan of loan contract

signed between Shangrao City Construction Investment and Development Group Co., Ltd. and

Jiangxi Provincial Branch of China Development Bank, guaranteed by Shangrao County

Construction Investment and Development Co., Ltd., and used for Shangrao County’s

Participatory Poverty Village Infrastructure Construction Project; 110 million yuan of loan

contract signed by Shangrao City Construction Investment and Development Group Co., Ltd. and

Jiangxi Provincial Branch of China Development Bank, guaranteed by Yugan County

Construction Investment and Development Co., Ltd., and used for Yugan County’s Participatory

Poverty Village Infrastructure Construction Project.

Note 2: Other borrowings at the end of 2016 are: 280 million yuan of loan contract signed

between Shangrao City Construction Investment and Development Group Co., Ltd. and Jiangxi

Provincial Branch of China Development Bank for the emergency response in Shangrao City and

its subordinate counties.

(XIX) Accounts payable

Age Ending balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 323,858,354.38 70.90 224,201,398.62 90.58

1-2 years 127,019,295.32 27.81 22,787,584.08 9.21

2-3 years 5,489,110.89 1.20 59,094.24 0.02

Over 3 years 430,197.69 0.09 471,103.45 0.19

Total 456,796,958.28 100.00 247,519,180.39 100.00

Note 1: The increase of the ending balance as compared with the end of last year is mainly

– F-125 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 37 of 60

due to the construction payables to Fujian Minnan Construction Engineering Co., Ltd. that shall be

paid by Transportation Hub Project Department of Shangrao City Construction Investment and

Development Group Co., Ltd.

Note2: At the end of 2016, there is no payable that shall be paid to shareholders holding over

5% (inclusive) of the Company’s shares.

Note 3: details of significant balance as at 31 December 2016:

Name Nature of the account Amount

Fujian Minnan Construction Engineering Co., Ltd. Construction payment 124,584,900.00

Nanchang Century Garden Industry Co., Ltd. Construction payment 53,600,000.00

Shangrao project headquarter of CECEP Water

Development Co., Ltd. Capital occupation fee 6,641,537.00

Jiangxi Boneng Shangrao Bus Co., Ltd. Payable for purchase of

buses3,950,000.00

BAIC FOTON Automobile Co., Ltd. Payable for purchase of

buses2,539,400.00

(XX) Advances from customers

AgeEnding balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 49,299,807.09 47.00 17,586,219.96 25.24

1-2 years 13,501,778.89 12.87 48,957,136.76 70.27

2-3 years 38,957,136.76 37.14 3,127,335.00 4.49

Over 3 years 3,127,335.00 2.98

Total 104,886,057.74 100.00 69,670,691.72 100.00

Note: There is no advances from shareholders holding over 5% (inclusive) of the Company’s

shares.

(XXI) Employee benefits payable

1. Details of employee benefits payable

ItemsBeginning

balance

Increase in

this period

Decrease in

this period

Ending balance

Short-term employee benefits 1,042,859.92 64,791,123.81 63,636,646.33 2,197,337.40

Post-employment

benefits-defined contribution

plan

Termination benefits

– F-126 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 38 of 60

ItemsBeginning

balance

Increase in

this period

Decrease in

this period

Ending balance

Other benefits due within one

year

Others

Total 1,042,859.92 64,791,123.81 63,636,646.33 2,197,337.40

2. Short-term employee benefits

ItemsBeginning

balance

Increase in

this period

Decrease in

this period

Ending balance

Wages, bonus, allowance,

subsidies992,259.92 52,445,013.23

51,232,422.65 2,204,850.50

Staff welfare 50,000.00 4,733,739.99 4,783,739.99

Social security 5,399,337.59 5,418,312.19 -18,974.60

Including: Medical insurance 1,150,987.56 1,155,051.56 -4,064.00

Injury insurance 165,497.49 165,497.49

Maternity insurance 49,585.72 49,585.72

Pension insurance 4,006,857.85 4,021,771.69 -14,913.84

Unemployment insurance 26,408.97 26,405.73 3.24

Housing accumulation fund 1,461,583.49 1,464,517.49 -2,934.00

Union running fund and employee

education fund751,449.51 737,054.01 14,395.50

Short-term paid absence

Short-term profit sharing plan

Other short-term employee

benefits-18,974.60

Total 1,042,859.92 64,791,123.81 63,636,046.33

2,197,337.40

(XXII) Taxes and dues payable

Items Ending balance Beginning balance

Enterprise income tax 74,140,618.11 115,293,244.13

Value-added tax 5,563,964.73 -7,758,173.66

Business tax 17,087,299.62 19,693,454.45

Resource tax 34,800.00

City maintenance tax 49,463,671.57 1,456,222.63

– F-127 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 39 of 60

Items Ending balance Beginning balance

Property tax 24,650.88 24,650.88

Stamp tax 482,064.48 1,441.28

Personal income tax 221,405.12 257,794.56

Education surcharge 116,771,365.76 936,610.75

Other taxes (fund category) 264,074.13 296,839.09

Total 264,053,914.40 130,202,084.11

(XXIII) Other payables

AgeEnding balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 169,012,232.11 9.11 371,322,074.59 17.23

1-2 years

211,077,229.62 11.38 1,525,814,472.0

4

70.81

2-3 years 1,226,740,458.02 66.11 222,332,026.82 10.32

Over 3 years 248,742,562.89 13.41 35,451,731.10 1.65

Total 1,855,572,482.64 100.00 2,154,920,304.5

5

100.00

Note1: At the end of 2016, there is no payable that shall be paid to shareholders holding over

5% (inclusive) of the Company’s shares.

Note 2: details of significant balance as at 31 December 2016:

Name Nature of the account Amount

Shangrao Land Reserve Center Current account 968,000,000.00

Shangrao Real Estate Administration special

account for shanty town transformation

Special fund for shanty

town transformation

335,716,900.00

Shangrao Normal School Relocation project fund 265,000,000.00

Shangrao Land Reserve Center Dispatch fund 132,020,443.00

China Agricultural Development Key Construction

Fund Co., Ltd.Construction fund

115,000,000.00

(XXIV) Long term liabilities due within one year

Name Items Ending balance Beginning balance

Long-term borrowings due within one year

Including: Avic Trust Co., Ltd. Assurance

Huaneng Guicheng Trust Co., Ltd. Assurance

China Development Bank Jiangxi

BranchPledge 57,000,000.00 31,000,000.00

– F-128 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 40 of 60

China Development Bank Jiangxi

BranchMortgage 38,500,000.00

China Development Bank Jiangxi

BranchOthers 20,000,000.00

Agricultural Development Bank

Shangrao BranchMortgage 545,000,000.00 394,000,000.00

Bank of Communications Shangrao

BranchMortgage 250,000,000.00

Hua Xia Bank Nanchang Branch Mortgage 600,000,000.00

Hua Xia Bank Nanchang Branch Assurance 300,000,000.00

Bocom International Trust Co., Ltd. Mortgage 97,000,000.00

Industrial Bank Nanchang Branch Mortgage 100,000,000.00

Industrial Bank Nanchang Branch Assurance 400,000,000.00

Jiujiang Bank Shangrao Branch Mortgage 300,000,000.00

Huarong International Trust Co., Ltd. Trust 25,000,000.00 50,000,000.00

China Everbright Bank Nanchang

BranchMortgage 25,000,000.00 7,500,000.00

China Everbright Bank Nanchang

BranchAssurance 5,000,000.00

China Everbright Bank Nanchang

BranchPledge 400,000,000.00

Ganzhou Bank Shangrao Branch Assurance 1,000,000.00

Zhongjiang International Trust Co.,

Ltd.Trust 2000,000.00 1,000,000.00

China Construction Investment Trust

Co., Ltd.Trust 500,000,000.00

China Minsheng Bank Shangrao

BranchAssurance 450,000,000.00

Total 2,827,000,000.00 1,772,000,000.00

(XXV) Long-term borrowings

Items Ending balance Beginning balance

Pledge loans 171,000,000.00 765,680,000.00

Mortgage loans 3,475,500,000.00 5,054,500,000.00

Trust loans 3,796,000,000.00 3,949,000,000.00

Other borrowings 550,000,000.00 500,000,000.00

Guaranteed loans 4,444,000,000.00

Total 12,436,500,000.00 10,269,180,000.00

Note 1: Pledge loans at December 31, 2016 include: ① Ten-year loans of RMB 35 million

yuan and 90 million yuan borrowed by the Company from Jiangxi Provincial Branch of China

– F-129 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 41 of 60

Development Bank are pledged respectively by the total equity and benefits under Agent

Construction Agreement of New Construction Project of Shangrao Fengxi Bridge signed by

Shangrao City Construction Investment and Development Group Co., Ltd. and Shangrao

Municipal Government on June 12, 2009, and Agent Construction Agreement of the First Phase

Infrastructure Construction Project of the Processing Trade Undertaking Base in the Central and

Western Regions Of Shangrao Economic Development Zone signed by them on June 5, 2009,

among which, 10 million yuan is due within one year; ② Ten-year loan of RMB 14.5 billion

yuan borrowed by Shangrao Chengdong Investment and Development Co., Ltd. from Jiangxi

Provincial Branch of China Development Bank are pledged by the total equity and benefits under

Agent Construction Agreement of Shangrao International Logistics Center Infrastructure

Construction Projects signed by Shangrao Chengdong Investment and Development Co., Ltd. and

Shangrao Municipal Government on December 15, 2008, and Agent Construction Agreement of

New Campus Construction Project of Shangrao Branch of Jiangxi Medical College signed by

Shangrao Chengdong Investment and Development Co., Ltd., Shangrao Municipal Government

and Shangrao Branch of Jiangxi Medical College on October 10, 2008, and Financing Agent

Construction Agreement of Shangsan Road Construction Project in Shangrao Economic

Development Zone signed by Shangrao Chengdong Investment and Development Co., Ltd. and

Shangrao Municipal Government on June 02, 2008, Financing Agent Construction Agreement of

Raoer Road Construction Project in Shangrao Economic Development Zone signed by Shangrao

Chengdong Investment and Development Co., Ltd. and Shangrao Municipal Government on June

02, 2008, and Agent Construction Agreement of Station Front Road Project of Shangrao New

Railway Station Area signed by Shangrao Chengdong Investment and Development Co., Ltd. and

Shangrao Municipal Government on April 15, 2009, among which, 47 million yuan is due within

one year; ③ The subsidiary, Shangrao City Investment Trading Co., Ltd. borrowed a loan of 400

million yuan from China Everbright Bank Nanchang Branch for a period of two years and was

– F-130 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 42 of 60

pledged by its 400 million yuan time deposit certificate deposited with China Everbright Bank

Nanchang Branch.

Note 2: Mortgage loans at December 31, 2016 include: ① The 8-year loan of 700 million

yuan borrowed by the subsidiary Ziyang Real Estate Development Co., Ltd. from Shangrao

Raodong Sub-branch of Agricultural Bank of China was secured by the land owned by Ziyang

Real Estate Co. with an area of 29,626.50 ㎡; ② The 8-year loan of 1,275 million yuan borrowed

by the parent company from Shangrao Branch of Agricultural Bank of China was secured by its

self-owned land with an area of 351,925.67 ㎡, among which 525 million is due within one year;

③ The 5-year loan of 625 million yuan borrowed by the parent company from Bank of

Communications Shangrao Branch was secured by its self-owned land with an area of 359,309.60

㎡, among which 97 million is due within one year; ④ The 5-year loan of 500 million yuan

borrowed by the parent company from Shanghai Pudong Development Bank Nanchang Branch

was secured by its self-owned land with an area of 148,06.001 ㎡; ⑤ The 5-year loan of 97.5

million yuan borrowed by the parent company from China Everbright Bank Nanchang Branch was

secured by its self-owned land with an area of 18773.30 ㎡;

Note 3: Trust loans at December 31, 2016 mainly include: ① The subsidiary Shangrao City

Investment Industry Co., Ltd. signed a trust loan contract with Zhongjiang International Trust Co.,

Ltd. to establish Zhongjiang International • Yinying No. 759 Loan Single Fund Trust Plan with

Zhongjiang International Trust Co., Ltd., under which the Company borrows 1 billion yuan. The

term of the loan is 36 months. The company uses its 1 billion time deposit certificate at Nanchang

Bank Shangrao Branch as pledge. ② The subsidiary Shangrao Chengdong Investment and

Development Co., Ltd. signed a trust loan contract with Zhongjiang International Trust Co., Ltd.

to establish Zhongjiang International • Yinying No. 759 Loan Single Fund Trust Plan with

Zhongjiang International Trust Co., Ltd., under which the Company borrows 730 million yuan.

The term of the loan is 36 months, with the parent company’s 11,317.30 ㎡ of real estate as

mortgage, and guaranteed by Shangrao Affordable Housing Investment Construction Co., Ltd. As

at December 31, 2016, its balance is 729 million yuan, of which 1 million yuan is due within one

year; ③ The Company signed a trust loan contract with Huarong International Trust Co., Ltd. to

– F-131 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 43 of 60

establish Huarong • Shangrao City Investment Trust Loan Collective Fund Trust Plan, under

which the Company borrows 500 million yuan. The term of the loan is 30 months, with the

Company’s 19,574.91 ㎡ of self-owned properties as mortgage. As at December 31, 2016, its

balance is 450 million yuan, of which 25 million yuan is due within one year; ④ The Company

signed a trust loan contract with China Minmetals International Trust Co., Ltd. to establish

Minmetals Trust - Xinyi No. 25 Shangrao City Investment Trust Fund Plan, under which the

Company borrows 500 million yuan. This loan is guaranteed by the Company’s agent construction

revenue from land first level consolidation project in Chengdong District of Shangrao City, which

shall be paid by Shangrao Municipal Government. After the transfer of creditor’s right, it will be

guaranteed by Shangrao Chengdong Investment and Development Co., Ltd. ⑤ The Company

signed a trust loan contract with China Construction Investment Trust Co., Ltd. to establish CCI•

Jianquan No. 34 Shangrao City Investment Collective Fund Trust Plan., under which the Company

borrows 500 million yuan. The term of the loan is 24 months. The Company uses its 700 million

of receivables from Shangrao Municipal Government as pledge. It is due in December 2017. ⑥

The Company signed a trust loan contract with Zhongjiang International Trust Co., Ltd. to

establish Zhongjiang International • Yinying No. 759 Loan Single Fund Trust Plan, under which

the Company borrows 769 million yuan, of which 1 million is due within one year. This loan is

guaranteed by Shangrao Affordable Housing Investment Construction Co., Ltd. ⑦ The Company

signed a trust loan contract with Everbright Xinglong Trust Co., Ltd. to establish Everbright Trust•

Puyuan No. 18 Receivable Property Right Trust Plan., under which the Company borrows 450

million yuan. This loan is guaranteed by the Company’s 800 million of receivables from Shangrao

Municipal Government. After the transfer of creditor’s right, it will be guaranteed by Shangrao

Chengdong Investment and Development Co., Ltd. ⑧ The Company signed a trust loan contract

with Shanghai International Trust Co., Ltd. to establish Shanghai Trust • Shangrao City

Investment Liability Investment Collective Fund Trust Plan., under which the Company borrows

350 million yuan.

Note 4: Details of other borrowings at December 31, 2016: ① The Company entered into

– F-132 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 44 of 60

an agreement for the business of listing and transfer of receivables with Tianjin Financial Assets

Exchange Co., Ltd. and Tianjin Financial Assets Registration and Settlement Co., Ltd., stipulating

that the debts of the accounts receivable of the Company shall be debated and the contractual

product trading mode shall be adopted. The transfer price of RMB500 million obtained after the

transfer of listing by Party B is guaranteed by Chongqing Three Gorges Guarantee Group Co., Ltd.

and is counter-guaranteed by Shangrao State-owned Assets Management Co., Ltd.

Note 5: Details of guaranteed loans at December 31, 2016: ① 10-year loan of 200 million

yuan was borrowed by the subsidiary, Shangrao Life Sewage Treatment Co., Ltd. from China

Everbright Bank, of which 5 million yuan is due within one year. This loan is guaranteed by the

Company; ② 3-year loan of 50 million yuan was borrowed by the subsidiary, Shangrao Life

Sewage Treatment Co., Ltd. from Ganzhou Bank Shangrao Branch, of which 1 million yuan is due

within one year. This loan is guaranteed by the Company and its subsidiary Shangrao Chengdong

Investment and Development Co., Ltd.; ③ 8-year loan of 350 million yuan was borrowed by the

subsidiary Ziyang Real Estate Development Co., Ltd. from Shangrao Raodong Sub-branch of

Agricultural Bank of China and guaranteed by the Company; ④ 5-year loan of 800 million yuan

was borrowed by the subsidiary Ziyang Real Estate Development Co., Ltd. from Huaxia Bank

Xianghu Sub-branch and guaranteed by the Company and its subsidiary Shangrao City Investment

Industry Co., Ltd.; ⑤ 5-year loan of 100 million yuan was borrowed by the subsidiary, Shangrao

City Investment Industry Co., Ltd., from ICBC Shangrao Zhongrong Sub-branch and guaranteed

by the Company; ⑥ 3-year loan of 405 million yuan was borrowed by the Company from China

Minsheng Bank Shangrao Branch, of which 255 million yuan is due within one year. This loan is

guaranteed by Shangrao Investment Holding Group Co., Ltd.; ⑦ 2-year loan of 595 million yuan

was borrowed by the Company from China Minsheng Bank Shangrao Branch, of which 195

million yuan is due within one year. This loan is guaranteed by Shangrao Investment Holding

Group Co., Ltd.; ⑧ 3-year loan of 1,100 million yuan was borrowed by the Company from Hua

Xia Bank, of which 300 million yuan is due within one year. This loan is guaranteed by Shangrao

Investment Holding Group Co., Ltd.; ⑨ a long-term loan of 400 million yuan was borrowed by

the Company from Hua Xia Bank and guaranteed by Shangrao City Investment Industry Co., Ltd.;

⑩ 5-year loan of 500 million yuan was borrowed by the Company from ICBC and guaranteed by

– F-133 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 45 of 60

Shangrao Investment Holding Group Co., Ltd.

(XXVI) Bonds payable

Items Ending balance Beginning balance

2010 Shangrao City Investment Enterprise

Bond

1,028,448,500.00 1,028,448,500.00

2012 Shangrao City Investment Enterprise

Bond

802,503,358.84 1,062,503,358.84

2015 Shangrao City Investment Corporate

Bond

2,119,400,000.00 2,000,000,000.00

2015 Shangrao City Construction Private

Placement Bond

1,099,980,000.00 1,099,980,000.00

2016 Shangrao City Investment Corporate

Bond 2,000,000,000.00

Total 7,050,331,858.84 5,190,931,858.84

Note 1: On July 19, 2010, the Company issued 1 billion yuan of 7-year corporate

bond--2010 Raocheng Bond upon approval by No.[2010]1452 Approval of National Development

and Reform Commission. The interest rate is fixed at simple 6.06% per annum. As at December

31, 2016, the principal is 1 billion yuan and the interest is 28,848,500 yuan.

Note 2: On August 13, 2012, the Company issued 1.3 billion yuan of 7-year corporate

bond--2012 Raocheng Bond upon approval by No.[2012]2435 Approval of National Development

and Reform Commission. The interest rate is fixed at simple 7.30% per annum. On September 11,

2013, the first installment of principal amount of 260 million yuan was redeemed. As at December

31, 2016, the principal is 780 million yuan and the interest is 22,503,300 yuan.

Note 3: On December 15, 2015, the Company privately issued 2 billion yuan of 5-year

corporate bond--2015 Raocheng Bond upon approval by No.[2015]2508 Letter of Shanghai Stock

Exchange. The interest rate is fixed at simple 5.97% per annum. As at December 31, 2016, the

principal is 2 billion yuan, and the interest is 119.4 million yuan.

Note 4: The Company completed the filing at Jiangsu Equity Exchange Center Co., Ltd. on

September 8, 2015, privately issuing private placement bonds of no more than RMB 500 million

for a period of 24 months. The assisting issuing agency is China Merchants Bank Shangrao

Branch. Zhonghe SME Financing Guarantee Co., Ltd. provides a full irrevocable guarantee of

collateral responsibility as credit enhancement measure. The interest rate is fixed, and the coupon

rate is 7.4%. As at December 31, 2016, the principal is 5 million yuan.

– F-134 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 46 of 60

Note 5: The Company completed the filing at Jiangxi Joint Stock Exchange Center on

December 23, 2015, privately issuing private placement bonds of no more than RMB 600 million

for a period of 36 months. The assisting issuing agency is Bank of Beijing Nanchang Branch.

Shangrao Longtan Lake Investment Co., Ltd. and Shangrao Chengdong Investment and

Development Co., Ltd. provide real estate mortgage as credit enhancement measure. The interest

rate is fixed, and the coupon rate is 6.2%. As at December 31, 2016, the principal is 6 million

yuan.

Note 6: On September 07, 2016, the Company privately issued 2 billion yuan of 5-year

corporate bond--2016 Raocheng Bond at fixed interest rate upon approval by No.[2016]1734

Letter of Shanghai Stock Exchange. The bond was issued in two tranches. The first tranche was

listed on the Shanghai Stock Exchange on September 28, 2016 at a coupon rate of 3.78%. The

second tranche was listed on October 10, 2016 with a coupon rate of 3.75%. As at December 31,

2016, the principal is 2 billion yuan.

(XXVII) Long-term payables

Items Ending balance Beginning balance

Finance lease sale and leaseback 145,956,506.91 182,677,752.55

Total 145,956,506.91 182,677,752.55

Note: The long-term payable is the financing payable that shall be paid by the subsidiary

Shangrao Sewage Treatment Co., Ltd. to AVIC International Leasing Company.

(XXVIII) Special accounts payable

Items Ending balance Beginning balance

Shangrao Municipal Bureau of Finance 40,000,000.00 40,000,000.00

Total 40,000,000.00 40,000,000.00

Note: The ending balance of 40,000.00 million yuan is the municipal finance loan received

from Shangrao Municipal Bureau of Finance for acquisition of 2,000.00 mu of land in the New

Zone according to Shangrao Government Notice No. [2003]207 issued by Office of Shangrao

Municipal People's Government.

(XXIX) Deferred income

ItemsBeginning

balanceIncrease in this year

Decrease in this

yearEnding balance

– F-135 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 47 of 60

ItemsBeginning

balanceIncrease in this year

Decrease in this

yearEnding balance

Government

grants13,391,750.00

2,709,000.0010,682,750.00

Total 13,391,750.00 2,709,000.00 10,682,750.00

Note: The deferred income at the end of 2016 is the subsidy for natural gas vehicles received

by Shangrao City Public Transport Co., Ltd., a subsidiary of the Company.

(XXX) Paid-in capital

Name of the investor

Ending balance Beginning balance

Investment amo

unt

Proportio

n

Investment amo

untProportion

Shangrao Investment Holding Group

Co., Ltd.620,000,000.00 100.00% 620,000,000.00 100.00%

Total 620,000,000.00 100.00%- 620,000,000.00 100.00%-

(XXXI) Capital surplus

Items Ending balance Beginning balance

Premium on capital 5,532,615,186.87 2,764,105,186.87

Other capital reserve 14,904,648,599.94 16,541,815,433.99

Total 20,437,263,786.81 19,305,920,620.86

Note 1: Premium on capital in 2015 is mainly the increased investment in Ziyang Real Estate

Development Co., Ltd by Shangrao No.1 Investment Fund Management Center (Limited

Partnership). Both parties signed a capital increase agreement, stipulating that No.1 Investment

Fund Management Center (Limited Partnership) shall make a one-time payment of capital

increase of RMB 2.6 billion yuan, of which 1 million was included in the registered capital of

Ziyang Real Estate Development Co., Ltd. and the remaining 2,599 million was credited to capital

reserve.

Note 2: Other capital reserves in 2015 mainly include: ① China Agricultural Development

Key Construction Fund Co., Ltd. invested RMB 119,250,000 yuan to increase the capital of the

parent company, and at the same time stipulated that Shangrao State-owned Assets Supervision

and Administration Commission and Shangrao Municipal People's Government should be the

repurchase party. All parties agree that the investment period of China Agricultural Development

Key Construction Fund Co., Ltd. for the parent company is 10 years. During the investment period,

China Agricultural Development Key Construction Fund Co., Ltd. has the right to require

– F-136 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 48 of 60

Shangrao People's Government to repurchase the equity according to the agreement, and may also

request Shangrao State-owned Assets Supervision and Administration Commission to repurchase,

and shall be complemented by Shangrao Municipal People's Government if any shortage should

arise. The repurchase date is no later than September 29, 2025, and the consideration for the equity

transfer is RMB 119,250,000 yuan. The parent company shall pay investment income to China

National Agricultural Development Key Construction Fund Co., Ltd. on a quarterly basis at a

fixed annual investment rate of return of 1.2%. The capital increase has not been registered for

industrial and commercial change. ② National Development Fund Co.,Ltd. invested RMB 140

million yuan to increase the capital of the parent company, and at the same time stipulated that

Shangrao State-owned Assets Supervision should be the repurchase party. All parties agree that the

investment period of National Development Fund Co.,Ltd. for the parent company is 15 years.

During the investment period, National Development Fund Co.,Ltd. has the right to require

Shangrao State-owned Assets Supervision and Administration Commission to repurchase the

equity according to the agreement. The repurchase date is no later than October 11, 2030, and the

consideration for the equity transfer is RMB 140 million yuan. The parent company shall pay a

cash dividend to National Development Fund Co.,Ltd.no later than March 20 each year at a fixed

annual investment rate of return of 1.54%, and shall be complemented by Shangrao State-owned

Assets Supervision and Administration Commission if the cash dividend is not enough to make up

for the rate of return. The capital increase has not been registered for industrial and commercial

change. ③ Other additional capital reserves are from financial appropriation fund and fixed

assets recorded at appraisal value.

Note 3: Changes in premium on capital in 2016 mainly include: ① Shangrao Shinshu

District Chengdong Development 1st Investment Management Center (Limited Partnership)

increased its investment in Shangrao Chengdong Investment and Development Co., Ltd. Both

parties signed the capital increase agreement, stipulating that Chengdong Development 1st

Investment Management Center (Limited Partnership) shall make a one-time payment of capital

increase of RMB 996.51 million yuan, of which 10 million was included in the registered capital

of Ziyang Real Estate Development Co., Ltd. and the remaining 986.51 million was credited to

capital reserve. ② Jiangxi Jinkong Investment Management Center (Limited Partnership)

– F-137 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 49 of 60

increased its investment in Ziyang Real Estate Development Co., Ltd. Both parties signed the

capital increase agreement, stipulating that Jiangxi Jinkong Investment Management Center

(Limited Partnership) shall make a one-time payment of capital increase of RMB 1,800 million

yuan, of which 18 million was included in the registered capital of Ziyang Real Estate

Development Co., Ltd. and the remaining 1,782 million was credited to capital reserve.

Note 4: Changes in other capital reserves in 2016 mainly include: ① The fixed assets are

recorded at their appraisal value. See Note VIII for details. ② China Agricultural Development

Key Construction Fund Co., Ltd. invested 50 million yuan to increase the capital of the parent

company, and at the same time stipulated that Shangrao Municipal People's Government should be

the repurchase party. All parties agree that the investment period of China Agricultural

Development Key Construction Fund Co., Ltd. for the parent company is 10 years. During the

investment period, China Agricultural Development Key Construction Fund Co., Ltd. has the right

to require Shangrao Municipal People's Government to repurchase the equity according to the

agreement. The repurchase date is no later than May 08, 2026, and the consideration for the equity

transfer is RMB 50 million yuan. The parent company shall pay investment income to China

National Agricultural Development Key Construction Fund Co., Ltd. on a quarterly basis at a

fixed annual investment rate of return of 1.2%. The capital increase has not been registered for

industrial and commercial change.

(XXXII) Surplus reserve

Items Ending balance Beginning balance

Statutory surplus reserve 206,490,656.80 167,118,258.11

Total 206,490,656.80 167,118,258.11

(XXXIII) Undistributed profits

Items Ending balance Beginning balance

Ending balance of previous year 1,088,155,935.41 960,295,529.50

Add: Adjustment of undistributed profits at

the beginning of this year-37,999,185.24

Beginning balance of this year 1,050,156,750.17 960,295,529.50

Add: From net profit of this year 356,075,160.88 223,427,980.95

Decrease in this year 112,850,398.69 95,567,575.04

Including: Appropriation to statutory

surplus reserve39,372,398.69 22,089,575.04

– F-138 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 50 of 60

Dividend distribution 73,478,000.00 73,478,000.00

Ending balance of this year 1,293,381,512.36 1,088,155,935.41

(XXXIV) Operating income and operating costs

ItemsAmount of this year Amount of previous year

Income Cost Income Cost

(1) Subtotal of revenue from main

businesses

2,065,535,454.83 1,788,337,757.90 1,550,549,346.34 1,405,173,320.11

Land transfer 603,783,783.78 408,532,600.00 452,000,000.00 410,909,090.91

Agent construction project 1,308,592,233.01 1,225,400,000.00 994,331,174.77 903,937,431.61

Revenue from sales of goods 43,252,051.14 42,617,150.37 4,252,443.25 4,168,656.61

Catering income 29,329,189.78 14,244,189.98 25,444,131.00 10,882,143.71

Room service 17,922,802.51 813,028.56 18,398,818.60 631,361.69

Sewage treatment 14,400,000.00 13,918,989.49 14,400,000.00 14,726,891.96

Operations 33,897,936.08 77,605,842.67 28,801,827.02 59,917,743.62

Chartered bus 1,542,231.20 666,324.68

IC Card 7,315,022.02 6,501,345.04

Service charge 2,511,394.75 110,000.00

Official car service 2,988,810.56 4,942,716.89

Others 263,239.94 5,643,281.98

(2) Subtotal of revenue from

other businesses

46,092,745.98 18,156,321.68 43,052,914.00 905,074.64

Financing income 36,218,079.26 2,119,274.03 36,409,600.00 666,320.00

House rent income 914,110.27 885,150.50 80,594.64

Property management fee 104,899.52 7,391,614.80 234,815.00

Parking service income 3,471,095.34 620,345.04 155,100.00

Advertising 4,456,700.63 62,490.00 4,877,358.36

Others 920,680.96 645,990.14 3,060.00

Maintenance service 7,180.00

Accumulated depreciation

of investment properties

7,962,597.81

Total 2,111,628,200.81 1,806,494,079.58 1,593,602,260.34 1,406,078,394.75

(XXXV) Financial expenses

Items Amount of this year Amount of previous year

Interest expense 198,180,155.50 88,557,507.80

Less: Interest income 5,767,482.07 5,655,673.23

Poundage 221,924.33 340,860.27

Others 1,725.00 77,593.00

Total 192,636,322.76 83,320,287.84

(XXXVI) Asset impairment losses

Items Amount of this year Amount of previous year

Bad debt losses 16,949,936.84 3,287,511.02

– F-139 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 51 of 60

Items Amount of this year Amount of previous year

Total 16,949,936.84 3,287,511.02

(XXXVII) Investment income

Items that generate investment income Amount of this year Amount of previous year

Income from long-term equity investment

accounted for using cost method 6,461,305.89

Income from long-term equity investments

accounted for using equity method 3,200,878.55 72,498.54

Investment income from disposal of long-term

equity investment

Investment income from financial assets at fair

value through profit or loss during the holding

period

Investment income from held-to-maturity

investments during the holding period

Investment income from available-for-sale

financial assets during the holding period 23,174,460.00 10,800,000.00

Investment income from disposal of financial

assets at fair value through profit or loss

Investment income from disposal of

held-to-maturity investments

Investment income from disposal of

available-for-sale financial assets

Other investment income 3,858,163.50 61,250.00

Total 30,233,502.05 17,395,054.43

(XXXVIII) Non-operating income

Items Amount of this year Amount of previous year

Government grants 370,598,900.00 232,479,038.20

Gains from fine

Others 338,994.97 691,375.40

Total 370,937,894.97 233,170,413.60

Note 1: The government grants mainly include the 260 million yuan of project construction

subsidy received by the parent company according to the Notice of Shangrao City Finance Bureau

for Granting Subsidy for the Construction of the Livelihood Projects in 2016 [Rao Caishu (2016)

No. 16], and the 36,919,190 yuan of natural gas subsidy received by Shangrao City Public

Transport Co., Ltd., a subsidiary of the Company.

(XXXIX) Non-operating costs

– F-140 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 52 of 60

Items Amount of this year Amount of previous year

Total losses from the disposal

of non-current assets374,475.71 1,451,322.88

Including: Losses from

disposal of fixed assets368,846.99 1,451,322.88

External donations 1,322,137.52 60,000.00

Fine expenses 1,590,931.40 500.00

Tax overdue fine 4,022,178.58

Recognized losses caused by

external guaranties70,262.57

Others 123,078.06 1,427,623.60

Total 3,480,885.26 6,961,625.06

(XL) Income tax expenses

Items Amount of this year Amount of previous year

Income tax expense for this period 23,819,169.62

25,721,508.85

Deferred income tax expense -4,205,095.98

-516,515.48

Total 19,614,073.64 25,204,993.37

(XLI) Reconciliation of net profits to cash flows from operating activities

Items Amount of this

year

Amount of

previous year1. Reconciliation of net profits to cash flows from operating

activitiesNet profits 356,448,332.94 210,608,047.16

Add: Provision for asset impairment 16,949,936.84 2,998,128.41

Depreciation of fixed assets, depletion of oil and gas

assets, depreciation of bearer biological assets

40,982,035.49 75,946,547.91

Amortization of intangible assets 3,035,992.37 3,035,992.37

Amortisation of long-term prepaid expenses 778,183.79 4,245,930.77

Losses from disposing fixed assets, intangible assets and

other long-term assets.

(“-” for gains)

374,475.71

Losses from fixed asset discard (“-” for gains)

Losses from fair value change (“-” for gains)

Financial expenses (“-” for gains) 198,180,155.50 88,557,507.80

Investment losses (“-” for gains) -30,233,502.05 -5,020,594.43

Decrease in deferred tax assets (“-” for increase) -4,205,095.98

Increase in deferred tax liabilities (“-” for decrease)

Decrease in inventories (“-” for increase) -2,917,967,934.55 -1,142,160,982.16

Decrease in operating receivables (“-” for increase) 2,365,578,111.87 3,530,207,829.47

Increase in operating payables (“-” for decrease) 151,629.77 1,684,518,275.48

Others

– F-141 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 53 of 60

Items Amount of this

year

Amount of

previous year Net cash flows from operating activities 30,072,321.70 4,452,936,682.78

2. Investing and financing activities that do not involve in cash

receipts and payments

Debts converted to capital

One year due convertible bonds

Fixed assets under financing lease

3. Net change in cash and cash equivalents

Ending balance of cash 9,737,544,740.35 7,882,041,689.70

Less: Beginning balance of cash 7,882,041,689.70 1,075,226,885.37

Add: Ending balance of cash equivalents

Less: Beginning balance of cash equivalents

Net increase in cash and cash equivalents 1,855,503,050.65 6,806,814,804.33

VIII. Explanations on Significant Items in the Financial Statements of the Parent Company

(I) Accounts receivable

Category

Ending balance Beginning balance

Book balance

Provision for

bad debts Book balance

Provision for

bad debts

Amount

Ratio

(%)

Amou

nt

Ratio

(%) Amount

Ratio

(%)

Amou

nt

Ratio

(%)

Accounts receivable that are

individually significant and

provided for bad debts

separately

- - - - - - - -

Accounts receivable that are

collectively provided for bad

debts

4,385,772,851.7

9

100.0

0 -

3,228,001,479.7

3

100.0

0 - -

Including: Age group 180,000.00 1.00 - - - -

Group of government

financial receivables

4,385,592,851.7

9 99.00 -

3,228,001,479.7

3

100.0

0 - -

Accounts receivable that are

not individually significant

but provided for bad debts

separately

- - -

Total 4,385,772,851.7

9

100.0

0

3,228,001,479.7

3

100.0

0

Note1: There is no receivables that shall be paid by shareholders holding over 5% (inclusive) of

– F-142 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 54 of 60

the Company’s shares.

Note 2: The balance of accounts receivable at the end of 2016 is the receivables from land transfer

and repurchase agreements that shall be paid by Shangrao Municipal Finance Bureau.

(II) Other receivables

Category

Ending balance Beginning balance

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Rati

o

(%) Amount

Ratio

(%) Amount

Ratio

(%)

Other receivables that are

individually significant and

provided for bad debts

separately

- - - - - - - -

Other receivables that are

collectively provided for bad

debts

5,231,591,347.81100.0

040,706,270.38 0.75

3,785,443,314.

20

100.0

0

24,425,616.1

10.65

Including: Age group 326,404,772.97 6.24 40,706,270.38 12.4

7959,045,088.61 24.85

24,425,616.1

12.55

Group of government

financial receivables3,352,075,638.35

64.07

2,651,041,894.

8470.60

Relate party group 1,553,110,936.4929.69

175,356,330.75 4.54

Other receivables that are not

individually significant but

provided for bad debts

separately

Total 5,231,591,347.81100.0

040,706,270.38 0.75

3,785,443,314.

20

100.0

0

24,425,616.1

10.65

Other receivables that are provided for bad debts using aging analysis

Age

Ending balance Beginning balance

Amount

Ratio

(%)

Provision for

bad debts Amount

Ratio

(%)

Provision for

bad debts

Less than 1

year88,463,101.44 27.10 878,555,492.07 92.13

1-2 years 184,060,739.21 56.39 18,406,073.92 56,056,399.74 5.85 5,605,639.97

2-3 years 38,186,232.32 11.70 7,637,246.46 2,988,728.51 0.31 597,745.70

3-5 years 2,063,500.00 0.63 1,031,750.00 6,444,475.71 0.67 3,222,237.86

Over 5

years13,631,200.00 4.18 13,631,200.00 14,999,992.58 1.04 14,999,992.58

– F-143 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 55 of 60

Total 326,404,772.97 100.00 40,706,270.38 959,045,088.61 100.00 24,425,616.11

Note1: There is no receivable that shall be paid by shareholders holding over 5% (inclusive)

of the Company’s shares.

Note 2: Details of significant balance of other receivables at the end of 2016 are as follows:

Name Nature of the account Amount

Shangrao Municipal Bureau of Finance Current account 1,259,119,273.00

Shangrao North Avenue Project Management

OfficeConstruction fund 803,725,000.00

Project Department of Ziyang North Avenue

Comprehensive Transformation and Upgrading

Project Construction Leading Group

Construction fund 407,290,000.00

Shangrao City House Demolition and Resettlement

Office

Demolition and

relocation cost205,944,429.17

Shangrao Central District Infrastructure

Construction Company

Relocation

compensation192,975,500.00

(III) Long-term equity investments

(1) Category of Long-term equity investments

Items

Beginning balance

Increase in this

year

Decrease in

this year

Ending balance

Amount

Provision

for asset

impairment

Amount

Provision

for asset

impairmen

t

Investment in

subsidiaries

1,078,230,000.0

0- 142,440,000.00

1,220,670,000.

00 -

Investment in

associates40,766,563.62 - 20,912,363.45 61,678,927.07

-

Total

1,118,996,563.6

2- 163,352,363.45

1,282,348,927.

07 -

(2) Investment in associates under equity method

Name of Investee

Inves

tment

ratio

(%)

Amount

of

initial

investm

ent (in

ten

thousan

d)

December 31,

2015

Increase or

decrease in

the year

Increase or

decrease of

equity in this

period

Accumulated

increase or

decrease of

equity

December 31,

2016

Jiangxi Shangrao Harbor

Logistics Co., Ltd.

50.0

01,000.00 13,197,911.30 278,867.77 3,476,779.07 13,476,779.09

– F-144 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 56 of 60

Shangrao Affordable

Housing Investment and

Construction Co., Ltd.

30.0

03,000.00 27,568,652.32 20,633,495.68

18,202,147.9848,202,147.98

Total 40,766,563.62 - 20,912,363.45 21,678,927.05 61,678,927.07

(IV) Operating income and costs

ItemsAmount of this year Amount of previous year

Income Cost Income Cost

(1) Subtotal of revenue

from main businesses1,912,376,016.79 1,633,932,600.00 1,446,331,174.77 1,314,846,522.52

Land transfer 603,783,783.78 408,532,600.00 452,000,000.00 410,909,090.91

Agent construction

project

1,308,592,233.01 1,225,400,000.00 994,331,174.77 903,937,431.61

(2) Subtotal of revenue

from other businesses37,360,801.92 10,081,871.84 27,387,252.00 746,914.64

Financing income 36,218,079.26 2,119,274.03 26,759,600.00 666,320.00

Renting income 914,110.27 627,652.00 80,594.64

Others 228,612.39

Amortisation of

investment properties

7,962,597.81

Total 1,949,736,818.71 1,644,014,471.84 1,473,718,426.77 1,315,593,437.16

(V) Investment income

Items that generate investment income Amount of this year Amount of previous year

Income from long-term equity investment

accounted for using cost method

Income from long-term equity investments

accounted for using equity method1,148,843.45 657,393.97

Investment income from disposal of long-term

equity investment

Investment income from financial assets at fair

value through profit or loss during the holding

period

Investment income from held-to-maturity

investments during the holding period

Investment income from available-for-sale

financial assets during the holding period3,858,163.50 6,461,305.89

Investment income from disposal of financial

assets at fair value through profit or loss

Investment income from disposal of

held-to-maturity investments

Investment income from disposal of

available-for-sale financial assets

Other investment income

– F-145 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 57 of 60

Total 5,007,006.95 7,118,699.86

IX. Related parties and related party transactions

(I) Actual control parties of the Company

Name of actual control parties Relationship

Shareholding

proportion in

the Company

Voting power

proportion in

the Company

Ultimate

controlling party

of the Company

State-owned Assets Supervision and

Administration Commission of

Shangrao Municipal People's

Government

Actual

control

100%

100% Yes

(II) Other related parties

Items Relationship

Jiangxi Shangrao Harbor Logistics Co., Ltd. Joint Venture

Shangrao Affordable Housing Investment and

Construction Co., Ltd.Holding company

Shangrao Haihua Real Estate Development Co., Ltd. Holding company

Shangrao Sanjiang Daotuo Drainage Co., Ltd. Holding company

Jiangxi Chunhe New Energy Co., Ltd. Holding company

Jiangxi Chunhong New Energy Co., Ltd. Holding company

(III) Receivables and payables with related parties

Item of

current

account

Name Substance December 31,

2016 December 31, 2015

Other

receivables

Jiangxi Shangrao Harbor Logistics Co.,

Ltd.Borrowings 8,000,000.00 9,668,440.00

Other

receivables

Shangrao Haihua Real Estate

Development Co., Ltd.

Current

account13,256,460.00

Other payablesShangrao Affordable Housing

Investment and Construction Co., Ltd.

Current

account25,000,000.00 25,000,000.00

X. Contingencies

1. In November 2012, the Company entered into a guarantee agreement with Jiangxi Jingke

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Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 58 of 60

Energy Co., Ltd. to provide a guarantee for the issue of 800 million yuan of corporate bond by

Jiangxi Jingke Energy Co., Ltd. At the same time, both parties agreed that Jiangxi Jinko Energy

Co., Ltd. would counter-guarantee the Company , and major shareholders of Jiangxi Jinke

Energy Co., Ltd. Li Xiande and Chen Kangping use their individual assets to provide unlimited

liability counter-guarantee of 800 million yuan for the Company; 2 months within the successful

issuance of corporate bond, Jiangxi Jingke Energy Co., Ltd. will swap out its fixed assets from

the bank to provide counter-guarantee for the Company, and mortgage the assets to the Company;

Jiangxi Jinko Energy Co., Ltd. shall take the land as counter-guarantee within 1 month from the

date of obtaining the land certificate of 300-mu supporting commercial and residential land

assets . On January 24, 2013, Jiangxi Jinke Energy Co., Ltd. issued RMB 800 million yuan of

2013 Jinke Corporate Bond with a term of 6 years upon the approval of National Development

and Reform Commission (NDRC CFG [2013] No. 139). On December 7, 2016, Jiangxi Jingke

Energy Co., Ltd. has already paid the bond in advance and the guarantee obligation of the

Company has thus been relieved.

2. In December 2013, the Company signed a maximum guarantee contract with Nanchang

Bank Railway Sub-branch. The Company provided guarantee for Jiangxi Shenguotou Jingdong

Commercial Real Estate Co., Ltd. to borrow 300 million yuan from Nanchang Bank Railway

Sub-branch with guarantee term from December 12, 2013 to December 10, 2015. According to

Rao Guozi No.[2015]82--Approval on Shangrao City Construction Investment and Development

Group Co., Ltd. to Provide Credit Guarantee for the Investors in Old Railway Station’s

Resettlement Housing Construction Project, the Company agreed to provide Jiangxi Shenguotou

Jingdong Commercial Real Estate Co., Ltd., an investor in this project, the credit guarantee for a

period of two years. As of December 31, 2016, the guarantee obligation has not been relieved.

3. In July 2015, the Company signed a guaranty letter with Jiangxi Heji Investment Co., Ltd.

to provide a full and unconditional irrevocable guarantee with collateral responsibility for the

public issuance of a corporate bond with total principal amount of RMB 700 million yuan (2015

Gan Heji Bond) by Jiangxi Heji Investment Co., Ltd. On November 11, 2015, Jiangxi Heji

Investment Co., Ltd. issued RMB 500 million yuan of 2015 Gan Heji Bond with a term of 7

years upon the approval of National Development and Reform Commission (NDRC CFG [2013]

No. 2635). As of December 31, 2016, the guarantee obligation has not been relieved.

– F-147 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 59 of 60

4. On December 9, 2013, the Company signed a guarantee contract with Huarong

International Trust Co., Ltd. to provide guarantee for Jiangxi Heji Investment Co., Ltd. to borrow

300 million yuan from Huarong International Trust Co., Ltd. with guarantee term from

December 18, 2015 to January 18, 2017. As of January 31, 2017, the guarantee obligation has

been relieved.

5. On December 30, 2013, the Company signed a maximum guarantee contract with

Shangrao Branch of China Merchants Bank to provide guarantee for Shangrao Investment

Holding Group Co., Ltd. to borrow 100 million yuan from Shangrao Branch of China Merchants

Bank with guarantee term from December 30, 2016 to December 29, 2019. On June 20, 2016,

the Company signed a guarantee contract with China Everbright Bank Nanchang Branch to

provide guarantee for Shangrao Investment Holding Group Co., Ltd. to borrow 2,500 million

yuan from China Everbright Bank Nanchang Branch with guarantee term from June 24, 2016 to

June 23, 2026.

XI. Major Commitments

As of December 31, 2016, there is no major commitment shall be disclosed.

XII. Post-balance Sheet Events

1. On January 6, 2017, Agricultural Bank of China Raodong Sub-branch made a loan of 1.25 billion yuan, with annual rate of 6.55%, term of 8 years and a maturity date on January 5, 2025.

2. On January 02, 2017, ICBC Shangrao Zhongrong Sub-branch made a loan of 400 million yuan, with annual rate of 5.9%, term of 5 years and a maturity date on January 01, 2022.

3. On January 11, 2017, ICBC Shangrao Sandao Sub-branch made a loan of 110 million yuan, with annual rate of 5.9%, term of 5 years and a maturity date on January 10, 2022.

4. On February 10, 2017, Ganzhou Bank Shangrao Branch made a loan of 230 million yuan, with annual rate of 6%, term of 5 years and a maturity date on February 09, 2022.

5. On February 10, 2017, ABC Financial Leasing Co., Ltd. made a loan of 500 million yuan, with annual rate of 5.98%, term of 5 years and a maturity date on February 09, 2022.

6. On March 17, 2017, China Minsheng Bank Shangrao Branch made a loan of 700 million yuan, with annual rate of 5.6%, term of 7 years and a maturity date on March 16, 2024.

7. On March 27, 2017, CDB Jiangxi Branch made a loan of 600 million yuan, with annual rate of 4.35%, term of 25 years and a maturity date on March 26, 2042.

– F-148 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2016

Page 60 of 60

8. On March 30, 2017, China Minsheng Bank Shangrao Branch made a loan of 700 million yuan, with annual rate of 5.6%, term of 7 years and a maturity date on March 29, 2024.

9. The guarantee provided for Jiangxi Shenguotou Jingdong Commercial Real Estate Co., Ltd. mentioned in Note X.2 has been repaid by Jiangxi Shenguotou Jingdong Commercial Real Estate Co., Ltd. on January 9, 2017. The obligation of the Company concerning this guaranty is thus relieved.

XIII. Other Material Statements

As of December 31, 2016, there is no other material event shall be disclosed.

Shangrao City Construction Investment and Development Group Co., Ltd. April 5, 2017

– F-149 –

– F-150 –

– F-151 –

– F-152 –

– F-153 –

– F-154 –

– F-155 –

– F-156 –

– F-157 –

– F-158 –

– F-159 –

– F-160 –

– F-161 –

– F-162 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 1 of 45

Shangrao City Construction Investment

and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended December 31, 2015

I. Company Profile

Shangrao City Urban Construction Investment and Development Group Co., Ltd. (hereinafter

referred to as “the Company”) was formerly named Shangrao Urban Construction Investment and

Development Co., Ltd., a wholly state-owned company established on June 18, 2002 with the

approval of the standing government meeting of Shangrao City. Its registered capital was RMB

50,000,000 Yuan, and the registration number of Corporate Business License is 3623001400246.

According to Shangrao Government Notification No.[2006]202 issued by Shangrao

Municipal People’s Government on October 16, 2006, the use right of 1,705 mu of land in the

urban area was injected into the Company as an investment. According to Shangrao Government

Notification No.[2007]310 issued by Shangrao Municipal People’s Government on 20 November

2007, the use right of 968.613 mu of construction land was injected into the Company as an

investment.

On December 19, 2008, according to Rao Guo Zi [2008] No.79 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Reply to <Report on Increasing

Registered Capital> of Shangrao City Urban Construction Investment and Development Co., Ltd.,

land use right of State-owned Land of Shangrao (SOLS) No.2008(195) and No.2008 (196), of

which the assessed value is 50,030,400 yuan, was used to increase the Company’s registered

capital by 50 million yuan,and the remaining was recorded into capital reserve. Therefore, the

Company’s registered capital amounted to 100 million yuan.

On March 9, 2009, the Company was renamed as Shangrao Urban Construction Investment

and Development Group Co., Ltd. with the Approval No.[2000]00029 from Shangrao City

Administration for Industry and Commerce.

On January 06, 2011, according to Rao Guo Zi [2010] No.61 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Approval on Increasing

Registered Capital of Shangrao City Urban Construction Investment and Development Co., Ltd.,

land use right of State-owned Land of Shangrao (SOLS) No.2010(119), of which the assessed

– F-163 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 2 of 45

value is 642,061,900 yuan, was used to increase the Company’s registered capital by 200 million

yuan,and the remaining was recorded into capital reserve. On March 22, 2011, according to Rao

Guo Zi [2010] No.61 Approval of Shangrao State-owned Assets Supervision and Administration

Commission--Approval on the Change of the Company's Registered Capital and Business Scope,

land use right of State-owned Land of Shangrao (SOLS) No.2007(182), of which the assessed

value is 342,866,600 yuan, was used to increase the Company’s registered capital by 320 million

yuan,and the remaining was recorded into capital reserve. After the capital increase, the registered

capital of the Company amounted to 620 million yuan.

On September 24, 2015, according to Rao Guo Zi [2015] No.56 Approval of Shangrao

State-owned Assets Supervision and Administration Commission--Approval on the Appropriation

of 100% Equity of Shangrao Urban Construction Investment and Development Group Co., Ltd.,

Shangrao State-owned Assets Management Co., Ltd., Shangrao City Water Corporation and

Shangrao Tourism Development Group Limited to Shangrao City Urban Construction Investment

and Development Group Co., Ltd., and upon verification by Shangrao City Administration for

Industry and Commerce, the investor of the Company was changed from Shangrao State-owned

Assets Supervision and Administration Commission to Shangrao Investment Holding Group Co.,

Ltd., The type of the Company was changed from state-solely-owned to legal person

wholly-owned. The actual controller of the Company is Shangrao State-owned Assets Supervision

and Administration Commission.

Registration number / unified social credit code: 913611007391724174; legal representative:

Zhang Ping.

Scope of business: infrastructure projects; land development; catering services (limited to

branch offices); highway construction. (Businesses subject to approval shall be carried out upon

approval by relevant government department.)

II. Basis for Preparation of Financial Statements

The financial statements have been prepared on a going concern basis, with all actual

transactions and events recognized and measured in accordance with Accounting Standards for

Business Enterprises - Basic Standard, Accounting System for Business Enterprises and the

specific accounting standards and other relevant provisions.

– F-164 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 3 of 45

III. Statement of Compliance with the Accounting Standards for Business Enterprises

(ASBE)

The financial statements of the Company have been prepared in accordance with the ASBEs,

and present truly and completely, the Company’s financial position, results of operations and cash

flows for the accounting period

IV. Significant Accounting Policies and Accounting Estimates, and Preparation of

Consolidated Financial statements

1. Accounting standards implemented

The Company and its subsidiaries implement Accounting Standards for Business Enterprises

and Enterprise Accounting System and their supplementary provisions issued by Ministry of

Finance.

2. Accounting Period

The accounting period of the Company runs from 1 January to 31 December of each calendar

year.

3. Basis of Bookkeeping and Principle of Measurement

The Company adopts the accrual system as the basis of bookkeeping and follows the

historical cost principle.

4. Functional Currency and Accounting Treatment for Foreign Currency Transaction

The Company uses Renminbi (RMB) as its functional currency. The financial transactions

involving foreign currencies in the fiscal year are booked at the market exchange rate of RMB on

the day of occurrence. At the end of reporting period, the balance of foreign currency accounts is

adjusted to the functional currency based on the market exchange rate at the end of reporting

period. The difference between the original carrying amount and the adjusted functional currency

is recognized as foreign exchange gains or losses Foreign exchange gains or losses incurred during

the preparation period are included in long-term prepaid expenses; foreign exchange gains or

losses related to the purchase and construction of fixed assets are treated according to the principle

of borrowing costs; other exchange gains or losses are included in the financial expenses for the

current period.

5. Standards for Cash Equivalents

Cash equivalents refer to the short-term, highly liquid investments that are readily

convertible into known amounts of cash and that are subject to an insignificant risk of change in

– F-165 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 4 of 45

value.

6. Accounting Method for Short-term Investment

The short-term investment of the Company is measured at investment cost upon its

acquisition, which is the actual payment upon acquisition deducting the cash dividends declared

but not yet paid or the interests which shall be paid but have not been acquired. Interests or cash

dividends acquired during the holding period, other than those have been recognized as

receivables, will directly offset the investment cost when actually received. At disposal, the

amount of any proceeds from disposal net of the carrying amount and unreceived dividends and

interest that have been included in receivables will be included in investment income for the

current period.

A short-term investment will be carried at the lower of its cost and market value at the end of

a period. If the market value is lower than the cost, a provision for decline in the value will be

made. If the market value of short-term investments that have been provided for decline in the

value has been recovered, it is reversed to the extent the provision for impairment has not been

made.

7. Accounting Method for Bad Debts

The Company adopts allowance method to account for the bad debt loss. Recognition

criteria of bad debt: ① the debtor is dead or bankrupt, and the debt can not be paid under the legal

liquidation procedure; ② the debtor can not pay off the debt in due time and there is significant

signs indicating that the debt can not be recovered.

The Company analyzed the recoverability of each receivables (accounts receivable and other

receivables) at the end of reporting period and predicted the possible bad debt losses. Provisions

for bad debts will be made for possible bad debt losses. Provisions for bad debts are made by a

combination of general identification and individual identification.

The general recognition is based on the aging analysis of receivables by each unit and adopts

the aging analysis method to provide for bad debt. Provision for bad debts is made according to

the following proportions: 0% for 1 year; 10% for 1-2 years (including); 20% for 2-3 years

(including); 50% for 3-5 years (including); 100% for over 5 years.

Individual identification method is used under the following conditions:

(1) Receivables with an age of less than 5 years but full provision for bad debts are required.

– F-166 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 5 of 45

There is no conclusive evidence that the receivable should be written off as a bad debt loss, but in

fact it is unlikely that the debt will be recovered. For example, if the debtor is in a non-recurring

state, insolvent,or experiencing a serious under-cash flow and serious natural disasters that caused

a production halt, and the debts cannot be paid off within a short period of time, and the losses are

likely to occur, the provision for bad debts shall be fully made. These circumstances include:

① the debtor is in a state of shutdown; ② the debtor is in the process of bankruptcy

application or execution; ③ the debtor is insolvent after being audited by an intermediary

institution; ④ the debtor is unable to pay off due to natural disasters such as fires, floods,

earthquakes and other force majeure; ⑤ other circumstances: the debtor is dead or has been

declared dead, disappeared or escaped, or actually does not exist, etc.; although the evidence

cannot be obtained from relevant departments, but facts have shown that it can not be recovered.

(2) Provision for bad debts shall be made partially according to the recoverability determined

by age analysis under the following circumstances:

① receivables occurred in the current year, and undue receivables; ② planning to reorganize

the receivables; ③ receivables with related parties.

(3) No provision for bad debts will be made for the balance of accounts with the internal

departments of the Group (included in the scope of the consolidated financial statements).

(4) No provision for bad debts will be made for receivables generated from special lending

by the local government or China Development Bank, and those from undertaking government

construction projects.

8. Accounting Method for Inventories

Inventories of the Company include raw materials, products under development,

development costs, land reserves, etc.

All kinds of inventories are carried out in perpetual inventory system, and the actual cost is

used in the acquisition. According to the nature and type of business, the weighted average method

or the FIFO method are used respectively. Low-value consumables and packaging materials are

written-off in full when issued for use.

Costs incurred for land acquisition and renovation carried out in order to optimize the land

resources within the scope of the authorized business shall be recorded into the cost of land

reserves; and interests from borrowings for land reserves are capitalized and included in the cost

– F-167 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 6 of 45

of land reserves.

The specific accounting method for the cost of real estate development is to take the real

estate development project as the accounting object and separately calculate the development cost.

Before the completion of the project, the actual costs incurred are recorded by individual project.

At the end of reporting period, the development costs that have been actually incurred but not yet

booked shall be provisionally estimated by the finance department of the project and carried

forward to the products under development when the project is completed and the revenue is

recognized. Development costs at the end of reporting period is the actual cost of uncompleted

projects.

Inventories are measured at the lower of cost and net realizable value at the end of each

period. The Company will determine the net realizable value of inventories based on solid

evidence obtained and after taking into consideration the purpose for which the inventory is held,

and the effect of events occurring after the balance sheet date. For materials held for use in

production, if the net realizable value of the finished products in which they will be incorporated

is higher than their cost, they will continue to be measured at cost; when a decline in the price of

the materials indicates that the cost of the finished products exceeds their net realizable value, they

will be measured at net realizable value. For inventories held to satisfy sales or service contracts,

the net realizable value is based on the contract price. If the quantities of inventories specified in

sales contracts are less than the quantities held by the Company, the net realizable value of the

excess portion of inventories will be based on general selling prices. For materials held for sale,

the net realizable value is base on market value. The Company will provide for decline in value of

inventories on an item-by-item basis. For large quantity and low value items of inventories,

provision will be made based on categories of inventories.

9. Accounting Method for Long-term Investment

(1) Long-term equity investments

① Long-term equity investments are measured at initial investment cost upon acquisition.

② Long-term equity investments will be accounted for using the cost method when the

Company’s investment in the investee is less than 20% of the total capital with voting power, or

when the Company does not have significant influence over the investee even if its investment is

no less than 20% of the total capital with voting power; long-term equity investments will be

– F-168 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 7 of 45

accounted for using the equity method when the Company’s investment is no less than 20% of the

total capital with voting power, or when the Company have significant influence even if its

investment is less than 20% of the total capital with voting power. When the Company’s

investment is no less than 50% of the total capital with voting power, or when the Company have

control over the investee even if its investment is less than 50% of the total capital with voting

power, long-term equity investments will be accounted for using the equity method and

consolidated financial statements will be prepared.

③ If the cost of a long-term equity investment exceeds the investor’s interest in the

investee’s owner’s equity, the difference will be amortized over the period stipulated in the

contract, or in no more than 10 years if there is no contract; if the cost of investment is lower than

the investor’s interest in the investee’s owner’s equity, the difference will be charged to capital

reserve.

④ On disposal of an equity investment, the difference between its carrying amount and the

proceeds actually received will be recognized in investment income or losses for the current

period.

(2) Long-term security investments

Long-term security investments are measured at initial investment cost upon acquisition.

The difference between the initial investment cost net of the related expenses and the interest of

bonds not yet matured, and the nominal value of the bonds will be regarded as the bond premium

or discount, which will be amortized during the term of the bonds using the actual interest rate and

straight-line method. Interest income is calculated using nominal interest rate by par value.

When disposing of a long-term security investment, the difference between the proceeds actually

received and its carrying amount will be recognized as investment income or loss.

(3) Provision for impairment of long-term investments

An impairment provision will be made for the difference between the recoverable amount

and carrying amount of an individual long-term investment, and an impairment loss will be

recognized in profit or loss for the current period.

10. Measurement and Depreciation of Fixed Assets

(1) Criteria for fixed assets

Buildings, machinery and equipment, transportation equipment and other equipment,

– F-169 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 8 of 45

appliances and tools related to production and operation with useful life of more than one year,

and other non-production and operation equipment and articles with unit price over 2,000 yuan

and useful life over 2 years are accounted for as fixed assets.

(2) Measurement of fixed assets

① The acquired fixed assets are measured at the actual payment of the price, packaging fee,

transportation fees, installation costs, and relevant taxes paid; ② The self-constructed fixed assets

are measured at all expenditures necessary for bringing the assets to their intended use. ③ Fixed

assets invested by the investors are measured at the value stipulated by the investor. ④ Fixed

assets under finance lease are measured at the lower of the original carrying amount of the leased

assets and the present value of the minimum lease payment at the lease starting date.

(3) Depreciation of fixed assets

① Fixed assets are depreciated over its useful life using the straight-line method.

② Category, estimated residual value rate and depreciable life of fixed assets are as follows:

Useful life Residual rate (%) Annual depreciation

rate

Houses and buildings 5-40 years 5.00% 2.38%－19.00%

Machines 10 years 5.00% 9.50%

Transportation facilities 8 years 5.00% 11.88%

Other equipment 5-10 years 5.00% 9.5%-19.00%

(4) Provision for fixed asset impairment

At the end of reporting period, fix assets are measured at the lower of its carrying amount

and recoverable amount. If the recoverable amount is less than its carrying amount, the difference

will be provided for impairment.

If the value of fixed assets that have been provided for impairment has been recovered, it is

reversed to the extent the provision for impairment has not been made. Fixed assets that have been

fully provided for impairment will no longer depreciated.

11. Accounting Method for Construction in Progress

(1)Construction in progress is measured at its actual cost. At the date when it reaches the

working condition for its intended use, it will be transferred into fixed assets based on project

budget, contracted construction price or actual project cost.

– F-170 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 9 of 45

(2)At the end of reporting period, a comprehensive review of construction in progress will be

carried out, and impairment will be provided for if the construction project:

① has long been halted and is not expected to resume in the next 3 years;

② has already outdated in terms of performance or technology, and has great uncertainties

for the economic benefits that it can bring to the company;

③ has been impaired based on other proofs.

12. Accounting Method for Borrowing Costs

Borrowing costs from the purchase or construction of fixed assets will be capitalized in the

cost of the assets if they are eligible for capitalization and incurred before the assets enter the

expected serviceable condition. Borrowing costs incurred after the assets enter the expected

serviceable condition will be recognized as financial expenses for the current period. Other

borrowing costs than those from the purchase or construction of fixed assets will be expensed

directly in the period when they are incurred.

13. Measurement and Amortization of Intangible Assets

(1) Measurement of intangible assets

① Intangible assets acquired are measured at the full price actually paid; ② Intangible

assets invested by the investors are measured at the value stipulated by all the investors. ③

Intangible assets that are self-developed and obtained through legal procedures are measured at

the cost incurred for the legal application for obtaining the asset, such as registration fees and legal

fees.

(2) Amortization of intangible assets

The intangible assets are amortized evenly within the contract or the beneficiary or effective

period stipulated by the laws and regulations since the acquisition of the intangible assets. If the

contract, laws and regulations do not clearly stipulate the benefits or useful life, the intangible

assets shall be amortized over a period no more than 10 years.

(3) Land use right acquired by the Company or obtained through payment of land transfer

premium is accounted for as an intangible asset before the land is used for development or

construction of self-use properties, and is amortized in installments according to the prescribed

time limit. If the land is used for construction of self-use properties, all the carrying amount of

land use right will be transferred to the cost of construction in progress.

– F-171 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 10 of 45

(4) At the end of reporting period, if the recoverable amount of an intangible assets is less

than its carrying amount, the difference will be provided for impairment.

14. Amortization of Long-term Prepaid Expenses

Long-term prepaid expenses are amortized over the life of the benefited period. Expenses

incurred during the preparation period (except for acquisition and construction of fixed assets) are

first collected in long-term prepaid expenses and then charged to profits or losses of the first

month of production and operation at the beginning of production and operation .

15. Accounting Method for Bonds Payable

Bonds payable of the Company shall be recorded according to the actually received price at

the time of issuance. The premium or discount of the bonds shall be amortized in a straight line

method during the existence of the bonds.

16. Recognition of provisions

The Company recognizes an obligation to a contingency as a provision when all of the

following conditions are satisfied:

(1) the obligation is a present obligation of the Company;

(2) it is probable that an outflow of economic benefits will be required to settle the

obligation;

(3) the amount of the obligation can be measured reliably.

17. Recognition Criteria for Revenue

(1)Revenue from sale of goods is recognized when the following conditions are met:

significant risks and rewards attached to the ownership of the goods sold are passed to the buyer;

neither continual involvement in the rights normally associated with the ownership of the goods

sold nor effective control over the goods controls are retained; revenue arising from the goods sold

has been received or evidence of receipt has been obtained; and cost incurred or to be incurred

associated with the goods sold is reliably measurable.

(2) Revenue from rendering of services is recognized when the following conditions are met:

the labor services have been rendered; the relevant income has been received, or evidence of

receipt has been obtained.

(3) Revenue from the use by others of enterprise assets: when it is probable that the economic

benefits related to the use by others of enterprise assets will flow to the Company and the amount

– F-172 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 11 of 45

of the revenue can be reliably measured, the related interest income and usage revenue will be

recognized.

18. Accounting Method for Income Taxes

Income taxes are accounted for by using the tax payable method.

19. Profit Distribution

According to the provisions of the Company Law, the profits after tax of the Company is

distributed in the following order:

(1) making up for losses in prior years; (2) appropriating 10% of the profits to statutory

surplus reserve; (3) appropriating to discretionary surplus reserve; (4) distributing dividends.

20. Preparation of Consolidated Financial Statements

(1) Principle and preparation method of the consolidated financial statements

The Company will prepare consolidated financial statements when it holds directly more

than 50% of the total capital with voting power of an investee; or it holds directly 50% or less of

the total capital with voting power of an investee but, in substance, has control over the investee.

Based on the financial statements of the Company and the subsidiaries included in the

consolidation scope and other relevant information, the Company consolidates the amounts of

each item and prepares consolidated financial statements after offsetting intragroup transactions

such as major transactions, capital transactions, claims and debts, etc.

(2) List of subsidiaries incorporated in the consolidated financial statements for this period

Registered

address Main operations

Registered capital (in

ten thousand)

Actual investment

amount at the end of

this period (in ten thousand)

Shareholdi

ng ratio (%)

Control method

Shangrao Chengdong Investment and Development Co., Ltd.

Shangrao, Jiangxi

Province

Investment and financing of infrastructure projects; investment and financing of railway northward movement construction project; asset management and operation; real estate development.

50,000.00 50,000.00 100% Direct control

Shangrao City Center Investment and Construction Development Co.,

Shangrao,

Jiangxi

Province

Urban infrastructure projects, land development, real estate development

1,000.00 1,000.00 100% Direct

control

– F-173 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 12 of 45

Ltd.

Shangrao City Investment Industry Co., Ltd.

Shangrao,

Jiangxi

Province

Building materials production and sales; infrastructure project investment and financing; urban infrastructure projects

36,000.00 35,000.00 100% Direct

control

Shangrao City Investment Land Development Co., Ltd.

Shangrao,

Jiangxi

Province

Land development and leveling services; infrastructure investment

500.00 500.00 100% Direct

control

Shangrao City Investment Engineering Management Consulting Co., Ltd.

Shangrao,

Jiangxi

Province

Project management, project cost, engineering consulting services

200.00 200.00 100% Direct

control

Shangrao Ziyang Real Estate Development Co., Ltd.

Shangrao,

Jiangxi

Province

Real estate development and management; infrastructure investment

1,100.00 1,100.00 100% Direct

control

Shangrao Longtan Lake Investment Co., Ltd.

Shangrao,

Jiangxi

Province

Industrial investment; urban infrastructure construction; real estate development and management; catering, accommodation, tourism and leisure entertainment

10,000.00 10,000.00 100% Direct

control

Shangrao Longtan Lake Hotel Co., Ltd.

Shangrao,

Jiangxi

Province

Catering services; sales of cigarettes and cigars; accommodation, cafes, beauty salons

300.00 300.00 100% Direct

control

Shangrao City Sewage Treatment Co., Ltd.

Shangrao,

Jiangxi

Province Sewage treatment 1,000.00 1,000.00 100%

Direct

control

Shangrao City Investment Property Service Co., Ltd.

Shangrao,

Jiangxi

Province

Property management; clean service; discontinued operation management

50.00 50.00 100% Direct

control

Shangrao City Comprehensive Transportation Hub Operations Management Co., Ltd.

Shangrao,

Jiangxi

Province

Transport hub station, parking lot construction and operation management; property management; design, production, release, agency of various types of advertising at home and abroad; property rental services; shopping malls operations management; catering, accommodation services; car rental services; car decorating, maintenance

2,000.00 2,000.00 100% Direct

control

– F-174 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 13 of 45

services; business information consulting services; investment and asset management.

Shangrao Small and Medium-Sized Enterprises Mutual Aid Fund Co., Ltd.

Shangrao,

Jiangxi

Province

Approved by Financial Office of Shangrao Municipal People's Government: to provide reloan service for small and medium-sized micro-enterprises and individuals that normally operate in Shangrao with cooperative banks; entrusted to carry out equity investment in small, medium and micro-enterprises; investment and financing management and related consulting services; other lawful items not required to be reported for approval

5,000.00 5,000.00 100% Direct

control

Shangrao City Public Transport Co., Ltd.

Shangrao,

Jiangxi

Province

Urban and rural bus passenger transport; tourist passenger; taxi passenger; new energy vehicle related parts; vehicle maintenance services; real estate development and management; marketing and planning; design, production, release, agency of various types of advertising at home and abroad.

6,000.00 3,000.00 100% Direct

control

Shangrao City Investment Trading Co., Ltd.

Shangrao,

Jiangxi

Province

Construction materials, metal materials, mechanical and electrical products, hardware and electrical equipment, auto parts, household appliances, daily necessities

1,000.00 1,000.00 100% Indirect

Shangrao Huakang Real Estate Development Co., Ltd.

Shangrao,

Jiangxi

Province

Real estate development, indoor and outdoor decoration, waterproof engineering services

229.54 229.54 100% Indirect

(3) Description of the change of consolidation scope

Compared with the previous year, three wholly owned subsidiaries are added to the

consolidation scope in this year, specifically as follows: the Company invested 20 million yuan to

set up a wholly owned subsidiary of Shangrao City Comprehensive Transportation Hub

– F-175 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 14 of 45

Operations Management Co., Ltd. ; the Company invested 20 million yuan to set up a wholly

owned subsidiary of Shangrao Small and Medium-Sized Enterprises Mutual Aid Fund Co., Ltd.;

and Shangrao City Public Transport Co., Ltd. was transferred to the Company as a whole

according to Shangrao Government Approval No.[2014]80.

V. Explanations for changes in accounting policies and accounting estimates as well as

correction of errors

1. Changes in accounting policies

The main accounting policies for the reporting period have not changed.

2. Changes in accounting estimates

The main accounting estimates for the reporting period have not changed.

3. Corrections of previous errors

There is no significant previous errors corrected during the reporting period.

VI. Taxation

The main types of taxes and tax rates applicable to the Company are as follows:

1. Business tax: levied at 5% of taxable operating income of the Company.

2. Enterprise income tax: levied at 25% of taxable income.

3. Urban maintenance and construction tax: levied at 7% of the total turnover tax

paid.

4. Education surtax: levied at 3% of the total turnover tax paid.

5. Local education surtax: levied at 2% of the total turnover tax paid.

VII. Notes to Significant Items in Consolidated Financial Statements (as of 31 December

2015; monetary unit: RMB Yuan)

1. Cash and bank balances

Ending balance Beginning balance

Cash 213,852.23 33,366.50

Bank balances 7,881,827,837.47 1,075,193,518.87

Other monetary capital 1,148,535,000.00 400,000,000.00

Total 9,030,576,689.70 1,475,226,885.37

Note: Other monetary capital at the end of the period: ① The security deposit required by the

parent company for bank acceptance bills issued by Fujian Minan Construction Co., Ltd.. The

amount of the notes is RMB 80 million; ② Shangrao Life Sewage Treatment Co., Ltd.signed a

bond contract with Bank of Communications Shangrao Branch, and deposited 68 million yuan of

– F-176 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 15 of 45

one-year fixed term deposit at Bank of Communications Shangrao Branch in July 2015, to provide

pledge for the maximum 180-million yuan liquidity loan with Bank of Communications Shangrao

Branch; ③ Shangrao City Investment Industry Co., Ltd., a subsidiary of the Company, entered

into a pledging deposit receipt contract with Nanchang Bank Shangrao Branch. In May 2015, it

deposited a 3-year fixed term deposit of 1 billion yuan at Nanchang Bank Shangrao Branch, to

provide pledge for its 1 billion yuan loan with Zhongjiang International Trust Co., Ltd.; ④ Ziyang

Real Estate Development Co., Ltd., a subsidiary of the Company, entered into a guarantee

agreement with Shangrao Branch of China Merchants Bank to deposit 535,000 yuan for the period

from 23 March 2015 to 31 July 2017 to provide pledge for the construction supervision contract

with a total amount of 5.35 million yuan signed with Jiangxi Hengshi Construction Supervision

Consulting Co., Ltd.

2. Accounts receivable

Ending balance Beginning balance

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%) Amount

Rati

o

(%)

Accounts

receivable that

are individually

significant and

provided for

bad debts

separately

- - - -

Accounts

receivable that

are collectively

provided for

bad debts

3,266,956,150.

44

100.0

0

380,390.3

8 0.01

1,806,061,978.

24

100.0

0 114,873.47 0.01

Including: Age group

38,529,602.01 1.18 380,390.3

8 0.45 24,391,673.28 1.35 114,873.47 0.47

Group of

government

financial

receivables

3,228,426,548.

43 98.82

1,781,670,304.

96 98.65 - -

Accounts - - - -

– F-177 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 16 of 45

receivable that

are not

individually

significant but

provided for

bad debts

separately

Total 3,266,956,150.

44

100.0

0

380,390.3

8 0.01

1,806,061,978.

24

100.0

0 114,873.47 0.01

Accounts receivable that are provided for bad debts using aging analysis

Ending balance Beginning balance

Amount Ratio (%)

Provision

for bad

debts Amount

Ratio

(%)

Provision for

bad debts

Less

than 1

year

35,414,180.21

91.91 -

23,242,938.58 95.29

1-2 years 2,771,939.80 7.19 277,193.98 1,148,734.70 4.71 114,873.47

2-3 years 228,482.00 0.59 45,696.40 - -

3-5 years 115,000.00 0.30 57,500.00

Total 38,529,602.01 100.00 380,390.38 24,391,673.28 100.00 114,873.47

Note1: There is no account receivable that shall be paid by shareholders holding over 5%

(inclusive) of the Company’s shares.

Note 2: The balance of accounts receivable at the end of reporting period is mainly

attributable to the proceeds from the land transfer and repurchase agreements of Shangrao

Municipal Finance Bureau.

Note 3: The increase of 115,000.00 yuan within aging of 3-5 years is the balance of Shangrao

Public Transport Co., Ltd., which is newly incorporated into the scope of consolidation.

3. Other receivables

Ending balance Beginning balance

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%) Amount

Ratio

(%)

Other

receivables

that are

individuall

- - - - - - - -

– F-178 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 17 of 45

y

significant

and

provided

for bad

debts

separately

Other

receivables

that are

collectively

provided

for bad

debts

3,798,502,723.

12

100.0

0

27,957,592.8

7 0.74

3,216,596,868.

16

100.0

0

25,016,964.4

6 0.78

Including: Age group

251,738,468.52 6.63 27,957,592.8

7 11.11 164,755,498.43 5.12

25,016,964.4

6 15.18

Group of

government

financial

receivables

3,546,764,254.

60 93.37

3,051,841,369.

73 94.88 - -

Other

receivables

that are not

individuall

y

significant

but

provided

for bad

debts

separately

- - - -

Total 3,798,502,723.

12

100.0

0

27,957,592.8

7 0.72

3,216,596,868.

16

100.0

0

25,016,964.4

6 0.78

Other receivables that are provided for bad debts using aging analysis

Ending balance Beginning balance

Amount Ratio (%)

Provision for

bad debts Amount

Ratio

(%)

Provision for

bad debts

Less than

1 year

152,817,248.93 65.92 102,503,577.28 62.22 -

1-2 years 72,158,536.70 21.54 7,215,853.67 18,081,306.99 10.97 1,808,130.70

2-3 years 3,183,396.65 4.89 636,679.33 11,543,531.77 7.01 2,308,706.35

– F-179 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 18 of 45

3-5 years 6,948,452.74 3.04 3,474,226.37 23,453,909.96 14.24 11,726,954.98

Over 5

years

16,630,833.50 4.61

16,630,833.50 9,173,172.43 5.56 9,173,172.43

Total 251,738,468.52 100.00 27,957,592.87 164,755,498.43 100.00 25,016,964.46

Note1: There is no receivable that shall be paid by shareholders holding over 5% (inclusive)

of the Company’s shares.

Note 2: Details of significant balance of other receivables at the end of reporting period are as

follows:

Nature of the account Amount

Shangrao Municipal Bureau of Finance Current account 869,069,984.00

Shangrao City Construction Investment and

Development Group Co., Ltd. Borrowings

350,000,000.00

Shangrao City House Demolition and

Resettlement Office

Demolition and

relocation cost

205,944,429.17

Shangrao Central District Infrastructure

Construction Company Relocation compensation

192,975,500.00

Shangrao Olympic Center Project

Management Department Construction fund

178,999,600.00

4. Prepayments

Ending balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 456,888,597.33 73.68 72,367,319.69 20.97

1-2 years 39,401,606.01 6.35 146,705,269.04 42.51

2-3 years 91,796,433.99 14.80 87,056,031.27 25.22

Over 3 years 32,014,341.99 5.16 38,997,393.85 11.30

Total 620,100,979.32 100.00 345,126,013.85 100.00

Note 1: The ending balance increased by 79.67% as compared with that at the end of last year,

is mainly due to the increase of prepaid construction payment for the first phase of diversion

project undertaken by a subsidiary Shangrao City Investment Engineering Management

Consulting Co., Ltd., and the newly-initiated National Highway No.320 Project of the parent

company.

Note1: There is no payables that shall be paid to shareholders holding over 5% (inclusive) of

the Company’s shares.

Note 3: Prepayments of more than three years at the end of reporting period are mainly those

prepaid for the Shangrao municipal construction project undertaken by the Company.

– F-180 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 19 of 45

5. Inventories

Ending balance Beginning balance

Book balance

Provi

sion

for

impa

irme

nt

Carrying

amount Book balance

Provi

sion

for

impa

irme

nt

Carrying

amount

Raw

material 419,695.49

419,695.49 225,048.31 -

225,048.31

Commoditie

s in stock 2,550,556.82

2,550,556.82 2,549,864.41 -

2,549,864.41

Developme

nt costs 9,080,920,591.82

9,080,920,591.82 8,016,303,121.37 -

8,016,303,121.37

Land

reserve 8,906,089,639.32

8,906,089,639.32 8,828,845,821.33 -

8,828,845,821.33

Materials

for

repetitive

usage 95,369.00

95,369.00

Low-value

consumable

s 8,985.13

8,985.13

Total

17,990,084,837.5

8

17,990,084,837.58

16,847,923,855.4

2 -

16,847,923,855.4

2

Note: details of significant balance of development costs at the end of reporting period

Project

commencing

date Ending balance

Including:

capitalised interest

Old train station shanty area

comprehensive transformation and

upgrading project

October 2012 5,178,120,344.72 1,822,624,168.20

First grade land consolidation in

Chengdong March 2010 732,979,407.09 563,747,503.85

Sewage renovation and westward

expansion project December 2013 360,830,395.74 50,715,025.92

320 National Road Project Department August 2015 334,828,007.18 93,993,808.18

Longtan resettlement area project October 2013 210,262,940.04 10,396,589.53

6. Long-term equity investments

(1) Category of Long-term equity investments

Beginning balance Increase in Decrease Ending balance

– F-181 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 20 of 45

Amount

Provision for asset

impairment

this year in this

year

Amount

Provision for asset

impairment

Investment in

associates 40,109,169.65 - 657,393.95

- 40,766,562.60 -

Other equity

investments 101,000,000.00 -

-

101,000,000.0

0 -

Investment in

subsidiaries 4,413,388.54

4,413,388.54

Total 141,109,169.65 - 5,070,782.49

146,179,951.1

4 -

Note: The newly increased investment in subsidiaries in the current year is the balance of

long-term equity investment of Shangrao City Public Transport Company in its subsidiary Jiangxi

Chunhe New Energy Co., Ltd.

(2)Investment in associates under equity method

Investmen

t ratio

Amoun

t of

initial

invest

ment

(in ten

thousa

nd)

Beginning

balance

Incre

ase or

decre

ase in

the

year

Increase or

decrease of

equity in

this period

Accumulate

d increase

or decrease

of equity

Ending

balance

Jiangxi Shangrao Harbor Logistics Co., Ltd.

50% 1,600.00 11,805,242.9

9 - 1,392,668.31 3,197,911.30 13,197,911.30

Shangrao Affordable Housing Investment and Construction Co., Ltd.

30% 3,000.0

0

28,303,926.6

6 - -735,274.36

-2,431,347.7

0 27,568,652.30

Total

4600.0

0

40,109,169.6

5 - 766,563.60 40,766,563.60

(3) Other equity investment accounted for using cost method

Investme

nt ratio

Initial

investment

amount

Beginning

balance

Increase in

this year

Decrease in

this year

Ending

balance

– F-182 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 21 of 45

Shangrao Guangtian

Building

Components Co.,

Ltd.

10.00% 1,000,000 1,000,000.00 - - 1,000,000.00

CDB Jingcheng

(Beijing)

Investment Fund

Co., Ltd.

1.46% 100,000,000 100,000,000.

00 - -

100,000,000.

00

Total

101,000,000.

00 - -

101,000,000.

00

7. Long-term liability investments

Beginning balance

Increase in

this year

Decrease

in this

year

Ending balance

Amount

Provision

for asset

impairme

nt

Amount

Provision

for asset

impairm

ent

Shangrao Investment

No.1 Fund

Management Center

651,115,000.0

0

651,115,000.0

0

Shangrao Zixin Real

Estate Development

Co., Ltd.

49,078,383.42 - - 49,078,383.42 -

Shangrao Haihua

Real Estate

Development Co.,

Ltd.

68,747,000.00 - - 68,747,000.00 -

Total 117,825,383.4

2

651,115,000.0

0 -

768,940,383.4

2 -

Note 1: The subsidiary Ziyang Real Estate Development Co., Ltd. transferred 70% equity of

Zixin Real Estate Development Co., Ltd. to Fuxin Investment Group (Shanghai) Co., Ltd. in

December 2011; at the same time, both parties agreed that Ziyang Real Estate Development Co.,

Ltd. does not participate in this company’s operation. The remaining 30% of equity would be paid

by Fuxin Investment Group (Shanghai) Co., Ltd. paid within three years. In each year, Fuxin

Investment Group (Shanghai) Co., Ltd. would pay a fixed return to Shangrao Ziyang Real Estate

Development Co., Ltd. at 18.00% of 60 million yuan.

As of December 31, 2014, due to land block demolition, Ziyang Real Estate Development

Co., Ltd. has been handling the compensation for land acquisition and has 70% of the land under

construction. The project is still under construction. 30% of this liability is expected to be deferred

– F-183 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 22 of 45

back.

Note 2: Ziyang Real Estate Development Co., Ltd. invested RMB 4.9 million yuan in

September 2012 to set up Shangrao Haihua Real Estate Development Co., Ltd. together with

natural person Ruan Xianghua, holding 49% shares of this company. In 2013, the Company

contributed RMB 63,847,000 yuan to participate in the real estate project of this company. The

shareholders of both parties agreed that Ziyang Real Estate Development Co., Ltd. will not

participate in the operation of this company. Ruan Xianghua will pay a fixed return at 18.00% of

68,747,000 yuan to Ziyang Ziyang Real Estate Development Co., Ltd. every year.

8. Fixed assets and accumulated depreciation

Beginning

balance

Increase in this

period

Decrease in

this period Ending balance

Total original book value 514,905,914.20 6,404,701,411.20 10,932,408.4

7 6,908,674,916.93

Including: Houses and

buildings 428,485,845.17

2,286,184,969.51 7,838,360.36 2,706,832,454.32

Machines 55,575,551.03 38,071,892.16 580,000.00 93,067,443.19

Transportation facilities 7,331,032.71 103,036,131.69 110,367,164.40

Other equipment 23,513,485.29 28,047,787.74 2,514,048.11 49,047,224.92

Structures and other

ancillary facilities

3,949,360,630.10 3,949,360,630.10

Total accumulated

depreciation 41,701,727.92 75,946,547.91

6,851,800.21 110,796,475.61

Including: Houses and

buildings 20,140,420.82

6,569,264.49 24,779.17 36,684,906.14

Machines 8,600,063.58 15,297,403.94 77,894.00 23,819,573.52

Transportation facilities 3,958,597.86 46,655,458.28 5,674,279.89 44,939,776.24

Other equipment 9,002,645.66 7,424,421.20 1,074,847.15 5,352,219.71

Structures and other

ancillary facilities

Total net value of fixed

assets 473,204,186.28

6,797,878,441.32

Including: Houses and

buildings 408,345,424.35

2,670,147,548.18

Machines 46,975,487.45 69,247,869.67

Transportation facilities 3,372,434.85 65,427,388.15

Other equipment 14,510,839.63 33,695,005.21

Structures and other

ancillary facilities

3,949,360,630.10

– F-184 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 23 of 45

Total provision for fixed

asset impairment -

Total carrying amount of

fixed assets 473,204,186.28

6,797,878,441.32

Including: Houses and

buildings 408,345,424.35

2,670,147,548.18

Machines 46,975,487.45 69,247,869.67

Transportation facilities 3,372,434.85 65,427,388.15

Other equipment 14,510,839.63 33,695,005.21

Structures and other

ancillary facilities

3,949,360,630.10

Note 1: Among the ending balance, the carrying amount of 5,750.60 M2 shops of Shangrao

Chengdong Investment and Development Co., Ltd. is RMB 29,562,100 yuan, and the carrying

amount of 1,716.39 M2 houses of Shangrao Life Sewage Treatment Co., Ltd. is 2,655,700 yuan.

Housing ownership certificate is still in the process.

Note 2: The significant increase of fixed assets in this year was the overall assets (including

liabilities) of Shangrao-Wuyishan Expressway Project, which was transferred in according to

Shangrao Government Approval No.[2015]213 and measured its appraisal value by ZhongMing

Appraisal No.[2016]2018,and the comprehensive transport hub project, which was transferred in

according to Shangrao Government Approval No.[2015]214 and measured its appraisal value by

ZhongMing Appraisal No.[2016]2017.

9. Construction materials

Ending balance Beginning balance

Special purpose materials 3,762,448.00 3,762,448.00

Total 3,762,448.00 3,762,448.00

10. Construction in progress

Ending balance Beginning balance

Book

balance

Provision

for

impair

ment

Carrying

amount

Book

balance

Provision

for

impairme

nt

Carrying

amount

Longtan Lake Hotel

renovation and expansion

project

829,813.99 829,813.99 423,358.48 - 423,358.4

8

Eastern Town Gas Filling

Station

663,294.39

663,294.39

– F-185 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 24 of 45

Western Town

Comprehensive Service

Center

920,603.77

920,603.77

Waiting hall of railway

station hub

35,795.00

35,795.00

Total

2,449,507.1

5

2,449,507.1

5 423,358.48 -

423,358.4

8

Note: The increase in construction in progress is mainly the balance of the construction in

progress of Shangrao Public Transport Co., Ltd., which is newly incorporated into the

consolidation scope.

11. Intangible assets

Beginning balance Increase in this

period

Decrease in

this period Ending balance

Total original book

value 57,587,187.30 -

57,587,187.30

Including: Land use

right 57,341,407.30

57,341,407.30

Application software 245,780.00 245,780.00

Total accumulated

amortization 4,115,240.56 3,035,992.37 7,151,232.93

Including: Land use

right 4,018,110.41 2,989,376.37

7,007,486.78

Application software 97,130.15 46,616.00 143,746.15

Total net value of

intangible assets 53,471,946.74 50,435,954.37

Including: Land use

right 53,323,296.89 50,333,920.52

Application software 148,649.85 102,033.85

Provision for intangible

asset impairment -

Total carrying amount

of intangible assets 53,471,946.74 50,435,954.37

Including: Land use

right 53,323,296.89 50,333,920.52

Application software 148,649.85 102,033.85

Note: In the ending balance, there is 95,866.66 M2 of land use right owned by the subsidiary

Shangrao City Sewage Treatment Co., Ltd. whose transfer procedures are still under processing.

12. Long-term prepaid expenses

– F-186 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 25 of 45

Beginning balance

Increase in this

year

Amortization in this year

Other decrea

se Ending balance

Hotel indoor facilities

4,953,585.90

- 4,245,930.77 - 707,655.13

Software patent charge - 10,500.00 - 10,500.00

Total 4,953,585.90 10,500.00 4,245,930.77 - 718,155.13

13. Short-term borrowings

Ending balance Beginning balance

Pledge loans 61,200,000.00 379,700,000.00

Trust loans 438,000,000.00 200,000,000.00

Guaranteed loans 200,000,000.00

Mortgage loans 200,000,000.00

Total 899,200,000.00 579,700,000.00

Note 1: Pledge loans at the end of this period are as follows: Shangrao Life Sewage

Treatment Co., Ltd. borrowed a one-year loan amounting to RMB 61.2 million yuan from

Shangrao Branch of Bank of Communications, which is pledged by its 68 million one-year fixed

term deposit certificate at Shangrao Branch of Bank of Communications.

Note 2: Trust loans at the end of the period are as follows: Shangrao City Investment Trading

Co., Ltd., a subsidiary of the Company, signed a trust loan contract with Industrial International

Trust Co., Ltd., who issued loans of RMB 304 million yuan and 44 million yuan respectively

through the trust funds under Xing-Gan Preferred Corporate Loan-Capital Trust (Phase 1) and

Xing-Gan Preferred Corporate Loan-Capital Trust (Phase 6) under the management of Industrial

International Trust Co., Ltd.The loan, with a term of 1 year, is pledged by its 445 million yuan

time deposit certificate at Industrial Bank Nanchang Branch.

Note 3: Guaranteed loans at the end of the period are as follows: Shangrao City Investment

Trading Co., Ltd. borrowed a one-year loan of 50,000.00 million yuan from China CITIC Bank

Nanchang Branch, which is guaranteed by Jiangxi Hanchen Asset Management Co., Ltd.;

Shangrao Life Sewage Treatment Co., Ltd. borrowed a one-year loan of 20 million yuan from

Shangrao Raodong Sub-branch of Agricultural Bank of China, which is guaranteed by Shangrao

City Urban Construction Investment and Development Group Co., Ltd.; Shangrao Life Sewage

Treatment Co., Ltd. borrowed a one-year loan of 50 million yuan from China CITIC Bank

Nanchang Branch, which is guaranteed by its parent company; Shangrao Longtan Lake

Investment Co., Ltd. borrowed a one-year loan of 80 million yuan from Bank of Beijing Nanchang

– F-187 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 26 of 45

Branch, which is guaranteed by its parent company;

Note 4: Mortgage loans at the end of the period are as follows: The Company borrowed RMB

43.6 million and RMB 156.4 million respectively from Shangrao Branch of China Merchants

Bank, which is mortgaged by its self-owned 8,956.94 M2 of real estate.

14. Accounts payable

Ending balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 224,201,398.62 90.58 23,555,288.08 53.70

1-2 years 22,787,584.08 9.21 7,270,154.13 16.57

2-3 years 59,094.24 0.02 111,560.24 0.25

Over 3 years 471,103.45 0.19 12,929,383.14 29.48

Total 247,519,180.39 100.00 43,866,385.59 100.00

Note 1: The increase of the ending balance as compared with the end of last year is mainly

due to the increase of construction payables to Shangrao Project Headquarter of CECEP Water

Development Co., Ltd. in the sewage rebuilding and westward relocation project.

Note2: There is no payable that shall be paid to shareholders holding over 5% (inclusive) of

the Company’s shares.

15. Advances from customers

Ending balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year 17,586,219.96 25.24 63,496,354.43 94.78

1-2 years 48,957,136.76 70.27 3,500,000.00 5.22

2-3 years 3,127,335.00 4.49 - -

Total 69,670,691.72 100.00 66,996,354.43 100.00

Note: There is no advances from shareholders holding over 5% (inclusive) of the Company’s

shares.

16. Taxes payable

Ending balance

Applicable

tax rate Beginning balance

Value-added tax -7,758,173.66 17% 3,300.72

Business tax 19,693,454.45 5% 11,731,532.56

Enterprise income tax 109,010,779.70 25% 86,330,920.97

Property tax 24,650.88 12% 24,650.88

City maintenance tax 1,456,222.63 7% 809,200.99

– F-188 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 27 of 45

Personal income tax 257,794.56 96,882.81

Construction Fee for

Cultural Undertakings15,600.00

Stamp tax 1,441.28

Total 122,701,769.84 98,996,488.93

17. Other payables to government

Ending balance Beginning balance

Educational surtax and local

educational tax936,610.75 509,532.72

Flood prevention and safety fund 291,467.16 317,804.20

Price adjustment fund 9,441.93 11,989.62

Employment security for the

disabled -19,670.00

Total 1,217,849.84 839,326.54

18. Other payables

Ending balance Beginning balance

Amount Ratio (%) Amount Ratio (%)

Less than 1 year

371,322,074.59 17.23 2,261,600,009.3

3 76.61

1-2 years 1,525,814,472.04 70.81 319,212,968.43 10.81

2-3 years 222,332,026.82 10.32 79,800,491.90 2.70

Over 3 years 35,451,731.10 1.65 291,599,543.45 9.88

Total2,154,920,304.55 100.00 2,952,213,013.1

1 100.00

Note1: There is no payable that shall be paid to shareholders holding over 5% (inclusive) of

the Company’s shares.

Note 2: Details of significant balance of other payables at the end of reporting period:

Nature of the account Amount

Shangrao Land Reserve Center Current account 1,568,000,000.00

Shangrao Normal School Relocation project fund 265,000,000.00

Shangrao Real Estate Administration special

account for shanty town transformation

Special fund for shanty

town transformation

159,997,300.00

Jiangxi Zhongdong Investment Co., Ltd. Investment 54,600,000.00

Jiangxi SDIC Jingdong Commercial Real Estate

Co., Ltd.Pledge

50,000,000.00

19. Long term liabilities due within one year

Items Ending balance Beginning balance

Long-term borrowings due within one year

– F-189 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 28 of 45

Including: Avic Trust Co., Ltd. Assurance 1,500,000,000.00

Huaneng Guicheng Trust Co., Ltd. Assurance 1,000,000,000.00

China Development Bank Jiangxi

Branch Pledge 31,000,000.00 117,200,000.00

China Development Bank Jiangxi

Branch Mortgage 38,500,000.00 77,500,000.00

Agricultural Development Bank

Shangrao Branch Mortgage 394,000,000.00 465,000,000.00

Bank of Communications Shangrao

Branch Mortgage 250,000,000.00 76,500,000.00

Hua Xia Bank Nanchang Branch Mortgage 600,000,000.00 400,000,000.00

Bocom International Trust Co., Ltd. Mortgage 48,500,000.00

New Times Trust Co., Ltd. Mortgage 420,000,000.00

Zhongjiang International Trust Co.,

Ltd. Mortgage 400,000,000.00

Industrial Bank Nanchang Branch Mortgage 100,000,000.00 -

Jiujiang Bank Shangrao Branch Mortgage 300,000,000.00

Huarong International Trust Co., Ltd. Trust 50,000,000.00

China Everbright Bank Nanchang

Branch Mortgage 7,500,000.00

Zhongjiang International Trust Co.,

Ltd. Trust 1,000,000.00

Total 1,772,000,000.00 4,504,700,000.00

20. Long-term borrowings

Ending balance Beginning balance

Pledge loans 765,680,000.00 423,000,000.00

Mortgage loans 5,054,500,000.00 4,272,500,000.00

Trust loans 3,949,000,000.00 639,500,000.00

Other borrowings 500,000,000.00 200,000,000.00

Total 10,269,180,000.00 5,535,000,000.00

Note 1: Ending balance of pledge loans are: ① Ten-year loans of RMB 80 million yuan,

41.68 million yuan and 130 million yuan borrowed by the Company from Jiangxi Provincial

Branch of China Development Bank are pledged respectively by the total equity and benefits

under Shangrao Central District Longtan Lake Area Network Construction Project and Agent

Construction Agreement of New Construction Project of Shangrao Fengxi Bridge signed by

Shangrao Urban Construction Investment and Development Group Co., Ltd. and Shangrao

Municipal Government on June 12, 2009, and Agent Construction Agreement of the First Phase

– F-190 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 29 of 45

Infrastructure Construction Project of the Processing Trade Undertaking Base in the Central and

Western Regions Of Shangrao Economic Development Zone signed by them on June 5, 2009,

among which, 30 million yuan is due within one year; ② Ten-year loan of RMB 14.5 billion

yuan borrowed by Shangrao Chengdong Investment and Development Co., Ltd. from Jiangxi

Provincial Branch of China Development Bank are pledged by the total equity and benefits under

Agent Construction Agreement of Shangrao International Logistics Center Infrastructure

Construction Projects signed by Shangrao Chengdong Investment and Development Co., Ltd. and

Shangrao Municipal Government on December 15, 2008, and Agent Construction Agreement of

New Campus Construction Project of Shangrao Branch of Jiangxi Medical College signed by

Shangrao Chengdong Investment and Development Co., Ltd., Shangrao Municipal Government

and Shangrao Branch of Jiangxi Medical College on October 10, 2008, among which, 1 million

yuan is due within one year; ③ The subsidiary, Shangrao City Investment Trading Co., Ltd.

borrowed a loan of 400 million yuan from China Everbright Bank Nanchang Branch for a period

of two years and was pledged by its 400 million yuan time deposit certificate deposited with China

Everbright Bank Nanchang Branch.

Note 2: Ending balance of mortgage loans mainly include: ① The 15-year loan of 1,200

million yuan borrowed by the subsidiary Shangrao City Investment Industry Co., Ltd. from

Shangrao Branch of Agricultural Development Bank, which was secured by the real estate with

the area of 23,757.00 ㎡ owned by the parent company, and the receivables from agent

construction with a total value of 214,214.05 million yuan and valid for 15 years; ② The 8-year

loan of 1,660 million yuan borrowed by the parent company from Shangrao Branch of

Agricultural Bank of China and secured by its self-owned land with an area of 351,925.67 ㎡,

among which, 380 million is due within one year; ③ The 5-year loan of 1,400 million yuan

borrowed by the parent company from Hua Xia Bank Nanchang Branch and secured by its

self-owned land with an area of 97,020.90 ㎡, among which 600 million is due within one year;

④ The 5-year loan of 875 million yuan borrowed by the parent company from Bank of

Communications Shangrao Branch and secured by its self-owned land with an area of 359,309.60

㎡, among which 250 million is due within one year; ⑤ The 3-year loan of 625 million yuan

– F-191 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 30 of 45

borrowed by the parent company from Industrial Bank Nanchang Branch and secured by its

self-owned land with an area of 292,068.40 ㎡, among which 100 million is due within one year;

⑥ The 5-year loan of 500 million yuan borrowed by the parent company from Shanghai Pudong

Development Bank Nanchang Branch and secured by its self-owned land with an area of

148,06.001 ㎡; ⑦ The 10-year loan of 197 million yuan borrowed by the parent company from

Jiangxi Provincial Branch of China Development Bank and secured by its self-owned land with an

area of 120,099.00 ㎡, among which 37.5 million is due within one year;

Note 3: Ending balance of trust loans mainly include: ①The subsidiary Shangrao

Chengdong Investment and Development Co., Ltd. signed a trust loan contract with Zhongjiang

International Trust Co., Ltd. to establish Zhongjiang International • Yinying No. 759 Loan Single

Fund Trust Plan with Zhongjiang International Trust Co., Ltd., under which the subsidiary

borrowed 1 billion yuan. The term of the loan is 36 months. The company uses its 1 billion time

deposit certificate at Nanchang Bank Shangrao Branch as pledge. ② The subsidiary Shangrao

Chengdong Investment and Development Co., Ltd. signed a trust loan contract with Zhongjiang

International Trust Co., Ltd. to establish Zhongjiang International • Yinying No. 759 Loan Single

Fund Trust Plan with Zhongjiang International Trust Co., Ltd., under which the Company borrows

730 million yuan. The term of the loan is 36 months, with the parent company’s 11,317.30 ㎡ of

real estate as mortgage, and guaranteed by Shangrao Affordable Housing Investment Construction

Co., Ltd.; ③ The Company signed a trust loan contract with Huarong International Trust Co., Ltd.

to establish Huarong • Shangrao City Investment Trust Loan Collective Fund Trust Plan, under

which the Company borrows 500 million yuan. The term of the loan is 30 months, with the

Company’s 19,574.91 ㎡ of self-owned properties as mortgage, of which 50 million yuan is due

within one year; ④ The Company signed a trust loan contract with China Minmetals

International Trust Co., Ltd. to establish Minmetals Trust - Xinyi No. 25 Shangrao City

Investment Trust Fund Plan, under which the Company borrows 500 million yuan. This loan is

guaranteed by the Company’s agent construction revenue from land first level consolidation

project in Chengdong District of Shangrao City, which shall be paid by Shangrao Municipal

Government. After the transfer of creditor’s right, it will be guaranteed by Shangrao Chengdong

Investment and Development Co., Ltd. ⑤ The Company signed a trust loan contract with China

– F-192 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 31 of 45

Construction Investment Trust Co., Ltd. to establish CCI• Jianquan No. 34 Shangrao City

Investment Collective Fund Trust Plan., under which the Company borrows 500 million yuan. The

term of the loan is 24 months. The Company uses its 700 million of receivables from Shangrao

Municipal Government as pledge.

Note 4: Ending balance of other borrowings are: The Company entered into an agreement for

the business of listing and transfer of receivables with Tianjin Financial Assets Exchange Co., Ltd.

and Tianjin Financial Assets Registration and Settlement Co., Ltd., stipulating that the debts of the

accounts receivable of the Company shall be debated and the contractual product trading mode

shall be adopted. The transfer price of RMB 500 million obtained after the transfer of listing by

Party B is guaranteed by Chongqing Three Gorges Guarantee Group Co., Ltd. and is

counter-guaranteed by Shangrao State-owned Assets Management Co., Ltd.

21. Bonds payable

Ending balance Beginning balance

2010 Shangrao City Investment Enterprise

Bond

1,028,448,500.00 1,028,448,500.00

2012 Shangrao City Investment Enterprise

Bond

1,062,503,358.84 1,328,997,223.20

2015 Shangrao City Investment Corporate

Bond

2,000,000,000.00

2015 Shangrao City Construction Private

Placement Bond

1,099,980,000.00

Total 5,190,931,858.84 2,357,445,723.20

Note 1: On July 19, 2010, the Company issued 1 billion yuan of 7-year corporate

bond--2010 Raocheng Bond with No.[2010]1452 Approval of National Development and Reform

Commission. The interest rate is fixed at simple 6.06% per annum. At the end of this period, the

principal is 1 billion yuan and the interest is 28,848,500 yuan.

Note 2: On August 13, 2012, the Company issued 1.3 billion yuan of 7-year corporate

bond--2012 Raocheng Bond with No.[2012]2435 Approval of National Development and Reform

Commission. The interest rate is fixed at simple 7.30% per annum. On September 11, 2013, the

first installment of principal amount of 260 million yuan was redeemed. At the end of this period,

the principal is 1.04 billion yuan and the interest is 22,503,300 yuan.

– F-193 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 32 of 45

Note 3: On December 15, 2015, the Company issued 2 billion yuan of 5-year corporate

bond--2015 Raocheng Bond with No.[2015]2508 Letter of Shanghai Stock Exchange. The interest

rate is fixed at simple 5.97% per annum. At the end of this period, the principal is 2 billion yuan.

Note 4: The Company completed the filing at Jiangsu Equity Exchange Center Co., Ltd. on

September 8, 2015, privately issuing private placement bonds of no more than RMB 500 million

for a period of 24 months. The assisting issuing agency is China Merchants Bank Shangrao

Branch. Zhonghe SME Financing Guarantee Co., Ltd. provides a full irrevocable guarantee of

collateral responsibility as credit enhancement measure.The interest rate is fixed, and the coupon

rate is 7.4%. At the end of this period, the principal is 5 million yuan.

Note 5: The Company completed the filing at Jiangxi Joint Stock Exchange Center on

December 23, 2015, privately issuing private placement bonds of no more than RMB 600 million

for a period of 36 months. The assisting issuing agency is Bank of Beijing Nanchang Branch.

Shangrao Longtan Lake Investment Co., Ltd. and Shangrao Chengdong Investment and

Development Co., Ltd. provide real estate mortgage as credit enhancement measure.The interest

rate is fixed, and the coupon rate is 6.2%. At the end of this period, the principal is 6 million yuan.

22. Special accounts payable

Ending balance Beginning balance

Shangrao Municipal Bureau of Finance 40,000,000.00 40,000,000.00

Total 40,000,000.00 40,000,000.00

Note: The ending balance is 40,000.00 million yuan of municipal finance loan received

from Shangrao Municipal Bureau of Finance for land acquisition of 2,000.00 mu of land in the

New Zone according to Shangrao Government Notice No. [2003]207 issued by Office of

Shangrao Municipal People's Government.

23. Paid-in capital

Beginning balanceIncrease in this

year

Decrease in this

year

Ending balance

Investment amoun

tProportion

Investment a

mount

Proportio

n

– F-194 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 33 of 45

Shangrao State-owned

Assets Supervision and

Administration

Commission

620,000,000.00 100.00%- 620,000,000.00

Shangrao Investment

Holding Group Co.,

Ltd.

620,000,000.00- -620,000,000.0

0100.00%

Total 620,000,000.00 100.00%-620,000,000.00-

-

620,000,000.0

0 100.00%-

24. Capital reserve

Beginning balanceIncrease in this

period

Decrease in

this periodEnding balance

Premium on

capital165,105,186.87 2,599,000,000.00 - 2,764,105,186.87

Other capital reserve 6,390,320,251.59 10,151,495,182.4

0

16,541,815,433.99

Total 6,555,425,438.46 12,750,495,182.4

0

19,305,920,620.86

Note 1: The reason for the change in premium on capital is that Shangrao No.1 Investment Fund

Management Center (Limited Partnership) increased its investment in Ziyang Real Estate

Development Co., Ltd. Both parties signed the capital increase agreement, which stipulated that

No.1 Investment Fund Management Center (Limited Partnership) make a one-time payment of

capital increase of RMB 2,600.00 million yuan, of which 1 million was included in the registered

capital of Ziyang Real Estate Development Co., Ltd. and the remaining 2,599 million was credited

to capital reserve.

Note 2: The change in other capital reserves is mainly due to: ① China Agricultural

Development Key Construction Fund Co., Ltd. invested RMB 119,250,000 yuan to increase the

capital of the parent company, and at the same time stipulated that Shangrao State-owned Assets

Supervision and Administration Commission and Shangrao Municipal People's Government

should be the repurchase party.All parties agree that the investment period of China Agricultural

Development Key Construction Fund Co., Ltd. for the parent company is 10 years. During the

investment period, China Agricultural Development Key Construction Fund Co., Ltd. has the right

to require Shangrao People's Government to repurchase the equity according to the agreement,

and may also request Shangrao State-owned Assets Supervision and Administration Commission

– F-195 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 34 of 45

to repurchase, and shall be complemented by Shangrao Municipal People's Government if any

shortage should arise.The repurchase date is no later than September 29, 2025, and the

consideration for the equity transfer is RMB 119,250,000 yuan.The parent company shall pay

investment income to China National Agricultural Development Key Construction Fund Co., Ltd.

on a quarterly basis at a fixed annual investment rate of return of 1.2%. The capital increase has

not been registered for industrial and commercial change.② National Development Fund Co.,Ltd.

invested RMB 140 million yuan to increase the capital of the parent company, and at the same

time stipulated that Shangrao State-owned Assets Supervision should be the repurchase party.All

parties agree that the investment period of National Development Fund Co.,Ltd. for the parent

company is 15 years. During the investment period, National Development Fund Co.,Ltd. has the

right to require Shangrao State-owned Assets Supervision and Administration Commission to

repurchase the equity according to the agreement.The repurchase date is no later than October 11,

2030, and the consideration for the equity transfer is RMB 140 million yuan.The parent company

shall pay a cash dividend to National Development Fund Co.,Ltd.no later than March 20 each year

at a fixed annual investment rate of return of 1.54%, and shall be complemented by Shangrao

State-owned Assets Supervision and Administration Commission if the cash dividend is not

enough to make up for the rate of return.The capital increase has not been registered for industrial

and commercial change.③ Other additional capital reserves are from financial appropriation fund

and fixed asset appraisal. For details of fixed assets, please refer to Note VIII.

25. Surplus reserve

Beginning balanceIncrease in this

period

Decrease in

this periodEnding balance

Statutory surplus

reserve 145,025,253.26 22,093,004.85-

167,118,258.11

Total 145,025,253.26 22,093,004.85 - 167,118,258.11

26. Undistributed profits

Ending balance Beginning balance

Ending balance of previous year 959,247,549.14 833,918,420.48

Add: Adjustment of undistributed profits at

the beginning of this year-

Beginning balance of this year 959,247,549.14 833,918,420.48

Add: From net profit of this year 210,608,047.16 139,252,033.10

– F-196 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 35 of 45

Decrease in this year 22,089,575.04 13,922,904.44

Including: Appropriation to statutory

surplus reserve 22,089,575.04 13,922,904.44

Dividend distribution 73,478,000.00 -

Ending balance of this year 1,074,288,021.26 959,247,549.14

27. Revenue from main operations

Amount of this period Amount of last period Land transfer 452,000,000.00 785,000,000.00

Land leveling 35,003,448.00

Agent construction project 994,331,174.77 -

Agent construction management -

Revenue from sales of goods 4,252,443.25 13,903,984.38

Catering income 25,444,131.00 23,389,252.00

Room service 18,398,818.60 18,051,445.45

Sewage treatment 14,400,000.00 18,485,000.00

Operations 28,801,827.02

Chartered bus 666,324.68

IC Card 6,501,345.04

Service charge 110,000.00

Other 5,643,281.98 295,563.10

Total 1,550,549,346.34 894,128,692.93

Note: The main operating income of this period is 73.41% higher than that of the previous

year, due to the newly incorporated subsidiary of Shangrao Public Transport Co., Ltd. in the

consolidation scope.

28. Costs of main operation

Amount of this period Amount of last period

Cost of land transfer 410,909,090.91 706,500,000.00

Cost of land leveling 23,731,050.53

Cost of agent construction project 903,937,431.61 -

Cost of goods sold 4,168,656.61 13,698,592.34

Cost of catering 10,882,143.71 8,973,538.51

Guest room cost 631,361.69 1,921,822.50

Cost of sewage treatment 14,726,891.96 12,104,281.41

Operating cost 59,917,743.62 -

Total 1,405,173,320.11 766,929,285.29

29. Profits from other operations

– F-197 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 36 of 45

Amount of this period Amount of last period

Revenue from other operations:

Financing income 36,409,600.00 16,970,000.00

House rent income 885,150.50 744,019.00

Property management fee 234,815.00 103,724.00

Parking service income 22,490.00

Advertising 4,877,358.36

Other 645,990.14 4,932.76

Subtotal 43,052,914.00 17,845,165.76

Costs of other operations:

Financial cost 666,320.00 93,730.00

House rent cost 80,594.64 1,110,180.00

Property management cost 10,582.12

Parking cost 155,100.00 -

Other 3,060.00 -

Subtotal 905,074.64 1,214,492.12

Profits from other operations 42,147,839.36 16,630,673.64

30. Financial expenses

Amount of this period Amount of last period

Interest expense 88,557,507.80 41,813,544.67

Less: Interest income 5,655,673.23 6,821,496.05

Poundage 340,860.27

Other 77,593.00 1,276,475.20

Total 83,320,287.84 36,268,523.82

31. Investment income

Amount of this

periodAmount of last period

Dividends declared by the investee under cost method 6,461,305.89 4,782,739.31

Net change in investor’s interest in the investee’s

owner’s equity adjusted at the end of the year- 12,301,961.46 -1,451,219.45

Long-term liability investment income 10,800,000.00 23,174,460.00

Gains from wealth management products 61,250.00

Total 5,020,594.43 26,505,979.86

32. Revenue from government grants

Amount of this period Amount of last period

Special subsidy for municipal construction 210,932,400.00 72,000,000.00

State subsidy for hybrid power 2,577,000.00

Operating income 9,220,000.00

– F-198 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 37 of 45

Fuel subsidies 9,749,638.20

Total 232,479,038.20 72,000,000.00

Note: Jiangxi Provincial Department of Finance documents Gan Cai Jian [2014] No. 222,

Gan Cai Yu Zhi [2014] No. 79, People's Republic of China Ministry of Transport Communication

Planning No.[2013] 34, Shangrao Municipal People's Government Office Copy No. [2015] 76 and

58, Shangrao State-owned Assets Supervision and Administration Commission Rao Guo Zi [2015]

No. 86.

33. Non-operating income

Amount of this period Amount of last period

Gains from fine 8,703.92

Other 691,375.40 117,382.95

Total 691,375.40 126,086.87

34. Non-operating costs

Amount of this period Amount of last period

Total losses from the disposal of non-current

assets 1,451,322.88 3,876.48

Including: Losses from disposal of fixed assets 1,451,322.88 3,876.48

External donations 60,000.00 130,400.00

Fine expenses 500.00 172,491.00

Tax overdue fine 4,022,178.58 66,805.57

Other 1,427,623.60 81,083.43

Total 6,961,625.06 454,656.48

35. Income tax

Amount of this period Amount of last period

Income tax expense for this period 24,324,821.17 19,616,715.63

Total 24,324,821.17 19,616,715.63

VIII. Explanations on Significant Items in the Financial Statements of the Parent

Company

1. Accounts receivable

Ending balance Beginning balance

Book balance

Provision for

bad debts Book balance

Provision for

bad debts

Amount

Ratio

(%)

Amou

nt

Ratio

(%) Amount

Ratio

(%)

Amou

nt

Rati

o

– F-199 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 38 of 45

(%)

Accounts

receivable that

are individually

significant and

provided for bad

debts separately

- - - - - - - -

Accounts

receivable that

are collectively

provided for bad

debts

3,228,001,479.7

3

100.0

0- -

1,781,670,304.9

6

100.0

0- -

Including: Age group

- - - - - - -

Group of

government

financial

receivables

3,228,001,479.7

3

100.0

0

- -1,781,670,304.9

6

100.0

0

- -

Accounts

receivable that

are not

individually

significant but

provided for bad

debts separately

- - - -

Total3,228,001,479.7

3

100.0

0

1,781,670,304.9

6

100.0

0

Note1: There is no account receivable that shall be paid by shareholders holding over 5%

(inclusive) of the Company’s shares.

Note 2: The balance of accounts receivable at the end of reporting period is the proceeds

from the land transfer and repurchase agreements of Shangrao Municipal Finance Bureau.

2. Other receivables

Ending balance Beginning balance

Book balance

Provision for bad

debts Book balance

Provision for bad

debts

Amount

Ratio

(%) Amount

Rati

o

(%) Amount

Ratio

(%) Amount

Rati

o

(%)

Other

receivables - - - - - - - -

– F-200 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 39 of 45

that are

individually

significant

and provided

for bad debts

separately

Other

receivables

that are

collectively

provided for

bad debts

3,785,443,314.

20

100.0

0

24,425,616.1

10.65

4,221,097,784.

78

100.0

0

17,290,378.7

3 0.41

Including: Age group

959,045,088.61 24.85 24,425,616.1

12.55 116,017,944.28 2.75

17,290,378.7

3

14.9

0

Group of

government

financial

receivables

2,651,041,894.

8470.60

3,720,219,719.

4588.13 - -

Group of

receivables

from related

parties

175,356,330.75 4.54 384,860,121.05

9.12

-

Other

receivables

that are not

individually

significant

but provided

for bad debts

separately

- - - -

Total3,785,443,314.

20

100.0

0

24,425,616.1

10.65

4,221,097,784.

78

100.0

0

17,290,378.7

30.41

Other receivables that are provided for bad debts using aging analysis

Ending balance Beginning balance

Amount

Ratio

(%)

Provision

for bad

debts Amount Ratio (%)

Provision for

bad debts

Less than

1 year878,555,492.07 92.13

75,245,976.10 64.86 -

1-2 years56,056,399.74 5.85

5,605,639.97 8,487,430.67 7.32 848,743.07

2-3 years 2,988,728.51 0.31 597,745.70 9,254,969.00 7.98 1,850,993.80

– F-201 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 40 of 45

3-5 years6,444,475.71 0.67

3,222,237.86 16,877,853.30 14.55 8,438,926.65

Over 5

years14,999,992.58 1.04

14,999,992.5

8 6,151,715.21 5.29 6,151,715.21

Total959,045,088.61 100.00

24,425,616.1

1 116,017,944.28 100.00 17,290,378.73

Note1: There is no receivable that shall be paid by shareholders holding over 5% (inclusive)

of the Company’s shares.

Note 2: Details of significant balance of other receivables at the end of reporting period are as

follows:

Nature of the account Amount

Shangrao Municipal Bureau of Finance Current account 862,547,984.00

Shangrao City Construction Investment and

Development Group Co., Ltd.Borrowings

350,000,000.00

Shangrao City House Demolition and Resettlement

Office

Demolition and

relocation cost

205,944,429.17

Shangrao Central District Infrastructure

Construction Company

Relocation

compensation

192,975,500.00

Shangrao Olympic Center Project Management

DepartmentConstruction fund

178,999,600.00

3. Long-term equity investments

(1) Category of Long-term equity investments

Beginning balance

Increase in this

year

Decrease in

this year

Ending balance

Amount

Provision for asset

impairment

Amount

Provision for asset

impairment

Investment in

subsidiaries

2,079,644,674.9

7- 2,776,024,858.75

4,855,669,533.

72 -

Investment in

associates40,109,169.65 - 657,393.97 40,766,563.62

-

Other equity

investments101,000,000.00 - 101,000,000.00

-

Total

2,220,753,844.6

2- 2,776,682,252.72

4,997,436,097.

34 -

(2) Investments in subsidiaries under equity method

– F-202 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 41 of 45

Investment ratio (%)

Amount

of initial

investme

nt (in ten

thousand

)

Beginning

balance

Increase or

decrease in the

year

Increase or

decrease of

investee’s

equity in this

period

Accumulated

increase or

decrease of

equity

Ending

balance

Shangrao

Chengdong

Investment and

Development

Co., Ltd.

100 3,000.001,416,962,914.7

341,914,532.92

1,428,877,447.

65

1,458,877,447.

65

Shangrao City

Center

Investment and

Development

Co., Ltd.

10034,105.2

8318,879,325.29 - 2,413,376.25 -24,586,850.96 316,465,949.04

Shangrao City

Investment

Industry Co.,

Ltd.

100 1,000.00 10,894,992.36 340,000,000.00 2,213,826.91 3,108,819.27 353,108,819.27

Shangrao City

Sewage

Treatment Co.,

Ltd.

100.0

01,000.00 31,021,299.92 -5,568,839.18 15,452,460.74 25,452,460.74

Longtan Lake

Investment Co.,

Ltd.

100.0

0

28,806.4

3242,815,006.20 -23,141,195.04 -68,390,488.84 219,673,811.16

Shangrao

Longtan Lake

Hotel Co., Ltd.

100.0

0300.00 14,823,938.87 5,003,749.10 16,827,687.97 19,827,687.97

Shangrao City

Investment

Property Service

Co., Ltd.

100.0

050.00 660,505.65 -108,898.35 51,607.30 551,607.30

Shangrao Ziyang

Real Estate

Development

Co., Ltd.

99.00 990.00 43,905,652.852,322,597,240.9

9

2,356,602,893.

84

2,366,502,893.

84

Shangrao City

Investment

Engineering

Management

Consulting Co.,

Ltd.

99.00 198.00 -2,583,028.23 -6,777,637.99 -11,340,666.22 -9,360,666.22

– F-203 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 42 of 45

Investment ratio (%)

Amount

of initial

investme

nt (in ten

thousand

)

Beginning

balance

Increase or

decrease in the

year

Increase or

decrease of

investee’s

equity in this

period

Accumulated

increase or

decrease of

equity

Ending

balance

Shangrao City

Investment Land

Development

Co., Ltd.

99.00 495.00 2,264,067.33 -68,253.85 -2,754,186.52 2,195,813.48

Shangrao City

Comprehensive

Transportation

Hub Operations

Management

Co., Ltd.

100.0

0790.00 7,900,000.00 -4,666,446.57 -4,666,446.57 3,233,553.43

Shangrao Small

and

Medium-Sized

Enterprises

Mutual Aid

Fund Co., Ltd.

100 5,000.00 50,000,000.00 50,361.28 50,361.28 50,050,361.28

Shangrao City

Public Transport

Co., Ltd.

100 3,000.00 30,000,000.00 19,089,794.79 19,089,794.79 49,089,794.79

Total

2,079,644,674.9

7

427,900,000.00 2,348,124,858.7

6

3,728,322,433.

73

4,855,669,533.

73

(3)Investment in associates under equity method

Inves

tmen

t

ratio

(%)

Amount

of

initial

investm

ent (in

ten

thousan

d)

Beginning

balance

Increase or

decrease in

the year

Increase or

decrease of

investee’s

equity in this

period

Accumulated

increase or

decrease of

equity

Ending

balance

Jiangxi

Shangrao

Harbor

Logistics Co.,

Ltd.

50.0

01,000.00 11,805,242.99 - 1,392,668.31 3,197,911.30 13,197,911.30

Shangrao

Affordable

30.0

03,000.00 28,303,926.66 - -735,274.36 -2,431,347.70 27,568,652.30

– F-204 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 43 of 45

Housing

Investment and

Construction

Co., Ltd.

Total 40,109,169.65 - 657,393.95 766,563.60 40,766,563.60

(4) Other equity investment accounted for using cost method

Investm

ent

ratio

Initial

investme

nt

amount

Beginning

balance

Increase

in this

year

Decrease in

this yearEnding balance

CDB Jingcheng

(Beijing) Investment

Fund Co., Ltd.

1.46%100,000,0

00100,000,000.00 - - 100,000,000.00

Shangrao Guangtian

Building Components

Co., Ltd.

10.00% 1,000,000 1,000,000.00 - - 1,000,000.00

Total 101,000,000.00 - - 101,000,000.00

4. Revenue from main operations

Amount of this period Amount of last period

Land transfer 452,000,000.00 785,000,000.00

Land leveling 35,003,448.00

Agent construction project 994,331,174.77 -

Total 1,446,331,174.77 820,003,448.00

5. Costs of main operation

Amount of this period Amount of last period

Cost of land transfer 410,909,090.91 706,500,000.00

Cost of land leveling 23,731,050.53

Cost of agent construction project 903,937,431.61 -

Total 1,314,846,522.52 730,231,050.53

6. Investment income

Amount of this period Amount of last period

Dividends declared by the investee under cost method

6,461,305.89 4,782,739.31

Net change in investor’s interest in the investee’s owner’s equity adjusted at the end of the year

-56,317,747.28-11,383,979.77

Gains from disposal of investment -

Total -49,856,441.39 -6,601,240.46

IX. Related parties and related party transactions

– F-205 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 44 of 45

1. Actual control party of the Company

Relationship

Shareholding

proportion in

the Company

(%)

Voting power

proportion in

the Company

(%)

Ultimate

controlling party

of the Company

Shangrao State-owned Assets

Supervision and Administration

Commission

Actual

control

100%

100% Yes

2. Other related parties

Relationship

Jiangxi Shangrao Harbor Logistics Co., Ltd. Joint venture

Shangrao Affordable Housing Investment and

Construction Co., Ltd. Holding company

Shangrao Haihua Real Estate Development Co., Ltd. Holding company

3. Receivables and payables with related parties

Name Substance Ending balance

Beginning

balance

Other

receivables

Jiangxi Shangrao Harbor Logistics Co.,

Ltd.

Borrowing

s 9,668,440.00 8,168,440.00

Other

receivables

Shangrao Haihua Real Estate

Development Co., Ltd.

Current

account 13,256,460.00 13,256,460.00

Other payables Shangrao Affordable Housing Investment

and Construction Co., Ltd.

Current

account 25,000,000.00 25,000,000.00

X. Contingencies

1. In November 2012, the Company entered into a guarantee agreement with Jiangxi Jingke

Energy Co., Ltd. to provide a guarantee for the issue of 800 million yuan of corporate bond by

Jiangxi Jingke Energy Co., Ltd. At the same time, both parties agreed that Jiangxi Jinko Energy

Co., Ltd. would counter-guarantee the Company , and major shareholders of Jiangxi Jinke

Energy Co., Ltd. Li Xiande and Chen Kangping use their individual assets to provide unlimited

liability counter-guarantee of 800 million yuan for the Company; 2 months within the successful

issuance of corporate bond, Jiangxi Jingke Energy Co., Ltd. will swap out its fixed assets from

the bank to provide counter-guarantee for the Company, and mortgage the assets to the Company;

Jiangxi Jinko Energy Co., Ltd. shall take the land as counter-guarantee within 1 month from the

– F-206 –

Shangrao City Construction Investment and Development Group Co., Ltd. Notes to the Financial Statements for the Year Ended 31 December 2015

Page 45 of 45

date of obtaining the land certificate of 300-mu supporting commercial and residential land

assets . On January 24, 2013, Jiangxi Jinke Energy Co., Ltd. issued RMB 800 million yuan of

2013 Jinke Corporate Bond with a term of 6 years upon the approval of National Development

and Reform Commission (NDRC CFG [2013] No. 139). As of December 31, 2016, the

guarantee obligation has not been relieved.

2. In December 2013, the Company signed a maximum guarantee contract with Nanchang

Bank Railway Sub-branch. The Company provided guarantee for Jiangxi Shenguotou Jingdong

Commercial Real Estate Co., Ltd. to borrow 300 million yuan from Nanchang Bank Railway

Sub-branch with guarantee term from December 12, 2013 to December 10, 2015. According to

Rao Guozi No.[2015]82--Approval on Shangrao City Construction Investment and Development

Group Co., Ltd. to Provide Credit Guarantee for the Investors in Old Railway Station’s

Resettlement Housing Construction Project, the Company agreed to provide Jiangxi Shenguotou

Jingdong Commercial Real Estate Co., Ltd., an investor in this project, the credit guarantee for a

period of two years.

XI. Commitments

As of December 31, 2015, there is no major commitment shall be disclosed.

XII. Post-balance Sheet Events

As of December 31, 2015, there is no event after the balance sheet date needed to be

disclosed.

XIII. Other Material Statements

As of December 31, 2015, there is no other material event shall be disclosed.

Shangrao City Construction Investment and Development Group Co., Ltd. April 23, 2016

– F-207 –

THE COMPANY

Shangrao City Construction Investment Development Group Company Limited

Headquarters and principal place of business of the Company:

No. 84 Zhongshan Road,Xinzhou District,

Shangrao, Jiangxi Province,PRC

TRUSTEE

Bank of Communications Trustee Limited1/F,. Far East Consortium Bldg.,

121 Des Voeux Road Central, Hong Kong

PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT

Bank of Communications Co., Ltd. Hong Kong Branch20 Pedder Street

CentralHong Kong

LEGAL ADVISERS TO THE COMPANY

as to Hong Kong law

Sidley Austin39/F, Two International Finance Centre

8 Finance StreetCentral, Hong Kong

as to PRC law

QZ & WD (Jiangxi) Law Firm7/F, Tower B, Timesquare,No. 555 Diezi Lake Road,

Hong Gu Tan District,Nanchang, 330000

China

LEGAL ADVISERS TO THE LEAD MANAGER

as to Hong Kong law as to PRC law

Shearman & Sterling12/F, Gloucester Tower, The Landmark

15 Queen’s Road CentralHong Kong

Allbright Law9, 11, 12/F, Shanghai Tower

No. 501 Yincheng Middle RoadPudong New AreaShanghai, China

AUDITOR

Zhongxinghua Certified Public Accountants LLPRoom 1516, East Tower of Sichuan Building,

No. 1 Bu Wai Street,Xicheng District, Beijing,

PRC

SINGAPORE LISTING AGENTShook Lin & Bok LLP

1 Robinson Road#18-00 AIA TowerSingapore 048542