Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state of the United States or other jurisdiction. The securities are being offered and sold outside the United States in reliance on Regulation S under the Securities Act and may not be offered or sold within the United States absent registration or an exemption from registration under the Securities Act. No public offering of the securities will be made in the United States or in any other jurisdiction where such an offering is restricted or prohibited.

This announcement and the listing document referred to herein have been published for information purposes only as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing document referred to herein) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing document referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong). Notice to Hong Kong investors: The Issuer, the Guarantor (as defined below) and the Company (as defined below) confirm that the Notes (as defined in the offering circular appended hereto) are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and will be listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly, the Issuer, the Guarantor and the Company confirm that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

Guangzhou Metro Investment Finance (BVI) Limited (廣州地鐵投融資(維京)有限公司)

(the “Issuer”) (incorporated with limited liability in the British Virgin Islands)

U.S.$3,000,000,000

Guaranteed Medium Term Note Programme (the “Programme”)

Unconditionally and Irrevocably Guaranteed by

Guangzhou Metro Investment Finance (HK) Limited

(廣州地鐵投融資(香港)有限公司) (incorporated with limited liability in Hong Kong)

(the “Guarantor”)

with the benefit of a keepwell and liquidity support deed and a deed of equity interest purchase undertaking by

Guangzhou Metro Group Co., Ltd.

(廣州地鐵集團有限公司) (incorporated with limited liability in the People’s Republic of China)

(the “Company”)

This announcement is issued pursuant to Rule 37.39A of the Listing Rules.

Please refer to the offering circular dated 10 September 2021 (the “Offering Circular”)

appended hereto in relation to the Programme. As disclosed in the Offering Circular, the Notes

were intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing

Rules) only and will be listed on The Stock Exchange of Hong Kong Limited on that basis.

The Offering Circular does not constitute a prospectus, notice, circular, brochure or

advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation

to the public to make offers to subscribe for or purchase any securities, nor is it circulated to

invite offers by the public to subscribe for or purchase any securities.

The Offering Circular must not be regarded as an inducement to subscribe for or purchase any

securities, and no such inducement is intended. No investment decision should be made based

on the information contained in the Offering Circular.

13 September 2021 As at the date of this announcement, the directors of the Issuer are Wang Xiaobin and Qian Wei. As at the date of this announcement, the directors of the Guarantor are Wang Xiaobin and Qian Wei.

As at the date of this announcement, the directors of the Company are Ding Jianlong, Liu Zhicheng, Mo Dongcheng, Ma Renhong, Xing Yiqiang, Tan Yue and Zhong Xuejun.

TABLE OF CONTENTS

APPENDIX – OFFERING CIRCULAR DATED 10 SEPTEMBER 2021

APPENDIX – OFFERING CIRCULAR DATED 10 SEPTEMBER 2021

IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES, OR INCERTAIN CIRCUMSTANCES, TO U.S. PERSONS

IMPORTANT: You must read the following before continuing. The following applies to theoffering circular following this page (the “Offering Circular”), and you are therefore advised to readthis carefully before reading, accessing or making any other use of the Offering Circular. In accessingthe Offering Circular, you agree to be bound by the following terms and conditions, including anymodifications to them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIESFOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT ISUNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL 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 STATESOR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHINTHE UNITED STATES, OR IN CERTAIN CIRCUMSTANCES, TO U.S. PERSONS, EXCEPTPURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE ORLOCAL SECURITIES LAWS.

THIS OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHERPERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND INPARTICULAR, MAY NOT BE FORWARDED TO ANY UNITED STATES ADDRESS. ANYFORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR INPART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN AVIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHERJURISDICTIONS.

Confirmation of Your Representation: The Offering Circular is being sent at your request and byaccepting the e-mail and accessing the Offering Circular, you shall be deemed to have represented tothe Issuer, the Guarantor, the Company, the Arrangers or the Dealers (each as defined in the OfferingCircular) that the electronic mail address that you gave the Issuer, the Guarantor, the Company, theArrangers or the Dealers and to which this e-mail has been delivered is not located in the UnitedStates, its territories or possessions, and that you consent to delivery of the Offering Circular and anyamendments or supplements thereto by electronic transmission.

You are reminded that the Offering Circular has been delivered to you on the basis that you are aperson into whose possession the Offering Circular may be lawfully delivered in accordance with thelaws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliverthe Offering Circular to any other person.

The materials relating to the offering of securities to which the Offering Circular relates do notconstitute, and may not be used in connection with, an offer or solicitation in any place where offersor solicitations are not permitted by law. If a jurisdiction requires that the offering be made by alicensed broker or dealer and the Dealers or any affiliate of the Dealers is a licensed broker or dealerin that jurisdiction, the offering shall be deemed to be made by the Dealers or such affiliate on behalfof the Issuer (as defined in the Offering Circular) in such jurisdiction.

The Offering Circular has been sent to you in an electronic form. You are reminded that documentstransmitted via this medium may be altered or changed during the process of electronic transmissionand consequently none of the Issuer, the Guarantor, the Company, the Arrangers or the Dealers or anyof their respective affiliates, directors, officers, employees, representatives, agents or any person whocontrols any of the Issuer, the Guarantor, the Company, the Arrangers, the Dealers or any of theirrespective affiliates accepts any liability or responsibility whatsoever in respect of any differencebetween the Offering Circular distributed to you in electronic format and the hard copy versionavailable to you on request from any of the Issuer, the Guarantor, the Company, the Arrangers or theDealers.

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

OFFERING CIRCULAR Strictly Confidential

Guangzhou Metro Investment Finance (BVI) Limited(廣州地鐵投融資(維京)有限公司)

(incorporated with limited liability in the British Virgin Islands and a wholly-owned subsidiary ofGuangzhou Metro Group Co., Ltd.)

(as Issuer)

Guangzhou Metro Investment Finance (HK) Limited(廣州地鐵投融資(香港)有限公司)

(incorporated with limited liability in Hong Kong and a wholly-owned subsidiary ofGuangzhou Metro Group Co., Ltd.)

(as Guarantor)

with the benefit of a Keepwell Deed and a Deed of Equity Interest Purchase Undertaking by

Guangzhou Metro Group Co., Ltd.(廣州地鐵集團有限公司)

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

U.S.$3,000,000,000Guaranteed Medium Term Note Programme

Under the U.S.$3,000,000,000 Guaranteed Medium Term Note Programme described in this Offering Circular (the “Programme”), Guangzhou Metro Investment Finance (BVI) Limited (廣州地鐵投融資(維京)有限公司) (the “Issuer”), subject tocompliance with all relevant laws, regulations and directives, may from time to time issue medium term notes (the “Notes”) unconditionally and irrevocably guaranteed (the “Guarantee”) by Guangzhou Metro Investment Finance (HK) Limited(廣州地鐵投融資(香港)有限公司) (the “Guarantor”). The Issuer is a direct wholly-owned subsidiary of the Guarantor, and the Guarantor is a direct wholly-owned subsidiary of Guangzhou Metro Group Co., Ltd. (the “Company”).

The Issuer, the Guarantor and the Company entered into an amended and restated keepwell and liquidity support deed on 7 December 2018 with Citicorp International Limited (the “Trustee”) as trustee of the Notes (the “Keepwell Deed”) as furtherdescribed in “Description of the Keepwell Deed”. The Keepwell Deed does not constitute a guarantee by the Company of the obligations of the Issuer under the Notes or of the Guarantor under the Guarantee.

The Company and the Trustee entered into an amended and restated deed of equity interest purchase undertaking on 7 December 2018 (the “Deed of Equity Interest Purchase Undertaking”) as further described in “Description of the Deed of EquityInterest Purchase Undertaking”. The Deed of Equity Interest Purchase Undertaking does not constitute a guarantee by the Company of the obligations of the Issuer under the Notes or of the Guarantor under the Guarantee.

Where applicable for a relevant Tranche (as defined in “Summary of the Programme”) of Notes, registration will be completed by the Company pursuant to the Notice of the National Development and Reform Commission on Promoting the Reformof Managing the External Debt Issuance by Enterprises with a Record-filing and Registration System (Fa Gai Wai Zi [2015] No. 2044) (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得通知(發改外資[2015]2044號))) (the “NDRC Circular”)issued by the National Development and Reform Commission of the PRC (“NDRC”, 國家發展和改革委員會) on 14 September 2015 which came into effect on the same day, as set forth in the relevant Pricing Supplement (as defined in “Summary ofthe Programme”). After the issuance of such relevant Tranche of Notes, the Company undertakes to provide the requisite information on the issuance of the Notes to NDRC within the time period prescribed by the NDRC Circular.

Application has been made to The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) for the listing of the Programme by way of debt issues to professional investors (as defined in Chapter 37 of the Rules Governing the Listingof Securities on The Stock Exchange of Hong Kong Limited ) (“Professional Investors”)), only during the 12-month period after the date of this Offering Circular on the Hong Kong Stock Exchange. This Offering Circular is for distribution to ProfessionalInvestors only.

Notice to Hong Kong investors: Each of the Issuer, the Guarantor and the Company confirms that the Notes are intended for purchase by Professional Investors only and will be listed on the Stock Exchange of Hong Kong Limited on that basis.Accordingly, each of the Issuer, the Guarantor and the Company confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this document to ProfessionalInvestors only have been reproduced in this document. Listing of the Programme and any Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme, the Notes,the Issuer, the Guarantor, the Company, the Group or quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make norepresentation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. Notice of the aggregate nominal amountof Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms and conditions not contained herein which are applicable to each Tranche (as defined in “Terms and Conditions of the Notes”) of Notes will be setout in a Pricing Supplement (as defined in “Summary of the Programme”) which, with respect to Notes to be listed on the Hong Kong Stock Exchange, will be delivered to the Hong Kong Stock Exchange on or before the date of issue of the Notesof such Tranche.

The Notes and the Guarantee have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state of the United States and may not be offeredor sold or, in case of Bearer Notes (as defined below), delivered in the United States or, in case of Regulation S (as defined below) Category 2 offering, to or for the account or benefit of, U.S. persons (as such term is defined in Regulation S underthe Securities Act (the “Regulation S”)) except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States. The Notes and the Guarantee are being offered outsidethe United States in reliance on Regulation S under the Securities Act. Bearer Notes are subject to U.S. tax law requirements. See “Subscription and Sale”.

The Notes of each Series (as defined in “Summary of the Programme”) issued in bearer form (“Bearer Notes”) will be represented on issue by a temporary global note in bearer form (each a “Temporary Global Note”) or a permanent global note inbearer form (each a “Permanent Global Note”). Bearer Notes that are issued in compliance with rules in substantially the same form as U.S. Treasury Regulations §1.163-5(c)(2)(i)(D) for purposes of Section 4701 of the U.S. Internal Revenue Codeof 1986 (the “Code”) (“TEFRA D”) must be initially represented by a Temporary Global Note and interests in a Temporary Global Note will be exchangeable, in whole or in part, for interests in a Permanent Global Note on or after the date 40 daysafter the later of the commencement of the offering and the relevant issue date (the “Exchange Date”), upon certification as to non-U.S. beneficial ownership. Notes in registered form (“Registered Notes”) will be represented by a global certificatein registered form (each a “Global Certificate” and together with any Temporary Global Notes and Permanent Global Notes, the “Global Notes”), one Registered Global Note being issued in respect of each Noteholder’s entire holding of Notes in registeredform of one Series. Global Notes may be deposited on the relevant issue date with a common depositary on behalf of Euroclear Bank SA/NA (“Euroclear”) and/or Clearstream Banking S.A. (“Clearstream, Luxembourg”), or with a sub-custodian forthe Central Moneymarkets Unit Service (the “CMU”) operated by the Hong Kong Monetary Authority. Until the expiration of 40 days after the later of the commencement of the offering of a Tranche of a registered Series and the issue date thereof,beneficial interests in a Global Note may be held only through Euroclear or Clearstream, Luxembourg or the CMU. The provisions governing the exchange of interests in Global Notes for other Global Notes and definitive Notes are described in “Summaryof Provisions Relating to the Notes while in Global Form”.

The Notes may be issued on a continuing basis to the Dealer specified under “Summary of the Programme” and any additional Dealer appointed under the Programme from time to time by the Issuer and the Guarantor (each a “Dealer”, and togetherthe “Dealers”), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer,be to all Dealers agreeing to subscribe such Notes.

MiFID II product governance/target market — The Pricing Supplement in respect of any Notes may include a legend entitled “MiFID II Product Governance” which will outline the target market assessment in respect of the Notes and which channelsfor distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a “distributor”) should take into consideration the target market assessment; however, a distributor subject to Directive 2014/65/EU(as amended, “MiFID II”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the “MiFID Product Governance Rules”), any Dealer subscribing for any Notesis a manufacturer in respect of such Notes, but otherwise neither the Arrangers nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.

UK MiFIR product governance/target market — The Pricing Supplement in respect of any Notes may include a legend entitled “UK MiFIR Product Governance” which will outline the target market assessment in respect of the Notes and which channelsfor distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a “distributor”) should take into consideration the target market assessment; however, a distributor subject to the FCA Handbook ProductIntervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) anddetermining appropriate distribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIR Product Governance Rules, any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arrangernor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MiFIR Product Governance Rules.

PRIIPs REGULATION — PROHIBITION OF SALES TO EEA RETAIL INVESTORS — If the Pricing Supplement in respect of any Notes includes a legend entitled “Prohibition of Sales to EEA and UK Retail Investors”, the Notes are not intendedto be offered, sold or otherwise made available to and, should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”) or in the United Kingdom (“UK”). For these purposes, a retail investor meansa person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive (EU) 2016/97 (the “Insurance Distribution Directive”), where that customer would not qualifyas a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwisemaking them available to retail investors in the EEA or in the UK has been prepared and therefore offering or selling the relevant Tranche of Notes or otherwise making them available to any retail investor in the EEA or in the UK may be unlawfulunder the PRIIPs Regulation.

UK PRIIPs REGULATION — PROHIBITION OF SALES TO UK RETAIL INVESTORS — If the Pricing Supplement in respect of any Notes includes a legend entitled “Prohibition of sales to UK Retail Investors”, the Notes are not intended tobe offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retailclient as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); or (ii) a customer within the meaning of the provisions of the FinancialServices and Markets Act 2000 (the “FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation(EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA (the “UK Prospectus Regulation”).Consequently, no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investorsin the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMPRegulations 2018”), unless otherwise specified before an offer of Notes, the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are “prescribed capital markets products” (as definedin the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

The Programme is rated “A2” by Moody’s Investors Services, Inc. (“Moody’s”). The rating is only correct as at the date of this Offering Circular. Moody’s is a licensed corporation under the SFO to conduct type 10 (providing credit rating services)regulated activities as defined under the SFO. Tranches of Notes to be issued under the Programme may be rated or unrated. Where a Tranche of Notes is to be rated, such rating will not necessarily be the same as the rating assigned to the Programme.A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction, revision or withdrawal at any time by the assigning rating agency.

Investing in the Notes involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in this Offering Circularand in the relevant Pricing Supplement and the merits and risks of investing in a particular issue of Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bearthe risks associated with an investment in the Notes. Investors should not purchase the Notes unless they understand and are able to bear risks associated with the Notes. Prospective investors should have regard to the factors describedunder the section headed “Risk Factors” in this Offering Circular. In particular, the Notes will be unconditionally and irrevocably guaranteed by the Guarantor, with the benefit of a Keepwell Deed and a Deed of Equity Interest PurchaseUndertaking provided by the Company. Investors of the Notes should be aware that neither the Keepwell Deed nor the Deed of Equity Interest Purchase Undertaking constitute a direct or indirect guarantee of the Notes by the Company,and that there are various other risks relating to the Notes, the Issuer, the Guarantor, the Company, the Group, their business and their jurisdictions of operations which investors of the Notes should familiarise themselves with before makingan investment in the Notes. See “Risk Factors” beginning on page 25.

Arrangers and Dealers

Guotai Junan International Standard Chartered Bank

Offering Circular dated 10 September 2021

TABLE OF CONTENTS

Page

NOTICE TO INVESTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION . . . . . . . . . vii

INFORMATION INCORPORATED BY REFERENCE AND FINANCIAL INFORMATION . . ix

SUPPLEMENTAL OFFERING CIRCULAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii

SUMMARY OF THE PROGRAMME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

OFFER STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY . . . . . . . . 14

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR . . . . . 22

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

USE OF PROCEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

DESCRIPTION OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

DESCRIPTION OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

DESCRIPTION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

SENIOR MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

PRC REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

FORM OF PRICING SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM . . 174

DESCRIPTION OF THE KEEPWELL DEED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

DESCRIPTION OF THE DEED OF EQUITY INTEREST PURCHASE UNDERTAKING . . . . 183

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

PRC CURRENCY CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

i

NOTICE TO INVESTORS

This Offering Circular includes particulars given in compliance with the Rules Governing the Listingof Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving informationwith regard to the Issuer, the Guarantor, the Company, the Group, the Notes, the Guarantee, theKeepwell Deed and the Deed of Equity Interest Purchase Undertaking. Each of the Issuer, theGuarantor and the Company accepts full responsibility for the accuracy of the information containedin this Offering Circular and confirms, having made all reasonable enquiries, that to the best of itsknowledge and belief there are no other facts the omission of which would make any statement hereinmisleading.

Each of the Issuer, the Guarantor and the Company, confirms that to the best of its knowledge andbelief (i) this Offering Circular contains all information with respect to the Issuer, the Guarantor, theCompany and the Company and its subsidiaries taken as a whole (the “Group”), the Notes, theGuarantee, the Deed of Equity Interest Purchase Undertaking and the Keepwell Deed which ismaterial in the context of the issue and offering of the Notes, (ii) all statements of fact relating to theIssuer, the Guarantor, the Company and the Group contained in this Offering Circular are in anymaterial respect true and accurate and not misleading, (iii) there are no other facts in relation to theIssuer, the Guarantor, the Company, the Group, the Notes, the Guarantee, the Deed of Equity InterestPurchase Undertaking and the Keepwell Deed the omission of which would in the context of the issueand offering of the Notes make any statement in this Offering Circular misleading in any materialrespect, (iv) the statements of intention and opinion with regard to the Issuer, the Guarantor, theCompany and the Group contained in this Offering Circular are honestly made or held and have beenreached after considering all relevant circumstances and have been based on reasonable assumptions,and (v) all reasonable enquiries have been made by the Issuer, the Guarantor and the Company toascertain such facts and to verify the accuracy of all such statements in this Offering Circular.

Each Tranche of Notes will be issued on the terms set out herein under “Terms and Conditions of theNotes” (the “Conditions”, and each term therein, a “Condition”) as amended and/or supplemented bya Pricing Supplement. This Offering Circular must be read and construed together with anyamendments or supplements hereto and with any information incorporated by reference herein (see“Information Incorporated by Reference and Financial Information”) and, in relation to any Trancheof Notes, must be read and construed together with the relevant Pricing Supplement. This OfferingCircular shall be read and construed on the basis that such documents are incorporated in and formpart of this Offering Circular.

The distribution of this Offering Circular and any Pricing Supplement and the offering, sale anddelivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possessionthis Offering Circular comes are required by the Issuer, the Guarantor, the Company, Guotai JunanSecurities (Hong Kong) Limited and Standard Chartered Bank (the “Arrangers”), the Trustee and theAgents (each as defined in “Terms and Conditions of the Notes”) to inform themselves about and toobserve any such restrictions. None of the Issuer, the Guarantor, the Company, the Arrangers, theDealers, the Trustee, the Agents or any of their respective affiliates, directors, officers, employees,representatives, agents, advisers or any person who controls any of them represents that this OfferingCircular or any Pricing Supplement may be lawfully distributed, or that any Notes may be lawfullyoffered, in compliance with any applicable registration or other requirements in any such jurisdiction,or pursuant to an exemption available thereunder, or assumes any responsibility for facilitating anysuch distribution or offering. In particular, no action is being taken to permit a public offering of anyof the Notes or the distribution of this Offering Circular or any Pricing Supplement in any jurisdictionwhere action would be required for such purposes. Accordingly, no Notes may be offered or sold,directly or indirectly, and none of this Offering Circular, any Pricing Supplement or any advertisementor other offering material may be distributed or published in any jurisdiction, except undercircumstances that will result in compliance with any applicable laws and regulations.

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This Offering Circular is not a prospectus for the purposes of the Regulation (EU) 2017/1129 asimplemented in members states of the EEA or in the UK (the “Prospectus Regulation”). ThisOffering Circular has been prepared on the basis that all offers of the Notes will be made pursuantto an exemption under the Prospectus Regulation from the requirement to produce a prospectus inconnection with offers of the Notes. Accordingly, any person making or intending to make any offerwithin the European Economic Area (“EEA”) or the United Kingdom (“UK”) of Notes which are thesubject of any offering contemplated in this Offering Circular should only do so in circumstances inwhich no obligation arises for the Issuer, the Guarantor, the Company, any of the Arrangers or any ofthe Dealers to produce a prospectus for such offers. There are restrictions on the offer and sale of theNotes, and the circulation of documents relating thereto, in certain jurisdictions and to personsconnected therewith. For a description of certain further restrictions on offers, sales and resales of theNotes and distribution of this Offering Circular and any Pricing Supplement, see “Subscription andSale”.

Admission to the Hong Kong Stock Exchange and quotation of any Notes on the Hong Kong StockExchange is not to be taken as an indication of the merits of the Programme, the Notes, the Issuer,the Guarantor, the Company or the Group. In making an investment decision, investors must rely ontheir own examination of the Issuer, the Guarantor, the Company, the Group and the terms of theoffering, including the merits and risks involved. Please see “Risk Factors” for a discussion of certainfactors to be considered in connection with an investment in the Notes.

No person has been or is authorised by the Issuer, the Guarantor and the Company to give anyinformation or to make any representation other than those contained in this Offering Circular or anyother document entered into in relation to the Programme and the sale of Notes and, if given or made,any such other information or representation should not be relied upon as having been authorised bythe Issuer, the Guarantor, the Company, any Arranger, any Dealer, the Trustee or any Agent (or anyof their respective affiliates, directors, officers, employees, representatives, advisers, agents or anyperson who controls any of them). Neither the delivery of this Offering Circular or any PricingSupplement nor any offering, sale or delivery made in connection with the issue of the Notes shall,under any circumstances, constitute a representation that there has been no change or developmentreasonably likely to involve a change in the affairs of the Issuer, the Guarantor, the Company, theGroup or any of them since the date hereof, or if later, the date upon which this Offering Circular hasbeen most recently amended or supplemented or create any implication that the information containedherein is correct as at any date subsequent to the date hereof or, as the case may be, the date uponwhich this Offering Circular has been most recently amended or supplemented or that any otherinformation supplied in connection with the Programme is correct as at any time subsequent to thedate on which it is supplied or, if different, the date indicated in the document containing the same.

Neither this Offering Circular nor any Pricing Supplement constitutes an offer of, or an invitation byor on behalf of any of the Issuer, the Guarantor, the Company, the Arrangers, the Dealers, the Trusteeor the Agents (or any of their respective affiliates, directors, officers, employees, representatives,advisers, agents or any person who controls any of them) to subscribe for or purchase any Notes andmay not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or inany circumstances in which such offer or solicitation is not authorised or is unlawful. Each recipientof this Offering Circular or any Pricing Supplement shall be taken to have made its own investigationand appraisal of the condition (financial or otherwise) of the Issuer, the Guarantor, the Company andthe Group.

This Offering Circular is highly confidential and has been prepared by the Issuer, the Guarantor andthe Company solely for use in connection with the Programme and the proposed offering of the Notesunder the Programme as described herein. None of the Issuer, the Guarantor and the Company hasauthorised its use for any other purpose. This Offering Circular may not be copied or reproduced inwhole or in part. It may be distributed only to and its contents may be disclosed only to theprospective investors to whom it is provided. By accepting delivery of this Offering Circular eachinvestor agrees to these restrictions.

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To the fullest extent permitted by law, none of the Dealers or the Arrangers accepts any responsibilityfor the contents of this Offering Circular or for any other statement, made or purported to be madeby an Arranger or a Dealer or on its behalf in connection with the Issuer, the Guarantor, the Companyor the issue and offering of the Notes. Each of the Arrangers and the Dealers accordingly disclaimsall and any liability whether arising in tort or contract or otherwise (save as referred to above) whichit might otherwise have in respect of this Offering Circular or any such statement.

The Arrangers, the Dealers, the Trustee and the Agents (or any of their respective affiliates, directors,officers, employees, representatives, advisers, agents or any person who controls any of them) havenot independently verified any of the information contained in this Offering Circular and can give noassurance that this information is accurate, truthful or complete. Accordingly, no representation orwarranty or undertaking, express or implied, is made or given and no responsibility or liability isaccepted by the Arrangers, the Dealers, the Trustee or the Agents (or any of their respective affiliates,directors, officers, employees, representatives, advisers, agents or any person who controls any ofthem) as to the accuracy, completeness or sufficiency of the information contained or incorporated inthis Offering Circular or any other information provided by the Issuer, the Guarantor or the Companyin connection with the Programme, and nothing contained or incorporated in this Offering Circular is,or shall be relied upon as, a promise, representation or warranty by the Arrangers, the Dealers, theTrustee or the Agents (or any of their respective affiliates, directors, officers, employees,representatives, advisers, agents or any person who controls any of them). None of this OfferingCircular, any Pricing Supplement or any other information supplied in connection with the Programmeor any Notes (i) is intended to provide the basis of any credit or other evaluation or (ii) should beconsidered as a recommendation by any of the Issuer, the Guarantor, the Company, the Arrangers, theDealers, the Trustee or the Agents (or any of their respective affiliates, directors, officers, employees,representatives, advisers, agents or any person who controls any of them) that any recipient of thisOffering Circular should purchase any Notes. Each potential purchaser of the Notes should determinefor itself the relevance of the information contained in this Offering Circular and its purchase of theNotes should be based upon such investigations with its own tax, legal and business advisers as itdeems necessary.

None of the Issuer, the Guarantor, the Company, the Arrangers, the Dealers, the Trustee or the Agents(or any of their respective affiliates, directors, officers, employees, representatives, advisers, agentsand each person who controls any of them) makes any representation to any investor in the Notesregarding the legality of its investment under any applicable laws. Any investor in the Notes shouldbe able to bear the economic risk of an investment in the Notes for an indefinite period of time.

THE NOTES AND THE GUARANTEE HAVE NOT BEEN AND WILL NOT BE REGISTEREDUNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OFANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THE NOTES MAYINCLUDE BEARER NOTES THAT ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS.SUBJECT TO CERTAIN EXCEPTIONS. THE NOTES MAY NOT BE OFFERED OR SOLD OR, INTHE CASE OF BEARER NOTES, DELIVERED WITHIN THE UNITED STATES OR, IN CASE OFREGULATION S CATEGORY 2 OFFERING, TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.PERSONS (AS DEFINED IN REGULATION S OR THE CODE, AS AMENDED, ANDREGULATIONS THEREUNDER IN CASE OF BEARER NOTES).

IN CONNECTION WITH THE ISSUE OF ANY TRANCHE OF NOTES, THE DEALER ORDEALERS (IF ANY) NAMED AS THE STABILISING MANAGER(S) (OR ANY PERSON(S)ACTING FOR IT) (THE “STABILISING MANAGER(S)”) IN THE APPLICABLE PRICINGSUPPLEMENT MAY, TO THE EXTENT PERMITTED BY APPLICABLE LAWS ANDDIRECTIVES, OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TOSUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THATWHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE CAN BE NO ASSURANCETHAT THE STABILISING MANAGER(S) WILL UNDERTAKE STABILISATION ACTION.ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH

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ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE RELEVANTTRANCHE OF NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME ANDMUST BE BROUGHT TO AN END AFTER A LIMITED TIME. ANY STABILISATION ACTIONOR OVER-ALLOTMENT MUST BE CONDUCTED IN ACCORDANCE WITH ALLAPPLICABLE LAWS, REGULATIONS AND RULES.

This Offering Circular does not describe all of the risks and investment considerations (includingthose relating to each investor’s particular circumstances) of an investment in Notes of a particularissue. Each potential purchaser of Notes should refer to and consider carefully the relevant PricingSupplement for each particular issue of Notes, which may describe additional risks and investmentconsiderations associated with such Notes. The risks and investment considerations identified in thisOffering Circular and the applicable Pricing Supplement are provided as general information only.Investors should consult their own financial and legal advisers as to the risks and investmentconsiderations arising from an investment in an issue of Notes and should possess the appropriateresources to analyse such investment and the suitability of such investment in their particularcircumstances. Each person receiving this Offering Circular acknowledges that such person has notrelied on the Issuer, the Guarantor, the Company, the Arrangers, the Dealers, the Trustee or the Agentsor any of their respective affiliates, directors, officers, employees, representatives, advisers, agents orany person who controls any of them in connection with its investigation of the accuracy of suchinformation or its investment decision.

MiFID II product governance/target market — The Pricing Supplement in respect of any Notesmay include a legend entitled “MiFID II Product Governance” which will outline the target marketassessment in respect of the Notes and which channels for distribution of the Notes are appropriate.Any distributor should take into consideration the target market assessment; however, a distributorsubject to MiFID II is responsible for undertaking its own target market assessment in respect of theNotes (by either adopting or refining the target market assessment) and determining appropriatedistribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the MiFIDProduct Governance Rules, any Dealer subscribing for any Notes is a manufacturer in respect of suchNotes, but otherwise none of the Arrangers or the Dealers nor any of their respective affiliates willbe a manufacturer for the purpose of the MiFID Product Governance Rules.

UK MiFIR product governance/target market — The Pricing Supplement in respect of any Notesmay include a legend entitled “UK MiFIR Product Governance” which will outline the target marketassessment in respect of the Notes and which channels for distribution of the Notes are appropriate.Any distributor should take into consideration the target market assessment; however, a distributorsubject to UK MiFIR Product Governance Rules is responsible for undertaking its own target marketassessment in respect of the Notes (by either adopting or refining the target market assessment) anddetermining appropriate distribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIRProduct Governance Rules, any Dealer subscribing for any Notes is a manufacturer in respect of suchNotes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will bea manufacturer for the purpose of the UK MiFIR Product Governance Rules.

PRIIPs REGULATION — PROHIBITION OF SALES TO EEA RETAIL INVESTORS — If thePricing Supplement in respect of any Notes includes a legend entitled “Prohibition of Sales to EEAInvestors”, the Notes are not intended to be offered, sold or otherwise made available to and, shouldnot be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes,a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11)of Article 4(1) of MiFID II; or (ii) a customer within the meaning of the Insurance DistributionDirective, where that customer would not qualify as a professional client as defined in point (10) ofArticle 4(1) of MiFID II. Consequently no key information document required by the PRIIPsRegulation for offering or selling the Notes or otherwise making them available to retail investors inthe EEA has been prepared and therefore offering or selling the relevant Tranche of Notes or otherwisemaking them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

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UK PRIIPs REGULATION — PROHIBITION OF SALES TO UK RETAIL INVESTORS — If thePricing Supplement in respect of any Notes includes a legend entitled “Prohibition of sales to UKRetail Investors”, the Notes are not intended to be offered, sold or otherwise made available to andshould not be offered, sold or otherwise made available to any retail investor in the UK. For thesepurposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point(8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of theEUWA; or (ii) a customer within the meaning of the provisions of the FSMA and any rules orregulations made under the FSMA to implement Directive (EU) 2016/97, where that customer wouldnot qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor asdefined in the UK Prospectus Regulation. Consequently, no key information document required by theUK PRIIPs Regulation for offering or selling the Notes or otherwise making them available to retailinvestors in the UK has been prepared and therefore offering or selling the Notes or otherwise makingthem available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

SINGAPORE SFA PRODUCT CLASSIFICATION — In connection with Section 309B of theSecurities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the“SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the“CMP Regulations 2018”), unless otherwise specified before an offer of Notes, the Issuer hasdetermined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), thatthe Notes are ‘prescribed capital markets products’ (as defined in the CMP Regulations 2018) andExcluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale ofInvestment Products and MAS Notice FAA-N16: Notice on Recommendations on InvestmentProducts).

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CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION

In this Offering Circular, unless otherwise specified or the context otherwise requires, all referencesto the “Company”, the “Group” and words of similar import, are to Guangzhou Metro Group Co.,Ltd. itself, or to Guangzhou Metro Group Co., Ltd. and its subsidiaries, as the context requires.

Unless otherwise specified or the context requires, all references herein to “Hong Kong” are to theHong Kong Special Administrative Region of the People’s Republic of China, to “China”, “MainlandChina” or the “PRC” are to the People’s Republic of China and, for the purpose of this OfferingCircular only, excluding Hong Kong, the Macau Special Administrative Region of the People’sRepublic of China and Taiwan, to the “United States” or “U.S.” are to the United States of America,to “EU” are to the European Union, to “Hong Kong dollars” or “HK$” are to the lawful currency ofHong Kong, to “U.S. dollars” or “U.S.$” are to the lawful currency of the United States of America,to “Renminbi”, “RMB” or “CNY” are to the lawful currency of the PRC, to “sterling” or “£” are tothe lawful currency of the United Kingdom, to “euro” or “€” are to the lawful currency of memberstates of the European Union that adopt the single currency introduced in accordance with the Treatyon the functioning of the European Community, as amended from time to time, to “IFRS” are toInternational Financial Reporting Standards issued by the International Accounting Standards Board,to “HKFRS” are to Hong Kong Financial Reporting Standards issued by the Hong Kong Institute ofCertified Public Accountants and to “PRC GAAP” are to the Accounting Standards for BusinessEnterprises of the PRC issued by the Ministry of Finance of the People’s Republic of China.

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

• “AIC” are to State Administration for Industry and Commerce of the People’s Republic ofChina, which was merged with other departments to form State Administration of MarketRegulation (“AMR”), or its competent local counterparts;

• the “Guangzhou Municipal Government” refers to the People’s Government ofGuangzhou Municipality or its local government entities and instrumentalities thereof, orwhere the context requires, any of them;

• the “Guangzhou SASAC” are to the Guangzhou Municipal State-owned AssetsSupervision and Administration Commission;

• “MOFCOM” are to the Ministry of Commerce of the People’s Republic of China or itscompetent local counterparts;

• “NDRC” are to the National Development and Reform Commission of the People’sRepublic of China or its competent local counterparts;

• “PBOC” are to the People’s Bank of China, the central bank of the People’s Republic ofChina;

• “PRC government” in this Offering Circular means the central government of the PRC,including all political subdivisions (including provincial, municipal and other regional orlocal governmental entities) and instrumentalities thereof, or where the context requires,any of them;

• “SASAC” are to the State-owned Assets Supervision and Administration Commission ofthe State Council of the People’s Republic of China;

• “SAFE” are to the State Administration of Foreign Exchange of the People’s Republic ofChina or its competent local counterpart; and

• “State Council” are to the State Council of the People’s Republic of China.

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

as percentages, amounts may have been rounded up or down. Accordingly, totals of columns or rows

of numbers in tables may not be equal to the apparent total of the individual items and actual numbers

may differ from those contained herein due to rounding. References to information in billions of units

are to the equivalent of a thousand million units.

Market data and certain industry forecasts and statistics in this Offering Circular have been obtained

from both public and private sources, including market research, publicly available information and

industry publications. Although this information is believed to be reliable, it has not been

independently verified by any of the Issuer, the Guarantor, the Company, the Arrangers, the Trustee,

the Agents or their respective affiliates, directors, officers, employees, representatives, advisers,

agents and any person who controls any of them, and none of the Issuer, the Guarantor, the Company,

the Arrangers, the Trustee, the Agents or their respective affiliates, directors, officers, employees,

representatives, advisers, agents and any person who controls any of them make any representation

as to the accuracy or completeness of that information. Such information may not be consistent with

other information compiled within or outside the PRC. In addition, third party information providers

may have obtained information from market participants and such information may not have been

independently verified.

The English names of the PRC nationals, entities, departments, facilities, laws, regulations,

certificates, titles and the like are translations of their Chinese names and are included for

identification purposes only.

WARNING

The contents of this Offering Circular have not been reviewed by any regulatory authority of any

jurisdiction. You are advised to exercise caution in relation to the offering of the Notes. If you are in

any doubt about any of the contents of this Offering Circular, you should obtain independent

professional advice.

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INFORMATION INCORPORATED BY REFERENCE AND FINANCIAL INFORMATION

This Offering Circular should be read and construed in conjunction with:

(i) each relevant Pricing Supplement;

(ii) all amendments and supplements from time to time to this Offering Circular;

(iii) any annual audited financial statements of the Guarantor that are circulated with this OfferingCircular and are dated as at a date, or for a period ending, subsequent to those financialstatements appearing elsewhere in this Offering Circular; and

(iv) any annual, interim or quarterly financial statements (whether audited or unaudited) of theCompany that are circulated with this Offering Circular and are dated as at a date, or for a periodending, subsequent to those financial statements appearing elsewhere in this Offering Circular;

which shall be deemed to be incorporated in, and to form part of, this Offering Circular and whichshall be deemed to modify or supersede the contents of this Offering Circular.

The audited consolidated financial statements of the Company as at and for the year ended 31December 2019, which are included elsewhere in this Offering Circular, have been audited by BDOChina Shu Lun Pan Certified Public Accountant LLP (“BDO China”), the independent auditor of theCompany. Such consolidated financial statements of the Company were prepared and presented inaccordance with PRC GAAP.

The audited consolidated financial statements of the Company as at and for the year ended 31December 2020, which are included elsewhere in this Offering Circular, have been audited by GrantThornton (“Grant Thornton”). The Company’s audited consolidated financial statements as at andfor the years ended 31 December 2019 and 2020 have been prepared and presented in accordance withPRC GAAP.

The unaudited but reviewed consolidated financial statements of the Company as at and for the sixmonths ended 30 June 2021, which are included elsewhere in this Offering Circular, have beenreviewed by BDO China. Such consolidated financial statements of the Company were prepared andpresented in accordance with PRC GAAP.

The audited consolidated financial statements of the Guarantor as at and for the years ended 31December 2019 and 2020, which are included elsewhere in this Offering Circular, have been auditedby BDO Limited (“BDO Hong Kong”), independent auditor of the Guarantor. Such consolidatedfinancial statements of the Guarantor were prepared and presented in accordance with HKFRS.

The unaudited but reviewed consolidated financial statements of the Guarantor as at and for the sixmonths ended 30 June 2021, which are included elsewhere in this Offering Circular, have beenreviewed by BDO China, the independent accountants to the Guarantor. Such consolidated financialstatements of the Guarantor were prepared and presented in accordance with HKFRS.

Neither the Company nor the Guarantor has prepared any of its financial statements (as the case maybe) in accordance with IFRS. PRC GAAP is substantially in line with IFRS, except for certainmodifications which reflect the unique circumstances and environment of the PRC.

Since 2017, the Ministry of Finance of the PRC has promulgated certain new accounting standards andnew requirements in relation to the format of financial statements (the “New Accounting Standardsand Requirements”). The Company’s audited consolidated financial statements as at and for the yearended 31 December 2019 and the Company’s unaudited but reviewed consolidated financialstatements as at and for the six months ended 30 June 2021 were prepared and presented in accordancewith the relevant applicable New Accounting Standards and Requirements. As a result, the

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presentation of certain accounting items in the Company’s audited consolidated financial statements

as at and for the year ended 31 December 2019 and the Company’s unaudited but reviewed

consolidated financial statements as at and for the six months ended 30 June 2021, as the case may

be, may not be comparable to the financial figures in the Company’s financial statements for the

previous periods. For details of the New Accounting Standards and Requirements and its impact on

the Company’s audited consolidated financial statements as at and for the year ended 31 December

2019 and the Company’s unaudited but reviewed consolidated financial statements as at and for the

six months ended 30 June 2021, please see “Notes to Financial Statements — V. Changes in

Accounting Policies and Estimates, Correction of Accounting Error, Notes on Other Adjustments —

1. Changes in Accounting Policies” of the Company’s audited consolidated financial statements as at

and for the year ended 31 December 2019 and “Notes to Financial Statements — V. Changes in

Accounting Policies and Estimates, Correction of Accounting Error, Notes on Other Adjustments —

1. Changes in Accounting Policies” of the Company’s unaudited but reviewed consolidated financial

statements as at and for the six months ended 30 June 2021, respectively.

Please also see “Risk Factors — Risks Relating to Financial and Other Information — Certain

accounting items in the Company’s audited consolidated financial statements as at and for the year

ended 31 December 2019 and the Company’s unaudited but reviewed consolidated financial

statements as at and for the six months ended 30 June 2021 may not be comparable to the financial

information in the Company’s consolidated financial statements for the previous periods” for further

information.

For the avoidance of doubt, BDO China is not the auditor of the Guarantor as required under the

Companies Ordinance (Cap. 622) of Hong Kong. Save for the audited consolidated financial

statements of the Guarantor as at and for the years ended 31 December 2019 and 2020, the Guarantor’s

financial information contained in this Offering Circular does not constitute the Guarantor’s specified

financial statements (as defined in the Companies Ordinance (Cap. 622) of Hong Kong) for the

financial years ended 31 December 2018, 2019 or 2020. As the Guarantor is a private company, it is

not required to deliver its financial statements to the Registrar of Companies, and has not done so.

The Guarantor’s auditor has issued auditor’s reports on the Guarantor’s specified financial statements

for the financial years ended 31 December 2018, 2019 and 2020. Such reports were not qualified or

otherwise modified, did not refer to any matter to which the Guarantor’s auditor drew attention by

way of emphasis without qualifying the reports and did not contain a statement under Sections 406(2),

407(2) or 407(3) of the Companies Ordinance (Cap. 622) of Hong Kong.

Any statement contained in this Offering Circular or in a document incorporated by reference into this

Offering Circular will be deemed to be modified or superseded for purposes of this Offering Circular

to the extent that a statement contained in any such subsequent document modifies or supersedes that

statement. Any statement that is modified or superseded in this manner will no longer be a part of this

Offering Circular, except as modified or superseded.

Copies of all such documents which are so deemed to be incorporated in, and to form part of, this

Offering Circular will be available (upon written request) free of charge during usual business hours

on any weekday (Saturdays, Sundays and public holidays excepted) for inspection at the specified

office of the Trustee set out at the end of this Offering Circular.

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SUPPLEMENTAL OFFERING CIRCULAR

Each of the Issuer, the Guarantor and the Company has given an undertaking to the Dealers that in

the event of (i) a significant new factor, material mistake or material inaccuracy relating to

information included in this Offering Circular which is capable of affecting the assessment by

investors of the Notes arising or being noted, (ii) a change in the condition of the Issuer, the Guarantor

and/or the Company which is material in the context of the Programme or the issue of any Notes or

(iii) this Offering Circular otherwise coming to contain an untrue statement of a material fact or

omitting to state a material fact necessary to make the statements contained therein not misleading or

if it is necessary at any time to amend this Offering Circular to comply with, or reflect changes in,

the laws or regulations of the British Virgin Islands, Hong Kong or the PRC or any other relevant

jurisdiction, the Issuer, the Guarantor and the Company shall update or amend this Offering Circular

(following consultation with the Dealers) by the publication of a supplement to it or a new Offering

Circular, in each case in a form approved by the Dealers.

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FORWARD-LOOKING STATEMENTS

Certain statements under “Risk Factors”, “Description of the Issuer”, “Description of the Guarantor”,

“Description of the Company” and elsewhere in this Offering Circular constitute “forward-looking

statements”. The words including “believe”, “expect”, “plan”, “anticipate”, “schedule”, “estimate”,

“intend”, “could”, “may”, “going forward” and similar words or expressions identify forward-looking

statements. In addition, all statements other than statements of historical facts included in this

Offering Circular, including, but without limitation, those regarding the financial position, business

strategy, prospects, capital expenditure and investment plans of the Group and the plans and

objectives of the Group’s management for its future operations (including development plans and

objectives relating to the Group’s operations), are forward-looking statements. Such forward-looking

statements involve known and unknown risks, uncertainties and other factors which may cause actual

results or performance of the Group to differ materially from those expressed or implied by such

forward-looking statements. Such forward-looking statements are based on numerous assumptions

regarding the Group’s present and future business strategies and the environment in which the Group

will operate in the future. These forward-looking statements reflect the views of the Issuer, the

Guarantor and/or the Company with respect to future events and are not a guarantee of future

performance or developments. Each of the Issuer, the Guarantor and the Company expressly disclaims

any obligation or undertaking to release any updates or revisions to any forward-looking statements

contained herein to reflect any change in the Issuer’s, the Guarantor’s, the Company’s or the Group’s

expectations with regard thereto or any change of events, conditions or circumstances, on which any

such statements were based. This Offering Circular discloses, under “Risk Factors” and elsewhere,

important factors that could cause actual results to differ materially from the Issuer’s, the Guarantor’s

or the Company’s expectations. All subsequent written and forward-looking statements attributable to

the Issuer, the Guarantor or the Company or persons acting on behalf of the Issuer, the Guarantor or

the Company are expressly qualified in their entirety by such cautionary statements.

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SUMMARY OF THE PROGRAMME

The following summary is qualified in its entirety by the remainder of this Offering Circular. Thissummary must be read as an introduction to this Offering Circular and any decision to invest in theNotes should be based on a consideration of the Offering Circular as a whole, including anyinformation incorporated by reference. Phrases used in this summary and not otherwise defined shallhave the meanings given to them in “Terms and Conditions of the Notes”.

Issuer Guangzhou Metro Investment Finance (BVI) Limited(廣州地鐵投融資(維京)有限公司) (Legal entity identifier(LEI): 30030026WRIFBEGCB472).

Guarantor Guangzhou Metro Investment Finance (HK) Limited(廣州地鐵投融資(香港)有限公司).

Company Guangzhou Metro Group Co., Ltd. (廣州地鐵集團有限公司).

Description Guaranteed Medium Term Note Programme.

Size Up to U.S.$3,000,000,000 (or the equivalent in othercurrencies at the date of issue) aggregate nominal amount ofNotes outstanding at any one time. The Issuer and theGuarantor may increase the aggregate nominal amount of theProgramme in accordance with the terms of the DealerAgreement.

Arrangers Guotai Junan Securities (Hong Kong) Limited and StandardChartered Bank.

Dealers Guotai Junan Securities (Hong Kong) Limited and StandardChartered Bank.

The Issuer and the Guarantor may from time to time terminatethe appointment of any Dealer under the Programme orappoint Dealer(s) either in respect of one or more Tranches orin respect of the whole Programme. References in thisOffering Circular to “Dealers” are to all persons appointed asa dealer in respect of one or more Tranches or theProgramme.

Certain Restrictions Each issue of Notes denominated in a currency in respect ofwhich particular laws, guidelines, regulations, restrictions orreporting requirements apply will only be issued incircumstances which comply with such laws, guidelines,regulations, restrictions or reporting requirements from timeto time (see “Subscription and Sale”) including the followingrestriction applicable at the date of this Offering Circular.

Notes having a maturity of less than one year

Notes having a maturity of less than one year will, if theproceeds of the issue are accepted in the United Kingdom,constitute deposits for the purposes of the prohibition onaccepting deposits contained in Section 19 of the FinancialServices and Markets Act 2000 (“FSMA”) unless they areissued to a limited class of professional investors and have adenomination of at least £100,000 or its equivalent (see“Subscription and Sale”).

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Trustee Citicorp International Limited.

Issuing and Paying Agent and(in respect of Notes notcleared through the CMU)Transfer Agent

Citibank, N.A., London Branch.

Registrar (in respect of Notesnot cleared through theCMU)

Citigroup Global Markets Europe AG.

CMU Lodging and PayingAgent, Registrar and TransferAgent (in respect of Notescleared through the CMU)

Citicorp International Limited.

Method of Issue The Notes will be issued on a syndicated or non-syndicatedbasis. The Notes will be issued in series (each a “Series”)having one or more issue dates and on terms otherwiseidentical (or identical other than in respect of the firstpayment of interest and/or the issue price), the Notes of eachSeries being intended to be interchangeable with all otherNotes of that Series. Each Series may be issued in tranches(each a “Tranche”) on the same or different issue dates. Thespecific terms of each Tranche (which will be completed,where necessary, with the relevant terms and conditions and,save in respect of the issue date, issue price, first payment ofinterest and nominal amount of the Tranche, will be identicalto the terms of other Tranches of the same Series) will becompleted in the pricing supplement (the “PricingSupplement”).

Issue Price Notes may be issued at their nominal amount or at a discountor premium to their nominal amount. Partly Paid Notes maybe issued, the issue price of which will be payable in two ormore instalments.

Form of Notes The Notes will be issued in bearer or registered form asdescribed in “Terms and Conditions of the Notes”. RegisteredNotes may not be exchanged for Bearer Notes and vice versa.

Clearing Systems Clearstream, Luxembourg, Euroclear, the CMU and, inrelation to any Tranche, such other clearing system as may beselected by the Issuer and/or the Guarantor, and approved bythe Trustee, the Issuing and Paying Agent and/or the CMULodging and Paying Agent.

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Initial Delivery of Notes On or before the issue date for each Tranche, the Global Noterepresenting the Notes may be deposited with a commondepositary for Euroclear and Clearstream, Luxembourg ordeposited with a sub-custodian for the CMU. Global Notesmay also be deposited with any other clearing system or maybe delivered outside any clearing system provided that themethod of such delivery has been agreed in advance by theIssuer, the Guarantor, the Trustee, the Issuing and PayingAgent and the relevant Dealer(s). Registered Notes that are tobe credited to one or more clearing systems on issue will beregistered in the name of, or in the name of nominees or acommon nominee for, such clearing systems.

Currencies Subject to compliance with all relevant laws, regulations anddirectives, Notes may be issued in any currency agreedbetween the Issuer, the Guarantor, the Issuing and PayingAgent and the relevant Dealer(s).

Maturities Subject to compliance with all relevant laws, regulations anddirectives, any maturity as may be agreed between the Issuer,the Guarantor and the relevant Dealer(s).

Specified Denomination Notes will be issued in such denominations as may be agreedbetween the Issuer, the Guarantor and the relevant Dealer(s)save that the minimum denomination of each Note will besuch as may be allowed or required from time to time by thecentral banks (or equivalent body) or any laws or regulationsapplicable to the relevant currency (see “— CertainRestrictions” above).

Fixed Rate Notes Fixed interest will be payable in arrear on such date or datesas may be agreed between the Issuer, the Guarantor and therelevant Dealer(s) and on redemption and will be calculatedon the basis of such Day Count Fraction as may be agreedbetween the Issuer, the Guarantor and the relevant Dealer(s).

Floating Rate Notes Floating Rate Notes will bear interest determined separatelyfor each Series as follows:

(i) on the same basis as the floating rate under a notionalinterest rate swap transaction in the relevant SpecifiedCurrency governed by an agreement incorporating the2006 ISDA Definitions (as published by theInternational Swaps and Derivatives Association, Inc.and as amended and updated as at the Issue Date of thefirst Tranche of the Notes of the relevant Series); or

(ii) by reference to LIBOR, EURIBOR or CNH HIBOR (orsuch other benchmark as may be specified in therelevant Pricing Supplement) as adjusted for anyapplicable margin; or

(iii) on such other basis as may be agreed between the Issuerand the relevant Dealer(s).

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Interest periods will be specified in the relevant PricingSupplement.

Zero Coupon Notes Zero Coupon Notes (as defined in “Terms and Conditions ofthe Notes”) may be issued at their nominal amount or at adiscount to it and will not bear interest.

Dual Currency Notes Payments (whether in respect of principal or interest andwhether at maturity or otherwise) in respect of Dual CurrencyNotes (as defined in “Terms and Conditions of the Notes”)will be made in such currencies, and based on such rates ofexchange, as the Issuer, the Guarantor and the relevantDealer(s) may agree and as may be specified in the relevantPricing Supplement.

Index Linked Notes Payments of principal in respect of Index Linked RedemptionNotes (as defined in “Terms and Conditions of the Notes”) orof interest in respect of Index Linked Interest Notes (asdefined in “Terms and Conditions of the Notes”) will becalculated by reference to such index and/or formula or tochanges in prices of securities or commodities or to suchother factors as the Issuer, the Guarantor and the relevantDealer(s) may agree and as may be specified in the relevantPricing Supplement.

Interest Periods and InterestRates

The length of the interest periods for the Notes and theapplicable interest rate or its method of calculation may differfrom time to time or be constant for any Series. Floating RateNotes and Index Linked Interest Notes may also have amaximum interest rate, a minimum interest rate, or both. Theuse of interest accrual periods permits the Notes to bearinterest at different rates in the same interest period. All suchinformation will be set out in the relevant PricingSupplement.

Redemption The applicable Pricing Supplement will indicate either thatthe relevant Notes cannot be redeemed prior to their statedmaturity (other than in specified instalments, if applicable, orfor taxation reasons or following an Event of Default (asdefined in “Terms and Conditions of the Notes”) or that suchNotes will be redeemable at the option of the Issuer and/orthe Noteholders upon giving notice to the Noteholders or theIssuer, as the case may be, on a date or dates specified priorto such stated maturity and at a price or prices and on suchother terms as may be agreed between the Issuer, theGuarantor and the relevant Dealer(s). The applicable PricingSupplement may provide that Notes may be redeemable intwo or more instalments of such amounts and on such datesas are indicated in the applicable Pricing Supplement.

Notes having a maturity of less than one year are subject torestrictions on their denomination and distribution, see “—Certain Restrictions — Notes having a maturity of less thanone year” above.

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Optional Redemption Notes may be redeemed before their stated maturity at theoption of the Issuer (either in whole or in part) and/or theNoteholders to the extent (if at all) specified in the relevantPricing Supplement.

Redemption for Change ofControl

The terms and conditions of the Notes allow for the electionin the Pricing Supplement for the early redemption of theNotes at the option of the holders thereof upon the occurrenceof a Change of Control Put Event as further described inCondition 6(f) of the Conditions.

Rating Withdrawal Redemption The terms and conditions of the Notes will contain aprovision for the early redemption of the Notes at the optionof the holders thereof upon the occurrence of a RatingWithdrawal Put Event as further described in Condition 6(f)of the Conditions.

Redemption For TaxationReasons

Notes will be redeemable at the Issuer’s option prior tomaturity for tax reasons as further described in Condition6(c) of the Conditions.

Status of Notes The Notes and the Receipts and the Coupons will constitutedirect, unsubordinated, unconditional and (subject to theprovisions of Condition 4(a) of the Conditions) unsecuredobligations of the Issuer and will rank at all times pari passuand without any preference among themselves. The paymentobligations of the Issuer under the Notes and the Receipts andthe Coupons shall, save for such exceptions as may beprovided by applicable legislation and subject to Condition4(a) of the Conditions, at all times rank at least equally withall other present and future unsecured and unsubordinatedobligations of the Issuer.

Status of the Guarantee The payment obligations of the Guarantor under theGuarantee shall, save for such exceptions as may be providedby applicable legislation and subject to Condition 4(a) of theConditions, at all times rank at least equally with all otherpresent and future unsecured and unsubordinated obligationsof the Guarantor.

Negative Pledge The Notes will contain a negative pledge provision asdescribed in Condition 4(a) of the Conditions.

Cross Default The Conditions will contain a cross default provision asdescribed in Condition 10 of the Conditions.

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Withholding Tax All payments of principal and interest in respect of the Notesor under the Guarantee will be made free and clear of, andwithout withholding or deduction for, any taxes, duties,assessments or governmental charges of whatever natureimposed, levied, collected, withheld or assessed by or withinthe British Virgin Islands, Hong Kong or the PRC or anyauthority therein or thereof having power to tax, unless suchwithholding or deduction is required by law. In that event, theIssuer or (as the case may be) the Guarantor will, subject tocertain customary exceptions, pay such additional amounts aswill result in the Noteholders receiving such amounts as theywould have received in respect of such Notes (includingunder the Guarantee) had no such withholding or deductionbeen required. See Condition 8 of the Conditions.

Rating The Programme is rated “A2” by Moody’s. Tranches of Noteswill be rated or unrated. Where a Tranche of Notes is to berated, such rating will be specified in the relevant PricingSupplement.

A rating is not a recommendation to buy, sell or holdsecurities and may be subject to suspension, reduction orwithdrawal at any time by the assigning rating agency.

Governing Law The Notes, the Trust Deed, the Keepwell Deed and the Deedof Equity Interest Purchase Undertaking are governed by, andconstrued in accordance with, English law.

Listing and Admission toTrading

Application has been made to the Hong Kong Stock Exchangefor the listing of the Programme under which Notes may beissued during the 12-month period after the date of thisOffering Circular on the Hong Kong Stock Exchange by wayof debt issues to Professional Investors only.

Separate application will be made for the listing of the Noteson the Hong Kong Stock Exchange.

However, unlisted Notes and Notes to be listed, traded orquoted on or by any other competent authority, stockexchange or quotation system may be issued pursuant to theProgramme. The relevant Pricing Supplement in respect ofthe issue of any Notes will specify whether or not such Noteswill be listed on the Hong Kong Stock Exchange or listed,traded or quoted on or by any other competent authority,exchange or quotation system.

Notes listed on the Hong Kong Stock Exchange will be tradedon the Hong Kong Stock Exchange in a board lot size of atleast HK$500,000 (or its equivalent in other currencies).

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Selling Restrictions There are restrictions on the offer, sale and transfer of theNotes in the United States, the European Economic Area(including the United Kingdom), Japan, Hong Kong, thePRC, Singapore and the British Virgin Islands and such otherrestrictions as may be required in connection with theoffering and sale of a particular Tranche of Notes, see“Subscription and Sale”.

Bearer Notes will be issued in compliance with rules insubstantially the same form as U.S. Treasury Regulations§1.163-5(c)(2)(i)(D) for purposes of Section 4701 of the U.S.Inland Revenue Code of 1986 (“Code”) (“TEFRA D”) unless(i) the relevant Pricing Supplement states that the BearerNotes are issued in compliance with rules in substantially thesame form as U.S. Treasury Regulation §1.163-5(c)(2)(i)(C)for purposes of Section 4701 of the Code (“TEFRA C”) or(ii) the Bearer Notes are issued other than in compliance withTEFRA D or TEFRA C. In the case of Bearer Notes, onlyNotes with a term of 365 days or less (taking into account anyunilateral extensions and rollovers) will be issued other thanin compliance with TEFRA D or TEFRA C and will bereferred to in the relevant Pricing Supplement as a transactionto which the United States Tax Equity and FiscalResponsibility Act of 1982 (“TEFRA”) is not applicable.Bearer Notes with a term of more than 365 days (taking intoaccount any unilateral extensions and rollovers) that are heldthrough the CMU must be issued in compliance with TEFRAC, unless at the time of issuance the CMU and CMU Lodgingand Paying Agent have procedures in place so as to enable theIssuer to comply with the certification requirements underTEFRA D.

United States SellingRestrictions

Regulation S, Category 1 or 2 as specified in the applicablePricing Supplement. TEFRA C, TEFRA D or TEFRA notapplicable, as specified in the applicable Pricing Supplement.“TEFRA not applicable” is only available for (i) RegisteredNotes or (ii) Bearer Notes with a term of 365 days or less(taking into account any unilateral rights to extend or rolloverthe term).

Keepwell Deed The Company has entered into the Keepwell Deed with theIssuer, the Guarantor and the Trustee, as more fully describedin “Description of the Keepwell Deed”.

Deed of Equity InterestPurchase Undertaking

The Company and the Trustee have entered into the Deed ofEquity Interest Purchase Undertaking as further described in“Description of the Deed of Equity Interest PurchaseUndertaking”.

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SUMMARY

The summary below is only intended to provide a limited overview of detailed information describedelsewhere in this Offering Circular. As it is a summary, it does not contain all of the information thatmay be important to investors and terms defined elsewhere in this Offering Circular shall have thesame meanings when used in this Summary. Prospective investors should therefore read the entireOffering Circular, including the section entitled “Risk Factors” and the financial statements of eachof the Company and the Guarantor and related notes thereto, before making an investment decision.

Description of the Issuer

The Issuer was incorporated in the British Virgin Islands as a company limited by shares on 24 June2015 under the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands(company number: 1879369). The registered office of the Issuer is at Palm Grove House, P.O. Box438, Road Town, Tortola, British Virgin Islands. As at the date of this Offering Circular, the Issuerhas established a branch in Hong Kong. As at the date of this Offering Circular, the Issuer isauthorised to issue a maximum of 100,000,000 shares of U.S.$1.00 par value each and the issued sharecapital of the Issuer is U.S.$100,000,000. The Issuer is a directly wholly-owned subsidiary of theGuarantor. As at the date of this Offering Circular, the Issuer has not been engaged, since itsincorporation, in any material activities other than in connection with the Programme, the Couponsand the Notes.

Description of the Guarantor

The Guarantor was incorporated in Hong Kong on 5 June 2015 under the Companies Ordinance (Cap.622) of Hong Kong (CR number: 2246695). The Guarantor’s registered office is at 16/F, Wing OnCentre, 111 Connaught Road Central, Hong Kong. The Guarantor is a directly wholly-ownedsubsidiary of the Company. The Guarantor is principally engaged in investment holding.

Description of the Group

Established in 1992, the Company is a state-owned company wholly-owned by the GuangzhouMunicipal Government, while the Guangzhou SASAC performs the duties of an investor and enjoysthe rights and interests of an investor on behalf of the Guangzhou Municipal Government. The Groupis the sole construction and operation entity for the Guangzhou Metro. Adhering to its corporatemission of “The Metro, To Speed Up Guangzhou” and social responsibility of “Serving the Societyand Benefitting the Public”, the Group is responsible for the investment, financing, construction,operation and management of the Guangzhou Metro. The Group is also engaged in a range ofdiversified rail related ancillary businesses including property development, resources operation andprovision of professional services to external entities. As at 30 June 2021, the Group was one of thelargest municipal enterprises in Guangzhou in terms of total assets.

As at 30 June 2021, the Company had a registered capital of approximately CNY58.43 billion. As at30 June 2021, the Group had total assets of approximately CNY509.83 billion. For the years ended31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the Groupreported total operating income of approximately CNY9.08 billion, CNY12.23 billion, CNY12.89billion, CNY5.29 billion and CNY5.01 billion, respectively, and net profit of approximatelyCNY180.27 million, CNY1,044.20 million, CNY229.95 million, CNY38.35 million and CNY794.56million, respectively.

As at 30 June 2021, the Group operated a network of railway lines of approximately 676.5 kilometresin total, comprising the Guangzhou Metro, the Guangzhou Tram, the Guangqing and Guangzhou EastRing Intercity Railway, the Jiangxi Nanchang Metro Line 3, the Hainan Sanya Tram and the PakistanLahore Orange Line, which amounted to approximately 531.1 kilometres, 22.1 kilometres, 60.8kilometres, 28.5 kilometres, 8.4 kilometres and 25.6 kilometres, respectively.

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As at 30 June 2021, the Guangzhou Metro comprised 15 inter-connecting railway lines in operation,with an approximately 531.1 kilometre network of tracks and a network of 283 stations. The 15railway lines, namely Line 1, Line 2, Line 3 and Line 3 (Northward Extension), Line 4, Line 5, Line6, Line 7, Line 8, Line 9, Line 13, Line 14 and Knowledge City (知識城) Line, Line 21, the APM Lineand the Guangfo Line, together comprise the “Railway Lines”. As at 30 June 2021, the constructionof the 15 Railway Lines in operation had involved an aggregate investment of approximatelyCNY223.09 billion. As at 30 June 2021, the Group had 11 railway extensions and projects underconstruction. For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June2020 and 2021, the Guangzhou Metro’s total passenger flow was approximately 3,025.96 million,3,305.88 million, 2,412.51 million, 894.99 million and 1,351.35 million, respectively, and the totalnumber of train trips operated by the Guangzhou Metro was approximately 2.32 million, 2.59 million,2.49 million, 1.20 million and 1.26 million, respectively. For the years ended 31 December 2018, 2019and 2020, the Guangzhou Metro’s average daily passenger flow amounted to approximately 51 percent., 54 per cent. and 57 per cent., respectively, of the public transport passenger flow in Guangzhouas a whole. As at 30 June 2021, the Guangzhou Metro had been under continuous and safe operationfor a total of 8,768 days.

Competitive Strengths

The Company believes that the Group has the following competitive strengths:

• the Guangzhou Metro faces relatively less significant competition in the urban mass transitrailway transport industry;

• strong support (but not including credit support) from the Guangzhou Municipal Government;

• significant growth opportunities in Guangzhou;

• well-diversified business portfolio strengthening the Group’s profitability and ability to managerisks;

• advanced technology and research and development;

• strong financial profile with access to diversified financing channels and innovative projectfinancing management models; and

• experienced management team.

Business Strategies

Through effective management of the Group and delivery of quality services, the Group strives tobecome a role model in the urban mass transit railway industry in the PRC. The Groups adopts thefollowing key strategies to capture future growth opportunities in the PRC’s urban mass transitrailway industry, enhance its competitiveness, maintain its industry leading position in Guangzhouand to achieve its corporate mission of “The Metro, To Speed Up Guangzhou” and socialresponsibility of “Serving the Society and Benefitting the Public”:

• enhance the Group’s leading position in the urban mass transit railway industry and the Group’soperation and management of the Guangzhou Metro;

• further expand the Group’s rail related ancillary businesses;

• continue to focus on the Group’s investment in industries related to railway transport; and

• enhance the Group’s research and development efforts to further enhance its competitiveness.

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Recent Developments

The ongoing COVID-19 pandemic.

The ongoing COVID-19 pandemic has caused substantial disruptions in the PRC and international

economies and markets which has resulted in additional uncertainties in the Group’s operating

environment, particularly with the emergence of new variants such as the Delta variant. In line with

the government policies, the Group has implemented various measures to combat the spread of

COVID-19 pandemic, as well as to protect the health and safety of its customers and employees. For

example, the Group implemented measures to control passenger flow in a number of stations of the

Guangzhou Metro and set up check points for monitoring the temperature of the passengers. The

Group has been closely monitoring the impact of the ongoing COVID-19 pandemic on the Group’s

businesses and will keep its contingency measures and risk management under review as the situation

evolves. Please see “Risk Factors — Risks Relating to the Group’s Business in General — The ongoing

COVID-19 pandemic may have an adverse effect on the Group’s business, financial condition and

results of operations” and “Risk Factors — Risks Relating to the Group’s Business in General — The

Group’s operations are subject to force majeure events, political unrest or civil disobedience

movements, natural disasters, outbreaks or pandemic of contagious diseases and other disasters”

Issue of debt instruments since 30 June 2021.

Since 30 June 2021, the Company has issued onshore debt securities in an aggregate principal amount

of CNY2,000,000,000.

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OFFER STRUCTURE

The following is a description of the structure of the offering, which should be read in conjunctionwith the sections entitled “Risk Factors”, “Terms and Conditions of the Notes”, “Description of theKeepwell Deed” and “Description of the Deed of Equity Interest Purchase Undertaking”.

THE NOTES AND THE GUARANTEE

The Notes will be issued by the Issuer. Subject to the Conditions, the Notes will constitute direct,unsubordinated, unconditional and (subject to Condition 4(a) of the Conditions) unsecured obligationsof the Issuer and shall at all times rank pari passu and without any preference among themselves.

On the relevant Issue Date, the Notes will have the benefit of a Guarantee by the Guarantor. Pursuantto the Guarantee, the Guarantor will unconditionally and irrevocably guarantee the due payment of allsums expressed to be payable by the Issuer under the Notes and the Receipts and the Coupons relatingto them and the Trust Deed (as defined in “Terms and Conditions of the Notes”).

THE KEEPWELL DEED

The Issuer, the Guarantor, the Company and the Trustee have executed the Keepwell Deed (as furtherdescribed in “Description of the Keepwell Deed”) in favour of the Trustee. Defined terms used in thissection shall have the meanings given to them in the Keepwell Deed or the Conditions. Pursuant tothe Keepwell Deed, the Company will undertake, among other things, that:

• it will directly or indirectly own and hold all the outstanding shares of each of the Issuer andthe Guarantor and will not directly or indirectly pledge, grant a security interest, or in any wayencumber or otherwise dispose of any such shares unless required to dispose of any or all suchshares pursuant to applicable law or regulation or a court decree or order of any governmentauthority which, in the opinion of a legal adviser to the Company, may not be successfullychallenged;

• it will cause each of the Issuer and the Guarantor to remain validly existing and remain solventat all times under the laws of their respective jurisdictions of incorporation;

• it will cause each of the Issuer and the Guarantor to have sufficient liquidity to ensure timelypayment by the Issuer or the Guarantor, as the case may be, of any amounts payable under orin respect of any of its indebtedness (including under the Notes and the Coupons or theGuarantee, as the case may be, in accordance with the Conditions and/or the Trust Deed andotherwise under the Trust Deed and the Agency Agreement);

• neither the Company nor any of its Principal Subsidiaries (other than a Listed Subsidiary (asdefined in “Terms and Conditions of the Notes”) and Subsidiary of a Listed Subsidiary) will,create, or have outstanding, any Security Interest upon the whole or any part of its present orfuture undertaking, assets or revenues (including any uncalled capital) to secure any RelevantIndebtedness outside the PRC, or any guarantee or indemnity in respect of any RelevantIndebtedness outside the PRC, without at the same time or prior thereto according to the Notesand the Coupons (a) the same security as is created or subsisting to secure any such RelevantIndebtedness, guarantee or indemnity, or (b) such other security as shall be approved by anExtraordinary Resolution (as defined in the Trust Deed) of the Noteholders;

• it will procure that the articles of association of each of the Issuer and the Guarantor shall notbe amended in a manner that is, directly or indirectly, adverse to holders of the Notes andCoupons;

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• it will cause each of the Issuer and the Guarantor to remain in full compliance with theConditions, the Guarantee, the Trust Deed and all applicable rules and regulations in HongKong;

• it will promptly take any and all action necessary to comply with its obligations under theKeepwell Deed;

• it will cause each of the Issuer and the Guarantor to take all action necessary in a timely mannerto comply with its obligations under the Keepwell Deed; and

• it will procure that the Issuer will not carry on any business activity whatsoever other than inconnection with the Programme and the Notes and Coupons (such activities in connection withthe Programme and the Notes and Coupons shall, for the avoidance of doubt, include (i) theestablishment and maintenance of the Programme; (ii) the offering, sale or issuance of the Notesand Coupons under the Programme, the incurrence of Relevant Indebtedness represented by theNotes and Coupons issued under the Conditions; (iii) the offering, sale or issuance of RelevantIndebtedness as permitted under the Conditions; (iv) the activities directly related to theestablishment and/or maintenance of the Issuer’s corporate existence; (v) the on-lending of theproceeds of the issue of the Notes and/or the Coupons (the “Proceeds of the Notes”) to theGuarantor or the Company or as any of them may direct), and to cause such recipient of theProceeds of the Notes to pay the interest and principal in respect of such intercompany loan ontime.

If the Issuer or the Guarantor at any time determines that it will have insufficient liquidity or cashflow to meet its payment obligations in respect of the Notes and the Coupons or the Guarantee, as thecase may be, or otherwise under the Trust Deed and the Agency Agreement (as defined in “Terms andConditions of the Notes”) as they fall due, then the Issuer or the Guarantor shall promptly notify theCompany of the shortfall and the Company will make available to the Issuer or the Guarantor, as thecase may be, before the due date of the relevant payment obligations, funds sufficient to enable theIssuer or the Guarantor, as the case may be, to pay such payment obligations in full as they fall due.

Notwithstanding and without prejudice to the other provisions in the Keepwell Deed, in the event thatthe Trustee has provided a Trigger Notice to the Issuer, the Guarantor and the Company, the Companyagrees, among other things, to, as soon as practicable grant to the Issuer or the Guarantor, as the casemay be, a standby facility (the “Standby Facility”) pursuant to which the Company will remit anamount in RMB that can be converted by the Issuer or the Guarantor, as the case may be, into theRelevant Amount (the “RMB Amount”). Each of the Company and the Issuer agrees andacknowledges that the terms of the Standby Facility shall be at arm’s length (or more favourable tothe Issuer) and shall not require any security from the Issuer.

The Keepwell Deed is not, and nothing therein contained and nothing done pursuant thereto by theCompany shall be deemed to constitute, or shall be constituted as, or shall be deemed on evidence of,a guarantee by, or any legal binding obligation of, the Company of the payment of any obligation,responsibilities, indebtedness or liability, of any kind or character whatsoever, of the Issuer or theGuarantor under the laws of any jurisdiction, including the PRC. The parties to the Keepwell Deedwill acknowledge that in order for each of the Issuer, the Company and the Guarantor to comply withits respective obligations under the Keepwell Deed, it may be subject to Regulatory Approvals. See“Risk Factors — Risks Relating to the Keepwell Deed and the Deed of Equity Interest PurchaseUndertaking — The Keepwell Deed is not a guarantee of the payment obligations under the Notes andthe Guarantee”.

For further details, please refer to “Description of the Keepwell Deed”.

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THE DEED OF EQUITY INTEREST PURCHASE UNDERTAKING

The Company has executed the Deed of Equity Interest Purchase Undertaking (as further described

in “Description of the Deed of Equity Interest Purchase Undertaking”) in favour of the Trustee.

Defined terms used in this section shall have the meanings given to them in the Deed of Equity

Interest Purchase Undertaking or the Conditions. While the Keepwell Deed contains a general

obligation requiring the Company to ensure that each of the Issuer and the Guarantor has sufficient

liquidity to meet their respective payment obligations (as further described in “Description of the

Keepwell Deed”), the Deed of Equity Interest Purchase Undertaking provides a specified way by

which the Company could assist the Issuer and the Guarantor to meet their respective obligations

under the Notes and the Coupons issued pursuant to the Programme and the Guarantee following the

occurrence of an Event of Default (as defined in the Conditions).

Under the Deed of Equity Interest Purchase Undertaking, the Company will undertake to the Trustee

that, the Company agrees to purchase, either by itself or through a PRC incorporated subsidiary of the

Company (the “Designated Purchaser”), all or any equity interests upon receiving a written purchase

notice (the “Purchase Notice”) from the Trustee (the “Purchase”). The equity interests comprise the

equity interests held by the Guarantor and/or the Issuer and/or any other subsidiaries of the Company

incorporated outside the PRC (the “Relevant Transferor(s)”) (the “Equity Interest”). Following

notification to it of the occurrence of an Event of Default under any one or more series or tranches

of the Notes, the Trustee shall issue a Purchase Notice to the Company. Within 10 Business Days after

the date of the Purchase Notice, the Company shall determine (i) the purchase price of the Equity

Interest(s) subject to the Purchase (the “Purchase Price”) in accordance with any applicable PRC

laws and regulations effective at the time of determination; and (ii) the other applicable terms relating

to the Purchase, provided that the Purchase Price shall be no less than the Shortfall Amount.

The Issuer and the Company have been advised by PRC counsel that (a) in relation to the Purchase

of any Equity Interest relating to a target subsidiary incorporated in the PRC held by any Relevant

Transferor, the Company will need to obtain the approval of MOFCOM, NDRC, SASAC and other

applicable approval authorities, and shall also submit all application documents to the competent

AMR for registration of the transfer of the Equity Interest of each Relevant Transferor; and (b) in

relation to the Purchase of any Equity Interest relating to a target subsidiary incorporated outside the

PRC held by any Relevant Transferor, the Company will need to obtain the approval of MOFCOM,

NDRC, SASAC, SAFE and other applicable approval authorities. The Company undertakes to use its

reasonable endeavours to obtain all applicable PRC regulatory approvals, authorisation or consents.

However, there can be no assurance that such approvals can be obtained. In the event that the

Company is unable to obtain the relevant PRC regulatory approvals, authorisations or consents, the

Company may be unable to complete the relevant equity interest acquisition as required under the

Deed of Equity Interest Purchase Undertaking. See “Risk Factors — Risks Relating to the Keepwell

Deed and the Deed of Equity Interest Purchase Undertaking — Performance by the Company of its

undertaking under the Deed of Equity Interest Purchase Undertaking is subject to approvals of the

PRC governmental authorities”.

For further details, please refer to “Description of the Deed of Equity Interest Purchase Undertaking”.

13

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY

The following tables set forth the summary consolidated financial information of the Company as atand for the periods indicated.

The summary audited consolidated financial information of the Company as at and for the years ended31 December 2018, 2019 and 2020 as set out below has been derived from the Company’s auditedconsolidated financial statements as at and for the years ended 31 December 2019 and 2020. Theaudited consolidated financial statements of the Company as at and for the year ended 31 December2019, which are included elsewhere in this Offering Circular, have been audited by BDO China, theindependent auditor of the Company. The audited consolidated financial statements of the Companyas at and for the year ended 31 December 2020, which are included elsewhere in this OfferingCircular, have been audited by Grant Thornton. The Company’s audited consolidated financialstatements as at and for the years ended 31 December 2019 and 2020 have been prepared andpresented in accordance with PRC GAAP. The summary audited consolidated financial informationbelow should be read in conjunction with the audited consolidated financial statements and the notesto those statements of the Company included elsewhere in this Offering Circular.

The summary unaudited but reviewed consolidated financial information of the Company as at 30June 2021 and for the six months ended 30 June 2020 and 2021 set out below has been derived fromthe unaudited but reviewed consolidated financial statements of the Company as at and for the sixmonths ended 30 June 2021, which have been reviewed by BDO China. The unaudited but reviewedconsolidated financial statements of the Company as at and for the six months ended 30 June 2021have been prepared and presented in accordance with PRC GAAP. The summary unaudited butreviewed consolidated financial information below should be read in conjunction with the unauditedbut reviewed consolidated financial statements and the notes to those statements of the Companyincluded elsewhere in this Offering Circular.

The unaudited but reviewed consolidated financial statements of the Company as at and for the sixmonths ended 30 June 2021 have not been audited by a certified public accountant, and should notbe relied upon by investors to provide the same quality of information associated with informationthat has been subject to an audit. None of the Arrangers or the Dealers or their respective affiliates,directors, officers or advisers makes any representation or warranty, express or implied, regardingthe sufficiency of such unaudited but reviewed consolidated financial statements for an assessment of,and potential investors must exercise caution when using such data to evaluate, the Group’s financialcondition and results of operations. In addition, the unaudited but reviewed consolidated financialstatements of the Company as at and for the six months ended 30 June 2021 should not be taken asan indication of the expected financial condition or results of operations of the Group for the fullfinancial year ending 31 December 2021.

Please also see “Risk Factors — Risks Relating to Financial and Other Information — Potentialinvestors should not place undue reliance on certain financial information contained in this OfferingCircular that is not audited and/or reviewed” for further information.

Since 2017, the Ministry of Finance of the PRC has promulgated the New Accounting Standards andRequirements. The Company’s audited consolidated financial statements as at and for the year ended31 December 2019 and the Company’s unaudited but reviewed consolidated financial statements asat and for the six months ended 30 June 2021 were prepared and presented in accordance with therelevant applicable New Accounting Standards and Requirements. As a result, the presentation ofcertain accounting items in the Company’s audited consolidated financial statements as at and for theyear ended 31 December 2019 and the Company’s unaudited but reviewed consolidated financialstatements as at and for the six months ended 30 June 2021, as the case may be, may not becomparable to the financial figures in the Company’s financial statements for the previous periods.For details of the New Accounting Standards and Requirements and its impact on the Company’saudited consolidated financial statements as at and for the year ended 31 December 2019 and theCompany’s unaudited but reviewed consolidated financial statements as at and for the six months

14

ended 30 June 2021, please see “Notes to Financial Statements — V. Changes in Accounting Policies

and Estimates, Correction of Accounting Error, Notes on Other Adjustments — 1. Changes in

Accounting Policies” of the Company’s audited consolidated financial statements as at and for the

year ended 31 December 2019 and “Notes to Financial Statements — V. Changes in Accounting

Policies and Estimates, Correction of Accounting Error, Notes on Other Adjustments — 1. Changes

in Accounting Policies” of the Company’s unaudited but reviewed consolidated financial statements

as at and for the six months ended 30 June 2021, respectively.

Please also see “Risk Factors — Risks Relating to Financial and Other Information — Certain

accounting items in the Company’s audited consolidated financial statements as at and for the year

ended 31 December 2019 and the Company’s unaudited but reviewed consolidated financial

statements as at and for the six months ended 30 June 2021 may not be comparable to the financial

information in the Company’s consolidated financial statements for the previous periods” for further

information.

Historical results are not necessarily indicative of results that may be achieved in any future period.

15

STATEMENT OF PROFIT OR LOSS

For the year ended 31 December

For the six months ended

30 June

2018 2019 2020 2020 2021

(Audited) (Audited) (Audited) (Unaudited) (Unaudited)

(CNY) (CNY) (CNY) (CNY) (CNY)

I. Overall turnover . . . . . . . . . . . . . 9,083,482,390.95 12,233,873,908.85 12,891,240,822.69 5,286,734,945.01 5,012,279,931.63Including: Revenue from operations . . . . 9,083,482,390.95 12,233,873,908.85 12,891,240,822.69 5,286,734,945.01 5,012,279,931.63

Interest revenue . . . . . . . . . . . . — — — — —

Earned insurance fee . . . . . . . . . . — — — — —

Revenues of charges and commission . — — — — —

II. Overall costs . . . . . . . . . . . . . . . 11,431,877,735.35 14,122,281,445.73 15,409,381,399.13 6,657,893,096.84 6,065,658,113.50Including: Cost of operations . . . . . . . 8,308,953,542.26 9,565,906,869.86 11,290,769,061.84 4,805,574,585.77 4,775,435,573.26

Interest expenses . . . . . . . . . . . — — — — —

Charges and commission expenses . . . — — — — —

Insurance fee return . . . . . . . . . . — — — — —

Net of insurance claim payments . . . . — — — — —

Accrual of insurance contract provisions — — — — —

Insurance dividend payment . . . . . . — — — — —

Subinsurance contract expenses . . . . — — — — —

Taxes and surcharges on operations . . 200,494,117.25 717,261,205.39 444,068,598.69 293,888,494.08 238,907,058.82

Selling and distribution expenses . . . . 100,200,772.43 159,385,867.94 129,239,044.07 48,065,575.41 52,421,306.90

General and administrative expenses . . 1,099,017,959.52 1,370,905,270.22 1,100,228,720.56 371,386,874.24 332,250,193.67

Research and development expenses . . 93,587,382.62 129,546,822.34 271,405,947.35 47,169,557.03 52,622,081.22

Financial expenses . . . . . . . . . . . 1,629,623,961.27 2,179,275,409.98 2,173,670,026.62 1,091,808,010.31 614,021,899.63

Including: Interest expenses . . . . . 1,502,005,476.08 2,243,996,543.65 2,582,525,656.52 1,238,124,028.57 786,128,470.60

Interest income . . . . . . 270,107,814.92 383,016,792.11 317,725,809.70 92,033,210.56 184,976,905.65

Loss on foreign exchange

transactions (“-” for

gain) . . . . . . . . . . 346,192,511.22 237,816,567.74 -119,754,569.57 -33,010,885.84 83,388.00

Others . . . . . . . . . . . . . . . . . — — — — —

Plus: Other income . . . . . . . . . . . 1,729,886,592.73 906,934,716.37 510,178,373.31 411,496,756.63 34,036,748.08

Investment income (“-” for loss) . . . . 2,368,404,559.03 2,640,698,402.43 2,215,045,355.50 1,033,828,896.78 510,614,295.72

Including: Investment income from

joint ventures and affiliates 26,589,357.79 951,179,984.14 714,351,690.62 393,401,498.91 468,973,546.68

Income from derecognition

of financial assets

measured at amortised

cost . . . . . . . . . . — — — — —

Exchange gain (“-” for loss) . . . . . . — — — — —

Net open hedging income (“-” for loss) — — — — —

Gains on change in fair value (“-” for

loss) . . . . . . . . . . . . . . . . 92,936,961.21 57,809,594.67 -141,525,419.77 — 641,854,862.88

Credit impairment loss (“-” for loss) . . — -51,760,651.61 -38,205,217.46 -14,315,460.00 -41,749,982.41

Assets impairment loss (“-” for loss) . . -1,607,770,226.20 -513,314,146.74 -35,062,709.66 141,793.76 -0.86

Gains or losses from disposal of assets

(“-” for loss) . . . . . . . . . . . . 48,939,750.77 5,689,927.08 301,935,819.27 — 753,556,525.00

III. Operating profit (“-” for loss) . . . . . . 284,002,293.14 1,157,650,305.32 294,225,624.75 59,993,835.34 844,934,266.54Plus: Non-operating profit . . . . . . . . . 10,195,284.35 8,678,143.81 38,179,224.02 17,890,625.13 8,862,065.22

Including: Government subsidies . . . . . — 457,361.49 3,245,000.00 1,058,209.96 4,060,942.68

Less: Non-operating expense . . . . . . . 21,820,187.81 18,073,872.88 10,244,815.19 3,241,969.32 11,436,516.72

IV. Profit before tax (“-” for loss) . . . . . . 272,377,389.68 1,148,254,576.25 322,160,033.58 74,642,491.15 842,359,815.04Less: Income tax expenses . . . . . . . . 92,110,879.98 104,051,485.61 92,206,120.16 36,291,182.27 47,800,005.48

V. Net profit (“-” for loss) . . . . . . . . . 180,266,509.70 1,044,203,090.64 229,953,913.42 38,351,308.88 794,559,809.56(I) Classification by ownership:

Net profit belongs to parent

company . . . . . . . . . . . . 100,978,738.46 993,878,306.42 186,644,560.84 21,373,361.93 740,370,192.28

Gain or loss of minority

shareholders . . . . . . . . . . 79,287,771.24 50,324,784.22 43,309,352.58 16,977,946.95 54,189,617.28

(II) Classification by business

continuity:

Net profit of continuous

operation . . . . . . . . . . 180,266,509.70 1,044,203,090.64 229,953,913.42 38,351,308.88 794,559,809.56

Net profit of cease operation . . — — — — —

16

For the year ended 31 December

For the six months ended

30 June

2018 2019 2020 2020 2021

(Audited) (Audited) (Audited) (Unaudited) (Unaudited)

(CNY) (CNY) (CNY) (CNY) (CNY)

VI. Other comprehensive income after tax . . -418,472,164.89 64,505,057.61 974,653,650.82 -387,856,770.68 28,862,692.77Other comprehensive income belong to

parent company . . . . . . . . . . . . -418,472,164.89 64,505,057.61 974,653,650.82 -387,856,770.68 28,862,692.77

(I) Other comprehensive income that

cannot be reclassified into income . — — — — —

1. Changes in net liabilities

or net assets of the benefit

plan . . . . . . . . . . . — — — — —

2. Under the equity method,

the investment entity shall

enjoy the share of other

comprehensive income

which cannot be classified

into the profit and loss . . — — — — —

3. Changes in fair value of

investment in other equity

instruments . . . . . . . . — — — — —

4. Changes in fair value of

enterprise’s credit risk . . — — — — —

5. Others . . . . . . . . . . — — — — —

(II) Other comprehensive income that

can be reclassified into income. . . -418,472,164.89 64,505,057.61 974,653,650.82 -387,856,770.68 28,862,692.77

1. Under the equity method,

the investment entity shall

enjoy the share of other

comprehensive income

which can be classified

into the profit and loss . . . — 921,530.95 364,617.97 -41,007,731.00 -161,769,668.79

2. Changes in fair value of

investment in other

creditor’s rights . . . . . . — — — — —

3. Changes in the fair value

of available for sale

financial assets . . . . . . -386,809,903.61 259,166,234.15 576,380,703.40 -225,711,638.96 —

4. Financial assets reclassified

into other comprehensive

income . . . . . . . . . . — — — — —

5. Gain or loss of hold to

maturity investments are

classified as available for

sale financial assets . . . . — — — — —

6. Provision for credit

impairment of other debt

investment . . . . . . . . — — — — —

7. Effective part of cash flow

hedging profit and loss. . . — — — — —

8. Translation difference of

foreign current statement . -31,662,261.28 -195,582,707.49 397,908,329.45 -120,676,924.03 190,632,361.56

9. Others . . . . . . . . . . . — — — -460,476.69 —

Other comprehensive income belong to

minority shareholders . . . . . . . . . . — — — — —

VII. Total of comprehensive income . . . . . -238,205,655.19 1,108,708,148.25 1,204,607,564.24 -349,505,461.80 823,422,502.33Total comprehensive income belong to

parent company . . . . . . . . . . . . -317,493,426.43 1,058,383,364.03 1,161,298,211.66 -366,483,408.75 769,232,885.05

Total comprehensive income belong to

minority shareholders . . . . . . . . . . 79,287,771.24 50,324,784.22 43,309,352.58 16,977,946.95 54,189,617.28

VIII. Earnings per share . . . . . . . . . . . . — — — — —Basic earnings per share . . . . . . . . . — — — — —

Diluted earnings per share . . . . . . . . . — — — — —

17

STATEMENT OF FINANCIAL POSITION

As at 31 December As at 30 June

2018 2019 2020 2021

(Audited) (Audited) (Audited) (Unaudited)

(CNY) (CNY) (CNY) (CNY)

Current assets:

Cash and cash equivalents . . . . . . . . . . . . . . . 25,913,354,235.98 13,829,839,781.21 20,491,296,125.80 32,405,534,380.69

Settlement provisions . . . . . . . . . . . . . . . . . . — — — —

Placements with banks and other financial institutions . — — — —

Trading financial assets . . . . . . . . . . . . . . . . . — — — 1,552,665,543.43

Financial assets at fair value through profit or loss . . 57,611,575.17 39,995,947.79 — —

Derivative financial assets . . . . . . . . . . . . . . . — — — —

Notes Receivable . . . . . . . . . . . . . . . . . . . . . 73,334,109.34 64,565,195.50 108,365,241.86 62,272,671.09

Accounts Receivable . . . . . . . . . . . . . . . . . . 1,977,977,168.46 1,886,941,613.60 3,113,372,191.72 2,480,368,134.83

Receivables financing . . . . . . . . . . . . . . . . . . — — — —

Prepayments . . . . . . . . . . . . . . . . . . . . . . . 393,024,936.70 456,564,349.80 2,325,231,190.96 2,612,941,557.94

Insurances fee receivables . . . . . . . . . . . . . . . . — — — —

Sub contract of insurance fee receivable . . . . . . . . — — — —

Reinsurance contract reserve receivable . . . . . . . . — — — —

Other receivables . . . . . . . . . . . . . . . . . . . . 12,205,564,645.13 16,592,209,686.72 14,756,227,753.53 12,570,935,492.57

Financial assets purchased under resale agreements . . — — — —

Inventories . . . . . . . . . . . . . . . . . . . . . . . . 25,623,891,322.24 14,227,688,069.66 7,075,221,058.87 16,539,387,551.53

Including: Raw materials . . . . . . . . . . . . . . . . 624,805,380.94 658,721,831.11 938,012,132.45 1,016,966,168.27

Merchandised inventories (Finished goods) . 492,392,035.99 1,568,986,707.18 757,013,573.60 611,750,146.25

Contractual assets . . . . . . . . . . . . . . . . . . . . — — 555,956,267.74 1,076,301,030.40

Classified as held-to-sale assets . . . . . . . . . . . . . — — — —

Non-current assets maturing within one year . . . . . . — — — —

Other current assets . . . . . . . . . . . . . . . . . . . 8,232,533,539.77 9,080,052,770.44 9,772,096,934.73 9,668,894,012.02

TOTAL CURRENT ASSETS . . . . . . . . . . . . . . 74,477,291,532.79 56,177,857,414.72 58,197,766,765.21 78,969,300,374.50

Non-current assets:

Loans and advances . . . . . . . . . . . . . . . . . . . — — — —

Debt investment . . . . . . . . . . . . . . . . . . . . . — — — —

Available-for-sale-financial assets . . . . . . . . . . . . 18,464,293,642.50 21,192,339,898.89 25,159,678,991.26 —

Other investment on bonds . . . . . . . . . . . . . . . — — — —

Held-to-maturity investments . . . . . . . . . . . . . . 1,029,622,620.00 — — —

Long-term receivables . . . . . . . . . . . . . . . . . . — — — —

Long-term equity investments . . . . . . . . . . . . . . 12,568,603,826.44 23,205,260,104.52 28,719,919,060.10 31,032,952,864.48

Other investment on equity . . . . . . . . . . . . . . . — — — 25,064,094,862.92

Other non-current financial assets . . . . . . . . . . . — 2,000,000.00 5,390,000.00 5,390,000.00

Investment real estates . . . . . . . . . . . . . . . . . 5,372,217,257.41 5,429,886,852.93 5,595,535,956.92 5,517,196,788.44

Fixed assets . . . . . . . . . . . . . . . . . . . . . . . 92,279,306,530.16 112,549,619,083.05 166,669,944,174.32 166,410,550,189.51

Construction in progress . . . . . . . . . . . . . . . . 111,865,036,944.45 131,888,020,804.03 130,229,052,059.80 153,907,506,530.66

Productive biological assets . . . . . . . . . . . . . . . — — — —

Oil and natural gas assets . . . . . . . . . . . . . . . . — — — —

Assets of right of use . . . . . . . . . . . . . . . . . . — — — 29,896,468.99

Intangible assets . . . . . . . . . . . . . . . . . . . . . 360,096,759.62 359,922,334.63 779,770,513.80 770,102,822.04

Research and development costs . . . . . . . . . . . . 9,423,719.39 937,827.24 1,491,041.38 2,430,453.12

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 6,201,715.94 6,201,715.94 — —

Long-term deferred expenses (Deferred assets) . . . . . 51,046,871.45 60,238,811.96 73,921,817.37 66,777,891.12

Deferred tax assets . . . . . . . . . . . . . . . . . . . 87,707,585.90 112,529,743.06 135,122,053.25 149,983,384.67

Other non-current assets . . . . . . . . . . . . . . . . . 35,485,417,363.12 38,261,886,594.16 45,109,659,067.40 47,903,783,907.01

Including: Special reserve materials . . . . . . . . . . — — — —

TOTAL NON-CURRENT ASSETS . . . . . . . . . . 277,578,974,836.38 333,068,843,770.41 402,479,484,735.60 430,860,666,162.96

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . 352,056,266,369.17 389,246,701,185.13 460,677,251,500.81 509,829,966,537.46

18

As at 31 December As at 30 June

2018 2019 2020 2021

(Audited) (Audited) (Audited) (Unaudited)

(CNY) (CNY) (CNY) (CNY)

Current liabilities:

Short-term borrowings . . . . . . . . . . . . . . . . . . 20,560,915,172.00 12,015,653,177.39 30,270,400,862.42 49,289,408,236.08

Borrowing from Central bank . . . . . . . . . . . . . . — — — —

Placements from banks and other financial institutions — — — —

Financial liabilities held for trading . . . . . . . . . . — — — —

Financial liabilities at fair value through profit or loss 48,068,686.00 — 40,683,475.00 —

Derivative financial liabilities . . . . . . . . . . . . . . — — — —

Notes payable . . . . . . . . . . . . . . . . . . . . . . 66,000,000.00 1,128,834,651.97 328,356,898.44 489,128,819.14

Accounts payable . . . . . . . . . . . . . . . . . . . . 16,498,054,226.80 22,809,936,792.34 39,634,290,649.10 50,278,023,549.23

Advances from customers . . . . . . . . . . . . . . . . 9,838,682,891.78 6,157,064,063.26 878,869,229.28 1,886,188,259.93

Contractual liability . . . . . . . . . . . . . . . . . . . — — 1,114,839,962.38 2,024,438,035.42

Repurchase of financial assets . . . . . . . . . . . . . — — — —

Absorbed deposit and savings in other banks . . . . . . — — — —

Agent of buying and sale of securities . . . . . . . . . — — — —

Agent of underwriting of securities . . . . . . . . . . . — — — —

Employee benefits payable . . . . . . . . . . . . . . . 1,775,650,145.41 2,297,044,516.77 2,555,019,090.89 1,331,546,941.51

Including: Accrued payroll . . . . . . . . . . . . . . . 1,572,300,120.36 2,044,854,995.19 2,245,357,660.09 961,284,340.32

Welfare fund payable . . . . . . . . . . . . 79,568.98 226,785.36 15,800.00 1,800.00

Including: Staff bonus and reserve fund . . — — — —

Taxes and fees payable . . . . . . . . . . . . . . . . . 378,876,159.76 1,046,071,572.49 997,048,412.25 441,432,067.74

Including: Taxes payable . . . . . . . . . . . . . . . . — — 992,032,467.80 438,318,967.29

Other payables . . . . . . . . . . . . . . . . . . . . . . 2,673,975,564.01 3,092,710,645.11 4,006,392,236.87 572,164,146.41

Charges and commission payable . . . . . . . . . . . . — — — —

Accounts payable reinsurance . . . . . . . . . . . . . . — — — —

Classified as held-to-sale liabilities . . . . . . . . . . . — — — —

Non-current liabilities maturing within one year . . . . 3,653,726,974.18 16,073,038,012.88 9,014,394,144.88 13,025,740,640.00

Other current liabilities . . . . . . . . . . . . . . . . . 10,001,935,866.20 11,231,398,731.34 11,479,450,911.44 10,318,015,136.90

TOTAL CURRENT LIABILITIES . . . . . . . . . . 65,495,885,686.14 75,851,752,163.55 100,319,745,872.95 129,656,085,832.36

Non-current liabilities:

Provision of insurance contracts . . . . . . . . . . . . — — — —

Long-term borrowings . . . . . . . . . . . . . . . . . . 29,521,150,732.53 38,039,070,942.72 48,494,108,093.92 57,374,384,709.53

Bonds payable . . . . . . . . . . . . . . . . . . . . . . 37,543,081,163.98 35,269,836,094.12 48,954,536,475.65 55,608,991,234.96

Including: Preferred stocks . . . . . . . . . . . . . . . — — — —

Perpetual bonds . . . . . . . . . . . . . . . — — — —

Lease liabilities . . . . . . . . . . . . . . . . . . . . . — — — 127,143,487.05

Long-term payables . . . . . . . . . . . . . . . . . . . 12,286,351,041.87 14,702,735,152.96 6,885,715,046.01 4,046,227,052.48

Long-term employee benefits payable . . . . . . . . . — — — —

Estimated liabilities . . . . . . . . . . . . . . . . . . . — — — —

Deferred income . . . . . . . . . . . . . . . . . . . . . 55,492,186.41 76,211,482.43 55,881,439.36 179,210,135.74

Deferred tax liabilities . . . . . . . . . . . . . . . . . 473,194.51 740,271.80 1,877,346.80 1,877,346.80

Other non-current liabilities . . . . . . . . . . . . . . . 32,475,421.77 7,515,373,800.00 5,943,710,200.00 5,692,774,040.00

Including: Special reserve fund . . . . . . . . . . . . . — — — —

TOTAL NON-CURRENT LIABILITIES . . . . . . . 79,439,023,741.07 95,603,967,744.03 110,335,828,601.74 123,030,608,006.56

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . 144,934,909,427.21 171,455,719,907.58 210,655,574,474.69 252,686,693,838.92

Owners’ equity (shareholders’ equity):

Paid-in capital (or share capital) . . . . . . . . . . . . 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51

Capital contributed by state . . . . . . . . . . . . . 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51

Capital contributed by stated owned legal entity . . — — — —

Capital contributed by collective entity . . . . . . . — — — —

Capital contributed by private entity . . . . . . . . — — — —

Capital contributed by foreign investors . . . . . . . — — — —

Less: Investment return . . . . . . . . . . . . . . . . . — — — —

Net paid-in capital (or share capital) . . . . . . . . . . 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51

Other equity instruments . . . . . . . . . . . . . . . . 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00

Including: Preferred stock . . . . . . . . . . . . . . . . — — — —

Perpetual capital securities . . . . . . . . . . . . . . . 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00

Capital reserves . . . . . . . . . . . . . . . . . . . . . 140,375,222,765.34 150,322,206,295.02 181,592,397,861.70 188,008,435,831.35

19

As at 31 December As at 30 June

2018 2019 2020 2021

(Audited) (Audited) (Audited) (Unaudited)

(CNY) (CNY) (CNY) (CNY)

Less: Treasury stock . . . . . . . . . . . . . . . . . . . — — — —

Other comprehensive income . . . . . . . . . . . . . . 239,868,749.93 304,373,807.54 1,279,027,458.36 1,594,731,465.80

Including: Translation difference of foreign currency

statement . . . . . . . . . . . . . . . . . . . -21,462,095.91 — 182,252,122.34 391,582,880.20

Specific reserves . . . . . . . . . . . . . . — — 26,901.28 27,483,950.41

Surplus reserves . . . . . . . . . . . . . . . 174,550,000.00 222,186,774.37 222,186,774.37 222,186,774.37

Including: Statutory surplus reserve . . . . 174,550,000.00 222,186,774.37 222,186,774.37 222,186,774.37

Discretionary surplus reserve . . — — — —

Reserve fund . . . . . . . . . . . — — — —

Enterprise expansion fund . . . . — — — —

Profits capitalised on return of

investments . . . . . . . . . . — — — —

Provision for normal risks . . . . . . . . . . . . . . . . — — — —

Undistributed profit . . . . . . . . . . . . . . . . . . . 689,281,581.07 1,317,222,922.21 1,046,830,606.99 1,355,037,635.91

Total owners’ equity belongs to parent company . . . . 206,904,319,033.85 217,591,386,536.65 249,565,866,340.21 256,633,272,395.35

Minority shareholders’ equity . . . . . . . . . . . . . . 217,037,108.11 199,594,740.90 455,810,685.91 510,000,303.19

TOTAL OWNERS’ EQUITY . . . . . . . . . . . . . . 207,121,356,941.96 217,790,981,277.55 250,021,677,026.12 257,143,272,698.54

TOTAL LIABILITIES AND OWNERS’ EQUITY . . . 352,056,266,369.17 389,246,701,185.13 460,677,251,500.81 509,829,966,537.46

20

Other Financial Data

For the year ended 31 December

2018 2019 2020

EBITDA (CNY in millions)(1) . . . . . . . . . . . . . . . . . . . . . . . 2,764.73 4,343.93 3,873.25EBITDA/TOTAL OPERATING INCOME . . . . . . . . . . . . . . . 30.44% 35.51% 30.05%

Note:

(1) The Company calculates EBITDA for any period as profit for the period before tax plus interest expenses, depreciation

of fixed assets, amortisation of intangible assets and amortisation of long-term deferred assets. EBITDA is not a standard

measure under PRC GAAP or IFRS. 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, net income or

any other measure of performance or as an indicator of the Group’s operating performance, liquidity, profitability or cash

flows generated by operating, investing or financing activities. In evaluating EBITDA, the Company believes that

investors should consider, among other things, the components of EBITDA and the amount by which EBITDA exceeds

capital expenditures and other charges. The Company has included EBITDA because it believes that it is a useful

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

operations to cover debt service and taxes. EBITDA presented herein may not be comparable to similarly titled measures

presented by other companies. Investors should not compare the Group’s EBITDA to EBITDA presented by other

companies because not all companies use the same definitions.

21

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR

The following tables set forth the summary consolidated financial information of the Guarantor as at

and for the periods indicated.

The summary audited consolidated financial information of the Guarantor as at and for the years

ended 31 December 2018, 2019 and 2020 as set out below has been derived from the Guarantor’s

audited consolidated financial statements as at and for the years ended 31 December 2019 and 2020,

which have been audited by BDO Hong Kong, the independent auditor of the Guarantor. The

Guarantor’s audited consolidated financial statements as at and for the years ended 31 December

2019 and 2020 were prepared and presented in accordance with HKFRS. The summary audited

consolidated financial information below should be read in conjunction with the audited consolidated

financial statements and the notes to those statements of the Guarantor included elsewhere in this

Offering Circular.

The summary unaudited but reviewed consolidated financial information of the Guarantor as at 30

June 2021 and for the six months ended 30 June 2020 and 2021 set out below has been derived from

the unaudited but reviewed consolidated financial statements of the Guarantor as at and for the six

months ended 30 June 2021, which have been reviewed by BDO China, the independent accountants

to the Guarantor. The unaudited but reviewed consolidated financial statements of the Guarantor as

at and for the six months ended 30 June 2021 were prepared and presented in accordance with

HKFRS. The summary unaudited but reviewed consolidated financial information below should be

read in conjunction with the unaudited but reviewed consolidated financial statements and the notes

to those statements of the Guarantor included elsewhere in this Offering Circular.

The unaudited but reviewed consolidated financial statements of the Guarantor as at and for the six

months ended 30 June 2021 have not been audited by a certified public accountant, and should not

be relied upon by investors to provide the same quality of information associated with information

that has been subject to an audit. None of the Arrangers or the Dealers or their respective affiliates,

directors, officers or advisers makes any representation or warranty, express or implied, regarding

the sufficiency of such unaudited but reviewed consolidated financial statements for an assessment of,

and potential investors must exercise caution when using such data to evaluate, the Guarantor’s

financial condition and results of operations. In addition, the unaudited but reviewed consolidated

financial statements of the Guarantor as at and for the six months ended 30 June 2021 should not be

taken as an indication of the expected financial condition or results of operations of the Guarantor

for the full financial year ending 31 December 2021.

Please also see “Risk Factors — Risks Relating to Financial and Other Information — Potential

investors should not place undue reliance on certain financial information contained in this Offering

Circular that is not audited and/or reviewed” for further information.

Historical results are not necessarily indicative of results that may be achieved in any future period.

22

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 DecemberFor the six months ended

30 June

2018 2019 2020 2020 2021

(Audited) (Audited) (Audited) (Unaudited) (Unaudited)

(HK$) (HK$) (HK$) (HK$) (HK$)

Investment income and gains, net . . . . . 9,582,922 60,591,570 43,538,749 30,084,776 17,535,398

Other income . . . . . . . . . . . . . . . . . 106,228,043 — — — —

Other gain and loss, net . . . . . . . . . . . 96,906,300 -35,582,207 41,605,927 42,235,819 -13,425,315

Share of result of an associate . . . . . . . — 690,265,311 990,379,136 437,635,379 563,834,132

Gain on bargain purchase . . . . . . . . . . — 2,987,765,305 — — —

Administrative expenses . . . . . . . . . . . -2,198,361 -7,466,423 -4,129,057 -2,319,267 -339,799

Finance costs . . . . . . . . . . . . . . . . . -334,441,224 -314,299,088 -329,038,015 -173,704,318 -112,494,294

Profit / (Loss) before income tax expense -123,922,320 3,381,274,468 742,356,740 333,932,389 455,110,122

Income tax expense . . . . . . . . . . . . . — — — — —

Profit / (Loss) for the year . . . . . . . . . -123,922,320 3,381,274,468 742,356,740 333,932,389 455,110,122

Other comprehensive income . . . . . . . .

Items that will not be reclassified toprofit or loss:

Change in fair value of equityinvestments at fair value through othercomprehensive income . . . . . . . . . . -72,931,040 4,207,560 -272,088,880 -265,076,280 771,386,000

Items that may be reclassifiedsubsequently to profit or loss:

Change in fair value of debt investmentsat fair value through othercomprehensive income . . . . . . . . . . -3,433,228 6,431,703 — — —

Share of other comprehensive income . . — -25,172,316 41,232,633 -45,210,831 -5,951,054

Reclassification adjustment to profit orloss on disposal of debt investments atfair value through other comprehensiveincome . . . . . . . . . . . . . . . . . . . 252,587 — — — —

Other comprehensive income for the year,net of tax. . . . . . . . . . . . . . . . . . -76,111,681 -14,533,053 -230,856,247 -310,287,111 765,434,946

Total comprehensive income for the year -200,034,001 3,366,741,415 511,500,493 23,645,278 1,220,545,068

23

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December As at 30 June

2018 2019 2020 2021

(Audited) (Audited) (Audited) (Unaudited)

(HK$) (HK$) (HK$) (HK$)AssetsNon-current assetsInterests in associate . . . . . . . . . . . . . . . . . . . . . — 9,494,595,550 10,199,669,180 10,960,209,908

Financial assets at fair value through othercomprehensive income . . . . . . . . . . . . . . . . . . 927,065,720 931,273,280 659,184,400 1,430,570,400

Available-for-sale financial assets . . . . . . . . . . . . . — — — —

Financial assets at fair value through profit or loss . . . 1,537,048,735 — — —

Total non-current assets . . . . . . . . . . . . . . . . . . . 2,464,114,455 10,425,868,830 10,858,853,580 12,390,780,308

Current assetsOther receivables . . . . . . . . . . . . . . . . . . . . . . . 5,772,594 — — 194,101,350

Financial assets at fair value through othercomprehensive income . . . . . . . . . . . . . . . . . . 388,008,948 — — —

Derivative financial instruments . . . . . . . . . . . . . . — 690,631 — —

Loan to immediate holding company . . . . . . . . . . . 1,472,792,000 3,114,800,000 1,550,600,178 1,552,759,529

Fixed deposits with original maturity over threemonths . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,920,000 — — —

Cash and cash equivalents . . . . . . . . . . . . . . . . . 1,634,907,680 246,544,005 1,289,198,517 795,775,079

Total current assets . . . . . . . . . . . . . . . . . . . . . . 3,513,401,222 3,362,034,636 2,839,798,695 2,542,635,958

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 5,977,515,677 13,787,903,466 13,698,652,275 14,933,416,266

LiabilitiesCurrent liabilitiesAccruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,280,561 74,177,678 43,832,200 44,472,241

Amount due to immediate holding company . . . . . . . 40,063,539 39,321,100 41,938,988 42,287,601

Derivative financial instruments . . . . . . . . . . . . . . 11,951,333 55,750,934 — —

Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 5,382,000,000 — —

Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . 1,566,800,000 1,543,656,342 1,534,439,027 1,536,575,871

Total current liabilities . . . . . . . . . . . . . . . . . . . 2,640,095,433 7,094,906,054 1,620,210,215 1,623,335,713

Net current (liabilities)/assets . . . . . . . . . . . . . . . 873,305,789 -3,732,871,418 1,219,588,480 919,300,245

Non-current liabilitiesNotes payable . . . . . . . . . . . . . . . . . . . . . . . . . 3,103,258,393 3,092,094,146 7,966,038,301 7,977,131,726

Total non-current liabilities . . . . . . . . . . . . . . . . . 3,103,258,393 3,092,094,146 7,966,038,301 7,977,131,726

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 5,743,353,826 10,187,000,200 9,586,248,516 9,600,467,439Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 234,161,851 3,600,903,266 4,112,403,759 5,332,948,827

Capital and reservesShare capital . . . . . . . . . . . . . . . . . . . . . . . . . . 777,077,505 777,077,505 777,077,505 777,077,505

Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . -542,915,654 2,823,825,761 3,335,326,254 4,555,871,322

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . 234,161,851 3,600,903,266 4,112,403,759 5,332,948,827

24

RISK FACTORS

Prior to making any investment decision, prospective investors should consider carefully all of theinformation in this Offering Circular, including the risks and uncertainties described below. Thebusiness, financial condition or results of operations of the Group could be materially and adverselyaffected by any of these risks. The Issuer, the Guarantor and the Company believe that the followingfactors may affect their ability to fulfil their obligations under the Notes issued under the Programme,the Guarantee, the Keepwell Deed and the Deed of Equity Interest Purchase Undertaking. All of thesefactors are contingencies which may or may not occur and the Issuer, the Guarantor and the Groupare not in a position to express a view on the likelihood of any such contingency occurring. Factorswhich the Issuer, the Guarantor and the Company believe may be material for the purpose of assessingthe risks associated with the Notes issued under the Programme, the Guarantee, the Deed of EquityInterest Purchase Undertaking and the Keepwell Deed are also described below.

The Issuer, the Guarantor and the Company believe that the factors described below represent theprincipal risks inherent in investing in the Notes issued under the Programme, but the inability of theIssuer, the Guarantor or the Company to pay principal, interest (if any) or other amounts or fulfilother obligations on or in connection with any Notes, the Guarantee, the Keepwell Deed or the Deedof Equity Interest Purchase Undertaking may occur for other reasons and the Issuer, the Guarantorand the Group do not represent that the statements below regarding the risks of investing in or holdingthe Notes are exhaustive.

Risks Relating to the Group’s Businesses in General

The uncertainties in the global economy, the global financial market and, in particular, theeconomy and financial market in the PRC could materially and adversely affect the business,financial condition and results of operations of the Group.

The Group’s business, financial condition and results of operations are affected by general globaleconomic conditions. The outlook for the PRC and world economy and financial markets remainsuncertain. In Asia and other emerging markets, some countries are expecting increasing inflationarypressure as a result of liberal monetary policy or excessive foreign fund inflow, or both. The UnitedKingdom’s exit from the EU has resulted in volatility in global financial markets, and it is expectedto create mid-to long-term economic uncertainty to not only the economies of the United Kingdom andthe EU but also globally. In addition, the U.S. government’s policies may create uncertainty for theglobal economy and financial markets. The United States and the PRC have been involved incontroversy over trade barriers in recent years that have triggered the implementation or proposedimplementation of tariffs on certain imported products into the two countries. On 15 January 2020,the U.S. government and the PRC government signed the U.S.-China Economic and Trade Agreement(the “Phase I Agreement”) pursuant to which the United States agreed to cancel a portion of tariffsimposed on products from the PRC, and the PRC agreed to additional purchases of goods and servicesfrom the United States. Both parties expressed a commitment to further improve various trade issues.However, there can be no assurance that the Phase I Agreement will be adhered to by bothgovernments or successfully reduce trade tensions. Geopolitical events such as continued tensions inthe Middle East and the Korean peninsula, as well as the escalation of tensions between the UnitedStates and the PRC over trade policies, political and other issues and the significant decrease in thecrude oil price due to the COVID-19 pandemic related international-wide travel restrictions and the2020 Russia-Saudi Arabia oil price war could significantly undermine the stability of the globaleconomy and financial markets. More recently, the ongoing COVID-19 pandemic has adverselyaffected global financial, foreign exchange, commodity and energy markets. In December 2019, thefirst case of a novel strain of coronavirus, COVID-19, was identified. The pandemic has since spreadglobally and there have been increased initial infection and fatality rates across the world. TheCOVID-19 pandemic and policies implemented by governments to deter the spread of the disease havehad and may continue to have an adverse effect on consumer confidence and the general economicconditions to which the Group’s business is subject. The governments of many countries (including

25

the PRC) have declared a state of emergency, closed their borders to international travellers and issued

stay-at-home orders with a view to containing the pandemic. There can be no assurance that such

measures will be effective in ending or deterring the spread of the COVID-19 pandemic. Whilst the

PRC has recently seen a rebound and a degree of normalisation of supply and demand, the pandemic

situation continues to be affected by localised re-emergences of the virus. While a number of

biopharmaceutical manufacturers have developed COVID-19 vaccines, there remains uncertainty

regarding the efficacy, safety, and durability of such vaccines, as well as how quickly and widely the

vaccines might be made available. The COVID-19 pandemic continues to affect many countries

globally and there remains significant uncertainty as to when the pandemic will end and whether

governments will extend or implement further travel restrictions or other restrictive measures to

contain the COVID-19 pandemic. The resultant disruptions to the supply chain and reduced levels of

consumption, commercial activities and industrial production in the affected countries may result in

an economic slowdown in such economies which, if prolonged, could cause a global recession.

Furthermore, the COVID-19 pandemic has caused stock markets worldwide to lose significant value

since February 2020. Market interest rates have declined significantly, with the 10-year United States

Treasury bond falling below 1.00 per cent. for the first time on 3 March 2020. As the situation of the

COVID-19 pandemic is still evolving, the heightened uncertainties surrounding the pandemic may

pose a material adverse impact on the Group’s business, financial condition, results of operations and

prospects.

While the central banks of various countries, including the Federal Reserve Board of Governors of the

United States, have cut policy rates and/or announced stimulus packages, and national governments

have proposed or adopted various forms of economic relief to contain the economic impacts of the

COVID-19 pandemic and stabilise the markets, there can be no assurance that such monetary and

fiscal policy measures will have the intended effects or that a global economic downturn will not

occur or market volatilities will not persist. Any severe or prolonged slowdown or instability in the

global economy may materially and adversely affect the Group’s business, financial condition,

prospects and results of operations. Economic conditions in the PRC are sensitive to global economic

conditions, and it is impossible to predict how the PRC economy will develop in the future and

whether it may slow down due to a global crisis or experience a financial crisis. Instability in the

global economy may materially and adversely affect the markets in which the Group operates, which

may lead to a decline in the general demand for the Group’s services and the Group’s residential and

commercial properties. In addition, a reduction in liquidity in the global financial markets and in the

PRC may negatively affect the Group’s liquidity. In particular:

• it is generally difficult for business enterprises to source financings from the financial and

capital markets during a credit crunch. This may adversely affect the Group’s ability to

engage in routine funding transactions or borrow from other financial institutions on

acceptable terms, or at all, and in turn may impede some of its investment or development

plans. The shortage of financings will have a significant effect on the Group since its

investments in infrastructure are capital-intensive. Without adequate capital, the Group

may fail to initiate the construction of new railway lines or property development projects

or continue to fund the construction of railway lines or property development projects

under development or the upgrading of railway lines in operation;

• in the event of an economic slowdown or the continuing of failure of economic recovery,

the Group may also be subject to solvency risks of banks and of its counterparties in its

financial arrangements and other contracts; and

• during an economic slowdown, the demand for transportation might fall. With a drop in

ridership, the Group’s income from operating its railway network might fall accordingly.

26

Therefore, instability in the global economy may materially and adversely affect the Group’s business,financial condition, prospects and results of operations. See also “— The ongoing COVID-19pandemic may have an adverse effect on the Group’s business, financial condition and results ofoperations” and “— The Group’s operations are subject to force majeure events, political unrest orcivil disobedience movements, natural disasters, outbreaks or pandemic of contagious diseases andother disasters” below for further information.

The ongoing COVID-19 pandemic may have an adverse effect on the Group’s business, financialcondition and results of operations.

The ongoing COVID-19 pandemic has caused severe disruption to business and economic activitiesin the PRC and globally. The governments of many countries (including the PRC) have declared astate of emergency, closed their borders to international travellers and issued stay-at-home orders witha view to containing the pandemic. As a result, the transportation industry has been adverselyimpacted. In particular, the passenger flow of the Guangzhou Metro has been and will be adverselyaffected due to a combination of factors including adverse passenger sentiment regarding publictransportation and government measures to contain and halt the spread of COVID-19, such as theimposition of passenger flow control in a number of stations of the Guangzhou Metro, which in turncould materially affect the operations of the Guangzhou Metro and results of operations and financialcondition of the Group. In addition, if any of the Group’s management or employees are affected byCOVID-19, the Group may be required to close down its offices or facilities to prevent the spread ofthe pandemic. Although the Group has adopted remedial measures to minimise the adverse impact ofthe ongoing COVID-19 pandemic on its businesses and operations, there can be no assurance that suchremedial measures adopted by the Group will have the intended effects or that the adverse impact ofthe ongoing COVID-19 pandemic on the Group will not persist. In addition, consumer confidence orconsumer sentiment in the PRC and elsewhere has been materially impacted due to the continuedescalation of the COVID-19 pandemic. Substantially all of the Group’s operating income is derivedfrom its operations in the PRC. As such, any labour shortages, fall in occupancy rates or contractionor slowdown in the growth of domestic consumption in the PRC as a result of the adverse impacts ofthe ongoing COVID-19 pandemic could materially and adversely affect the results of operation,financial condition and prospects of the Group. The customers and tenants of the Group’s propertydevelopment business may experience financial difficulties and/or face significant disruptions to theiroperations and businesses which in turn, may adversely affect sales and rental payments from suchcustomers and tenants to the Group. Government measures or actions to combat the spread ofCOVID-19 could also adversely affect the ability of the Group’s contractors to perform their contractswith the Group, including its construction contractors. As a result, completion of the Group’s propertydevelopment projects may be delayed, which may in turn result in cost overrun, a decrease in salesof properties and/or otherwise adversely affect the Group’s financial condition, operating results andprofitability. In addition, the Group’s sales and pre-sale of residential properties may also beadversely affected due to reasons such as the decreased number of potential buyers attending sales andpre-sale activities of the Group and restrictions imposed on large-scale public activities to complywith social-distancing policies promoted by the government authorities. Moreover, the COVID-19pandemic may lead to lower levels of economic growth in the PRC which may reduce the demand forresidential and commercial properties in the PRC, which may in turn have an adverse impact on theGroup’s ability to sell its properties.

While the PRC government has introduced certain economic relief measures to support the economy,there can be no assurance that such measures will have the intended effects. The ongoing COVID-19pandemic is expected to have an adverse impact on the Group’s businesses and it is impossible topredict the magnitude of such impact, which could vary depending on the duration of the outbreak andthe ability of the global community to contain the disease and implement economic stimulusmeasures. There are uncertainties as to how the COVID-19 pandemic will evolve and any continuationand/or escalation and/or intensification of the COVID-19 pandemic could materially and adverselyaffect the Group’s business, financial condition and results of operations and the Group’s ability tomeet its financial obligations.

27

Any adverse change in the economic, political and social conditions in Guangzhou couldmaterially and adversely affect the Group’s business, financial condition, results of operationsand prospects.

Substantially all of the Group’s businesses, investments and operations are located in Guangzhou. The

Group’s businesses, financial condition and results of operations are therefore heavily dependent on

the social conditions, local government policies and the level of economic activity in Guangzhou. The

Group may not be able to establish or invest in new business outside Guangzhou in the future and theCompany expects that the Group’s future business and operations will continue to be primarilyconcentrated in Guangzhou. If the economic growth of Guangzhou slows down, adverse changes inthe social conditions or local government policies arise or any severe natural disasters or catastrophicevents or epidemic and/or pandemic of infections or contagious diseases occur in Guangzhou, theGroup’s business, financial condition and results of operations could be materially and adverselyaffected. See also “— The Group’s operations are subject to force majeure events, political unrest orcivil disobedience movements, natural disasters, outbreaks or pandemic of contagious diseases andother disasters” below for further information.

The Guangzhou Municipal Government can exert significant influence on the Group, and couldcause the Group to make decisions or modify the scope of its activities, or impose new obligationson the Group, that may not be in the Group’s best interests.

The Company is a state-owned company wholly-owned by the Guangzhou Municipal Government andis directly supervised by the Guangzhou SASAC. As a result, the Guangzhou Municipal Governmentis in a position to exert significant influence on the Group’s major business decisions and strategies,including the scope of its activities, investment decisions and dividend policies. There can be noassurance that the Guangzhou Municipal Government would always take actions that are in theGroup’s best interests or that aim to maximise the Group’s profits. For example, the GuangzhouMunicipal Government may use its ability to influence the Group’s businesses and strategies in amanner which is beneficial to Guangzhou or Guangdong Province as a whole and which may notnecessarily be in the Group’s best interests. The Guangzhou Municipal Government may also changeits policies, intention, preferences, views, expectations, projections, forecasts and opinions, as a resultof changes in the PRC economic, political and social environment as well as its projections ofpopulation and employment growth in Guangzhou or Guangdong Province and any such change mayhave a material effect on the Group’s business and prospects. Any amendment, modification or repealof existing policies of the Guangzhou Municipal Government could result in a modification of theexisting regulatory regime relating to the Group’s businesses which in turn could have a materialadverse effect on the Group’s financial condition and results of operations.

The PRC government (including the Guangzhou Municipal Government) has no obligation torepay any amount under the Notes or the Guarantee.

The PRC government (including the Guangzhou Municipal Government) is not an obligor and shallunder no circumstances have any obligation arising out of or in connection with the Notes or theGuarantee. This position has been reinforced by the Circular of the Ministry of Finance on Issuesrelevant to the Regulation on the Financing Activities Conducted by Financial Institutions for LocalGovernments and State-owned Enterprises (財政部關於規範金融企業對地方政府和國有企業投融資行為有關問題的通知)(財金[2018]23號) (the “MOF Circular”) promulgated on 28 March 2018 andtook effect on the same day, the Circular of the National Development and Reform Commission andthe Ministry of Finance on Improvement of Market Regulatory Regime and Strict Prevention ofForeign Debt Risks and Local Government Indebtedness Risks (國家發展改革委財政部關於完善市場約束機制嚴格防範外債風險和地方債務風險的通知) (the “Joint Circular”) promulgated on 11 May2018 and took effect on the same day and the Circular of the General Office of the National

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Development and Reform Commission on Relevant Requirements for Record-filing andRegistration of Issuance of Foreign Debts by Local State-owned Enterprises (國家發展改革委辦公廳關於對地方國有企業發行外債申請備案登記有關要求的通知(發改辦外資[2019]666號)) (“Circular666”) promulgated on 6 June 2019 and took effect on the same day.

The PRC government and the Guangzhou Municipal Government have no obligation to repay anyamount under the Notes or the Guarantee. Investments in the Notes are relying solely on the creditrisk of the Issuer and the Guarantor. In the event the Issuer and the Guarantor do not fulfil theirrespective obligations under the Notes and the Guarantee (as the case may be), investors will only beable to claim as an unsecured creditor against the Issuer, the Guarantor and their respective assets, andnot any other person including the PRC government and the Guangzhou Municipal Government or anyother local or municipal government. As the MOF Circular, the Joint Circular and Circular 666 arerelatively new and given the limited volume of published decisions related to these circulars, theinterpretation and enforcement of these laws and regulations involve uncertainties.

In addition, any ownership or control of the Group by the PRC government (including the GuangzhouMunicipal Government) does not necessarily correlate to, or provide any assurance as to, the Issuer’sor the Guarantor’s financial condition. If the Issuer or the Guarantor does not fulfil its obligationsunder the Notes or the Guarantee (as the case may be), the Noteholders will only have recourse againstthe Issuer and/or the Guarantor, and not any other person including the PRC government or othergovernment entities.

Therefore, investors should base their investment decisions on the financial condition of the Issuer,the Guarantor and the Group and any perceived credit risk associated with an investment in the Notesbased on the financial information of the Group as reflected in the Company’s consolidated financialstatements.

The performance of the Group depends, to a large extent, on the performance of its mass railtransit segment.

The Group’s mass rail transit segment, which includes investment, financing, construction, operationand management of the Guangzhou Metro, has been, and is expected to continue to be, its primarysource of operating income. As such, any economic downturn or other negative conditions affectingthe Group’s mass rail transit segment or the mass rail transit industry may have a material adverseeffect on the financial condition and results of operations of the Group.

The Group requires approvals, permits or licences to undertake its business operations and anydelays, loss, termination or non-renewal of these permits or licences could have a significant andadverse impact on its business.

The Group requires permits and licences issued by the relevant government agencies to conduct itsbusiness and it must comply with the restrictions and conditions imposed by the various levels ofgovernment to maintain its permits and licences. If the Group is unable to maintain any necessarypermits and licences, renew its permits and licences upon expiry of their original terms on a timelybasis, or obtain new permits and licences for any new business which the Group may participate in,the Group’s business operations would be directly and adversely affected.

The Group is subject to extensive regulatory requirements and any failure to comply with theapplicable laws, rules and regulations may materially and adversely affect the Group’s financialcondition and results of operations.

Certain segments of the Group’s business activities are extensively regulated in the PRC. The Groupis subject to extensive laws, policies and regulatory requirements issued by the relevant governmentalauthorities in the PRC, including but not limited to extensive health and safety regulations in the PRC.The Group is also subject to the supervision of a number of government ministries and departments,

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including but not limited to NDRC and the State Administration of Work Safety. Any breach of theapplicable laws or regulations to which the Group is subject may result in the imposition of fines andpenalties, the suspension or closure of its relevant operations or the suspension or revocation of itslicences or permits to conduct its relevant businesses.

Given the magnitude and complexity of the laws and regulations to which the Group is subject,compliance with such laws and regulations or the establishment of effective monitoring systems maybe onerous or may require a significant amount of financial and other resources. Although the Groupis obliged to comply with all applicable laws and regulations, there can be no assurance that the Groupwill be in compliance with all applicable laws and regulations at all times due to the unpredictableand evolving nature of such applicable laws and regulations in the PRC which may subject to futurechanges. These changes could adversely impact the Group’s business operations. If applicable lawsand regulations change adversely or the relevant regulatory authorities change their interpretation orenforcement of relevant policies in the future, the Group may be required to obtain further approvalsor meet other additional regulatory requirements. In addition, if there are any future changes inapplicable laws, regulations, administrative interpretations or regulatory documents, or stricterenforcement policies by the relevant PRC regulatory authorities, more stringent requirements couldbe imposed on the industries in which the Group operates. Compliance with such new requirementscould impose substantial additional costs or otherwise have a material adverse effect on the Group’sbusiness, financial condition and results of operations. Any failure of the Group to comply with anyexisting or future applicable laws and regulations could subject the Group to, among other things,civil liabilities and penalties which may in turn adversely affect the Group’s business, financialcondition and results of operation.

For example, there was a road collapse near a construction site of Line 21 of the Guangzhou Metrowhich caused, among other things, a number of casualties (the “2018 Incident”). Following the 2018Incident, the Guangzhou Municipal Safety Supervision Bureau (廣州市安監局) formed aninvestigation team to carry out an investigation in the 2018 Incident and imposed variousadministrative penalties on certain third parties and personnel. The Company believes that the 2018Incident does not have any material adverse effect on the Group’s business, financial condition andresults of operations.

In addition, there was a tunnel and road collapse at a construction site of a metro line in Foshan, whichcaused, among other things, a number of casualties (the “Foshan Incident”). A subsidiary of theCompany, namely, Guangzhou Railway Traffic Construction Supervise Co., Ltd. (廣州軌道交通建設監理有限公司), is a supervision unit of the construction project. Following the Foshan Incident, anemployee of Guangzhou Railway Traffic Construction Supervise Co., Ltd. was issued a party warning.In addition, Guangzhou Railway Traffic Construction Supervise Co., Ltd.’s credit rating has beenrated by the Foshan City Transportation Bureau (佛山市交通運輸局) as substandard and is notallowed to participate in tendering and bidding for urban rail transit projects in the administrative areaof Foshan City for two years. While there can be no assurance that the Group will not be imposed anyother penalties, fines or subject to civil or criminal liabilities, the Company believes that the FoshanIncident does not have any material adverse effect on the Group’s business, financial condition andresults of operations.

PRC health and safety laws and regulations are constantly evolving. There can be no assurance thatthe PRC government will not impose additional or stricter health and safety laws or regulations, whichmay increase the Group’s compliance costs and in turn could materially affect the Group’s operationsand financial condition.

The Group consists of a number of companies operating in various business segments and issubject to challenges not found in companies with a single business line.

The Group conducts businesses in various industries and is exposed to risks associated with multiplebusinesses.

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The Group is exposed to business, market and regulatory risks relating to different industries and

markets, and may from time to time expand its businesses to new industries and markets in which it

has limited operating experience. The Group needs to devote substantial resources to become familiar

with, and monitor changes in, different operating environments so that it can succeed in its businesses.

In addition, as the Group has a number of members, successful operation of the Group requires an

effective management system. As the Group continues to grow its businesses and expand into various

industries, the Group’s operations may become more complex, which would increase the difficulty of

implementing its management system.

The Company may provide direct funding, guarantees and other support to certain of its subsidiaries

from time to time. For example, the Company may provide shareholder loans to, or act as a guarantor

for the borrowings of, certain subsidiaries. If a subsidiary defaults on any borrowings lent or

guaranteed by the Company, the Company will not receive the repayment as planned or the relevant

lender may exercise its right under the guarantee to demand repayment from the Company. The

occurrence of either of these types of events may result in a funding shortage for the Company and

may materially and adversely affect the Company’s ability to provide financial support to its other

subsidiaries. If the Company’s financial or non-financial support ceases or diminishes for any reason,

the operations of the relevant subsidiaries may be materially and adversely affected, which in turn

may have a material adverse effect on the Group’s business, financial condition and results of

operations.

The Group may not be successful in integrating and managing future investments and/oracquisitions.

The Group may from time to time consider investment and acquisition opportunities that may

complement its core business portfolio and capabilities, and assist in expanding the market share of

its core business operations. The ability of the Group’s operations to grow by investments in and/or

acquisitions of its target businesses is dependent upon, and may be limited by, the availability of

attractive projects, its ability to agree commercial, technical and financing terms to the satisfaction

of the Group and to obtain required approvals from relevant regulatory authorities.

Such investments and/or acquisitions may expose the Group to potential difficulties that could prevent

it from achieving the strategic objectives for the investments and/or acquisitions or the anticipated

levels of profitability from the investments and/or acquisitions. These difficulties include:

• diversion of management’s attention from the Group’s existing businesses;

• increases in the Group’s expenses and working capital requirements, which may reduce itsreturn on invested capital;

• difficulty of expanding into different markets and challenges of operating in markets andindustries in which the Group does not have substantial experience;

• increases in debt, which may increase the Group’s financing costs as a result of higherinterest payments;

• exposure to unanticipated contingent liabilities to acquired businesses; and

• difficulties in integrating acquired businesses or investments into the Group’s existingoperations, which may prevent it from achieving, or may reduce, the anticipated synergies.

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In addition, where the Group invests in joint ventures, it may not have management control over itsinvestments and there can be no assurance that such joint ventures will operate smoothly orsuccessfully, if at all. There can also be no assurance that joint venture partners will act in a waywhich is consistent with the interests of the Group and be able and willing to fulfil their obligationsunder the relevant joint venture or other agreements.

The Group may not be able to successfully identify, acquire, invest in or operate suitableinvestment projects, acquisition targets or businesses.

There can be no assurance that the Group will be able to identify suitable investments and acquisitiontargets, complete the investments and acquisitions on satisfactory terms or, if at all, and if any suchinvestments and acquisitions are consummated, there can be no assurance that such acquiredinvestments and acquisitions will satisfactorily integrate with the Group’s existing businesses andinvestments. Any failure of the Group to implement its expansion plans through investments andacquisitions could have a material adverse effect on the Group’s business, financial position andresults of operations, as well as its future prospects. In addition, in the event that the Group entersinto any letter of intent or agreement for any material investment or acquisition after the issue of theNotes, the market price and the trading volume of the Notes may be adversely affected.

In addition, the Group’s members operating in different segments may determine that it is in theirshareholders’ interests to pursue new business ventures. There can be no assurance that such businessventures will be successful or that they will generate the synergies expected, if any. The successfulcompletion of new business ventures will depend on several factors, including satisfactory duediligence findings and the receipt of necessary regulatory approval, among others, some of which arebeyond the control of the Group. If the Group fails to complete such business ventures or suchventures prove to be unsuccessful, the business, financial condition, results of operation and prospectsof the relevant operating segments involved may be adversely affected.

There are risks associated with any material acquisitions by the Group in the future.

The Group may consider expanding its business by acquiring certain interests in other companies.During the course of these transactions, the Group will conduct due diligence investigations withrespect to the target companies, but the due diligence with respect to any acquisition opportunity maynot reveal all relevant facts that are necessary or useful in evaluating such opportunity, which couldsubject the Group to unknown financial, legal and other risks and liabilities. When determining theconsideration for any acquisition, the Group will consider various factors, including but not limitedto the quality of the target business, estimated costs associated with the acquisition and themanagement of the target business, prevailing market conditions and intensity of competition. TheGroup will also face various issues arising from the acquisition after the relevant transaction iscompleted, such as integration of the business into its operations and allocation of internal resources.There can be no assurance that the Group will be able to address these issues effectively.

In addition, any major acquisition or transaction of similar nature may consume substantialmanagement attention and financial resources of the Group or even cause the Group to incursignificant indebtedness. Any material decrease in its financial resources may limit the Group’sordinary operating activities and increase pressure on its liquidity, and in turn could adversely affectits business, financial condition and results of operations.

The Group is unable to predict whether there will be any target suitable for acquisition or when anysuitable acquisition opportunities could arise. In the event that the Group enters into any letter ofintent or agreement for any material acquisition after the issue of the Notes, the market price and thetrading volume of the Notes may be adversely affected.

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The Group may not be able to execute successfully or fully its business strategy with respect toassets, projects or subsidiaries in which the Company has minority interests.

The Group may not be able to execute successfully or fully its business strategy with respect to assets,projects or subsidiaries in which the Company has minority interests. The Group may also fail tomanage such assets, projects or subsidiaries successfully. The Group’s involvement with such assets,projects and subsidiaries is generally subject to the terms of applicable agreements and arrangements.The Group may not have any board representation, veto power or power to exercise control over themanagement, policies, business and affairs of certain of its members in which the Company does nothave majority interests.

In addition, the Group conducts some of its business activities through one or more joint venturecompanies. The Group generally enters into such joint ventures where the Company believes that theGroup is able to benefit from the strong industry insight and experience of its partners. If any of theother equity owners or the Group’s partners fail to perform their respective obligations or otherwisebreach the terms and conditions of the Group’s shareholding arrangements or joint ventureagreements, or if the Group has different views or strategies with its partners, it could have a materialadverse effect on the Group’s business, financial condition or results of operations.

The Group has substantial indebtedness and may incur substantial additional indebtedness in thefuture, which could adversely affect its future strategy and operations and its ability to generatesufficient cash to satisfy its outstanding and future debt obligations.

Due to the capital-intensive nature of the Group’s businesses, the Group currently has, and willcontinue to have in the foreseeable future, a substantial amount of indebtedness. As at 30 June 2021,the short-term borrowings of the Group amounted to approximately CNY49.29 billion, the totalcurrent liabilities of the Group amounted to approximately CNY129.66 billion and the long-termborrowings of the Group amounted to approximately CNY57.37 billion. The Group may incursubstantial additional indebtedness and continuing liabilities in the future, including the issuance ofdebt securities or entering into banking or other loan arrangements. The substantial level of existingindebtedness and incurrence of further indebtedness could have important consequences to theGroup’s business, including:

• limiting the Group’s ability to satisfy its obligations on its outstanding debts;

• increasing the Group’s vulnerability to adverse general economic and industry conditions;

• requiring the Group to dedicate a substantial portion of its cash flows from operations toservicing and repaying its indebtedness, thereby reducing the availability of its cash flowsto fund working capital, capital expenditures and other general corporate purposes;

• limiting the Group’s ability to capture investment and/or acquisition opportunities andinhibiting its ability to grow and expand its business;

• adding to the Group’s interest exposure as a proportion of its costs of doing business;

• limiting the Group’s flexibility in planning for or reacting to changes in its businesses andthe industries in which it operates;

• reducing the Group’s competitiveness compared to its competitors that have fewer debts;

• limiting, along with the financial and other restrictive covenants of its indebtedness, amongother things, the Group’s ability to borrow additional funds; and

• increasing the costs of additional financing.

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The Group continually reviews its current and expected future funding requirements and evaluates and

engages in discussions with financial institutions and other market participants, from time to time, on

proposals regarding different sources of funding. In incurring indebtedness and liabilities from time

to time, members of the Group may create security over their assets, receivables or equity interests

in companies or entities held by them (which may include the Company’s subsidiaries) in favour of

the relevant creditors. Examples of security interests given by the Group include fixed charges and

pledges which have been created on the assets, receivables and equity interests of some members

within the Group. Should any of such secured indebtedness becomes immediately due and payable as

a result of any default in payment or the occurrence of other events of default as defined under the

relevant secured indebtedness, the relevant secured creditors would be entitled to take enforcement

actions against such secured assets, receivables and equity interests. The secured creditors might take

over the Company’s or the relevant subsidiaries’ titles to the secured assets, receivables and equityinterests or sell them through auction. In such an event, the value of the Group’s assets portfolio willdiminish and fewer assets and/or equity interests will be available for distribution to unsecuredcreditors. If any member of the Group incurs additional debts, the risks that the Group faces as a resultof its already substantial indebtedness and leverage could intensify.

Furthermore, the Company and/or its subsidiaries may, from time to time, fail to comply with certainrestrictions and/or covenants in their respective debt obligations and other agreements. If theCompany or any of the relevant subsidiaries is unable to comply with the restrictions (includingrestrictions imposed on the Group’s future investments) and covenants in its current or future debtobligations and other agreements, a default under the terms of such agreements may occur. In theevent of a default under such agreements, the holders of the debts could terminate their commitmentsto the Company or its relevant subsidiaries, accelerate the debts and declare all amounts borrowed dueand payable or terminate the agreements, as the case may be. Some of the financing arrangementsentered into by the Company and its subsidiaries may contain cross acceleration or cross defaultprovisions. As a result, a default by the Company or any of its subsidiaries under any of suchagreements may cause the acceleration of repayment of not only such debts but also other debts, orresult in a default under other debt agreements. If any of these events occur, there can be no assurancethat the assets and cash flows of the Company and/or its subsidiaries would be sufficient to repay infull all of their respective indebtedness as it becomes due, or that the Company and/or its subsidiarieswould be able to find alternative financing to finance such indebtedness. Even if the Company and/orits subsidiaries could obtain alternative financing, there can be no assurance that it would be on termsthat are favourable or acceptable to the Company or, as the case may be, its subsidiaries.

The Group incurred net cash outflows from operating activities in the past. If the Group has netcash outflows from operating activities in the future, the Group’s liquidity and financialcondition may be materially and adversely affected.

The Group incurred net cash outflows from operating activities in the past. In particular, for the yearended 31 December 2018 and the six months ended 30 June 2020 and 2021, the Group incurred netcash outflows from operating activities of approximately CNY13.28 billion, CNY1.51 billion andCNY0.03 billion, respectively.

Net cash outflows from operating activities may reduce the Group’s financial flexibility and its abilityto obtain additional borrowings from banks. There can be no assurance that the Group will be ableto record net cash inflows from operating activities in the future. The Group’s liquidity and financialcondition may be materially and adversely affected should the Group record net cash outflows fromoperating activities in the future, and there can be no assurance that it will have sufficient cash fromother sources to fund its operations. If the Group resorts to other financing activities to generateadditional cash, the Group will incur additional financing costs and there can be no assurance that theGroup will be able to obtain the financing on terms acceptable to the Group or at all.

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The Guarantor reported net losses after tax in the past. If the Guarantor incurs net loss after taxin the future, the Guarantor’s liquidity and financial condition may be materially and adverselyaffected.

For the year ended 31 December 2018, the Guarantor reported net losses after tax of approximatelyHK$200.03 million. The Guarantor’s net losses after tax for the year ended 31 December 2018 wereprimarily constituted by its finance cost relating to interest expense on bank borrowings. There canbe no assurance that the Guarantor will be able to generate net profit after tax in the future. If theGuarantor incurs net loss after tax in the future, the Guarantor’s liquidity and financial condition maybe materially and adversely affected.

The Group’s ability to generate cash to service its indebtedness depends on many factors beyondits control.

The Group’s ability to make payments on and to refinance its indebtedness, including the Notes, andto fund planned capital expenditures and project development will depend on the Group’s ability togenerate cash. This, to a certain extent, is subject to general economic, financial, competitive,legislative, regulatory and other factors that are beyond the Group’s control including prevailinguncertainties in the capital markets as a result of the ongoing COVID-19 pandemic. The Group’sbusinesses might not generate sufficient cash flow from operations to enable it to pay its indebtedness,including the Notes, or to fund the Group’s other liquidity needs. The Group may need to refinanceall or a portion of its indebtedness, including the Notes, on or before maturity. However, the Groupmight not be able to refinance any of its indebtedness, including the Notes, on commerciallyreasonable terms and within the covenants and limitations imposed by the Group’s existing or anyfuture financing, or at all. If the Group is unable to service its indebtedness or obtain refinancing onterms acceptable to the Group, it may be forced to adopt an alternative strategy that may includereducing or delaying capital expenditures, selling assets or seeking equity capital. These strategiesmay not be instituted on satisfactory terms, if at all.

Some of the Group’s members may not possess valid land use rights or building ownershipcertificates to certain properties and some of the Group’s properties are subject to usage forspecial purposes and restrictions on transfer.

Some of the Group’s members may not possess valid land use rights certificates or building ownershipcertificates to certain properties. Some of these members may be in the process of applying for or willapply for the relevant certificate, permits or approvals for certain properties (including thoseproperties where construction is in progress). In addition, some members may lease properties whoseowners do not possess valid land use rights certificate or building ownership certificate. There can beno assurance that such certificates and permits will be obtained in a timely manner, or at all, and anydelay may result in a disruption to their business operations and may adversely affect their financialperformance. Some of the land that the Group uses or occupies is obtained through allocation fromthe government without paying a land premium to the relevant land authorities. Under PRC laws andregulations, approvals from, and payment of the land premium to, the relevant land authorities isnecessary for any transfer, lease, sale and disposal of such allocated land or the buildings attachedthereto. There can be no assurance that the relevant governmental authority will continue to allow theGroup to use the land and properties allocated to it in the same manner as currently used or at all. Inaddition, restrictions on the transfer of such land and properties may have a material adverse impacton the liquidity of the Group’s assets.

The Group engages in related party transactions with its associates and joint ventures from timeto time which may create potential conflicts of interest.

The Group has engaged in and will continue to engage in a variety of transactions with its associatesand joint ventures. There can be no assurance that those transactions would be deemed as arm’s lengthor its related parties will not take actions that favour their interests over the Group’s. There can beno assurance that conflicts of interests will not arise between the Group and its affiliates and joint

35

ventures pursuant to such related party transactions. The internal control regarding the managementof various related party transactions can also be challenging and demanding for the Group. Failure toadequately control and manage its related party transaction could have an adverse effect on theGroup’s business, financial condition or results of operations.

The Group relies on information technology systems for its business and any informationtechnology system limitations or failures could adversely affect its business, financial conditionand results of operations.

The Group’s business depends on the integrity and performance of its business, accounting and otherdata processing systems. If the Group’s systems cannot cope with increased demand or otherwise failto perform, the Group could experience unanticipated business disruptions, slower response times andlimitation on its ability to monitor and manage data and exposure to risk, control financial andoperation conditions, and keep accurate records. These consequences could result in operatingoutages, poor operating performance, financial losses, and potential intervention by regulatoryauthorities.

Although the Group’s systems have not experienced any major system failures and delays in the past,there can be no assurance that the Group’s systems would not experience future system failures anddelays, or the measures taken by the Group to reduce the risk of system disruptions are effective oradequate. If internet traffic and communication volume increase unexpectedly or other unanticipatedevents occur, the Group may need to expand and upgrade the Group’s technology, systems andnetwork infrastructure. There can be no assurance that the Group will be able to accurately project therate, timing or cost of any increases, or expand and upgrade the Group’s systems and infrastructureto accommodate any increases in a timely manner.

The Group is exposed to interest rate risk.

Interest rate fluctuations may have a significant influence on the financial performance of the Group.Any changes in interest rates may impact the Group’s borrowing costs as some of the Group’sborrowings bear floating interest rates. The Group may be susceptible to interest rate volatility if itis unable to match its floating rate liabilities with floating rate payments or secure appropriate hedgesfor the same. While the Group’s exposure to interest rate volatility may be hedged through the use ofinterest rate swaps and interest caps, the magnitude of the final exposure depends on the effectivenessof the hedge. There can be no assurance that fluctuations in interest rates will not have an adverseeffect on the Group’s earnings and cash flows. If any of the variety of instruments and strategies theGroup uses to hedge its exposure to the interest rate risk are ineffective, the Group may incur losses,which could have a material adverse effect on the Group’s financial position and results of operations.

The Group may not be able to detect and prevent fraud or other misconducts committed by itsofficers, employees, representatives, agents or customers or other third parties.

Following the 18th Chinese Communist Party Congress in 2012 and the wide-reaching anticorruptioncampaign in the PRC, the Central Leading Group for Inspection Work (the “Inspection LeadingGroup”), a co-ordination body set up under the Central Committee of the Chinese Communist Partyfor the purpose of managing party disciplinary inspections nationwide, has dispatched inspectionteams to provinces and central government organs such as ministries and state-owned enterprises, inthe PRC to conduct inspection work on party disciplinary enforcement.

There can be no assurance that there will not be any investigations or actions against the Group orits officers or employees by the Inspection Leading Group or other governmental authorities or thatsuch investigations or actions would not affect the Group as a result.

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In addition, the Group may be exposed to fraud or other misconducts committed by its officers,employees, representatives, agents, customers or other third parties that could subject it to litigation,financial losses and sanctions imposed by governmental authorities, as well as affect its reputation.Such misconduct could include:

• hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risksor losses;

• intentionally concealing material facts, or failing to perform necessary due diligenceprocedures designed to identify potential risks, which are material to the Group in decidingwhether to make investments, engage in certain projects or dispose of assets;

• improperly using or disclosing confidential information;

• engaging in improper activities such as offering bribes to counterparties in return for anytype of benefit or gain or accepting bribery activities;

• misappropriation of funds;

• conducting transactions that exceed authorised limits;

• engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities;

• engaging in unauthorised or excessive transactions to the detriment of the Group’scustomers or clients;

• conducting any inside dealing; or

• otherwise not complying with applicable laws or the Group’s internal policies andprocedures.

The Group’s internal control procedures are designed to monitor its operations and ensure overallcompliance. However, such internal control procedures may be unable to identify all incidents ofnon-compliance or suspicious transactions in a timely manner, if at all. Furthermore, it is not alwayspossible to detect and prevent fraud and other misconducts, and the precautions undertaken by theGroup to prevent and detect such activities may not be effective. Hence, it is possible that fraud orother misconducts may have previously occurred but was undetected, or that fraud or othermisconducts may occur in the future. If such fraud or other misconduct does occur, it may causenegative publicity as a result and the relevant government agencies may freeze the Group’s assets orimpose fines or other penalties on the Group. Any of these instances may materially and adverselyaffect the Group’s reputation, business, financial condition and results of operations.

The Group faces litigation risks in the course of its business.

In the ordinary course of the Group’s business, claims involving project owners, customers,sub-contractors, joint venture partners and other parties may be brought against the Group or by theGroup in connection with its contracts from time to time. Please see “Notes to Financial Statements— IX. Contingencies — 1. Contingent liabilities from pending litigation and arbitration” of theCompany’s unaudited but reviewed consolidated financial statements as at and for the six monthsended 30 June 2021. Claims may be brought against the Group for alleged defective or incompletework, liability for defective products related to personal injury or death, damage to or destruction ofproperty and late completion of a project. Such claims can involve actual damages and liquidateddamages. If the Group was found to be liable in any of the claims against it, the Group would incura charge against earnings to the extent that a reserve had not been established for the matter in itsaccounts or to the extent that the claims were not sufficiently covered by its insurance. Claims brought

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by the Group against project owners may include claims for additional costs incurred in excess ofcurrent contract provisions arising out of project delays and changes in the initial scope of work.Claims between the Group and its sub-contractors and vendors may include claims similar to thosedescribed above.

Both claims brought against the Group and by the Group, if not resolved through negotiation, are oftensubject to lengthy and expensive litigation or arbitration proceedings such that the amounts ultimatelyrealised from project claims by the Group could differ from the balances included in the Group’sfinancial statements. Such claims could therefore have a material adverse impact on the Group’sfinancial condition, results of operations, cash flow and reputation.

In addition, the Group may have disagreements with regulatory bodies in the course of its operations,which may subject it to administrative proceedings and unfavourable decrees that result in liabilities.Also, in the event that the Group makes any other investments or acquisitions in the future, there canbe no assurance that the Group would not have any exposure to any litigation or arbitrationproceedings or other liabilities relating to the acquired businesses or entities.

The Group’s operations are subject to force majeure events, political unrest or civil disobediencemovements, natural disasters, outbreaks or pandemic of contagious diseases and other disasters.

Force majeure events, natural disasters, catastrophe or other events could result in severe personalinjury, property damage and environmental and other damage, which may curtail the Group’soperations, cause delays in estimated completion dates for projects of the Group and materially andadversely affect its cash flows and, accordingly, adversely affect its ability to repay any debts. If anyof the Group’s properties are damaged by severe weather or any other disaster, accident, catastropheor other events, the Group’s operations may be significantly interrupted. The occurrence orcontinuance of any of these or similar events could increase the costs associated with the Group’soperations and reduce its ability to operate its businesses effectively, thereby reducing its revenuesand profits.

In addition, the Group’s contracts with its contractors and other counterparties may have forcemajeure provisions that permit such parties to suspend, terminate or otherwise not perform theirobligations under the relevant contracts upon the occurrence of certain events such as strikes and otherindustrial or labour disturbances, terrorism, restraints of government, civil protests, disobediencemovements or disturbances, or any natural disasters; all of which are beyond the control of the partyasserting such force majeure event. If one or more of the Group’s contractors or other counterpartiesdo not fulfil their contractual obligations for any extended period of time due to a force majeure eventor otherwise, the Group’s results of operations and financial condition could be materially andadversely affected.

Risks of substantial costs and liabilities are inherent in the Group’s principal operations and there canbe no assurance that significant costs and liabilities will not be incurred, including those relating toclaims for damages to property or persons. Insurance policies for civil liability and damages taken outby the Group could prove to be significantly inadequate, and there can be no assurance that the Groupwill always be able to maintain a level of cover at least equal to current cover levels and at the samecost. The frequency and magnitude of natural disasters seen over the past few years could have asignificant impact on the capacities of the insurance and reinsurance market and on the costs of civilliability and damages insurance cover for the Group. See “— The Group may not have adequateinsurance to cover all potential liabilities or losses” below.

The Group’s operations and financial condition could also be materially and adversely affected by anyoutbreak, epidemic and/or pandemic of (or the escalation and/or intensification of any outbreak,epidemic and/or pandemic of) infectious or contagious diseases and/or other adverse public healthdevelopments in the PRC or elsewhere. In particular, the ongoing COVID-19 pandemic in the PRCand other countries has led to business suspension, travel and other restrictions, labour shortages and

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supply or delivery chain constraints in the PRC and globally. It is difficult to predict the level ofimpact of the ongoing COVID-19 pandemic on the PRC and the global economy and there can be noassurance that it would not have a material adverse effect on the Group’s business, results ofoperations, financial condition and prospects.

In addition, all levels of business in Hong Kong, the PRC and other Asian countries were adverselyaffected by the outbreak of severe acute respiratory syndrome (“SARS”) in 2003. There had also beensporadic outbreaks of the H5N1 virus or “Avian Influenza A” among birds, in particular poultry, aswell as some isolated cases of transmission of the virus to humans. There had also been outbreaksamong humans of the A/H1N1 influenza virus globally. The COVID-19 pandemic and the outbreak ofSARS and the influenza A/H1N1 virus led to a significant decline in travel volumes and businessactivities throughout most of the Asian region as well as globally. Other recent epidemics include theMiddle East Respiratory Syndrome (MERS), the H5N1 avian flu, the H7N9 avian flu, the Ebola virusdisease and the Zika virus disease. The occurrence of another outbreak of highly contagious diseaseor epidemic disease (whether known or unknown to the world) (or the escalation and/or intensificationof any outbreak, epidemic and/or pandemic of infectious disease) in the PRC or elsewhere may resultin another economic downturn regionally and/or globally and could materially and adversely affectthe overall level of business and travel activities in the affected areas and/or globally, which in turncould have a material adverse effect on the Group’s business, results of operations and financialcondition.

Failure to recruit and retain key managerial personnel, employees and labour unrest maymaterially and adversely affect the Group’s operations.

The success of the Group’s businesses depends, to a large extent, on the strategic vision of membersof its senior management, the continued service of key managerial personnel including key seniorexecutives and the ability to attract and retain highly skilled personnel such as engineers. If such keypersonnel leaves the Group to join other employers, the Group may face difficulties employing andassimilating suitable replacement personnel in the short term. If the Group is not successful inrecruiting or retaining its employees, its operations may be adversely affected. In addition, if any ofthem fails to observe and perform their obligations under their service agreements, or any labourunrest may cause disruption to the operations of the Group which, coupled with any increase in labourcosts resulting from such dispute, may have a material adverse impact on the Group’s results ofoperations and profits. Although the Group has not experienced any major labour disputes, there canbe no assurance that the Group will not experience such disputes in the future.

The Group may not have adequate insurance to cover all potential liabilities or losses.

The Company believes that the Group maintains insurance which is consistent with market practicein the relevant PRC industries that the Group operates in and in amounts that the Company believesto be adequate. However, the Group faces various risks in connection with its businesses and may lackadequate insurance coverage or may have no relevant insurance coverage. In addition, the Group maynot always be able to obtain the type and amount of insurance at commercially reasonable rates. Overtime, premiums and deductibles for insurance policies may substantially increase, and certaininsurance policies could become unavailable or only available with reduced amounts of coverage.There can be no assurance that the insurance maintained by the Group will provide adequate coveragein all circumstances. Although the Group has had a track record of safe operation and it has notsuffered any material hazards over the last three years, there can be no assurance that hazards,accidents or mishaps will not occur in the future. The occurrence of any such incident for which theGroup is uninsured or inadequately insured may have a material adverse effect on its business,financial condition and results of operations. Moreover, any claims made under any insurance policiesmaintained by the Group may not be paid in a timely manner, or at all, and may be insufficient if suchan event were to occur.

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The Group may not be able to adequately protect its intellectual property, which could adverselyaffect its business operations.

The Group relies on a combination of patents, copyrights, trademarks and contractual rights to protectits intellectual property. There can be no assurance that any protective measures adopted by the Groupwill be sufficient to prevent any misappropriation of the Group’s intellectual property, or that theGroup’s competitors will not independently develop alternative technology that is equivalent orsuperior to technology based on the Group’s intellectual property. The legal regime governingintellectual property in the PRC is still evolving and the level of protection afforded in respect ofintellectual property rights in the PRC differs from those in other jurisdictions. In the event that thesteps that the Group has taken and the protection afforded by law do not adequately safeguard itsproprietary technology or property, the Group could suffer losses due to the sales of competingproducts or services that exploit its intellectual property which in turn could adversely affect theGroup’s business, financial condition and results of operations.

The Group is not insulated from the rising operating costs of labour, construction materials andconstruction equipment.

As a result of economic growth in the PRC, wages for construction workers and the prices ofconstruction materials as well as building equipment have undergone substantial increases in recentyears. In addition, the Labour Contract Law of the PRC (中華人民共和國勞動合同法) (the “LabourContract Law”) which came into effect on 1 July 2013 enhanced the protection for employees andincreased the liability of employers in many circumstances, which may further increase the Group’slabour costs. The Group bears the risk in respect of fluctuations in wages, the price of constructionmaterials and is also exposed to the price volatility of construction equipment used in constructionprojects. If the Group is unable to pass on any increase in the cost of labour, construction materialsand construction equipment to its customers, its results of operations may be negatively affected.There can be no assurance as to the future price movements of any construction materials required bythe Group and any detrimental movements in the future could have a material adverse effect on theGroup’s financial condition and results of operations.

The Group may be adversely affected by the performance of third party contractors.

The Group engages third party contractors to construct the railway and property development projectsthe Group undertakes. The Group generally selects independent contractors through an open tenderprocess. However, there can be no assurance that the services rendered by any of these independentcontractors or sub-contractors will always be satisfactory or meet its quality and safety standards. Ifthe performance of any independent contractor is not satisfactory, the Group may need to replace suchcontractor or take other actions to remedy the situation, which could adversely affect the cost andconstruction progress of its projects. Further, the completion of its railway and property developmentprojects may be delayed, and the Group may incur additional costs due to a contractor’s financial orother difficulties. In addition, if the Group undertakes additional railway or property developmentprojects, and there may be a shortage of contractors that meet its quality requirements. Contractorsmay undertake projects for other companies and developers, engage in risky or unsound practices orencounter financial or other difficulties, which may affect their ability to complete their work for theGroup on time or within budget. Any of these factors could have a material adverse effect on theGroup’s businesses, financial condition and results of operations.

The Group is subject to project development risks and cost overruns, and delays may adverselyaffect its results of operations.

There are a number of construction, financing, operating and other risks associated with projectdevelopment in the PRC. Construction projects that the Group undertakes, such as its railway andproperty development projects, typically require substantial capital expenditure during theconstruction phase. The time taken and the costs involved in completing construction can be adverselyaffected by many factors, including shortages of raw materials, equipment and labour, adverse

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weather conditions, natural disasters, epidemic or pandemic of contagious diseases, terrorism, labourdisputes, disputes with sub-contractors, accidents, changes in governmental priorities and otherunforeseen circumstances. Any of these instances could give rise to delays in the completion of theGroup’s construction projects, which in turn could lead to cost overruns. Construction delays canresult in loss of operating income. In addition, as construction costs for new projects have generallyincreased due to factors that are generally beyond the Group’s control, construction delays mayfurther increase such costs. Although the majority of the Group’s construction projects have beencompleted on schedule, there can be no assurance that this will remain the case or that futureconstruction projects will be completed on time, or at all, and generate satisfactory returns.

Future changes in laws, regulations or enforcement policies in the PRC could adversely affectthe Group’s business.

Laws, regulations and enforcement policies in the PRC, including those regulating the mass railtransit and real estate industries, are evolving and are subject to future changes. These changes couldadversely impact the Group’s business operations. In addition, different regulatory authorities mayhave different interpretation and enforcement of the policies affecting the industries in which theGroup operates, and the Group is required to meet policy requirements issued by the relevantregulatory authorities from time to time, and obtain applicable approvals and complete filings inaccordance with the relevant regulatory authorities’ interpretation and enforcement of such policies.

If applicable laws and regulations change adversely or the relevant regulatory authorities change theirinterpretation or enforcement of relevant policies in the future, the Group may be required to obtainfurther approvals or meet other additional regulatory requirements. In addition, the Group may not beable to access the credit markets or obtain financing through corporate debt, commercial paper,medium-term notes, convertible bonds or equity issuances under the amended industry policies. Ifthere are any future changes in applicable laws, regulations, administrative interpretations orregulatory documents, or stricter enforcement policies are imposed by the relevant PRC regulatoryauthorities, more stringent requirements could be imposed on the industries in which the Groupoperates. Compliance with such new requirements could impose substantial additional costs orotherwise have a material adverse effect on the Group’s business, financial condition and results ofoperations. In addition, if the Group fails to meet such new rules and requirements relating toapproval, environmental or safety compliance of its operations, the Group may be ordered by therelevant PRC regulatory authorities to terminate the relevant business or close the relevant productionor construction facilities. Alternatively, these changes may also result in a relaxation of certainrequirements, which could be beneficial to the Group’s competitors or could lower market entrybarriers and increase competition. As a result, the Group’s business, financial condition and resultsof operations could be materially and adversely affected.

Members of the Group may become listed and therefore they may be subject to regulatoryrestrictions and listing requirements and the Company’s shareholding or voting interests in suchmembers may be diluted.

The shares of one or more members of the Group are, or may become, listed on one or more stockexchanges. As a result of this, the entering into of certain transactions by any such member may besubject to various regulatory restrictions. Intra-group transactions and connected transactions mayalso be subject to applicable listing requirements, such as the issuance of press notices, the obtainingof independent shareholders’ approval at general meetings and disclosure in annual reports andaccounts. Members with funding needs may therefore not be able to obtain financial support from theGroup in a timely manner, or at all.

In addition, in the event that the shares of one or more subsidiaries of the Company become listed ona stock exchange, the Company’s shareholding or voting interests in such subsidiaries may be diluted.There can be no assurance that any such dilution in shareholding or voting interests will not have amaterial adverse effect on the Group’s business, financial condition and results of operations.

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Changes in the organisational structure of the Group may affect the Group’s financial conditionand results of operations.

The Group may undergo certain organisational restructuring from time to time which may affectcertain subsidiaries of the Company. There can also be no assurance that any such organisationalrestructuring will not have a material adverse effect on the Group’s business, financial condition,results of operations and prospects.

Risks Relating to the Group’s Operation of the Guangzhou Metro

The Group requires significant capital for its businesses and is exposed to the impact of changesin interest rates in respect of its borrowings. If the Group is unable to obtain additional capitalon acceptable terms when needed, its growth prospects and future profitability may be adverselyaffected.

The Group’s operation of the Guangzhou Metro is capital-intensive. The Group requires significantcapital resources to fund its new projects, to maintain, renew and replace its operating assets andinfrastructure and to maintain and improve its operational efficiency. A significant amount of capitalresources is also required for further growth in the scale of the Group’s operations, and its expansioninto new business areas and geographic markets may call for increased capital expenditure, furtherincreasing its funding requirements.

In addition to government fiscal funds, the Group historically financed its working capitalrequirements and capital expenditure through a combination of internal cash flow from its operationsand external financing through various channels, such as bank and other borrowings, equity financingand debt issuances. The Group’s ability to obtain external financing in the future and the cost of suchfinancing are subject to a variety of uncertainties, including:

• the condition of the global and PRC financial markets;

• potential changes in monetary policies with respect to bank interest rates and lendingpolicy;

• the Group’s ability to obtain the PRC government approvals required to access domestic orinternational financing; and

• the performance of the Group’s operations.

If the Group is unable to obtain financing on a timely basis and at a reasonable cost, it may not beable to undertake new projects or implement them as planned. This would restrict the Group’s abilityto operate and grow and, over time, may reduce the quality and reliability of the service the Groupprovides and in turn adversely affect the Group’s business, results of operations and financialcondition.

The Group’s results of operations and financial condition are, to some extent, subject to thecontinuous receipt of government subsidies and other government financial and business support(but not including credit support).

The Group has been receiving financial support (but not including credit support) from the GuangzhouMunicipal Government, including government subsidies to compensate for the Group’s losses inoperating the Guangzhou Metro. For the years ended 31 December 2018, 2019 and 2020, the Groupreceived approximately CNY1.45 billion, CNY1.53 billion and CNY1.10 billion, respectively, of farediscount subsidies from the Guangzhou Municipal Government. The Guangzhou MunicipalGovernment’s granting of subsidies to the Group is dependent on a number of factors, including butnot limited to the social, political and economic policies of the PRC government and the annual fiscalbudget of the Guangzhou Municipal Government. In addition to financial support (but not including

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credit support), the Group also enjoys various forms of business support from the GuangzhouMunicipal Government, including but not limited to the Group being granted the right to conductproperty development and resources operation in the areas along the Railway Lines (as definedbelow). There can be no assurance that the Guangzhou Municipal Government will continue toprovide government subsidies and/or other government financial and business support (but notincluding credit support) to the Group. Any reduction or discontinuance of such government subsidiesand/or support may materially and adversely affect the Group’s financial condition and results ofoperations. In addition, the Group also receives fiscal funds from the Guangzhou MunicipalGovernment in support of its development of the mass transit railway infrastructure in Guangzhou. Asthe fiscal funds are generally paid in instalments, they may not be received in line with the Group’scash flow cycle. As a result, the Group may need to seek alternative source of financing to fund itsprojects, which may materially increase the Group’s financing costs.

The Group’s operation of the Guangzhou Metro is largely dependent on the level of theGuangzhou Municipal Government’s spending on transportation and other infrastructure.

The Group’s operation of the Guangzhou Metro is largely dependent on the continued spending by theGuangzhou Municipal Government to expand the urban transit railway network and build railwaylines and other public transportation infrastructure, including roads, tunnels, interchange facilities andcertain other municipal works. Any significant reduction in the Guangzhou Municipal Government’spublic budgets relating to infrastructure, particularly the transportation infrastructure sector, couldhave a material adverse effect on the Group’s operation of the Guangzhou Metro. Various factorsaffect the nature, scale, location and timing of the Guangzhou Municipal Government’s publicinvestment plans in the urban infrastructure sector in the city. These factors include the policies andpriorities of both the state and the Guangzhou Municipal Government regarding different businesssectors, deregulation to encourage private sector participation in the urban infrastructure sector andthe general condition and prospects of the overall PRC and Guangzhou economy.

The growth of the Group’s business of operating the Guangzhou Metro and increase in passengerflow depend, in part, on the government approval of the Group’s new railway projects, theimplementation of those projects and other factors that the Group may not be able to control.

The growth of the Group’s business of operating the Guangzhou Metro depends, in part, on whetherthe Group is able to obtain approval of its new railway projects from the various relevant PRCgovernmental authorities and whether it can implement such new railway projects in a timely and costeffective manner in order to expand capacity and thereby accommodate more passengers and furtherfacilitate the growth of the Group’s other businesses, such as property development and resourcesoperation along railway lines. The Group’s plans for new railway projects are subject to a number ofuncertainties, including:

• whether, and on what terms, including the location, length, funding plan and constructiontime, new railway projects of the Group will be approved by the relevant PRCgovernmental authorities and, in particular, whether such terms will enable the Group toearn a commercial rate of return on its investment in new railway projects;

• whether there will be sufficient population in the catchment area for a new railway projectand whether that catchment area is encouraged to use the mass transit railway system as aresult of government planning of highways and bus routes; and

• whether the Group will be able to obtain adequate financing on acceptable terms to fundthe required capital expenditure.

Although the Group is currently the sole construction and operation entity for the Guangzhou Metro,there can be no assurance that new railway projects will be awarded to the Group on commerciallyviable terms or at all. In addition, although the Group has significant experience in the design andconstruction of railway projects and a track record in financing and completing projects, there can be

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no assurance that new railway projects undertaken by it will be completed on time and/or withinbudget. Further, due to the fact that most transportation infrastructure projects, including the Group’srailway projects, are funded by government agencies, these projects are sometimes subject to changesor postponement arising from factors such as changes in government budget, changes in policyconsiderations or changes of government in certain districts or regions. In addition, disputes withpublic bodies may last for considerably longer periods of time than for those that occur with privatesector counterparties, and payments from public bodies may be delayed as a result.

Increases in the passenger flow will also be affected by macroeconomic factors, such as populationand employment growth and distribution and changes in demographics and economic conditions. Inaddition, increases in the passenger flow will be affected by the amount of road congestion and anyexpansion of the bus network. Furthermore, because of certain inherent capacity limitations andstructural inflexibilities of mass transit railways, the Group may not be able to respond quickly toincreases in demand. For example, the Group may not be able to change its routes to cater for newpassenger demand in areas in which it does not operate. New routes are limited by the planning ofrelevant PRC governmental authorities and such routes may not be built quickly enough or cater todemand in newly developed areas. All these risks may have a material adverse effect on the Group’sresults of operations and financial position.

The Group’s ability to raise fares to cover the Group’s operating costs could be limited.

The Group relies on the Guangzhou Municipal Government to determine its railway fares and anyadjustment to its railway fares is subject to the Guangzhou Municipal Government’s approval. Forpublic policy reasons, the railway fares charged by the Group for the Guangzhou Metro are relativelylow. As at 30 June 2021, the Guangzhou Metro adopted a distance-based fare system for all theRailway Lines except for the APM Line. See “Description of the Group — Business — Operation ofthe Guangzhou Metro — Fares, Management Fee Income and Subsidies”. As at 30 June 2021, theGuangzhou Metro charged CNY2 per person per ride for any trip on the APM Line. In addition, theGroup is entitled to receive annual management fees from Guangdong Guangfo Rail Transit Co., Ltd.(廣東廣佛軌道交通有限公司)(“Guangfo Rail Transit Company”) for the Group’s operation of theGuangfo Line. The revenue from ticket fees and the management fees from Guangfo Rail TransitCompany are unable to fully cover the Group’s operational expenses. The Group’s ability to raisefares is subject to the Guangzhou Municipal Government’s approval, which takes into considerationfactors such as changes in market conditions, trends in the usage of public transportation and otherfactors to compensate for increases in operating, financing and other costs which are limited by theGuangzhou Municipal Government’s policies on railway fares, competitive dynamics in the masstransit industry and commuter preferences.

Competition in Guangzhou from other forms of public and private transportation may adverselyaffect the Group.

As a developer and operator of the mass transit railway network in Guangzhou, the Group competeswith other forms of public and private transportation available in the city, principally buses, taxis andprivate vehicles. The speed, reliability and comfort offered by the Guangzhou Metro may be erodedby:

• the general improvement in bus services, including wider use of air-conditioning on buses;

• the expanding bus network;

• the opening of new highways and expressways thus resulting in an overall improvement inroad traffic conditions; and

• the increased ownership and usage of private vehicles.

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Private vehicles and other forms of public transportation may cover more routes throughoutGuangzhou and its vicinities and provide commuters with alternative access or more comfortable andconvenient transportation services. There can be no assurance that the Group will be able to competewith existing and new forms of transportation in respect of each of these factors, or at all. As a result,the Company expects increased competition from such public and private transportation providers,which may adversely affect the Group.

Accidents, natural disasters and security incidents could lead to decreased revenues andincreased expenditure and reduce the Group’s operating flexibility.

The Group’s operation of the Guangzhou Metro could be affected by accidents, powers outages, fires,natural disasters, terrorist attacks and security incidents resulting in major equipment and powerfailures, collisions, derailments and security concerns, which in turn will interrupt or prevent theoperation of the Guangzhou Metro and lead to:

• decreased revenues;

• increased expenditure;

• prolonged interruptions in, or reductions of, railway operations;

• a prolonged payback period for railway line construction projects;

• a reduction in the Group’s operating flexibility;

• increased liabilities for the Group; and

• pressure for greater regulation.

There can be no assurance that the Group will not be subject to legal action arising from damage dueto the safety of its facilities and equipment in operation, which may materially and adversely affectthe Group’s reputation, business, results of operation and financial condition.

The Group’s business of operating the Guangzhou Metro may be materially and adverselyaffected if the Group fails to maintain risk management and internal control systems or thesesystems prove to be ineffective or inadequate.

The Group operates a command centre which serves as the centralised command and managementcentre for the transport network operation. The command centre allows the Group to manage risk andimplement internal control systems and procedures. Certain areas within the Group’s risk managementand internal control systems may require constant monitoring, maintenance and continualimprovements by the Group’s senior management and staff. The Group’s business and prospects maybe materially and adversely affected if the Group’s efforts to maintain these systems prove to beineffective or inadequate. Deficiencies in the Group’s risk management and internal control systemsand procedures may adversely affect the Group’s ability to record, process, summarise and reportfinancial and other data in an accurate and timely manner, as well as adversely impact the Group’sability to identify any reporting errors and non-compliance with rules and regulations.

The Group’s internal control system may contain inherent limitations caused by employee errors orfault. As a result, there can be no assurance that the Group’s risk management and internal controlsystems are adequate or effective, notwithstanding the Group’s efforts, and any failure to address anyinternal control matters and other deficiencies could result in investigations and disciplinary actionsor even prosecution being initiated against the Group or its employees, disruption to the Group’s riskmanagement system, and a material adverse effect on the Group’s financial condition and results ofoperations.

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The Group is required to comply with various environmental, safety and health laws andregulations which may be onerous or expensive to comply with.

The Group is required to comply with various environmental, as well as health and safety, laws andregulations promulgated by the PRC government. If the Group fails to comply with these laws andregulations, it could be exposed to penalties, fines, suspension or revocation of its licences or permitsto conduct its businesses, administrative proceedings and litigation. Given the magnitude andcomplexity of these laws and regulations, compliance with them or the establishment of effectivemonitoring systems may be onerous or require a significant amount of financial and other resources.As these laws and regulations continue to evolve, there can be no assurance that the PRC governmentor the governments of other overseas jurisdictions in which the Group operate its businesses will notimpose additional or more onerous laws or regulations, compliance with which may cause the Groupto incur significantly increased costs, which the Group may not be able to pass on to its customers.

Risks Relating to the Group’s Property Development Business

The Group’s property development business is subject to fluctuations in the PRC property marketas well as to general risks relating to the ownership and management of property.

The Group is engaged in the property development business. Most of the Group’s completedproperties and properties under development are located in Guangzhou in the form of subway complexdevelopment and station integration development. Economic developments in Guangzhou, the PRCand internationally, such as the inflationary pressure as a result of liberal monetary policy orexcessive foreign fund inflow in some emerging markets, the volatility in the global financial, foreignexchange and commodity and markets caused by the exit of United Kingdom from the EU, as well asgeopolitical events such as continued tensions in the Middle East and the Korean peninsula, theescalation of tensions between the United States and the PRC over trade policies, political and otherissues, the significant decrease in the crude oil price due to the international-wide travel restrictionsand the 2020 Russia-Saudi Arabia oil price war and the ongoing COVID-19 pandemic, could alsoadversely affect the stability of global market conditions and the property market in the PRC.

The Group is also exposed to general risks inherent in property development, including thatconstruction may not be completed on schedule or within budget, that development may be affectedby governmental regulations, that there may be delays in timing as a result of changes in theparameters regarding government land grants, that developed properties may not be leased or sold onprofitable terms and that purchasers and/or tenants may default. In particular, the ongoing COVID-19pandemic may also adversely affect the ability of the Group’s customers and tenants to maintain theirbusiness performance and ability to settle sales and rental payment to the Group. The terms on whichproperty developers are prepared to bid for development packages will also be affected by the stateof the property market at the time of tender. In the event that there is a downturn in the propertymarket in the PRC, the targeted revenue from property development could be significantly reduced.The Group’s property development business in the PRC could also be adversely affected by the PRCgovernment’s land policy and property market control measures.

The Group’s property development projects may be materially and adversely affected bydifficulties in and costs associated with demolition and resettlement of existing businesses andresidents.

The Group’s property development projects may involve the demolition of existing buildings and theresettlement of incumbent businesses and residents. On 21 January 2011, the State Councilpromulgated the Regulation on Expropriation and Compensation Related to Buildings on State-OwnedLand (國有土地上房屋徵收與補償條例), which replaced the Regulations for the Administration ofDemolition and Removal of Urban Housing (城市房屋拆遷管理條例). The regulation provides, amongother things, that only government authorities are permitted to conduct resettlement activities, butcompanies which have already obtained a demolition and resettlement permit may continue to use

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such permit to complete the demolition and resettlement. The Group has relied on, and will continueto rely on the local government for demolition and resettlement. There can be no assurance that thelocal government will be able to complete demolition and resettlement within the expected timetable,which may significantly delay the timetable for the Group’s land development activities andconsequently adversely affect the Group’s financial condition.

The Group may not be able to complete its property development projects on time or at all.

Property development projects require substantial capital expenditure prior to and during theconstruction period. One, two or several years may elapse before a project generates positive cashflows through pre-sales or sales. The timing and costs involved in completing a development projectcan be adversely affected by many factors, including:

• delays in obtaining licences, permits or approvals as required by government authorities;

• changes in government policies or in applicable laws or regulations;

• delays in or increased costs of relocation of existing site occupants or demolition ofexisting structures;

• shortages of materials, equipment, contractors and skilled labour;

• labour disputes;

• construction accidents;

• disputes with or delays caused by the Group’s contractors or sub-contractors;

• delays in the construction of supporting infrastructure or completing land clearing work bythe local government authorities;

• adverse weather conditions and natural disasters, including earthquakes, ice storms andother natural hazards;

• changes in market conditions;

• unforeseen engineering, design, environmental, structural or geographic problems;

• discovery of historic and cultural relics in the construction site; and

• widespread diseases or epidemics, including the ongoing COVID-19 pandemic, SARS,Middle East Respiratory Syndrome, H5N1 or H7N9 flu, H1N1 flu and other diseases.

Construction delays or failure to complete the construction of a project according to its plannedspecifications, schedule or budget as a result of the above factors may result in increased costs, harmto the Group’s reputation, loss of or delay in recognising revenues and lower returns. In addition, ifthe Group fails to complete a property that the Group has pre-sold by the agreed delivery time, theGroup will typically be liable to the purchasers for their losses and such purchasers may seekcompensation for late delivery pursuant to the pre-sale contracts or PRC laws and regulations. If thedelay in completion extends beyond a specified period, the Group’s purchasers may terminate theirpre-sale contracts and claim for damages.

There can be no assurance that the Group will not experience any significant delays in completion ordelivery of its projects in the future or that it will not be subject to any liabilities for any such delays.

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Any such delay may disrupt the Group’s project schedules and result in violation of the applicableland regulations or a breach of the relevant land grant contracts, which could materially and adverselyaffect the Group’s business, prospects, financial condition and results of operations and subject theGroup to various penalties, including forfeiture of land.

Moreover, further regulatory changes, competition, inability to procure governmental approvals orrequired changes in project development practice could occur at any stage of the planning anddevelopment process. The Group may not be able to complete projects that it is currently developingor plans to develop and the Group may find itself liable to purchasers of the pre-sold units for lossessuffered by them.

The Group may be involved in legal and other proceedings arising out of its development and saleof properties from time to time and may face significant liabilities as a result.

The Group may be involved in disputes with various parties in the development and sale of itsproperties, including property development partners, contractors, suppliers, construction workers andcustomers. These disputes may lead to legal proceedings and may result in substantial increases incosts and delays to its development schedule.

PRC government policies, regulations and measures intended to curb property speculation mayhave a negative impact on the business or financial position of the Group; furthermore, the PRCgovernment may in the future adopt other measures to slow down growth in the propertydevelopment sector.

The Group is involved in the property development business and is subject to extensive governmentregulations in virtually every aspect of such operations and is highly susceptible to changes inregulatory measures and policy initiatives implemented by the PRC government. In the past, the PRCgovernment has introduced an array of policies and measures intended to curtail the overheating ofproperty development and discourage speculation in the residential property market. These measuresinclude, among others, the following:

• tightening lending requirements for property developers;

• requiring at least 70 per cent. of the land supply approved by a local government forresidential property development in any given year to be used for developinglow-to-medium-cost and small-to-medium-size units and low-cost rental properties;

• adopting the “70/90 rule”, which requires at least 70 per cent. of the total gross floor area(“GFA”) of a residential project approved or constructed on or after 1 June 2006 to consistof units with a GFA of less than 90 square metres per unit;

• increasing the minimum down payment to 30 per cent. of the purchase price of theunderlying property (if the GFA exceeds 90 square metres) for first-time residential buyers,which may make the Group’s properties less affordable to its customers;

• increasing (i) the minimum amount of down payment to 60 per cent. of the purchase priceof the underlying property and (ii) the minimum mortgage loan interest rate to 110 per cent.of the relevant PBOC benchmark lending interest rate for second home buyers usingmortgage loans;

• suspending loans for the purchase of third or more residences;

• suspending loans for the purchase of local residences for non-local residents who areunable to provide certificates evidencing their payment of local taxes or social insurancefor more than one year;

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• for a buyer of commercial/residential dual-purpose properties, increasing the minimumamount of down payment to 45 per cent. of the purchase price of the underlying property,with the other terms similar to those for commercial properties;

• imposing a business tax levy on the entire sales proceeds from resale of properties if theholding period is shorter than five years; and

• imposing 20 per cent. capital gains tax on gains from the sale of self-owned property.

On 20 February 2013, the executive meeting of the State Council released five measures to tightenregulation of the property market (the “Five National Measures”) and has further released the Noticeof the State Council on Further Improving Regulation of the Property Market (Guo Ban Fa [2013])No. 17 (國務院辦公廳關於繼續做好房地產市場調控工作的通知), which further tightened therelevant property market regulations. The Five National Measures provide that the municipalities,provincial capitals and cities which have already implemented purchase restrictions in accordancewith the Circular of the General Office of the State Council on Issues concerning Further Works ofRegulation and Control of the Real Estate Market (國務院辦公廳關於進一步做好房地產市場調控工作有關問題的通知) dated 26 January 2011 should continue to enforce such purchase restrictions.Such restrictions apply to first or second hand commodity residential properties in all administrativedistricts of a particular city and require examination of potential purchasers’ qualifications topurchase to be carried out prior to the signing of any purchase agreement. In addition, a non-localresidential family that owns one or more houses and a non-local residential family that cannot provideevidence of the payment of local taxes or social insurance for a required period shall continue to bebarred from purchasing any other commercial residential houses.

Pursuant to the Five National Measures, the People’s Government of Guangdong Provincepromulgated its opinion on Continuing Improvement in the Control of the Real Estate Market on 25March 2013, and the Shanghai and Chongqing Municipal People’s Governments promulgated theiropinions on 30 March 2013. These opinions show the PRC government’s intention to further curbspeculation in the real estate market through restrictive measures on purchases of multiple houses,raising the down payment ratio and interest rates required for second-house purchasers and levyingincome tax.

Other notices in relation to curbing speculation in the real estate market include:

(1) Notice of the Guangzhou Municipal Housing and Urban-Rural Development Bureau onAdjusting the Work Rules of Approval for the Use of Advance Payment of CommercialHousing (Sui Jian Fang Chan [2019] No. 1737) (廣州市住房和城鄉建設局關於調整商品房預售款使用核准工作規則的通知(穗建房產[2019]1737號)), which came into effect on 20September 2019;

(2) Notice of the China Banking and Insurance Regulatory Commission of Commencing theWork on “Consolidating Achievements in Irregularity Rectification and PromotingCompliance Building” (Yin Bao Jian Fa [2019] No. 23) (中國銀保監會關於開展“鞏固治亂象成果,促進合規建設”工作的通知(銀保監發[2019]23號)), which came into effect on 8May 2019;

(3) Notice of the Ministry of National Resources of the People’s Republic of China onFormulation and Implementation of the “Five Category” Control Targets of ResidentialLand (Zi Ran Zi Ban Fa [2019] No. 29) (中華人民共和國自然資源部辦公廳關於做好2019年住宅用地“五類”調控目標制定實施工作的通知(自然資辦發[2019]29號)), which cameinto effect on 22 April 2019;

(4) Opinions of the Guangzhou Municipal Housing and Urban-Rural Development Bureau onImproving the Sales Managements of Commercial Service Real Estate Projects (Sui JianFang Chan [2018] No. 2430) (廣州市住房和城鄉建設委員會關於完善商服類房地產項目銷售管理的意見 (穗建房產[2018]2430號)), which came into effect on 19 December 2018;

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(5) Circular of the Ministry of Housing and Urban-Rural Development on Further MaintainingEffective Regulation of the Real Estate Market (Jian Fang [2018] No. 49) (住房城鄉建設部關於進一步做好房地產市場調控工作有關問題的通知(建房[2018]49號)), which cameinto effect on 19 May 2018;

(6) Circular of the Ministry of Housing and Urban-Rural Development and the Ministry ofLand and Resources on Tightening the Management and Control over IntermediateResidential Properties and Land Supply (Jian Fang [2017] No. 80) (住房城鄉建設部、國土資源部關於加強近期住房及用地供應管理和調控有關工作的通知(建房[2017]80號)),which came into effect on 1 April 2017; and

(7) Circular of the General Office of Guangzhou Government on Further Tightening EffectiveRegulation of the Real Estate Market (Sui Fu Ban Han [2017] No. 65) (廣州市人民政府辦公廳關於進一步加強房地產市場調控的通知(穗府辦函[2017]65號)), which came intoeffect on 31 March 2017.

There can be no assurance that these restrictive government policies and measures will not adverselyaffect the results of operations of the Group. In addition, there can be no assurance that the PRCgovernment will not introduce further policies or measures to cool the property market in the PRC.

These existing policies and measures and any future policies and measures, or even rumours or threatsof any new restrictive policies and measures, could adversely affect the Group’s business, cash flows,results of operations and financial condition, for example limiting the Group’s access to capital,reducing consumer demand for the Group’s properties and increasing its operating costs. They mayalso lead to changes in market conditions, including price instability and an imbalance of supply anddemand in respect of office, residential, retail, entertainment and cultural properties, which may havea material adverse effect on the Group’s business, financial condition and results of operations.

The Group may not always be able to obtain sites that are suitable for property development.

The Group derives revenue from the sale and lease of properties that it develops. This revenue streamdepends on the completion of, and the Group’s ability to sell, its property developments. To maintainor grow its business in the future, the Group will need to acquire suitable development sites aboveor adjacent to its railway lines or railway complexes so as to replenish its land reserves. Its abilityto identify and acquire suitable sites is subject to a number of factors, some of which are beyond itscontrol. Although a substantial amount of the properties developed by the Group consists of subwaycomplex developments and station integration developments at locations where the Group operatesrailway services, there can be no assurance that the Group will always be able to win the projects todevelop property at such locations.

The PRC government controls all new land supply in the PRC and regulates land sale in the secondarymarket. As a result, the policies of the PRC government towards land supply may adversely affect theability of the Group to acquire land use rights for sites it seeks to develop and could increase the costsof any acquisition. The business, financial condition and results of operations of the Group may thusbe adversely affected if it is unable to obtain or acquire suitable land sites for development at pricesthat allow the Group to achieve reasonable returns upon the sale of developed properties to itscustomers.

The PRC government may impose a penalty on the Group or cancel the land use rights for anyproject which was not developed in compliance with the terms of the land use rights grantcontract.

Under PRC laws and regulations, if a property developer fails to develop land according to the termsof the land use rights grant contract (including those relating to the payment of fees, designated useof land, amount of GFA developed, time for commencement and completion or suspension of thedevelopment, and amount of capital invested), the relevant government authorities may issue awarning to or impose a penalty on the developer or cancel the relevant land use rights.

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If the Group fails to obtain any land use right for any project or its land use rights do not comply withapplicable PRC laws, it may be subject to fines and other penalties including the cancellation of landuse rights. There can be no assurance that any cancellation of land use rights or imposition of apenalty will not arise in the future. If any land use right of the Group is cancelled, it will not be ableto continue its property development on the affected land, recover the costs incurred for the initialacquisition of the land or recover the development costs and other costs incurred up to the date ofcancellation. Any requirement that the Group shall pay idle land fees or other related penalties mayadversely affect the Group’s business, results of operations or financial condition.

The PRC government may impose fines or penalties on the Group or revoke the land use rightswith respect to certain land held by the Group.

Under applicable PRC laws and regulations, the PRC government may impose an idle land fee equalto 20 per cent. of the land premium or allocation fees if (i) the Group does not commence developmenton the land held by the Group for more than one year after the date specified in the relevant land userights grant contract, (ii) the Group commences development on an area which is less than one-thirdof the area granted and then suspends the development for more than one year without governmentapproval, or (iii) the capital invested is less than one-fourth of the total investment approved for thedevelopment and then the Group suspends the development for more than one year withoutgovernment approval. The PRC government may revoke the land use rights certificate withoutoffering any compensation if the Group does not commence development for more than two yearsafter the date specified in the relevant land use rights grant contract without compelling causes.

The State Council issued the Notice on Promoting the Saving and Intensification of Use of Land (國務院關於促進節約集約用地的通知) which states, among other things, that the Ministry of Land andResources and other authorities are required to research and commence the drafting of theimplementation rules concerning the levy of land appreciation fees on idle land. In addition, theMinistry of Land and Resources issued the Notice on Restricting the Administration of ConstructionLand and Promoting the Use of Approved Land (關於嚴格建設用地管理促進批而未用土地利用的通知) in August 2009, which reiterates its policy on idle land.

Other notices in relation to idle land use right include:

(1) Guiding Opinions of the General Office of the State Council on Improving and Building theSecondary Market of Assigning, Leasing, and Mortgaging Rights to Use Construction Land(Guo Ban Fa [2019] No. 34) (國務院辦公廳關於完善建設用地使用權轉讓、出租、抵押二級市場的指導意見 (國辦發[2019]34號)), which came into effect on 6 July 2019;

(2) Circular of the Ministry of Land and Resources on Printing and Distributing the PilotProgramme on Improving the Secondary Market Relating to the Transfer, Lease andMortgage of Construction Land Use Right (Guo Tu Zi Fa [2017] No. 12) (國土資源部印發《關於完善建設用地使用權轉讓、出租、抵押二級市場的試點方案》的通知 (國土資發[2017]12號)), which came into effect on 22 January 2017; and

(3) Circular of the Ministry of Land and Resources on Printing and Distributing the GuidingOpinions on Deeply Advancing the Redevelopment of the Urban and Rural Land with LowLand Use Efficiency (for Trial Implement) (Guo Tu Zi Fa [2016] No. 147) (國土資源部關於印發《關於深入推進城鎮低效用地再開發的指導意見(試行)》的通知(國土資發[2016]147號)), which came into effect on 11 November 2016.

The Group may from time to time have idle land and the imposition of fines and penalties in relationto any idle land could have a material adverse effect on the Group’s business, financial condition andresults of operations.

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The Group faces competition from other real estate developers.

In recent years, a large number of property developers in the PRC, and a number of leading HongKong property developers and other overseas developers, have begun undertaking propertydevelopment and investment projects primarily in the first and second tier cities of the PRC. Someof these developers may have better track records and greater financial, land and other resources,better name recognition and greater economies of scale than the Group. In the past, the PRCgovernment has introduced various policies and measures in order to limit the growth and to preventthe overheating of the property development sector, which has led to decreased land supply andfurther increased competition for land amongst property developers.

Competition among property developers may result in an increase in land acquisition costs, anincrease in construction costs, an oversupply of properties, a decrease in property prices in certainparts of the PRC or an inability to sell such properties, a slowdown in the rate at which new propertydevelopments are approved or reviewed by the relevant PRC government authorities and an increasein administrative costs for hiring or retaining qualified personnel, any of which may adversely affectthe Group’s business, financial position and results of operations. If the Group cannot respond tochanges in market conditions in the markets in which it operates more effectively than its competitors,the Group’s reputation, business, financial position and results of operations may be adverselyaffected.

Although the Group’s property development business focuses on subway complex development andstation integration development, which differentiates the Group from other property developers, therecan be no assurance that the Group will not face intense competition from other real estate developers.

Some of the Group’s property development projects are undertaken through joint ventures.

The Group has invested in joint venture companies to develop some of its residential and commercialproperties. Certain corporate actions of these joint ventures may require approval of all or most of thepartners. As at the date of this Offering Circular, although the Group has not experienced anysignificant problems with respect to its joint venture partners which could not be resolved, shouldsuch problems occur in the future they could have a material adverse effect on the success of theseproperties. If the Group’s joint venture partners act in a manner which is contrary to the Group’sinterests, or if the Group has different views or strategies with its partners, the Group’s businesses ,financial condition, results of operations and prospects may be materially and adversely affected.

The Group’s property development business is subject to rising costs for labour and materials,which it may not be able to pass on to construction contractors or to purchasers.

Construction and development costs account for the majority of the Group’s cost of sales, which aresignificant factors affecting the Group’s financial condition and results of operations. As a result ofeconomic growth and the boom in the property industry in the PRC, wages for construction workersand the price of construction materials and building equipment have substantially increased in recentyears. Under the terms of most of the Group’s construction contracts, contractors may adjust contractprices to cover increases in wages and the cost of construction materials. The Group may agree to beara greater share of the substantially increased material costs after relevant contract is signed other thanas required in the contract, in order to maintain good relationship with its contractors. The Group isalso exposed to the price volatility of labour and construction materials to the extent that itperiodically enters into new construction contracts or renews existing construction contracts ondifferent terms during the life of a project, which may span several years, or, if it chooses, hiresconstruction workers directly or purchase construction materials directly from suppliers. Furthermore,the Group is unable to pass increased costs on to pre-sale purchasers when construction costs increasesubsequent to the date of the pre-sale contract. If the Group is unable to pass on any increase in thecost of labour, construction materials or building equipment to either its construction contractors orthe purchasers of its properties, the Group’s business, prospects, financial condition and results ofoperations may be materially and adversely affected.

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The Group’s results of operations and operating cash flow may vary from period to period.

The Group’s results of operations and operating cash flow may vary from period to period, due to a

number of factors, including the timing of the Group’s property development projects, the timing of

the sale of properties that the Group has developed, the Group’s revenue recognition policies and any

volatility in expenses, such as raw material costs. The overall schedules for the Group’s property

development and the number of properties that the Group can develop or complete during any

particular period are limited as a result of the substantial capital required for the acquisition of land,

demolition and resettlement and construction.

The sale of properties that the Group develops is subject to general market and economic conditions

in the areas where the Group conducts its business and the level of acceptance of the Group’s

properties by prospective customers. The Group recognises revenue upon the completion and delivery

of the properties to purchasers, which may typically take up to two years after the commencement of

pre-sales. Therefore, in periods in which the Group pre-sells a large aggregate GFA, the Group may

not generate a correspondingly high level of revenue if the properties pre-sold are not delivered within

the same period.

In addition, the Group’s business depends on obtaining adequate supplies of raw materials and is

subject to fluctuation in the market prices of raw materials. The prices that the Group pays for raw

materials may increase due to increased industry demand, inflation, higher fuel and transportation

costs and other factors. The Group may continue to experience fluctuations in revenue and operating

cash flow from period to period.

Risks Relating to Conducting Business in the PRC

The Group’s business, financial condition, results of operations and prospects could be adverselyaffected by slowdown in the PRC economy.

The Group’s businesses are primarily concentrated in the PRC. Substantially all of the Group’s assets

are located in the PRC and substantially all of the Group’s operating income is derived from its

operating activities in the PRC. Therefore, the performance of the PRC economy affects, to a

significant degree, the Group’s business, prospects, financial condition and results of operations.

In 2015, the PRC government adopted intensive reforms with the primary aim of restructuring and

rebalancing the PRC economy towards a more sustainable model by focusing more on domestic

consumption and away from investment and export fuelled growth.

In recent years, as a result of recurring liquidity tightening in the banking system, alternative lending

and borrowing outside of traditional banking practices, generally known as “shadow banking”, has

grown to become an integral and significant aspect of the PRC economy. Such alternative lending is

loosely regulated and has led to an increase in China’s debt levels leading to concerns over rising bad

debts and financial problems. As some of the funds obtained from shadow banking are being used for

investments in speculative and risky products, should a widespread default on such investments occur,

this could harm the growth prospects of the PRC economy. In 2014, there were reports of a number

of shadow banking defaults in the PRC resulting in increased scrutiny and oversight by regulators who

have proposed draft rules to control the industry. Even if the PRC government increases regulation

over such alternative lending and borrowing, there can be no assurance that such regulations will be

successful, or that they would not have an adverse impact on the overall loan markets and liquidity

in the PRC, which will materially and adversely impact the PRC economy.

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Although the PRC government has taken several measures with the intention of increasing investorconfidence in the PRC economy, there can be no assurance that such measures will be effective. Therecan be no assurance that the PRC government will not implement any reforms which may conflict withsuch targeted growth. The Group’s business, financial conditions and results of operations could beadversely affected by the PRC government’s inability to effect timely economic reforms.

Any slowdown in the PRC economy may increase the Group’s exposure to material losses from itsinvestments, decrease the opportunities for developing the Group’s businesses, create a credittightening environment, increase the Group’s financing costs, or reduce government subsidies to theGroup, any of which may result in a material adverse effect on the Group’s business, results ofoperations and financial condition.

Economic, political and social conditions in the PRC and government policies could affect theGroup’s business and prospects.

Substantially all of the Group’s assets are located in the PRC and substantially all of the Group’soperating income is derived from its operating activities in the PRC. Accordingly, the Group’sbusiness prospects, financial condition and results of operation are, to a significant degree, subject tothe economic, political and social conditions and legal development in the PRC.

The PRC economy differs from the economies of developed countries in many respects, including,among other things, the level of government involvement, the level of economic development, growthrates, foreign exchange controls and resource allocation.

The PRC economy is in the process of transitioning from a centrally-planned economy to a moremarket-oriented economy. For more than three decades, the PRC government has implemented variouseconomic reform measures to utilise market forces in the development of the PRC economy. Inaddition, the PRC government continues to play a significant role in regulating certain industries andthe economy through numerous policy measures. Such economic reform policy measures may beadjusted, modified or applied differently depending on the industries and regions of the country. TheGroup cannot predict whether changes in the nation’s economic, political or social conditions or inany 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 are unprecedented orexperimental and are expected to be refined and improved over time. Other political, economic andsocial factors may also lead to further adjustments of the reform measures. This refining andadjustment process may not necessarily have a positive effect on the Group’s operations and businessdevelopment.

The Group’s business, financial condition and results of operations may be adversely affected by:

• changes in PRC political, economic and social conditions;

• changes in policies of the PRC government, including changes in policies in relation to theGroup’s business segments;

• changes in laws and regulations or the interpretation of laws and regulations;

• measures that may be introduced to control inflation or deflation;

• changes in the rate or method of taxation;

• the imposition of additional restrictions on currency conversion and remittances abroad;and

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• a reduction in tariff protection and other import restrictions.

If the PRC’s economic growth slows down or if the PRC economy experiences a prolonged decreasein growth rate or a significant downturn or if global market uncertainties persist (such as due to thecontinued tension between the United States and the PRC over trade policies, political or otherissues), the unfavourable business environment and economic condition for the Group’s potentialcustomers such as the passengers of the Guangzhou Metro and potential tenant and buyers of theGroup’s properties could reduce their demand for the Group’s products and services, the Group’sbusiness, results of operations and financial condition could be materially and adversely affected.

The operations of the Group may be affected by inflation and deflation within the PRC.

Economic growth in the PRC has historically been accompanied by periods of high inflation.Increasing inflation rates were caused by many factors beyond the Group’s control, such as risingproduction and labour costs, high lending levels, changes in national and foreign governmentalpolicies and regulations as well as movements in exchange rates and interest rates. It is impossibleto accurately predict future inflationary trends. If inflation rates rise beyond the Group’s expectations,the Group may be unable to increase the price of its services and products in amounts that aresufficient to cover its increasing operating costs. Further inflationary pressures within the PRC mayhave a material adverse effect on the Group’s business, financial condition or results of operations.

Recently, concerns have arisen over deflationary pressures in the PRC as a result of weak domesticdemand and a slowing economy. Inflation rates within the PRC have been on a downward trend inrecent years. A prolonged period of deflation may result in falling profits, closure of plants andshrinking employment and incomes by companies and individuals, any of which could adverselyaffect the Group’s business, financial condition or results of operations.

The PRC legal system is evolving and may cause uncertainty which could limit the legalprotection available to or against the Group.

As a substantial part of the Group’s businesses is conducted, and a substantial part of the Group’sassets is located, in the PRC, the Group’s operations are governed principally by, and subject to PRClaws and regulations. The PRC legal system is based on written statutes. Prior court opinions arelimited. Prior court decisions may only be cited as reference. Since 1979, the PRC government haspromulgated laws and regulations in relation to economic matters such as foreign investment,corporate organisation and governance, commerce, taxation, foreign exchange and trade, with a viewto developing a comprehensive system of commercial law. However, since these laws and regulations(including the MOF Circular promulgated on 28 March 2018 and which took effect on the same dayand the Joint Circular promulgated on 11 May 2018 and which took effect on the same day) arerelatively new, and because of limited volume of published decisions and that the PRC legal systemcontinues to rapidly evolve, the interpretation and enforcement of these laws, regulations and rulesinvolves uncertainties. may be uncertain and their interpretation may not be as consistent orpredictable as compared to other more developed jurisdictions. Such uncertainty may impede theGroup’s ability to enforce contracts that the Group has entered into with its investors, creditors,customers, suppliers and business partners. The Group cannot predict the effect of futuredevelopments in the PRC legal system or the integration of such developments under the legal systemsof other jurisdictions, including the promulgation of new laws, changes to existing laws or theinterpretation or enforcement thereof, the pre-emption of local regulations by national laws, or theoverturn of local government’s decisions by itself, provincial or national governments. Thisuncertainty in interpretation, implementation and enforcement may limit legal protections availableto or against the Group.

In addition, any litigation in the PRC may be protracted and could result in substantial costs and maydivert the Group’s resources or management’s attention, all of which could have a material adverseeffect on the Group’s business, prospects, financial condition and results of operations.

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Certain PRC regulations governing PRC companies are less developed than those applicable tocompanies incorporated in more developed countries.

Most of the Group’s members are established in the PRC and are subject to PRC regulations governingPRC companies. These regulations contain certain provisions that are required to be included in thejoint venture contracts, articles of association and all other major operational agreements of thesePRC companies and are intended to regulate the internal affairs of these companies. These regulationsin general, and the provisions for protection of shareholders’ rights and access to information inparticular, are less developed than those applicable to companies incorporated in Hong Kong, theUnited States, the United Kingdom and other developed countries or regions.

It may be difficult to effect service of process upon, or to enforce against, the directors ormembers of the Group’s senior management who reside in the PRC in connection with judgmentsobtained in non-PR C courts.

Most of the Group’s assets and the Group’s members are located in the PRC. In addition, most of theassets of the Company’s directors and the members of its senior management are likely to be locatedwithin the PRC. Therefore, it may not be possible for investors to effect service of process upon theCompany’s directors or members of its senior management inside the PRC. The PRC has not enteredinto treaties or arrangements providing for the recognition of judgment made by courts of most otherjurisdictions.

On 14 July 2006, Hong Kong and the PRC entered into the Arrangement on Reciprocal Recognitionand Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland andof the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements BetweenParties Concerned (關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排) (the “Choice of Court Arrangement”), pursuant to which a party with a final courtjudgment rendered by a Hong Kong court requiring payment of money in a civil and commercial caseaccording to a “choice of court” agreement in writing may apply for recognition and enforcement ofthe judgment in the PRC. Similarly, a party with a final court judgment rendered by a PRC courtrequiring payment of money in a civil and commercial case pursuant to a “choice of court” agreementin writing may apply for recognition and enforcement of such judgment in Hong Kong. A “choice ofcourt” agreement in writing is defined as any agreement in writing entered into between parties afterthe effective date of the Choice of Court Arrangement in which a Hong Kong court or a PRC courtis expressly designated as the court having sole jurisdiction for resolving the dispute. Therefore, it isnot possible to enforce a judgment rendered by a Hong Kong court in the PRC if the parties in disputedo not enter into a “choice of court” agreement in writing. As a result, it may be difficult or impossiblefor investors to effect service of process against the Company or the Company’s directors or membersof its senior management in the PRC and/or seek recognition and enforcement for foreign judgmentsin the PRC. On 18 January 2019, Hong Kong and the PRC entered into the Arrangement on ReciprocalRecognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts ofthe Mainland and of the Hong Kong Special Administrative Region (關於內地與香港特別行政區法院相互認可和執行民商事案件判決的安排) (the “2019 Arrangement”), which seeks to establish abilateral legal mechanism with greater clarity and certainty for recognition and enforcement ofjudgments in a wider range of civil and commercial matters between the courts of Hong Kong and thePRC. The 2019 Arrangement will be implemented by local legislation in Hong Kong and will takeeffect after both Hong Kong and the PRC have completed the necessary procedures to enableimplementation and shall apply to judgments made by the courts of Hong Kong and the PRC on orafter the date of the commencement of the 2019 Arrangement. Upon commencement of the 2019Arrangement, the Choice of Court Arrangement shall be terminated, except for “choice of court”agreements in writing made between parties before the commencement of the 2019 Arrangement, inwhich case the Choice of Court Arrangement shall continue to apply. However, the recognition andenforcement of judgments rendered by a Hong Kong court in the PRC are subject to the provisions,

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limits, procedures and other terms and requirements of the 2019 Arrangement. There can be noassurance that investors can successfully effect service of process against the Company or theCompany’s directors or members of its senior management in the PRC and/or to seek recognition andenforcement for judgments rendered by a Hong Kong court in the PRC.

In addition, the obligations under the Keepwell Deed and the Deed of Equity Interest PurchaseUndertaking may not give rise to a debt claim against the Company or be recognised by PRC courtsin insolvency proceedings in relation to the Company in the PRC. As the parties to the Keepwell Deedand the Deed of Equity Interest Purchase Undertaking have submitted to the exclusive jurisdiction ofthe Hong Kong courts, parties who have successfully obtained a judgment from Hong Kong courts inrelation to a claim under the Keepwell Deed and the Deed of Equity Interest Purchase Undertakingand wish to enforce such a judgment in the PRC may do so pursuant to the Choice of CourtArrangement and the 2019 Arrangement. However, it is currently uncertain as to whether such ajudgment will be recognised and enforced by PRC courts where it relates to insolvency proceedingscommenced in the PRC as the judicial practice in this area evolves. Consequently, even if the holdersof the Notes or the Trustee have successfully obtained judgment in Hong Kong courts in relation tothe Keepwell Deed and the Deed of Equity Interest Purchase Undertaking, there can be no assurancethat the PRC courts will recognise and enforce such a judgment in insolvency proceedings relating tothe Company. Accordingly, the holders of the Notes may have limited or no remedies if insolvencyproceedings are commenced in relation to the Company in the PRC.

Furthermore, the PRC does not have treaties or agreements providing for the reciprocal recognitionand enforcement of judgments awarded by courts of the United States, the United Kingdom, or mostother European countries or Japan. Hence, the recognition and enforcement in the PRC of judgmentof a court in any of these jurisdictions in relation to any matter not subject to a binding arbitrationprovision may be difficult or even impossible.

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

The Group operates some of its businesses through its operating subsidiaries in the PRC. The PRClaws require that dividends 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 statutory reserves beforedistributing the net profit for the current financial year. These statutory reserves are not available fordistribution as cash dividends. Since the availability of funds to fund the Group’s operations and toservice its indebtedness depends upon dividends received from these subsidiaries, any legalrestrictions on the availability and usage of dividend payments from the Group’s subsidiaries mayimpact the Group’s ability to fund its operations and to service its indebtedness.

The Group is subject to restrictions on the remittance of Renminbi into and out of the PRC andgovernmental controls on currency conversion, and may be affected by the risks relating tofluctuations in exchange rates in the future.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies andthe remittance of currency out of PRC. Substantially all of the Group’s operating income isdenominated in Renminbi, a portion of which may need to be converted into other currencies in orderto meet the Group’s foreign currency obligations, such as payments of dividends, overseasacquisitions, and payments of principal and interests under the Notes or other foreign currencydenominated debt, if any.

Under the existing PRC laws and regulations on foreign exchange, payments of current account items,including profit distributions, interest payments and trade and service related foreign exchangetransactions, can be made in foreign currencies without prior approval from SAFE provided thatcertain procedural requirements are complied with. Approval from or registration with competentgovernment authorities is required where Renminbi is to be converted into foreign currency and

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remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreigncurrencies. The PRC government may, at its discretion, take measures to restrict access to foreigncurrencies for current account and capital account transactions under certain circumstances. If theforeign exchange control system prevents the Group from obtaining sufficient foreign currencies tosatisfy the Group’s foreign currency demands, the Group may not be able to pay interests and/orprincipal to holders of the Notes or other foreign currency denominated debt, if any. In addition, therecan be no assurance that new laws or regulations will not be promulgated in the future that would havethe effect of further restricting the remittance of Renminbi into or out of the PRC.

Any appreciation of Renminbi against the U.S. dollars or any other foreign currencies may result inthe decrease in the value of the Group’s foreign currency denominated assets and the Group’sproceeds from the offering of Notes denominated in the U.S. dollars or other foreign currency.Conversely, any depreciation of Renminbi may adversely affect the Group’s ability to service Notesdenominated in the U.S. dollars or other foreign currency.

The value of Renminbi against U.S. dollars and other foreign currencies is subject to changes in thePRC’s policies, as well as international economic and political developments. On 21 July 2005, thePRC government adopted a more flexible managed floating exchange rate system to allow the valueof Renminbi to fluctuate within a regulated band that is based on market supply and demand withreference to a basket of currencies. From 21 July 2005 to 17 March 2014, the floating band ofinterbank spot foreign exchange market trading price of Renminbi against U.S. dollars was graduallywidened from 0.3 per cent. to 2 per cent. On 11 August 2015, PBOC adjusted the mechanism formarket makers to form the central parity rate by requiring them to consider the closing exchange rateof the last trading date, the supply and demand of foreign exchange and the rate change at primaryinternational currencies. On 11 December 2015, the China Foreign Exchange Trade System, asub-institutional organisation of PBOC, published the China Foreign Exchange Trade System(CFETS) Renminbi exchange rate index for the first time which weighs the Renminbi based on 13currencies, to guide the market in order to measure the Renminbi exchange rate from a newperspective. Although starting from 1 October 2016, Renminbi has been added to the Special DrawingRights basket created by the International Monetary Fund, there can be no assurance that the PRCgovernment will continue to gradually liberalise the control over cross-border Renminbi remittancesin the future, that any pilot schemes for Renminbi cross-border utilisation will not be discontinued orthat new PRC regulations will not be promulgated in the future which have the effect of restrictingthe remittance of Renminbi into or outside the PRC.

In addition, the value of Renminbi has depreciated significantly against U.S. dollars since the end of2015 and there can be no assurance that the Renminbi will not experience significant depreciation orappreciation against U.S. dollars or against any other currency in the future. Furthermore, membersof the Group may be required to obtain SAFE’s approval before converting significant amounts offoreign currencies into Renminbi. As a result, any significant increase in the value of Renminbiagainst foreign currencies could reduce the value of the Group’s foreign currency denominatedrevenue and assets and could materially and adversely affect the Group’s business, financialcondition, results of operations and prospects.

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.

The Labour Contract Law became effective on 1 January 2008, and it was amended on 28 December2012, which has taken effect on 1 July 2013. The Labour Contract Law establishes additionalrestrictions and increases the cost to employers upon termination of employees, including specificprovisions related to fixed term employment contracts, temporary employment, probation,consultation with the labour union and employee general assembly, employment without a contract,dismissal of employees, compensation upon termination and overtime work, and collectivebargaining. According to the Labour Contract Law, an employer is obligated to sign an unlimited termlabour contract with an employee if the employer continues to employ the employee after two

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consecutive fixed term labour contracts. The employer must also pay compensation to employees ifthe employer terminates an unlimited term labour contract unless an employee refuses to extend thelabour contract with the employee under the same terms or better terms than those in the originalcontract. Further it requires certain terminations to be based upon seniority instead of merit. In theevent that the Group decides to significantly change or decrease the Group’s workforce within thePRC, the Labour Contract Law could adversely affect the Group’s financial condition and results ofoperations.

In addition, the PRC government has continued to introduce various new labour related regulationsafter the promulgation of the Labour Contract Law. Among other things, the Paid Annual LeaveProvisions (職工帶薪年休假條例), which became effective on 1 January 2008, require that paidannual leaves ranging from five to fifteen days be available to nearly all employees and further requirethat employers compensate an employee for any annual leave days the employee is unable to take inthe amount of three times of such employee’s daily salary, subject to certain exceptions. Under theNational Leisure and Tourism Outline 2013-2020 (國務院辦公廳關於印發國民旅遊休閒綱要(2013-2020年)), which became effective on 2 February 2013, regulations on paid annual leave ofemployees shall have been implemented on a general basis by 2020.

On 28 October 2010, the Standing Committee of the National People’s Congress promulgated the PRCSocial Insurance Law (中華人民共和國社會保險法) which has taken effect on 1 July 2011 and wasamended on 12 December 2018. According to the PRC Social Insurance Law, employees willparticipate in pension insurance, work related injury insurance, medical insurance, unemploymentinsurance and maternity insurance and the employers must, together with their employees orseparately, pay for the social insurance premiums for such employees.

To further strengthen the protection on labour remuneration, rest and vacations, social insurance andother basic rights and interests of labourers, the Opinion of the Central Committee of the CommunistParty of China and the State Council on Building Harmonious Labour Relationships (中共中央、國務院關於構建和諧勞動關係的意見) was issued on 21 March 2015, which acts as a guideline on PRClabour legislation.

As a result of the implementation of these and any future rules and regulations designed to enhancethe standard for labour protection, the Group’s labour costs may continue to increase. If the costs oflabour increase significantly, and the Group cannot offset such increase by reducing other costs orcannot pass on such increase to for example, the buyers or tenants of its commercial properties in thePRC, its business, the Group’s results of operations and financial position may be materially andadversely affected. There can be no assurance that any disputes, work stoppages or strikes will notarise in the future.

Risks Relating to Financial and Other Information

Certain accounting items in the Company’s audited consolidated financial statements as at andfor the year ended 31 December 2019 and the Company’s unaudited but reviewed consolidatedfinancial statements as at and for the six months ended 30 June 2021 may not be comparable tothe financial information in the Company’s consolidated financial statements for the previousperiods.

Since 2017, the Ministry of Finance of the PRC has promulgated the New Accounting Standards. TheCompany’s audited consolidated financial statements as at and for the year ended 31 December 2019and the Company’s unaudited but reviewed consolidated financial statements as at and for the sixmonths ended 30 June 2021 were prepared and presented in accordance with the relevant applicableNew Accounting Standards and Requirements. As a result, the presentation of certain accountingitems in the Company’s audited consolidated financial statements as at and for the year ended 31December 2019 and the Company’s unaudited but reviewed consolidated financial statements as atand for the six months ended 30 June 2021, as the case may be, may not be comparable to the financialfigures in the Company’s financial statements for the previous periods. For details of the New

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Accounting Standards and Requirements and its impact on the Company’s audited consolidatedfinancial statements as at and for the year ended 31 December 2019 and the Company’s unaudited butreviewed consolidated financial statements as at and for the six months ended 30 June 2021, pleasesee “Notes to Financial Statements — V. Changes in Accounting Policies and Estimates, Correctionof Accounting Error, Notes on Other Adjustments — 1. Changes in Accounting Policies” of theCompany’s audited consolidated financial statements as at and for the year ended 31 December 2019and “Notes to Financial Statements — V. Changes in Accounting Policies and Estimates, Correctionof Accounting Error, Notes on Other Adjustment — 1. Changes in Accounting Policies” of theCompany’s unaudited but reviewed consolidated financial statements as at and for the six monthsended 30 June 2021, respectively.

There can be no assurance that the Ministry of Finance of the PRC will not promulgate other newaccounting standards or requirements in relation to financial statements which may affect theCompany’s accounting policies or the presentation of the Company’s financial statements.

Potential investors should not place undue reliance on certain financial information containedin this Offering Circular that is not audited and/or reviewed.

The unaudited but reviewed consolidated financial statements of the Guarantor and the Company asat and for the six months ended 30 June 2021, which are included elsewhere in this Offering Circular,have not been audited by a certified public accountant, and should not be relied upon by investors toprovide the same quality of information associated with information that has been subject to an audit.None of the Arrangers, the Dealers, the Trustee, the Agents or any of their respective affiliates,directors, officers or advisers makes any representation or warranty, express or implied, regarding thesufficiency of such unaudited but reviewed consolidated financial statements for an assessment of,and potential investors must exercise caution when using such data to evaluate, the Guarantor’s, theCompany’s or the Group’s financial condition and results of operations. In addition, the unaudited butreviewed consolidated financial statements of the Guarantor and the Company as at and for the sixmonths ended 30 June 2021 should not be taken as an indication of the expected financial conditionor results of operations of the Guarantor, the Company and the Group (as the case may be) for the fullfinancial year ending 31 December 2021.

Historical consolidated financial information of the Group may not be indicative of its currentor future results of operations.

The historical financial information of the Group included in this Offering Circular is not indicativeof its future financial results. Such financial information is not intended to represent or predict theGroup’s results of operations of any future periods. The Group’s future results of operations maychange materially if its future growth deviates from the historical trends for various reasons, includingfactors beyond its control, such as changes in economic environment, PRC environmental rules andregulations and the competitive landscape of the industries in which the Group operates its businesses.

BDO China, the auditor to the Company and the independent accountants to the Guarantor, hasreceived adverse regulatory decisions and warnings issued by relevant PRC authorities andadverse litigation decisions in recent years.

BDO China, the auditor to the Company and the independent accountants to the Guarantor, is aregistered accounting firm in the PRC supervised by the PRC courts and other relevant PRCregulatory agencies, including the Ministry of Finance of the PRC and the China SecuritiesRegulatory Commission.

In recent years, BDO China was subject to certain administrative and regulatory actions. It was foundto be deficient in performing its audit work by relevant PRC regulatory agencies such as the ChinaSecurities Regulatory Commission in respect of its audits of the financial reports of certain companiesand received administrative orders and warnings from the PRC regulatory agencies. For example,BDO China was found, among other things, to have failed to carry out audit procedures in accordance

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with applicable accounting standards and issued audit report with false records in relation to thepreparation of the 2014 audit report of Geeya Technology Co., Ltd. (金亞科技股份有限公司). BDOChina was fined approximately CNY2.7 million and its revenue of approximately CNY0.9 million wasconfiscated. Certain responsible persons were also issued warning letters by the China SecuritiesRegulatory Commission. In addition, BDO China was also found, among other things, to have failedto conduct audit procedures in accordance with applicable accounting standards for irregularitiesidentified during its audit process and failed to observe the relevant accounting standards in relationto the preparation of the 2013 audit report of Shanghai Great Wisdom Co., Ltd. (上海大智慧股份有限公司). As a result, BDO China was subject to adverse legal consequences as well as adverselitigation decisions.

As confirmed by BDO China, the companies involved in the administrative and regulatory actions andlegal proceedings above were all unrelated to the Group and the audit work performed for the Groupis not affected by the above incidents. BDO China also confirmed that the audit report, independentaccountants’ report and review reports included elsewhere in this Offering Circular remain valid andeffective. BDO China also confirmed that its ability to provide comfort letters and the qualificationof the auditors and accountants involved are not affected by such administrative and regulatoryactions. However, there can be no assurance that the relevant PRC regulatory agencies would not carryout any review of BDO China’s audit and/or other assurance work conducted in relation to othercompanies. There can also be no assurance that BDO China’s involvement in such administrative andregulatory actions or any negative publicities about BDO China would not affect investors’ confidencein companies and financial statements audited by it or have a material adverse effect on the Group.Prospective investors should consider these factors prior to making any investment decision.

The Company published and may continue to publish periodical financial information in thePRC pursuant to applicable PRC regulatory rules. Investors should be cautious and not placeany reliance on the financial information other than that disclosed in this Offering Circular.

The Company from time to time issues medium-term or short-term notes and commercial papers inthe domestic capital markets in the PRC. For so long as any Note remains outstanding, the Companyis obligated by the terms of the Notes, among others, to provide holders of the Notes with its auditedfinancial statements and certain unaudited periodical financial statements. The periodical financialinformation published by the Group in the PRC may not be audited or reviewed by independentaccountants. As such, such financial information should not be referred to or relied upon by investorsto provide the same quality of information associated with any audited or reviewed financialinformation. The Company is not responsible to holders of the Notes for the unaudited and unreviewedfinancial information from time to time published in the PRC and therefore investors should not placeany reliance on any such financial information.

Certain facts and statistics in this Offering Circular are derived from publications notindependently verified by the Issuer, the Guarantor, the Company, the Arrangers, the Dealers,the Trustee, the Agents or their respective advisers.

This Offering Circular contains facts and statistics relating to the economy of the PRC and theindustries in which the Group operates. While each of the Issuer, the Guarantor and the Company hastaken reasonable care to select reputable and reliable information sources and ensure that the facts andstatistics relating to the PRC’s economy and the industries in which the Group operates presented areaccurately extracted from such sources, such facts and statistics have not been independently verifiedby the Issuer, the Guarantor, the Company, the Arrangers, the Dealers, the Trustee, the Agents or theirrespective affiliates, directors, officers, employees, representatives, advisers, agents or any personwho controls any of them and, therefore, none of them makes any representation as to the accuracyof such facts and statistics, which may not be consistent with other information compiled within oroutside the PRC. Due to ineffective calculation and collection methods and other problems, the factsand statistics herein may be inaccurate or may not be comparable to facts and statistics produced forother economies and should not be unduly relied upon.

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The Issuer has little or no business activities of its own and will be dependent on funds from itsaffiliates to make payments under the Notes.

The Issuer has little or no business activities of its own and its ability to make payments under the

Notes depends on funds from its affiliates. In the event that the Issuer does not obtain sufficient funds

from its affiliates, its ability to make payments under the Notes could be adversely affected.

Risks Relating to the Notes Issued Under the Programme and the Guarantee

The Notes and the Guarantee are unsecured obligations.

As the Notes and the Guarantee are unsecured obligations of the Issuer and the Guarantor,

respectively, the repayment of the Notes and payment under the Guarantee may be adversely affected

if:

(i) the Issuer or the Guarantor enters into bankruptcy, liquidation, reorganisation or other

winding-up proceedings;

(ii) there is a default in payment under the Issuer’s or the Guarantor’s future securedindebtedness or other unsecured indebtedness; or

(iii) there is an acceleration of any of the Issuer’s or the Guarantor’s indebtedness.

If any of these events were to occur, the Issuer’s or the Guarantor’s assets may not be sufficient topay amounts due on the Notes.

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

Each potential investor in any Notes must determine the suitability of that investment in light of itsown circumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the relevantNotes, the merits and risks of investing in the relevant Notes and the information containedor incorporated by reference in this Offering Circular, any applicable supplement to theOffering Circular or any Pricing Supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the contextof its particular financial situation, an investment in the relevant Notes and the impact suchinvestment will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment inthe relevant Notes, including where principal or interest is payable in one or morecurrencies, or where the currency for principal or interest payments is different from thepotential investor’s currency;

(iv) understand thoroughly the terms of the relevant Notes and be familiar with the behaviourof any relevant indices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenariosfor economic, interest rate and other factors that may affect its investment and its abilityto bear the applicable risks.

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Some Notes may be complex financial instruments and such instruments may be purchased as a wayto reduce risk or enhance yield with an understood, measured and appropriate addition of risk to thepurchaser’s overall portfolios. A potential investor should not invest in Notes which are complexfinancial instruments unless it has the expertise (either alone or with the help of a financial adviser)to evaluate how the Notes will perform under changing conditions, the resulting effects on the valueof such Notes and the impact this investment will have on the potential investor’s overall investmentportfolio.

Additionally, the investment activities of certain investors are subject to legal investment laws andregulations, or review or regulation by certain authorities. Each potential investor should consult itslegal advisers to determine whether and to what extent (i) the Notes are legal investments, (ii) theNotes can be used as collateral for various types of borrowing, and (iii) other restrictions apply to itspurchase of any Note. Financial institutions should consult their legal advisers or the appropriateregulators to determine the appropriate treatment of the Notes under any applicable risk-based capitalor similar rules.

Modification and waivers are binding on all Noteholders.

The Conditions contain provisions for calling meetings of Noteholders to consider matters affectingtheir interests generally. These provisions permit defined majorities to bind all Noteholders includingNoteholders who did not attend and vote at the relevant meeting and Noteholders who voted in amanner contrary to the majority.

The Conditions also provide that the Trustee may, without the consent of Noteholders, Receiptholdersor Couponholders, agree to (i) any modification (except as mentioned in the Trust Deed) of, or thewaiver or authorisation of any breach or proposed breach of, any of the Conditions or any of theprovisions of the Trust Deed, the Agency Agreement, the Deed of Equity Interest PurchaseUndertaking and the Keepwell Deed, or determine, without any such consent as aforesaid, that anyEvent of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated assuch (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicialto interests of the Noteholders) or (ii) any modification which, in the opinion of the Trustee, is of aformal, minor or technical nature or is to correct a manifest error or to comply with mandatoryprovisions of law.

The Notes may be represented by Global Notes or Global Certificates and holders of a beneficialinterest in a Global Note or Global Certificates must rely on the procedures of the relevantClearing System(s).

Notes issued under the Programme may be represented by one or more Global Notes (in the case ofBearer Notes) or Global Certificates (in the case of Registered Notes). Such Global Notes and GlobalCertificates will be deposited with a common depositary for Euroclear and Clearstream, Luxembourgor lodged with a sub-custodian for the CMU (each of Euroclear, Clearstream, Luxembourg and theCMU, a “Clearing System”). Except in the circumstances described in the relevant Global Note orGlobal Certificate, investors will not be entitled to receive definitive Notes. The relevant ClearingSystem(s) will maintain records of the beneficial interests in the Global Notes or Global Certificates.While the Notes are represented by one or more Global Notes or Global Certificates, investors willbe able to trade their beneficial interests only through the Clearing Systems.

While the Notes are represented by one or more Global Notes or Global Certificates, the Issuer, orfailing which, the Guarantor will discharge its payment obligations under the Notes by makingpayments to the relevant Clearing System for distribution to their account holders or in the case ofthe CMU, to the persons for whose account(s) interests in such Global Note or Global Certificate arecredited as being held in the CMU in accordance with the CMU Rules (as defined in the Trust Deed).

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A holder of a beneficial interest in a Global Note or Global Certificate must rely on the proceduresof the relevant Clearing System(s) to receive payments under the relevant Notes. Neither the Issuer,the Guarantor nor the Company has any responsibility or liability for the records relating to, orpayments made in respect of, beneficial interests in the Global Notes or Global Certificates.

Holders of beneficial interests in the Global Notes or Global Certificates will not have a direct rightto vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to theextent that they are enabled by the relevant Clearing System(s) to appoint appropriate proxies.Similarly, holders of beneficial interests in the Global Notes or Global Certificates will not have adirect right under the respective Global Notes or Global Certificates to take enforcement actionagainst the Issuer, the Guarantor or the Company in the event of a default under the relevant Notesbut will have to rely upon their rights under the Trust Deed.

Noteholders should be aware that definitive Notes which have a denomination that is not anintegral multiple of the minimum Specified Denomination (as defined in the Conditions) may beilliquid and difficult to trade.

In relation to any issue of Notes which have a denomination consisting of a minimum SpecifiedDenomination plus a higher integral multiple of another smaller amount, it is possible that the Notesmay be traded in amounts in excess of the minimum Specified Denomination that are not integralmultiples of such minimum Specified Denomination. In such a case a Noteholder who, as a result oftrading such amounts, holds a principal amount of less than the minimum Specified Denomination willnot receive a definitive Note in respect of such holding (should definitive Notes be printed) and wouldneed to purchase a principal amount of Notes such that it holds an amount equal to one or moreSpecified Denominations. If definitive Notes are issued, holders should be aware that definitive Noteswhich have a denomination that is not an integral multiple of the minimum Specified Denominationmay be illiquid and difficult to trade.

The Issuer is a special purpose company with no business activities of its own and will bedependent on funds from the Group to make payments under the Notes.

The Issuer was established by the Group specifically for the purpose of issuing the Notes and willon-lend the entire proceeds from the issue of the Notes to the Guarantor and/or other members of theGroup. The Issuer does not and will not have any assets other than such loan receivables and its abilityto make payments under the Notes will depend on its receipt of timely payments under its loanagreements or other financing arrangements with the Guarantor and/or other members of the Group.

The Guarantor may be unable to make payments on the Guarantee and the Guarantee isstructurally subordinated to other obligations of the Guarantor’s subsidiaries.

The Guarantor is a holding company with limited operations of its own and its ability to makepayments under the Guarantee and to make payments to the Issuer under any loan arrangement to fundpayments on the Notes depends on the Guarantor’s receipt of timely payments under its loanagreements or other financing arrangements with the Company and/or other members of the Group.The ability of the Company and other members of the Group to make payments to the Guarantor issubject to their performance and cash flow requirements and may be subject to applicable laws andregulations. The outstanding indebtedness of the Company and other members of the Group maycontain covenants restricting the ability of the Company and/or such members of the Group to makepayments to the Guarantor in certain circumstances for so long as such indebtedness remainsoutstanding.

As the Guarantor is a holding company, payments under the Guarantee are structurally subordinatedto all existing and future liabilities and obligations of each of the Guarantor’s subsidiaries andassociated companies, except for those liabilities and obligations of the Issuer. Claims of creditors ofsuch subsidiaries and associated companies will have priority as to the assets of such subsidiaries and

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associated companies over the Guarantor and its creditors, including holders of the Notes seeking toenforce the Guarantee. The Guarantor’s obligations under the Guarantee will not be guaranteed by anyof its subsidiaries or associated companies. The Notes do not contain any restrictions on the abilityof the Guarantor’s subsidiaries or associated companies to incur additional unsecured indebtedness.

The Issuer may be unable to redeem the Notes.

On certain dates, including the occurrence of any early redemption event specified in the relevantPricing Supplement or otherwise and at maturity of the Notes, the Issuer may, and at maturity, will,be required to redeem all of the Notes. If such an event were to occur, the Issuer may not havesufficient cash on hand and may not be able to arrange financing to redeem the Notes in time, or onacceptable terms, or at all. The ability to redeem the Notes in such event may also be limited by theterms of other debt instruments. Failure to repay, repurchase or redeem tendered Notes by the Issuerwould constitute an event of default under the Notes, which may also constitute a default under theterms of other indebtedness of the Group.

If the Issuer, the Guarantor or the Company is unable to comply with the restrictions andcovenants in their respective debt agreements (if any), or the Notes, there could be a defaultunder the terms of these agreements, or the Notes, which could cause repayment of the debts ofthe Issuer, the Guarantor or the Company to be accelerated.

If the Issuer, the Guarantor or the Company is unable to comply with the restrictions and covenantsin the Notes, or current or future debt obligations and other agreements (if any), there could be adefault under the terms of these agreements. In the event of a default under these agreements, theholders of the debts could terminate their commitments to lend to the Issuer, the Guarantor or theCompany, accelerate repayment of the debts, declare all amounts borrowed due and payable orterminate the agreements, as the case may be. Furthermore, those debt agreements may contain crossacceleration or cross default provisions. As a result, the default by the Issuer, the Guarantor or theCompany under one debt agreement may cause the acceleration of repayment of debts or result in adefault under its other debt agreements, including the Notes. If any of these events occur, there canbe no assurance that there would be sufficient assets and cash flows to repay in full all of indebtednessof the Issuer, the Guarantor or the Company, or that it would be able to find alternative financing.Even if the Issuer, the Guarantor or the Company could obtain alternative financing, there can be noassurance that it would be on terms that are favourable or acceptable to the Issuer, the Guarantor orthe Company.

The rating of the Programme may be downgraded or withdrawn.

The Programme is rated “A2” by Moody’s. The rating represents the opinions of the rating agency andits assessment of the ability of the Issuer and the Guarantor to perform their respective obligationsunder the Notes and the Guarantee and credit risks in determining the likelihood that payments willbe made when due under the Notes. A rating is not a recommendation to buy, sell or hold the Notesand may be subject to revision, suspension, reduction or withdrawn at any time. There can be noassurance that any such rating will remain for any given period of time or that any such rating willnot be lowered or withdrawn entirely by the rating agency if in its judgment circumstances in thefuture so warrant. Any reduction or withdrawal of the rating may adversely affect the market price ofthe Notes and the Issuer’s or the Guarantor’s ability to access the debt capital markets.

Any downgrading of the Company’s corporate rating, or those of its subsidiaries, by ratingagencies could adversely affect the Group’s business and the Group’s liquidity.

Any adverse revision to the Company’s corporate rating, or those of its subsidiaries, for domestic andinternational debt by rating agencies such as Moody’s may adversely affect the Group’s business, itsfinancial performance and the trading price of the Notes. Further, the Group’s ability to obtainfinancing or to access to capital markets may also be limited, thereby lowering its liquidity.

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Gains on the transfer of the Notes may be subject to income tax under PRC tax laws.

Under the Enterprise Income Tax Law of the PRC (the “EIT Law”) which took effect on 1 January2008 and was amended on 24 February 2017 and its implementation rules, any gains realised on thetransfer of the Notes by holders who are deemed under the EIT Law as non-resident enterprises maybe subject to PRC enterprise income tax if such gains are regarded as income derived from sourceswithin the PRC. Under the EIT Law, a “non-resident enterprise” means an enterprise established underthe laws of a jurisdiction other than the PRC and whose actual administrative organisation is not inthe PRC, which has established offices or premises in the PRC, or which has not established anyoffices or premises in the PRC but has obtained income derived from sources within the PRC. Thereremains uncertainty as to whether the gains realised on the transfer of the Notes by enterprise holderswould be treated as incomes derived from sources within the PRC and be subject to PRC enterpriseincome tax. In addition, there is uncertainty as to whether gains realised on the transfer of the Notesby individual holders who are not PRC citizens or residents will be subject to PRC individual incometax. If such gains are subject to PRC income tax, the 10 per cent. enterprise income tax rate and 20per cent. individual income tax rate will apply respectively unless there is an applicable tax treaty orarrangement that reduces or exempts such income tax. The taxable income will be the balance of thetotal income obtained from the transfer of the Notes minus all costs and expenses that are permittedunder PRC tax laws to be deducted from the income. According to the Arrangement between theMainland of China and the Hong Kong Special Administrative Region for the Avoidance of DoubleTaxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排) which was promulgated on 21 August 2006,Noteholders who are Hong Kong residents, including both enterprise holders and individual holders,will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Notesif such capital gains are not connected with an office or establishment that the Noteholders have inthe PRC and all the other relevant conditions are satisfied.

If a Noteholder, being a non-resident enterprise or non-resident individual, is required to pay any PRCincome tax on gains on the transfer of the Notes, the value of the relevant Noteholder’s investmentin the Notes may be materially and adversely affected.

The insolvency laws of British Virgin Islands, Hong Kong and the PRC and other localinsolvency laws may differ from those of another jurisdiction with which the holders of the Notesare familiar.

As the Issuer is incorporated under the laws of British Virgin Islands, the Guarantor is incorporatedunder the laws of Hong Kong, and the Company is incorporated under the laws of the PRC, anyinsolvency proceeding relating to the Issuer, the Guarantor or the Company would likely involveinsolvency laws of Hong Kong, the British Virgin Islands or the PRC, as applicable, the proceduraland substantive provisions of which may differ from comparable provisions of the local insolvencylaws of jurisdictions with which the holders of the Notes are familiar.

The Trustee may request that the Noteholders provide an indemnity and/or security and/orpre-funding to its satisfaction.

In certain circumstances (including without limitation the giving of notice to the Issuer and theGuarantor pursuant to Condition 10 of the Conditions and the taking of steps and/or actions and/orthe instituting of proceedings pursuant to Condition 12 of the Conditions), the Trustee may (at its solediscretion) request the Noteholders to provide an indemnity and/or security and/or pre-funding to itssatisfaction before it takes actions on behalf of the Noteholders. The Trustee shall not be obliged totake any such actions if not indemnified and/or secured and/or pre-funded to its satisfaction.Negotiating and agreeing to any indemnity and/or security and/or pre-funding can be a lengthyprocess and may impact on when such actions can be taken. The Trustee may not be able to takeactions notwithstanding the provision of an indemnity and/or security and/or pre-funding to it, in

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breach of the terms of the Trust Deed or the Conditions constituting the Notes and in suchcircumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to theextent permitted by the agreements and the applicable law, it will be for the Noteholders to take suchactions directly.

Risks Relating to the Structure of A Particular Issue of Notes Under the Programme

A wide range of Notes may be issued under the Programme. A number of these Notes may havefeatures which contain particular risks for potential investors. Set out below is a description of certainsuch features:

The market price of Notes carrying optional redemption features may be more limited than thatof Notes without these features.

Notes issued under the Programme may sometimes have Issuer optional redemption features. In adecreasing interest rate environment, the Issuer may exercise its right to redeem such Notes earlierthan the final maturity date at the stated optional redemption price and an investor may facereinvestment risk as well as see the market price of the Notes converge to its redemption price as itgets closer to the optional redemption date.

Dual Currency Notes have features which are different from single currency issues.

The Issuer may issue Notes with principal or interest payable in one or more currencies which maybe different from the currency in which the Notes are denominated. Potential investors should beaware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency thanexpected; and

(iv) the amount of principal payable at redemption may be less than the nominal amount of suchNotes or even zero.

Failure by an investor to pay a subsequent instalment of partly paid Notes may result in aninvestor losing all of its investment.

The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure topay any subsequent instalments could result in an investor losing all of its investment.

The regulation and reform of “benchmark” rates of interest and indices may adversely affect thevalue of Notes linked to or referencing such “benchmarks”.

Interest rates and indices which are deemed to be or used as “benchmarks”, are the subject of recentnational, international regulatory and other regulatory guidance and proposals for reform. Some ofthese reforms are already effective whilst others are still to be implemented. These reforms may causesuch benchmarks to perform differently than in the past or to disappear entirely or have otherconsequences which cannot be predicted. Any such consequence could have a material adverse effecton any Note linked to or referencing such a benchmark.

Regulation (EU) 2016/1011 (the “EU Benchmarks Regulation”) applies, subject to certaintransitional provisions, to the provision of benchmarks, the contribution of input data to a benchmarkand the use of a benchmark within the EU. Among other things, it (i) requires benchmarkadministrators to be authorised or registered (or, if non-EU-based, to be subject to an equivalent

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regime or otherwise recognised or endorsed) and (ii) prevents certain uses by EU supervised entitiesof benchmarks of administrators that are not authorised or registered (or, if non-EU based, not deemedequivalent or recognised or endorsed). Regulation (EU) 2016/1011 as it forms part of domestic lawby virtue of the European Union (Withdrawal) Act 2018 (the “UK Benchmarks Regulation”) amongother things, applies to the provision of benchmarks and the use of a benchmark in the UK. Similarly,it prohibits the use in the UK by UK supervised entities of benchmarks of administrators that are notauthorised by the FCA or registered on the FCA register (or, if non-UK based, not deemed equivalentor recognised or endorsed).

The EU Benchmarks Regulation and/or the UK Benchmarks Regulation, as applicable, could have amaterial impact on any Notes linked to or referencing a benchmark in particular, if the methodologyor other terms of the benchmark are changed in order to comply with the requirements of the EUBenchmarks Regulation and/or the UK Benchmarks Regulation, as applicable. Such changes could,among other things, have the effect of reducing, increasing or otherwise affecting the volatility of thepublished rate or level of the relevant benchmark.

More broadly, any of the international, national, or other proposals, for reforms or the generalincreased regulatory scrutiny of benchmarks, could increase the costs and risks of administering orotherwise participating in the setting of a benchmark and complying with any such regulations orrequirements. For example, the sustainability of the London Interbank Offered Rate (“LIBOR”) hasbeen questioned as a result of the absence of relevant active underlying markets and possibledisincentives (including as a result of regulatory reforms) for market participants to continuecontributing to such benchmarks. The Financial Conduct Authority has indicated through a series ofannouncements that the continuation of LIBOR on the current basis cannot and will not be guaranteedafter 2021. On 5 March 2021, the FCA announced that (i) the publication of 24 LIBOR settings (asdetailed in the FCA announcement) will cease immediately after 31 December 2021, (ii) thepublication of the overnight and 12-month U.S. dollar LIBOR settings will cease immediately after30 June 2023, (iii) immediately after 31 December 2021, the 1-month, 3-month and 6-month sterlingLIBOR settings will no longer be representative of the underlying market and economic reality thatthey are intended to measure and representativeness will not be restored (and the FCA will consult onrequiring the ICE Benchmark Administration Limited (the “IBA”) to continue to publish thesesettings on a synthetic basis, which will no longer be representative of the underlying market andeconomic reality they are intended to measure, for a further period after end 2021) and (iv)immediately after 30 June 2023, the 1-month, 3-month and 6-month U.S. dollar LIBOR settings willno longer be representative of the underlying market and economic reality that they are intended tomeasure and representativeness will not be restored (and the FCA will consider the case for using itsproposed powers to require IBA to continue publishing these settings on a synthetic basis, which willno longer be representative of the underlying market and economic reality they are intended tomeasure, for a further period after end June 2023). The potential elimination of the LIBOR benchmarkor any other benchmark, or changes in the manner of administration of any benchmark, could requirean adjustment to the Conditions or result in other consequences, in respect of any Notes linked to suchbenchmark. Such factors may have (without limitation) the following effects on certain benchmarks:(i) discouraging market participants from continuing to administer or contribute to a benchmark; (ii)triggering changes in the rules or methodologies used in the benchmark and/or (iii) leading to thedisappearance of the benchmark. Any of the above changes or any other consequential changes as aresult of international or national reforms or other initiatives or investigations, could have a materialadverse effect on the value of and return on any Notes linked to or referencing a benchmark, orotherwise dependent on (in whole or in part) upon, a benchmark.

The Conditions provide for certain fallback arrangements in the event that a Benchmark Event occurs,including if an inter-bank offered rate (such as LIBOR or Euro interbank offered rate) or otherrelevant reference rate (which could include, without limitation, any mid-swap rate), and/or any pageon which such benchmark may be published (or any successor service) becomes unavailable, or if anyPaying Agent, Calculation Agent, the Issuer or other party is restricted from calculating, or is nolonger permitted lawfully to calculate, interest on any Notes by reference to such benchmark, all as

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more particularly set out in the definition of “Benchmark Event”. Such fallback arrangements includethe possibility that the rate of interest could be set by reference to a Successor Rate or, alternatively,if there is no Successor Rate, an Alternative Reference Rate (both as defined in the Conditions), ineach case with or without the application of an adjustment spread which, if applied, could be positive,negative or zero), and allow the Issuer to make amendments to the Conditions to ensure the properoperation of the Successor Rate or Alternative Reference Rate (as the case may be) and, in either case,an Adjustment Spread (if any).

Under these fallback arrangements, the Issuer will use all reasonable endeavours to appoint, as soonas reasonably practicable, an Independent Adviser (as defined in the Conditions) to determine (actingin good faith), a Successor Rate or Alternative Reference Rate (as applicable) and, in either case, anAdjustment Spread (if any) (as defined in the Conditions), no later than five Business Days (asdefined in the Conditions) prior to the relevant Interest Determination Date (as defined in theConditions), being the IA Determination Cut-off Date, but in the event that the Issuer is unable toappoint an Independent Adviser, or such Independent Adviser fails to determine the Successor Rateor Alternative Reference Rate and, in either case, an Adjustment Spread (if any), prior to the IADetermination Cut-off Date, the Issuer (acting in good faith) will have discretion to determine therelevant Successor Rate or, or if there is no Successor Rate, an Alternative Reference Rate and, ineither case, an Adjustment Spread (if any). There can be no assurance that such Successor Rate orAlternative Reference Rate (as applicable) determined by the Issuer will be set at a level which is onterms commercially acceptable to all Noteholders. However, it may not be possible to determine orapply an Adjustment Spread and even if an adjustment is applied, such Adjustment Spread may notbe effective to reduce or eliminate economic prejudice to investors. If no Adjustment Spread can bedetermined, a Successor Rate or Alternative Rate may nonetheless be used to determine the Rate ofInterest. The use of a Successor Rate or Alternative Reference Rate (including the application of anAdjustment Spread) is likely to result in any Notes linked to or referencing the relevant ReferenceRate performing differently (which may include payment of a lower Rate of Interest) than they wouldif the relevant Reference Rate were to continue to apply in its current form.

In certain circumstances, the ultimate fallback for the purposes of calculation of the Rate of Interestfor a particular Interest Period (as defined in the Conditions) may result in the Rate of Interest for thelast preceding Interest Period being used (or alternatively, if there has not been a first InterestPayment Date, the initial Rate of Interest). This will result in the floating rate Notes, in effect,becoming fixed rate Notes.

Due to the uncertainty concerning the availability of Successor Rates and Alternative ReferenceRates, any determinations that may need to be made by the Issuer and the involvement of anIndependent Adviser, there is a risk that the relevant fallback provisions may not operate as intendedat the relevant time. Moreover, any of the above matters or any other significant change to the settingor existence of any relevant reference rate could affect the ability of the Issuer to meet its obligationsunder the Floating Rate Notes or could have a material adverse effect on the value or liquidity of, andthe amount payable under, the Floating Rate Notes.

Investors should consult their own independent advisers and make their own assessment about thepotential risks imposed by the Benchmark Regulations or any other international or national reformsin making any investment decision with respect to any Notes linked to or referencing a benchmark.

The value of, and return on, Floating Rate Notes linked to or referencing LIBOR may beadversely affected in the event of a permanent discontinuation of LIBOR.

The value of, and return on, Floating Rate Notes linked to or referencing LIBOR or other similarindices may be adversely affected in the event of a permanent discontinuation of LIBOR or othersimilar indices.

Where Screen Rate Determination is specified as the manner in which the Rate of Interest in respectof Floating Rate Notes is to be determined, and LIBOR (or other similar indices) has been selected

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as the Reference Rate, the Conditions provide that the Rate of Interest shall be determined byreference to the Relevant Screen Page (or its successor or replacement). In circumstances whereLIBOR (or other similar indices) is discontinued, neither the Relevant Screen Page, nor any successoror replacement may be available.

Where the Relevant Screen Page is not available, and no successor or replacement for the RelevantScreen Page is available, the Conditions provide for the Rate of Interest to be determined by theCalculation Agent by reference to quotations from banks communicated to the Calculation Agent.Where such quotations are not available (as may be the case if the relevant banks are not submittingrates for the determination of LIBOR (or other similar indices)), the Rate of Interest may revert to theRate of Interest applicable as at the last preceding Interest Determination Date before LIBOR (orother similar indices) was discontinued, and if LIBOR (or other similar indices) is discontinuedpermanently, the same Rate of Interest will continue to be the Rate of Interest for each successiveInterest Period until the maturity of the Floating Rate Notes, so that the Floating Rate Notes will, ineffect, become fixed rate notes utilising the last available LIBOR (or other similar indices) rate. Inthe event that a published LIBOR (or other similar indices) rate is unavailable after 2021 and banksare unwilling to provide quotations for the calculation of LIBOR (or other similar indices), the rateof interest on the Notes will become fixed and the value of the Notes may be adversely affected.Uncertainty as to the continuation of LIBOR (or other similar indices), the availability of quotes fromreference banks, and the rate that would be applicable if LIBOR (or other similar indices) isdiscontinued may adversely affect the value of, and return on, the Floating Rate Notes.

Where ISDA Determination is specified as the manner in which the Rate of Interest in respect ofFloating Rate Notes is to be determined, the Conditions provide that the Rate of Interest in respectof the Notes shall be determined by reference to the relevant Floating Rate Option in the 2006 ISDADefinitions. Where the Floating Rate Option specified is a “LIBOR” (or other similar indices)Floating Rate Option, the Rate of Interest may be determined by reference to the relevant screen rateor the rate determined on the basis of quotations from certain banks. If LIBOR (or other similarindices) is permanently discontinued and the relevant screen rate or, failing that, quotations frombanks are not available, the operation of these provisions may lead to uncertainty as to the Rate ofInterest that would be applicable, and may, adversely affect the value of, and return on, the FloatingRate Notes.

The market price of variable rate Notes with a multiplier or other leverage factor may be volatile.

Notes with variable interest rates can be volatile securities. If they are structured to includemultipliers or other leverage factors, or caps or floors, or any combination of those features or othersimilar related features, their market values may be even more volatile than those for securities thatdo not include such features.

Inverse Floating Rate Notes are typically more volatile than conventional floating rate debt.

Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon areference rate such as LIBOR. The market values of such Notes typically are more volatile thanmarket values of other conventional floating rate debt securities based on the same reference rate (andwith otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increasein the reference rate not only decreases the interest rate of the Notes, but may also reflect an increasein prevailing interest rates, which further adversely affects the market value of these Notes.

Notes carrying an interest rate which may be converted from fixed to floating interest rates andvice versa, may have lower market values than other Notes.

Fixed Rate Notes and Floating Rate Notes (as defined in the Conditions) may bear interest at a ratethat the Issuer may elect to convert from a fixed rate to a floating rate, or from a floating rate to afixed rate. The Issuer’s ability to convert the interest rate will affect the secondary market and themarket value of such Notes since the Issuer may be expected to convert the rate when it is likely to

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produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate,the spread on the Fixed Rate Notes may be less favourable than then prevailing spreads on comparableFloating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time maybe lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate, thefixed rate may be lower than then prevailing rates on its Notes.

The market prices of Notes issued at a substantial discount or premium tend to fluctuate morein relation to general changes in interest rates than do prices for conventional interest bearingsecurities.

The market values of securities issued at a substantial discount or premium to their nominal amounttend to fluctuate more in relation to general changes in interest rates than do prices for conventionalinterest bearing securities. Generally, the longer the remaining term of the securities, the greater theprice volatility as compared to conventional interest bearing securities with comparable maturities.

Investors may lose part or all of their investment in any Index Linked Notes issued.

If, in the case of a particular Tranche of Notes, the relevant Pricing Supplement specifies that theNotes are Index Linked Notes or variable redemption amount Notes, there is a risk that the investormay lose the value of its entire investment or part of it.

Risks Relating to the Market Generally

Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk,interest rate risk and credit risk:

Notes issued under the Programme have no current active trading market and may trade at adiscount to their initial offering price and/or with limited liquidity.

Notes issued under the Programme will be new securities which may not be widely distributed andfor which there is currently no active trading market (unless in the case of any particular Tranche,such Tranche is to be consolidated with and form a single series with a Tranche of Notes which isalready issued). If the Notes are traded after their initial issuance, they may trade at a discount to theirinitial offering price, depending upon prevailing interest rates, the market for similar securities,general economic conditions and the financial condition of the Issuer, the Guarantor, the Companyand the Group. If the Notes are trading at a discount, investors may not be able to receive a favourableprice for their Notes, and in some circumstances investors may not be able to sell their Notes at allor at their fair market value. Although application has been made to the Hong Kong Stock Exchangefor the listing of the Programme by way of debt issues to professional investors only during the12-month period after the date of this Offering Circular on the Hong Kong Stock Exchange, there canbe no assurance that such application will be accepted, that any particular Tranche of Notes will beso admitted or that an active trading market will develop. In addition, the market for investment gradeand crossover grade debt has been subject to disruptions that have caused volatility in prices ofsecurities similar to the Notes issued under the Programme. Accordingly, there can be no assuranceas to the development or liquidity of any trading market, or that disruptions will not occur, for anyparticular Tranche of Notes.

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

The price and trading volume of the Notes may be highly volatile. Factors such as variations in therevenues, earnings and cash flows of the Group and proposals of new investments, strategic alliancesand/or acquisitions, interest rates and fluctuations in prices for comparable companies could cause theprice of the Notes to change. Any such developments may result in large and sudden changes in thevolume and price at which the Notes will trade. There can be no assurance that these developmentswill not occur in the future.

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

The market price of the Notes may be adversely affected by declines in the international financialmarkets and world economic conditions. The market for the Notes is, to varying degrees, influencedby economic, political, social and market conditions in other markets, especially those in Asia.Although economic conditions are different in each country, investors’ reactions to developments inone country can affect the securities markets and the securities of issuers in other countries, includingthe PRC. Since the global financial crisis of 2008 and 2009, the international financial markets haveexperienced significant volatility. In particular, the ongoing COVID-19 pandemic has caused stockmarkets worldwide to lose significant value since February 2020. If similar developments occur in theinternational financial markets in the future, the market price of the Notes could be adversely affected.

Exchange rate risks and exchange controls may result in a Noteholder receiving less interest orprincipal than expected.

The Issuer will pay principal and interest on the Notes in the currency specified in the relevant PricingSupplement (the “Specified Currency”). This presents certain risks relating to currency conversionsif a Noteholder’s financial activities are denominated principally in a currency or currency unit (the“Investor’s Currency”) other than the Specified Currency. These include the risk that exchange ratesmay significantly change (including changes due to devaluation of the Specified Currency orrevaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over theInvestor’s Currency may impose or modify exchange controls. An appreciation in the value of theInvestor’s Currency relative to the Specified Currency would decrease (i) the Investor’s Currencyequivalent yield on the Notes, (ii) the Investor’s Currency equivalent value of the principal payableon the Notes and (iii) the Investor’s Currency equivalent market value of the Notes.

Governments and monetary authorities may impose (as some have done in the past) exchange controlsthat could adversely affect an applicable exchange rate. As a result, a Noteholder may receive lessinterest or principal than expected, or no interest or principal.

Changes in market interest rates may adversely affect the value of Fixed Rate Notes.

Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates mayadversely affect the value of Fixed Rate Notes.

The credit ratings assigned to the Notes may not reflect all risks.

One or more independent credit rating agencies may assign credit ratings to an issue of Notes. Theratings may not reflect the potential impact of all risks related to structure, market, additional factorsdiscussed above and other factors that may affect the value of the Notes. A credit rating is not arecommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agencyat any time.

Risks Relating to Renminbi Denominated Notes

Notes denominated in Renminbi (“Renminbi Notes”) may be issued under the Programme. RenminbiNotes contain particular risks for potential investors.

Renminbi is not freely convertible; there are significant restrictions on remittance of Renminbiinto and outside the PRC.

Renminbi is not freely convertible at present. The PRC government continues to regulate conversionbetween Renminbi and foreign currencies, including the Hong Kong dollar, despite the significantreduction in control by the PRC government in recent years over trade transactions involving importand export of goods and services as well as other frequent routine foreign exchange transactions.These transactions are known as current account items. However, remittance of Renminbi by foreign

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investors into the PRC for the purposes of capital account items, such as capital contributions, isgenerally only permitted upon obtaining specific approvals from, or completing specific registrationsor filings with, the relevant authorities on a case-by-case basis and is subject to a strict monitoringsystem. Regulations in the PRC on the remittance of Renminbi into the PRC for settlement of capitalaccount items are developing gradually.

Participating banks in Hong Kong, Singapore and Taiwan have been permitted to engage in thesettlement of Renminbi trade transactions under a pilot scheme introduced in July 2009. Thisrepresents a current account activity. The pilot scheme was extended in August 2011 to cover thewhole nation and to make Renminbi trade and other current account item settlement available in allcountries worldwide. It was further extended in August 2011 to cover all provinces and cities in thePRC. The Renminbi trade settlements under the pilot scheme have become one of the most significantsources of Renminbi funding in Hong Kong.

On 7 April 2011, SAFE promulgated the Circular on Issues Concerning the Capital Account Items inconnection with Cross-border Renminbi (the “SAFE Circular”), which became effective on 1 May2011. According to the SAFE Circular, in the event that foreign investors intend to use cross-borderRenminbi (including offshore Renminbi and onshore Renminbi held in the capital accounts ofnon-PRC residents) to make contributions to an onshore enterprise or make payments for the transferof equity interest of an onshore enterprise by a PRC resident, such onshore enterprise shall be requiredto submit prior written consent of the relevant MOFCOM to the relevant local branches of SAFE ofsuch onshore enterprise and register for or modify a foreign invested enterprise status. Further, theSAFE Circular clarifies that the foreign debts borrowed, and the external guarantee provided, by anonshore entity (including a financial institution) in CNY shall, in principle, be regulated under thecurrent PRC foreign debt and external guarantee regime.

In respect of Renminbi foreign direct investments (“FDI”), PBOC promulgated the AdministrativeMeasures on Renminbi Settlement of Foreign Direct Investment (the “PBOC FDI Measures”) on 13October 2011 as part of PBOC’s detailed Renminbi FDI accounts administration system. The systemcovers almost all aspects in relation to FDI, including capital injections, payments for the acquisitionof PRC domestic enterprises, repatriation of dividends and other distributions, as well as Renminbidenominated cross-border loans. On 14 June 2012, PBOC issued a circular setting out the operationalguidelines for FDI. PBOC further issued the Circular on the Relevant Issues on Renminbi Settlementof Investment in Onshore Financial Institutions by Foreign Investors on 23 September 2013, whichprovides further details for using Renminbi to invest in a financial institution domiciled in the PRC.Under the PBOC FDI Measures, special approval for FDI and shareholder loans from PBOC, whichwas previously required, is no longer necessary. However, post-event filing with PBOC is stillnecessary.

The new rules replace the PBOC approval requirement with a less onerous post-event registration andfiling requirement. Under the new rules, foreign invested enterprises (whether established or acquiredby foreign investors) need to (i) register their corporate information after the completion of a CNYFDI transaction, and (ii) make post-event registration or filing with PBOC of any changes inregistration information or in the event of increase or decrease of registered capital, equity transferor replacement, merger, division or other material changes.

In addition, PBOC promulgated the Circular of the People’s Bank of China on Further Improving thePolicy of Cross-border Renminbi Business to Promote Trade and Investment Facilitation (Yin Fa[2018] No. 3) (中國人民銀行關於進一步完善人民幣跨境業務政策促進貿易投資便利化的通知) on 1May, 2018, allowing, in particular, overseas investor who intends to set up several foreign investedenterprises or projects within the territory of China may open special deposit accounts for upfrontRenminbi expenses respectively.

On 3 December 2013, MOFCOM further promulgated the Announcement on Issues ConcerningCross-border CNY Direct Investment (the “MOFCOM Circular”). In accordance with the MOFCOMCircular, the cross-border CNY direct investment and the reinvestment of the invested foreign funded

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enterprises shall conform to the requirements of laws, regulations and relevant provisions on foreigninvestment and abide by relevant provisions of the industrial policy, safety review of foreign capitalmerger and acquisition and anti-monopoly review on foreign investment of PRC. The foreign fundedenterprises shall not use any funds from cross-border CNY direct investment to make any direct orindirect investment in securities, financial derivatives (excluding the strategic investment in listedcompanies) or entrusted loans within China.

To support the development of the China (Shanghai) Pilot Free Trade Zone (the “Shanghai FTZ”),the Shanghai Head Office of PBOC issued the Circular on Supporting the Expanded Cross-borderUtilisation of Renminbi in the Shanghai FTZ (中國人民銀行關於金融支持中國(上海)自由貿易試驗區建設的意見) (the “Shanghai FTZ Circular”) on 20 February 2014, which allows banks in Shanghaito settle FDI based on a foreign investor’s instruction. In respect of FDI in industries that are not onthe “negative list” of the Shanghai FTZ, the MOFCOM approval previously required is replaced bya filing. However, the application of the Shanghai FTZ Circular is limited to the Shanghai FTZ.

On 13 April, 2016, the Guangzhou Branch Office of PBOC issued the Circular on Supporting theExpanded Cross-border Utilisation of Renminbi in the China (Guangdong) Pilot Free Trade Zone (the“Guangdong FTZ”) (中國人民銀行關於金融支持中國(廣東)自由貿易試驗區建設的指導意見) (the“Guangdong FTZ Circular”). The Guangdong FTZ Circular allows international conglomerateswhich establishes member enterprises (including financial enterprise) with actual operation andinvestment in the Guangdong FTZ to conduct cross-border two-way Renminbi capital pool business.However, the application of the Guangdong FTZ Circular is limited to the Guangdong FTZ.

As the above announcements and measures are still relatively new, how they will be applied inpractice still remain subject to the interpretation by the relevant PRC authorities.

Although starting from 1 October 2016, the Renminbi has been added to the Special Drawing Rightsbasket created by the International Monetary Fund and PBOC implemented policies further improvingaccessibility to Renminbi to settle cross-border transactions in foreign currencies, there can be noassurance that the PRC government will continue to gradually liberalise the control over cross-borderRenminbi remittances in the future, that any pilot schemes for Renminbi cross-border utilisation willnot be discontinued or that new PRC regulations will not be promulgated in the future which have theeffect of restricting the remittance of Renminbi into or outside the PRC. In the event that the Groupis not able to repatriate funds outside the PRC in Renminbi, the Issuer or the Guarantor will need tosource Renminbi offshore to finance their respective obligations under Renminbi Notes, and its abilityto do so will be subject to the overall availability of Renminbi outside the PRC and the ability of theIssuer or the Guarantor to source Renminbi to finance their respective obligations under Notesdenominated in Renminbi.

There is only limited availability of Renminbi outside the PRC, which may affect the liquidity ofRenminbi Notes and the Issuer’s and the Guarantor’s ability to source Renminbi outside the PRCto service such Renminbi Notes.

As a result of the restrictions by the PRC government on cross-border Renminbi fund flows, theavailability of Renminbi outside the PRC is limited. While PBOC has entered into agreements on theclearing of Renminbi business with financial institutions in a number of financial centres and cities(each, a “Renminbi Clearing Bank”) including but not limited to Hong Kong, and is in the processof establishing Renminbi clearing and settlement mechanisms (“Settlement Agreements”) in severalother jurisdictions, the current size of Renminbi denominated financial assets outside the PRC islimited.

There are restrictions imposed by PBOC on Renminbi business participating banks in respect ofcross-border Renminbi settlement, such as those relating to direct transactions with PRC enterprises.Furthermore, Renminbi business participating banks do not have direct Renminbi liquidity supportfrom PBOC. The Renminbi Clearing Banks only have access to onshore liquidity support from PBOC

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for the purpose of squaring open positions of participating banks for limited types of transactions andare not obliged to square for participating banks any open positions resulting from other foreignexchange transactions or conversion services. In such cases, the participating banks will need tosource Renminbi outside the PRC to square such open positions.

Although it is expected that the offshore Renminbi market will continue to grow in depth and size,its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange.There can be no assurance that new PRC regulations will not be promulgated or the SettlementAgreement will not be terminated or amended in the future which will have the effect of restrictingavailability of Renminbi offshore. The limited availability of Renminbi outside the PRC may affectthe liquidity of Renminbi Notes. To the extent the Issuer is required to source Renminbi in theoffshore market to service Renminbi Notes, there can be no assurance that the Issuer will be able tosource such Renminbi on satisfactory terms, if at all.

Investment in Renminbi Notes is subject to exchange rate risks.

The value of the Renminbi against the U.S. dollar and other foreign currencies fluctuates and isaffected by changes in the PRC, by international political and economic conditions and by many otherfactors. All payments of interest and principal will be made with respect to Renminbi Notes inRenminbi. If an investor measures its investment returns by reference to a currency other thanRenminbi, an investment in the Renminbi Notes entails foreign exchange related risks, includingpossible significant changes in the value of Renminbi relative to the currency by reference to whichan investor measures its investment returns. Depreciation of the Renminbi against such currency couldcause a decrease in the effective yield of the Renminbi Notes below their stated coupon rates andcould result in a loss when the return on the Renminbi Notes is translated into such currency. Inaddition, there may be tax consequences for investors as a result of any foreign currency gainsresulting from any investment in Renminbi Notes.

Investment in Renminbi Notes is subject to interest rate risks.

The value of Renminbi payments under the Renminbi Notes, may be susceptible to interest ratefluctuations occurring within and outside the PRC, including PRC Renminbi repo rates and/or theShanghai inter-bank offered rate. The PRC government has gradually liberalised its regulation ofinterest rates in recent years. Further liberalisation may increase interest rate volatility. In addition,the interest rate for Renminbi in markets outside the PRC may significantly deviate from the interestrate for Renminbi in the PRC as a result of foreign exchange controls imposed by PRC law andregulations and prevailing market conditions.

As Renminbi Notes may carry a fixed interest rate, the trading price of the Renminbi Notes willconsequently vary with the fluctuations in the Renminbi interest rates. If holders of the RenminbiNotes propose to sell their Renminbi Notes before their maturity, they may receive an offer lower thanthe amount they have invested.

Payments in respect of Renminbi Notes will only be made to investors in the manner specifiedin such Renminbi Notes.

All payments to investors in respect of Renminbi Notes will be made solely by (i) when RenminbiNotes are represented by Global Notes or Global Certificates, transfer to a Renminbi bank accountmaintained in Hong Kong in accordance with prevailing CMU rules and procedures, or (ii) whenRenminbi Notes are in definitive form, transfer to a Renminbi bank account maintained in Hong Kongin accordance with prevailing rules and regulations. The Issuer and the Guarantor cannot be requiredto make payment by any other means (including in any other currency or in bank notes, by cheque ordraft or by transfer to a bank account in the PRC).

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Remittance of proceeds into or outside of the PRC in Renminbi is restricted.

In the event that the Issuer decides to remit some or all of the proceeds into the PRC in Renminbi,its ability to do so will be subject to obtaining all necessary approvals from, and/or registration orfiling with, the relevant PRC government authorities. However, there can be no assurance that thenecessary approvals from, and/or registration or filing with, the relevant PRC government authoritieswill be obtained at all or, if obtained, they will not be revoked or amended in the future.

There can be no assurance that the PRC government will continue to gradually liberalise the controlover cross-border Renminbi remittances in the future, that the pilot schemes introduced will not bediscontinued or that new PRC regulations will not be promulgated in the future which have the effectof restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that theIssuer does remit some or all of the proceeds into the PRC in Renminbi and the Issuer subsequentlyis not able to repatriate funds outside the PRC in Renminbi, it will need to source Renminbi outsidethe PRC to finance its obligations under the Renminbi Notes, and its ability to do so will be subjectto the overall availability of Renminbi outside the PRC.

Risks Relating to the Keepwell Deed and the Deed of Equity Interest Purchase Undertaking

The Keepwell Deed is not a guarantee of the payment obligations under the Notes and theGuarantee.

The Company will enter into the Keepwell Deed in connection with the offering of Notes guaranteedby the Guarantor. See “Description of the Keepwell Deed”. Upon the occurrence of an event of defaultas set out in Condition 10 in the Conditions, the Trustee may take action against the Company toenforce the provisions of the Keepwell Deed. However, neither the Keepwell Deed nor any actionstaken by the Company thereunder can be deemed as a guarantee by the Company for the paymentobligation of the Issuer under the Notes or the Guarantor under the Guarantee. Accordingly, upon theoccurrence of an event of default as set out in Condition 10 of the Conditions, the Company will onlybe obliged to cause the Issuer or the Guarantor to obtain, before the due date of the relevant paymentobligations, funds sufficient by means as permitted by applicable laws and regulations so as to enablethe Issuer or the Guarantor to pay such payment obligations in full as they fall due, rather than assumethe payment obligation as in the case of a guarantee.

Furthermore, the performance by the Company of its obligations under the Keepwell Deed may besubject to Regulatory Approvals (as defined in the Keepwell Deed). For example:

• Even if the Company intends to perform its obligations under the Keepwell Deed in causingthe Issuer or the Guarantor to obtain, before the due date of the relevant paymentobligations, funds sufficient meet its obligations under the Notes or the Guarantee,depending on the manner in which the Company performs such obligations, suchperformance may be subject to obtaining prior consent, approvals, registration and/orfilings from relevant PRC governmental authorities, including NDRC or its competent localcounterpart, MOFCOM or its competent local counterpart and SAFE or its competent localcounterpart.

• Even if the Company intends, in accordance with its obligations under the Keepwell Deed,to grant the Issuer a standby facility pursuant to which the Company will remit the RMBAmount (as defined in the Keepwell Deed), the Company may not be able to grant suchstandby facility due to reasons beyond its control, such as the failure or inability to obtainany required consents, approvals, registrations and/or filing from relevant PRC governmentauthorities and unforeseeable changes in government policies or regulations.

In addition, under the Keepwell Deed, the Company will undertake with the Issuer, the Guarantor andthe Trustee, among other things, to cause the Issuer and the Guarantor to have sufficient liquidity toensure timely payment of any amounts payable in respect of the Notes and/or the Guarantee. However,

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any claim by the Issuer, the Guarantor and/or the Trustee against the Company in relation to theKeepwell Deed will be effectively subordinated to all existing and future obligations of theCompany’s subsidiaries (other than the Issuer and the Guarantor), particularly the onshore operatingsubsidiaries of the Company, and all claims by creditors of such subsidiaries (other than the Issuer andthe Guarantor) will have priority to the assets of such entities over the claims of the Issuer, theGuarantor and the Trustee under the Keepwell Deed.

Performance by the Company of its undertaking under the Deed of Equity Interest PurchaseUndertaking is subject to approvals of the PRC governmental authorities.

The Company intends to assist the Issuer and the Guarantor to meet their respective obligations underthe relevant series of Notes, the Guarantee and the Trust Deed by entering into the Deed of EquityInterest Purchase Undertaking. Under the Deed of Equity Interest Purchase Undertaking, the Companyagrees to purchase from the Relevant Transferor(s) (as defined in the Deed of Equity Interest PurchaseUndertaking) the equity interest in certain of its onshore or offshore subsidiaries at a purchase pricenot lower than the amount sufficient to enable the Issuer and the Guarantor to discharge theirrespective obligations under the relevant series of Notes, the Guarantee and the Trust Deed and otheramounts as described in the Deed of Equity Interest Purchase Undertaking.

Among other things, performance by the Company of the Deed of Equity Interest PurchaseUndertaking is subject to the approval of:

• the MOFCOM in respect of the transfer of the equity interest in the PRC incorporatedsubsidiaries from the Relevant Transferor to the Company;

• the PRC State Administration for Industry and Commerce or its local counterpart in respectof the transfer of the equity interest in the PRC incorporated subsidiaries from the RelevantTransferor to the Company;

• the relevant PRC tax authorities in respect of withholding tax for the Relevant Transferor;and

• SAFE in respect of (i) changing the SAFE registration of the PRC incorporated companiesbeing sold, and (ii) the remittance of the purchase price, denominated in U.S. dollars, fromthe Company in the PRC to the Guarantor in Hong Kong (where applicable).

As the approval process is beyond the control of the Company, there can be no assurance that theCompany will successfully obtain either of the requisite approvals or registrations, in time, or at all,or that the PRC government’s relevant policies or regulations will not change in the future. In theevent that the Company fails to obtain the requisite approvals, the Issuer and the Guarantor may stillhave insufficient funds to discharge their outstanding payment obligations to the holders of the Notes.

Further, in the event of an insolvency of a Relevant Transferor, any sale proceeds received by thatRelevant Transferor may be subject to the insolvency claims of third parties. The Trustee’s claimagainst the sale proceeds will be an unsecured claim and may rank lower in priority to any claims bysecured third party creditors of such Relevant Transferor where it is the Guarantor. Where a RelevantTransferor is not the Guarantor, the Trustee will not have a direct claim against the sale proceedsreceived by such Relevant Transferor.

Performance by the Company of its undertaking under the Deed of Equity Interest PurchaseUndertaking may be subject to consent from third party creditors and shareholders, and may alsobe restricted if any of the equity interests are secured in favour of third party creditors.

Under the terms of the Deed of Equity Interest Purchase Undertaking, the Company agrees topurchase, upon the occurrence of an event of default as set out in Condition 10 of the Conditions, from

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the Relevant Transferor (as defined in the Deed of Equity Interest Purchase Undertaking) the equity

interest held by it in certain of such Relevant Transferor’s onshore and offshore subsidiaries. The

ability of the Company to perform this undertaking may be affected by any present or future financing

agreements of the Company and its subsidiaries:

• in the event that such financial agreements contain non-disposal or other restrictive

covenants that would prevent the sale of an equity interest by a Relevant Transferor, the

Company and its subsidiaries would need to obtain the consent from the third party creditor

before the Relevant Transferor is able to proceed with the sale of such equity interest; and

• in the event that certain equity interests have been secured in favour of third party

creditors, the Company and its subsidiaries would need to arrange for these security

interests to be released before the Relevant Transferor is able to proceed with the sale of

such equity interests.

Under the Conditions and the Keepwell Deed, there are no restrictions on the Guarantor or the

Company’s onshore or offshore subsidiaries entering into financing agreements with such

non-disposal or other restrictive covenants or securing the equity interests of any member of the

Guarantor and the Company’s offshore subsidiaries in favour of its creditors.

In the event the obligation to purchase under the Deed of Equity Interest Purchase Undertaking

becomes effective, there can be no assurance that the Relevant Transferor will be able to obtain any

required consents from its creditors or that it will be able to arrange for any existing security

arrangement to be released in order for the sale of the equity interest to proceed. If the Relevant

Transferor is not able to do so, it may need to repay the indebtedness owed to its third party creditors

in order to be able to sell the relevant equity interests to the Company.

In the event that the required consents or waivers from third party creditors are not able to be obtained

and in the case of third party creditors, the relevant indebtedness cannot be repaid in the timely

manner, the sale of the equity interest may not be able to proceed and eventually the Issuer and the

Guarantor may have insufficient funds to discharge their respective payment obligations to the holders

of the Notes.

In addition, the sale of the equity interests in certain non-wholly-owned companies may be subject to

pre-emptive rights or other restrictions in such company’s articles of association, shareholders’

agreement or otherwise that would require the selling shareholder to obtain consent or waiver from

other third party shareholders before any equity interest can be sold to the Company. In the event the

obligation to purchase under the Deed of Equity Interest Purchase Undertaking becomes effective

there can be no assurance that any required consents or waivers can be obtained from third party

shareholders in a timely manner or at all.

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USE OF PROCEEDS

The net proceeds from the issue of each Tranche of Notes will be used for repayment of existing

offshore debts. If, in respect of any particular issue, there is a particular identified use of proceeds,

this will be stated in the applicable Pricing Supplement.

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CAPITALISATION AND INDEBTEDNESS

Capitalisation and Indebtedness of the Company

The following table sets out the Company’s unaudited but reviewed consolidated capitalisation and

indebtedness as at 30 June 2021.

This table should be read in conjunction with the unaudited but reviewed consolidated financial

statements of the Company and related notes thereto included elsewhere in this Offering Circular.

As at

30 June 2021

(Unaudited)

(CNY)

Bank and other borrowings — current portionShort-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,289,408,236.08Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,128,819.14Non-current liabilities maturing within one year . . . . . . . . . . . . . . . . . . . . . . 13,025,740,640.00Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,318,015,136.90

73,122,292,832.12

Bank and other borrowings — non-current portionLong-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,374,384,709.53Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,608,991,234.96

112,983,375,944.49

Total owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257,143,272,698.54

Total capitalisation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443,248,941,475.15

Note:

(1) Total capitalisation comprises current and non-current bank and other borrowings and total owners’ equity.

Since 30 June 2021, the Company has issued onshore debt securities in an aggregate principal amount

of CNY2,000,000,000. Except as otherwise disclosed above, there has been no material adverse

change to the unaudited but reviewed consolidated capitalisation or indebtedness of the Company

since 30 June 2021.

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Capitalisation and Indebtedness of the Guarantor

The following table sets out the Guarantor’s unaudited but reviewed consolidated capitalisation and

indebtedness as at 30 June 2021.

This table should be read in conjunction with the unaudited but reviewed consolidated financial

statements of the Guarantor and related notes thereto included elsewhere in this Offering Circular.

As at

30 June 2021

(Unaudited)

(HK$)

Bank and other borrowings — current portionBank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,536,575,871

1,536,575,871Bank and other borrowings — non-current portionNotes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,977,131,726

7,977,131,726

Total owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,332,948,827

Total capitalisation(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,846,656,424

Note:

(1) Total capitalisation comprises current and non-current bank and other borrowings and total equity.

Except as otherwise disclosed above, there has been no material adverse change to the unaudited but

reviewed consolidated capitalisation or indebtedness of the Guarantor since 30 June 2021.

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DESCRIPTION OF THE ISSUER

Overview

The Issuer was incorporated in the British Virgin Islands as a company limited by shares on 24 June

2015 under the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands

(company number: 1879369). The registered office of the Issuer is at Palm Grove House, P.O. Box

438, Road Town, Tortola, British Virgin Islands. As at the date of this Offering Circular, the Issuer

has established a branch in Hong Kong.

Business Activity

The Issuer is a directly wholly-owned subsidiary of the Guarantor. As at the date of this Offering

Circular, the Issuer has not been engaged, since its incorporation, in any material activities other than

in connection with the Programme, the Coupons and the Notes.

Directors

The directors of the Issuer are Wang Xiaobin and Qian Wei.

Share Capital

As at the date of this Offering Circular, the Issuer is authorised to issue a maximum of 100,000,000

shares of U.S.$1.00 par value each and the issued share capital of the Issuer is U.S.$100,000,000.

None of the equity securities of the Issuer is listed or dealt in on any stock exchange and no listing

or permission to deal in such securities is being or is proposed to be sought as at the date of this

Offering Circular.

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DESCRIPTION OF THE GUARANTOR

Overview

The Guarantor was incorporated in Hong Kong on 5 June 2015 under the Companies Ordinance (Cap.

622) of Hong Kong (CR number: 2246695). The Guarantor’s registered office is at 16/F, Wing On

Centre, 111 Connaught Road Central, Hong Kong. The Guarantor is a directly wholly-owned

subsidiary of the Company.

Business Activity

The Guarantor is principally engaged in investment holding.

Directors

The directors of the Guarantor are Wang Xiaobin and Qian Wei.

Share Capital

As at the date of this Offering Circular, the issued share capital of the Guarantor is U.S.$100.01

million. None of the equity securities of the Guarantor is listed or dealt in on any stock exchange and

no listing or permission to deal in such securities is being or is proposed to be sought as at the date

of this Offering Circular.

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DESCRIPTION OF THE GROUP

Overview

Established in 1992, the Company is a state-owned company wholly-owned by the Guangzhou

Municipal Government, while the Guangzhou SASAC performs the duties of an investor and enjoys

the rights and interests of an investor on behalf of the Guangzhou Municipal Government. The Group

is the sole construction and operation entity for the Guangzhou Metro. Adhering to its corporate

mission of “The Metro, To Speed Up Guangzhou” and social responsibility of “Serving the Society

and Benefitting the Public”, the Group is responsible for the investment, financing, construction,

operation and management of the Guangzhou Metro. The Group is also engaged in a range of

diversified rail related ancillary businesses including property development, resources operation and

provision of professional services to external entities. As at 30 June 2021, the Group was one of the

largest municipal enterprises in Guangzhou in terms of total assets.

As at 30 June 2021, the Company had a registered capital of approximately CNY58.43 billion. As at

30 June 2021, the Group had total assets of approximately CNY509.83 billion. For the years ended

31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the Group

reported total operating income of approximately CNY9.08 billion, CNY12.23 billion, CNY12.89

billion, CNY5.29 billion and CNY5.01 billion, respectively, and net profit of approximately

CNY180.27 million, CNY1,044.20 million, CNY229.95 million, CNY38.35 million and CNY794.56

million, respectively.

As at 30 June 2021, the Group operated a network of railway lines of approximately 676.5 kilometres

in total, comprising the Guangzhou Metro, the Guangzhou Tram, the Guangqing and Guangzhou East

Ring Intercity Railway, the Jiangxi Nanchang Metro Line 3, the Hainan Sanya Tram and the Pakistan

Lahore Orange Line, which amounted to approximately 531.1 kilometres, 22.1 kilometres, 60.8

kilometres, 28.5 kilometres, 8.4 kilometres and 25.6 kilometres, respectively.

As at 30 June 2021, the Guangzhou Metro comprised 15 inter-connecting railway lines in operation,

with an approximately 531.1 kilometre network of tracks and a network of 283 stations. The 15

railway lines, namely Line 1, Line 2, Line 3 and Line 3 (Northward Extension), Line 4, Line 5, Line

6, Line 7, Line 8, Line 9, Line 13, Line 14 and Knowledge City (知識城) Line, Line 21, the APM Line

and the Guangfo Line, together comprise the “Railway Lines”. As at 30 June 2021, the construction

of the 15 Railway Lines in operation had involved an aggregate investment of approximately

CNY223.09 billion. As at 30 June 2021, the Group had 11 railway extensions and projects under

construction. For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June

2020 and 2021, the Guangzhou Metro’s total passenger flow was approximately 3,025.96 million,

3,305.88 million, 2,412.51 million, 894.99 million and 1,351.35 million, respectively, and the total

number of train trips operated by the Guangzhou Metro was approximately 2.32 million, 2.59 million,

2.49 million, 1.20 million and 1.26 million, respectively. For the years ended 31 December 2018, 2019

and 2020, the Guangzhou Metro’s average daily passenger flow amounted to approximately 51 per

cent., 54 per cent. and 57 per cent., respectively, of the public transport passenger flow in Guangzhou

as a whole. As at 30 June 2021, the Guangzhou Metro had been under continuous and safe operation

for a total of 8,768 days.

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The map below shows the Railway Lines of the Guangzhou Metro in operation as at 30 June 2021:

In recognition of its achievements, the Group has received numerous awards. Its recent awards include

without limitation:

• Jinkeng Station of Line 21 of the Guangzhou Metro won the “Three-Star Green Building

Design Label Certificate” in 2019.

• The Company won the prize of “Progress in science and technology of Guangdong

Province” in 2019.

• The Group’s “MTC-1 type communication-based train control (CBTC) system equipment

and the city rail transit automatic fare collection system equipment based on multi-mode

payment” was awarded the prize of “Science and Technology Achievement Promotion

Project” by the Ministry of Transport in 2019.

• The Company was recognised as the “Guangzhou Key Enterprise in High-end Professional

Service Industry in 2018” in 2019.

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• The Group’s “Research on Key Technique of Boarding Operation Under Pressure in ShieldConstruction with Paste HDN (盾構施工“衡盾泥”輔助帶壓進倉關鍵技術研究)” wasawarded the First Prize of “Science and Technology Progress Award of GuangdongProvince” in 2019.

• Certain projects supervised by the Group won four national awards, eight provincialawards, and seven municipal awards, including China Jeme Tien Yow Award for CivilEngineering, China Luban Award for Construction Engineering, National Quality ProjectAward, etc. in 2019.

• The Group was awarded the “Outstanding Contribution Award for Statistical Work of UrbanRail Transit Industry” in 2018.

• Line 9 of the Guangzhou Metro was awarded the “10th Guangdong Jeme Tien YowHometown Cup Award” in 2018.

• The Group’s “Urban Rail Transit Industry Unattended Material Warehouse ManagementModel and Intelligent System Platform (城軌交通行業無人值守物資倉庫管理模式及智能系統平臺)” won the first prize at the 2018 National Rail Transit Equipment ManagementInnovation Achievement awards.

• The Company was awarded the “Outstanding Unit for Enterprise Informatisation Award”and the “Best Solution for Enterprise Informatisation Award” in 2017.

• The Company was recognised as a “New Brand of Guangdong” by Guangdong ProvincialParty Committee Propaganda Department, and was recognised as “Guangdong Province’sEnterprise Demonstration Site for Nurturing and Practicing Socialist Core Values” in 2017.

• The quality inspection technology of the construction project of Line 6 Phase I of theGuangzhou Metro was awarded the “Special Prize of the Fourth Guangdong ProvincialExcellent Construction Project Testing and Monitoring Award” in 2017.

• The Company’s “Urban Rail Transit Equipment Lean Maintenance InformationManagement System (LMIS)” was awarded the “First Prize of National TransportationIndustry Equipment Management Innovation Achievement (2014-2016)” in 2017.

• The construction of Line 7 Phase I of the Guangzhou Metro was awarded “The NinthGuangdong Province Zhan Tianyou Hometown Award” in 2017.

• The Company’s “Research and Development and Application of Parallel Mud/Dual ModeEarth Pressure Balance” and “Research of Integrated Application of New Technologies inCivil Engineering of Urban Rail Transit under Complex Geological Conditions” wereawarded the “First Prize” and the “Second Prize” of “the Fifth Guangdong Provincial CivilEngineering Society Science and Technology Award” in 2017, respectively.

• The Company’s “Refined-Oriented Urban Rail Transit Equipment Lean MaintenanceInformation Management System” was awarded the “First Prize for the 2017 NationalState-owned Enterprise Management Innovation Achievement”.

• The Company was awarded the title of “China Urban Rail Transit Association 2017Advanced Unit for Statistical Work” by the China Urban Rail Transit Association in 2017.

• The Company’s “Development of Linear Motor Vehicle with Independent IntellectualProperty Rights in relation to Urban Rail Transit” was awarded the “First Prize of the 2015Guangdong Provincial Science and Technology Award” in 2016.

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• The Company’s “Project of New Tram Test Section of Haizhu Island Circular, Guangzhou”

was awarded the “2015 Guangdong Province Liveable Environment Example Award” by

the Department of Housing and Urban-Rural Development of Guangdong Province in 2016.

• The Company was recognised as one of the “China Top 500 Enterprises in Service Industry

for the Year of 2015” by the China Association of Enterprises and the China Entrepreneur

Association for five consecutive years in 2016.

• The Company was awarded the new “ISO9001: 2015 Quality Management System

Certification” by the China National Accreditation Service for Conformity Assessment and

the United Kingdom Accreditation Service in 2016.

• The Company was recognised as one of the “Outstanding Units for Urban Governance in

Guangzhou” in 2016.

• The Company was awarded “Excellent Grade for 2011-2015 Rule of Law Implementation

Assessment in Guangzhou Municipal” in 2015.

• The Company was awarded the “China’s Living Environment Role Model Award” by the

Ministry of Housing and Urban-Rural Development in 2015.

History and Development

The Company is a state-owned company wholly-owned by the Guangzhou Municipal Government.

The rights of the Guangzhou Municipal Government, represented by the Guangzhou SASAC, are

contained in the articles of association of the Company and the Company is managed in accordance

with its articles of association and with the provisions of the law of the PRC. The Company was

incorporated under the laws of the PRC with limited liability on 21 November 1992. As at 30 June

2021, the Company had a registered capital of approximately CNY58.43 billion.

The table below sets out a number of key events in the business and corporate development of the

Group:

Year Milestone

1992 . . . . . . . The Company was established with a registered capital of CNY52.38 million.

1999 . . . . . . . Line 1 of the Guangzhou Metro commenced operation.

2002 . . . . . . . The registered capital of the Company was increased to CNY5.89 billion.

2003 . . . . . . . Line 2 (Sanyuanli — Pazhou) of the Guangzhou Metro commenced operation.

2004 . . . . . . . The registered capital of the Company was increased to CNY6.28 billion.

2005 . . . . . . . Line 2 (Pazhou — Wanshengwei), Line 3 (Guangzhou East Railway Station — Kecun)and Line 4 (Wanshengwei — Xinzao) of the Guangzhou Metro commenced operation.

2006 . . . . . . . Line 3 (Kecun — Panyu Square), Line 3 (Tianhe Coach Terminal — Tiyu Xi (BranchLine)) and Line 4 (Xinzao — Huangge) of the Guangzhou Metro commencedoperation.

2007 . . . . . . . Line 4 (Huangge — Jinzhou) of the Guangzhou Metro commenced operation.

2009 . . . . . . . Line 5 of the Guangzhou Metro commenced operation.

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Year Milestone

2010 . . . . . . . The registered capital of the Company was increased to CNY17.12 billion.

Northward Extension of Line 3, Line 4 (Huangcun — Wanshengwei), Line 2 and 8, theGuangfo Line and the APM Line of the Guangzhou Metro commenced operation.

The 16th Asian Games were held in Guangzhou. Six lines for Asian Gamescommenced operation.

2011 . . . . . . . The Group was awarded a maintenance contract in Macau.

The Group was awarded preparation contracts for metro operation in Xi’an andSuzhou.

2012 . . . . . . . Wansheng Square (萬勝廣場) commenced construction.

The Group was awarded a maintenance contract in Malaysia.

The Group was awarded preparation contracts for metro operation in Changsha.

2013 . . . . . . . The registered capital of the Company was increased to CNY29.32 billion.

Line 6 Phase I of the Guangzhou Metro commenced operation. Lisheng Square(荔勝廣場) commenced construction.

2014 . . . . . . . First circular new tram of the Guangzhou Metro commenced operation.

Yuejiang Shangpin (悅江上品) commenced construction.

2015 . . . . . . . The Company was reformed into a limited company and changed from GuangzhouMetro Corporation (廣州市地下鐵道總公司) to its present name.

10 railway lines of the Guangzhou Metro commenced construction at the same time.

The Group was awarded preparation contracts for metro operation in Changsha.

The Group won the bid for Australia’s Mineral Resources Limited’s automatedintegrated bulk ore transportation system procurement project.

The registered capital of the Company was increased to CNY58.43 billion.

2016 . . . . . . . Hedong East Station of Line 11 of the Guangzhou Metro commenced construction.

Line 6 Phase II, Line 7 Phase I and the Guangfo Line Phase II of the Guangzhou Metrocommenced operation.

2017 . . . . . . . The Huangpu District and Guangzhou Development Zone Line 1 of Guangzhou Trams(Changlingju — Luogang) commenced construction.

Tianhe Park Station of Line 13 Phase II of the Guangzhou Metro commencedconstruction.

Southward Extension of Line 4, Line 9 Phase I, Line 13 Phase I and the KnowledgeCity Extension Line of Line 14 commenced operation.

Qingsheng Station of Line 4 of the Guangzhou Metro commenced operation.

2018 . . . . . . . Northward Extension of Line 3 (Airport South — Airport North), Line 14 Phase I(Dongfeng — Jiahewanggang), Line 21 Phase I (Zhencheng Square — Zhenlong West)and Guangfo Line (Yangang — Lijiao) of the Guangzhou Metro commencedoperation.

Eastward Extension of Line 3, Eastward Extension of Line 5, Line 7 Phase II, Line 10,Line 12, and Line 14 Phase II of the Guangzhou Metro commenced construction.

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Year Milestone

2019 . . . . . . . Line 8 (Fenghuang Xincun Station — Cultural Park Station) and Line 21 (YuancunStation — Zhenlongxi Station) of the Guangzhou Metro commenced operation.

A consortium in which the Company participated won the bid for thepublic-private-partnership (“PPP”) project for the investment, construction, operationand maintenance of Nanchang Rail Transit Line 3 (Part B).

A consortium in which the Company participated won the bid for the PPP project forthe investment, construction, operation and maintenance of Chongqing Rail TransitLine 4 (Min’an Avenue — Shichuan).

2020 . . . . . . . In April 2020, a consortium led by the Company won the bid for the PPP project forthe investment, construction, operation and maintenance of Changsha Rail TransitLine 6 (Part B).

In October 2020, the Company’s subsidiary, Guangzhou Metro Design and ResearchInstitute Co., Ltd. (廣州地鐵設計研究院股份有限公司), was listed on the ShenzhenStock Exchange and therefore became the first listed company in the PRC principallyengaged in metro design.

In October 2020, the Pakistan Lahore Orange Line, which is operated and maintainedby a consortium led by the Company, commenced operation.

In November 2020, Northward Extension of Line 8 (Cultural Park — Jiaoxin) of theGuangzhou Metro commenced operation.

In November 2020, the Company and Yuexiu Property Company Limited entered intoa property equity cooperation agreement.

In December 2020, the Company and Guangdong University of Technology enteredinto a research cooperation agreement on intelligent energy management in railtransit.

Recent Developments

The ongoing COVID-19 pandemic.

The ongoing COVID-19 pandemic has caused substantial disruptions in the PRC and international

economies and markets which has resulted in additional uncertainties in the Group’s operating

environment, particularly with the emergence of new variants such as the Delta variant. In line with

the government policies, the Group has implemented various measures to combat the spread of

COVID-19 pandemic, as well as to protect the health and safety of its customers and employees. For

example, the Group implemented measures to control passenger flow in a number of stations of the

Guangzhou Metro and set up check points for monitoring the temperature of the passengers. The

Group has been closely monitoring the impact of the ongoing COVID-19 pandemic on the Group’s

businesses and will keep its contingency measures and risk management under review as the situation

evolves. Please see “Risk Factors — Risks Relating to the Group’s Business in General — The ongoing

COVID-19 pandemic may have an adverse effect on the Group’s business, financial condition and

results of operations” and “Risk Factors — Risks Relating to the Group’s Business in General — The

Group’s operations are subject to force majeure events, political unrest or civil disobedience

movements, natural disasters, outbreaks or pandemic of contagious diseases and other disasters”

Issue of debt instruments since 30 June 2021.

Since 30 June 2021, the Company has issued onshore debt securities in an aggregate principal amount

of CNY2,000,000,000.

89

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90

Competitive Strengths

The Company believes that the Group has the following competitive strengths:

The Guangzhou Metro faces relatively less significant competition in the urban mass transitrailway transport industry.

The urban mass transit railway transport industry in the PRC is capital-intensive and highly regulated,

and the construction of urban rail transit system requires significant capital, resources, expertise and

governmental approval measures. Urban rail transit construction projects typically rely heavily on

financial and policy support (but not including credit support) provided by the PRC government

and/or entities controlled by the PRC government. Construction and operation of new railway lines

must also be approved by the relevant government authorities. The Company believes that these

factors present high barriers to entry for certain competitors.

In addition, an urban mass transit railway typically locates in a specific area and there is generally

no competition between urban mass transit railways located in different areas. As such, there is less

competition in the urban mass transit railway transport industry.

The size of rail transport corporations generally depends on the overall strength of the cities in which

they are located, such as the size and level of economic development of the cities. For example, rail

transport corporations in Beijing, Shanghai, Guangzhou and Shenzhen generally have larger business

scales and relatively more rapid development. In addition, due to the worsening of the traffic

congestion condition in major urban areas in Guangzhou, the Company believes that the urban mass

transit railway has competitive advantages in terms of operation capacity, environmental protection

and cost-efficiency compared to alternative means of transport, which has resulted in strong demand

for railway transport by the public and has also made it less likely for other transport operators in

Guangzhou to directly compete against the Guangzhou Metro. Being the sole construction and

operation entity for the Guangzhou Metro and a leading railway operator in the PRC, the Group is

well-positioned to capitalise on the strong demand for railway transport by the public. As at 30 June

2021, the Guangzhou Metro comprised 15 inter-connecting railway lines in operation, with an

approximately 531.1 kilometre network of tracks and a network of 283 stations. For the years ended

31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the Guangzhou

Metro’s total passenger flow was approximately 3,025.96 million, 3,305.88 million, 2,412.51 million,

894.99 million and 1,351.35 million, respectively, and the total number of train trips operated by the

Guangzhou Metro was approximately 2.32 million, 2.59 million, 2.49 million, 1.20 million and 1.26

million, respectively. For the years ended 31 December 2018, 2019 and 2020, the Guangzhou Metro’s

average daily passenger flow amounted to approximately 51 per cent., 54 per cent. and 57 per cent.,

respectively, of the public transport passenger flow in Guangzhou as a whole. In addition, the Group

is also responsible for the construction and operation of rail transit in the Guangdong-Hong

Kong-Macau Greater Bay Area.

In light of the high entry barriers for the urban mass transit railway transport industry, the Group

being the sole construction and operation entity for the Guangzhou Metro, the Guangzhou Metro’s

long operating track record and the Group’s relationship with, and support (but not including credit

support) from, the Guangzhou Municipal Government, the Company believes that the Group faces

relatively less significant competition and is well-positioned to take advantage of the opportunities

created by the growth of the urban mass transit railway industry in the PRC.

91

Strong support (but not including credit support) from the Guangzhou Municipal Government.

As a state-owned company wholly-owned by the Guangzhou Municipal Government and directlysupervised by the Guangzhou SASAC, the Guangzhou Municipal Development and ReformCommission and the Guangzhou Municipal Bureau of Finance, the Group is the sole construction andoperation entity for the Guangzhou Metro and is responsible for the investment, financing,construction, operation and management of the Guangzhou Metro. The Company believes that theGroup is able to leverage on the strong policy, financial, business and other support (but not includingcredit support) from the Guangzhou Municipal Government to enhance its development and leadingposition in the urban mass transit railway transport industry.

Policy support: The urban mass transit railway transport industry in the PRC is experiencing rapidgrowth in terms of scale of operation, passenger flow, construction and planned construction ofrailway lines and investments in urban mass railway projects as a result of its booming economy,continuous increase in per capita disposal income and urbanisation. In light of the severe trafficcongestion in major PRC urban areas, environmental problems and air pollution, combined with thegovernment’s efforts to increase infrastructure investment, the PRC government has introducednumerous policies and incentives to encourage the development of the urban mass transit railwaytransport industry. According to the Master Planning in Guangzhou (2017-2035) (廣州城市總體規劃(2017-2035年)), the Guangzhou Municipal Government plans to complete construction ofapproximately 600 kilometres, 800 kilometres, 1,000 kilometres and 2,000 kilometres, respectively,of railway transport network by the end of 2020, 2023, 2025 and 2035, respectively.

The Company believes that these factors represent significant market opportunities for the Group. Asthe sole construction and operation entity for the Guangzhou Metro, the Group is well-positioned tocapture the opportunities presented by the rapid growth of Guangzhou’s mass transit railwayinfrastructure development. The Company expects that the Group’s business will further benefit fromthe favourable industry prospects of the mass transit railway transport industry in the PRC and is ableto sustain further growth. As at 30 June 2021, the Group had 11 railway extensions and projects underconstruction.

In addition to the Guangzhou Municipal Government’s support for the development of the urban masstransit railway industry, the Group has also benefited from strong support (but not including creditsupport) from the Guangzhou Municipal Government for the development of property and landresources along and around the Railway Lines. In particular, the Group has been granted the land userights on land areas above the railway stations and surrounding adjacent areas and the Group wasgiven the right to acquire high quality land resources at a discounted price without going through theprocess of public auction. The Guangzhou Municipal Bureau of Finance has also facilitated theallocation of revenue from the primary land development along and around the Railway Lines to theGroup.

Financial support (but not including credit support): The Guangzhou Municipal Government iscommitted to develop the transportation infrastructure in Guangzhou in order to solve trafficcongestion and sustain the city’s economic growth and attractiveness. The Guangzhou MunicipalGovernment has entrusted the Group to be the sole financing platform of the Guangzhou Metro. TheGuangzhou Municipal Government provides strong financial support (but not including creditsupport) to the Group. For the years ended 31 December 2018, 2019 and 2020, the Group received atotal of approximately CNY28.83 billion, CNY14.00 billion and CNY21.95 billion of financialsupport (but not including credit support) from the Guangzhou Municipal Government and localgovernments in Guangzhou. In addition, the Group has received tax reduction and/or exemptiontreatment by the Guangzhou Municipal Government. For example, from 2011 to 2020, the GuangzhouMunicipal Bureau of Tax has waived approximately 80 per cent. of the property tax charged on thestations operated by the Guangzhou Metro, and from 2013 to 2015, approximately 50 per cent. of the

92

urban land use tax charged on the stations, car depots and maintenance areas operated by the

Guangzhou Metro. In addition, the land occupied by the Group for the operation of stations, car depots

and maintenance areas by the Guangzhou Metro was exempt from urban land use tax from 2016 to

2020 pursuant to the relevant PRC tax regulations.

Replacement and upgrade: If any replacement or upgrade of the equipment of the Railway Lines is

needed, the Group will generally apply to the Guangzhou Municipal Bureau of Finance for financial

subsidies to be granted to the Group as part of the financial planning of that particular year when such

replacement or upgrade of equipment arises.

Business support: The Guangzhou Municipal Government granted the Group the right to conduct

property development and resources operation including advertising, commercial leasing as well as

underground communication in the areas along the Railway Lines.

Senior staff support: The Company’s chairman, directors and supervisors (other than those elected by

the Company’s employees) are typically appointed directly by the Guangzhou Municipal Government

or the Guangzhou SASAC, who directly supervises and participates in the decision making and

day-to-day management of the Company. These members of senior management have extensive

industry expertise in the mass transit railway sector and can provide value-adding services and

leadership skills to the Group.

Significant growth opportunities in Guangzhou.

Guangzhou is one of the tier-one cities in the PRC and has competitive advantages in geographical

location, industrial development, level of reform and opening up and cultural development. With the

strategic national development of the Belt and Road Initiative, Guangzhou is expected to play an

increasingly important and strategic role as a communicating hub connecting the PRC to countries and

regions in Southeast Asia, South Asia and South Pacific. In addition, Guangzhou also benefits from

the Guangdong-Hong Kong-Macau Greater Bay Area development plan, a national policy which aims

to create a “One-hour Living Circle” that connects and upgrades the quality of life in Guangdong,

Hong Kong and Macau.

Guangzhou is also the fourth city in the PRC having urban railway lines in operation as at the date

of this Offering Circular. As at 30 June 2021, the Guangzhou Metro operated approximately 531.1

kilometres network of tracks. For the year ended 31 December 2020, the total number of passengers

carried by the Guangzhou Metro reached approximately 2,412.51 million. As at 30 June 2021, railway

lines under construction by the Group amounted to approximately 291.73 kilometres. The Group is

well-positioned to capitalise on the business opportunities driven by the increasing demand for public

transport in Guangzhou contributed by the accelerated development and urbanisation of Guangzhou

and the surrounding areas.

The Guangdong Free Trade Zone (“FTZ”): Established on 31 December 2014, the Guangdong FTZ

is located in the Guangzhou Nansha New Area. It aims to become a demonstrative area for deep

collaboration between the Guangdong Province, Hong Kong and Macau, a crucial hub of 21st

century’s maritime silk road and a pilot area for next round of economic reforms nationwide.

Zengcheng (增城): Transportation construction in Zengcheng has accelerated since Zengcheng’s

status was changed from a city to a district of Guangzhou. Line 13 Phase I of the Guangzhou Metro

commenced operation in 2017. Upon commencement of operation of Line 21 of the Guangzhou Metro,

Zengcheng becomes more accessible and is within a half an hour commute of central Guangzhou.

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Expansion project of Guangzhou Baiyun International Airport (“Baiyun Airport”): Terminal II of

Baiyun Airport, as part of the expansion project of Baiyun Airport, was opened on 26 April 2018. In

order to improve the regional coverage and distribution capacity of Baiyun Airport, an integrated

transport hub with Baiyun Airport as centre was under construction. The hub will be supported by

Guangzhou-Foshan Intercity Loop Line and Guangzhou-Dongguan-Shenzhen Intercity Railway which

will be extended to Terminal I and Terminal II of Baiyun Airport, and by Guangzhou-Qingyuan

Intercity Railway which is planned to connect Baiyun Airport through Guangzhou North Railway

Station. The integrated transport hub will connect Eastern and Western Pearl River Delta regions

along with Northern Guangzhou. In addition, a special light rail system is planned to connect Baiyun

Airport and a number of railway stations. As for the rail transit in Guangzhou, Line 9 of the

Guangzhou Metro is connected to Terminal II of the Baiyun Airport due to the extension of Line 3

of the Guangzhou Metro to Terminal II of Baiyun Airport.

Guangzhou-Shenzhen-Hong Kong Express Rail Link: Upon commencement of operation of the

Guangzhou-Shenzhen-Hong Kong Express Rail Link in September 2018, the journey time between

Hong Kong and Guangzhou has been reduced from approximately 100 minutes to approximately 48

minutes. Hong Kong is connected directly with major cities in the PRC through the rail link, achieving

the “One-hour Living Circle” around the Greater Pearl River Delta. The Guangzhou Metro also

provides linkage between Baiyun Airport and the Guangzhou-Shenzhen-Hong Kong Express Rail

Link.

The Company believes that, with the Group’s comprehensive strengths and extensive experience in the

construction and operation of the urban mass transit railway system, it is able to take advantage of

the business opportunities and growth in the Guangzhou and surrounding regions.

Well-diversified business portfolio strengthening the Group’s profitability and ability to managerisks.

Leveraging its advantage in mass transit railway development, the Group has established a “rail +

property” business model to achieve synergies among various business segments of the Group and to

maximise its profits and investment return. The Group has also derived its operating income from

various other income streams and the various business segments have attained steady growth.

Although the operating income from the operation of the Guangzhou Metro constitutes a significant

portion of the Group’s total operating income, for the years ended 31 December 2018, 2019 and 2020

and the six months ended 30 June 2020 and 2021, the Group’s operating income derived from

businesses other than operation of the Guangzhou Metro amounted to approximately CNY4.09 billion,

CNY6.72 billion, CNY6.98 billion, CNY3.56 billion and CNY2.66 billion, respectively, representing

approximately 45.02 cent., 54.92 per cent., 54.17 per cent., 67.33 per cent. and 53.15 per cent. of the

Group’s total operating income, respectively. In addition, for the years ended 31 December 2018, 2019

and 2020 and the six months ended 30 June 2020 and 2021, the Group recorded profit before tax of

approximately CNY0.27 billion, CNY1.15 billion, CNY0.32 billion, CNY0.07 billion and CNY0.84

billion, respectively.

The Group’s well-diversified business portfolio enables the Group to maintain sustainable growth and

to reduce the risks associated with reliance on limited portfolios of business and mitigate any adverse

impact resulting from price, supply and demand volatilities relating to any single business portfolio.

The Group’s steady and diversified sources of income and cash flows enhance the Group’s stability

as well as flexibility in managing its overall operations.

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Advanced technology and research and development.

The Company believes that the Group has a competitive advantage in its research and developmentcapabilities. The Group has received a number of awards and recognitions for its research findingswhich have been widely applied in the construction and operation of railway transport in the PRC. Forexample:

• the Group’s “Research on Key Technique of Boarding Operation Under Pressure in ShieldConstruction with Paste HDN(盾構施工“衡盾泥”輔助帶壓進倉關鍵技術研究)” wasawarded the First Prize of “Science and Technology Progress Award of GuangdongProvince” in 2019;

• the Company’s “MTC-I Communication-based Train Control (CBTC) System Complete Setof Technical Equipment” received an award from the Ministry of Transport of the PRC in2019;

• the Company’s “Urban Rail Transit Automatic Ticket Checking System and EquipmentBased On Multi-payment” received an award from the Ministry of Transport of the PRC in2019;

• the Company’s “Research and Development and Application of Parallel Mud/Dual ModeEarth Pressure Balance” and “Research of Integrated Application of New Technologies inCivil Engineering of Urban Rail Transit under Complex Geological Conditions” wereawarded the “First Prize” and the “Second Prize” of “the Fifth Guangdong Provincial CivilEngineering Society Science and Technology Award” in 2017, respectively;

• the quality inspection technology of the construction project of Line 6 Phase I of theGuangzhou Metro was awarded the “Special Prize of the Fourth Guangdong ProvincialExcellent Construction Project Testing and Monitoring Award” in 2017;

• the Group’s “Integration and Application of Energy Saving, Environmental Protection andSafety Technology for Line 2 of the Guangzhou Metro” was awarded the “Second Prize ofNational Science and Technology Progress Award”;

• the Group’s “Application Research on Bridge Pre-fabricated and Assembling Technologyin Urban Rail Transit” was awarded the “Third Prize of Guangzhou Municipal Science andTechnology Progress Award”;

• the Group’s “Research on Complex Construction Theory and Technological Innovation”was awarded the “First Prize of Guangzhou Municipal Science and Technology ProgressAward”; and

• the Group’s “Research and Development on Rail Platform Screen Doors and AutomaticTrain Control System” and project “Research and Development on Urban Rail TransitDC1500V Steel-aluminium Rail Current Collector System” were recognised as “A FlagshipProject Representing Technological Achievements in Guangdong Provincial ConstructionIndustry”.

The Guangzhou Metro is a leader in the urban mass transit railway industry in the PRC in terms oftechnology innovation. For example:

• Line 3 of the Guangzhou Metro was the first metro line with the fastest speed of 120kilometres per hour in the PRC;

• Line 4 of the Guangzhou Metro was the first metro line propelled by linear motors in thePRC;

• the Guangfo Line of the Guangzhou Metro was the first fully underground metro line in thePRC;

95

• the APM Line of the Guangzhou Metro was the first metro line using automated peoplemover system in the PRC; and

• the Guangzhou Metro was the first modern rail transit system powered by super capacitorin the PRC.

The Group established the National Urban Rail Transit Safety Operation and Maintenance ProtectionEngineering Lab in the Guangdong Province. The National Urban Rail Transit Safety Operation andMaintenance Protection Engineering Lab focuses on the development of new technologies andproducts in the field of railway safety and introduced a number of experts in the industry asconsultants. The Group also initiated the establishment of the Guangzhou Rail Transit IndustryAlliances (廣州市軌道交通產業聯盟). The Company’s subsidiary, Guangzhou Metro Design andResearch Institute Co., Ltd., is a national Class A comprehensive research institute. It is engaged inthe planning, surveying, design, research and consulting of urban rail transport, municipalconstruction, environmental engineering and civil defence. In the past three years, the Group investeda total of approximately CNY1.13 billion in scientific research. As at 30 June 2021, the Group hadapplied for over 780 patents and had registered over 440 patents in the PRC.

In addition, the Group established research partnerships with universities in the PRC and overseassuch as University of Birmingham, Beijing Jiaotong University, South China University ofTechnology and Southwest Jiaotong University, and entered into scientific cooperation frameworkagreements with PRC institutions and entities such as China Academy of Railway Sciences, ZhuzhouCSR Times Electric Co., Ltd. and Zhuzhou Times New Material Technology Co., Ltd.

Strong financial profile with access to diversified financing channels and innovative projectfinancing management models.

In addition to government grants, the Group actively seeks alternative financing from other sources,including bank loans, debt financing and financial leasing. Leveraging the Group’s strategic positionand strong government support (but not including credit support), the Group benefits from its diverseand extensive investment and financing channels, which enable the Group to source the necessaryfunding for its operations, improve its capital structure and lower its financial costs. The Groupmaintains an industry low leverage ratio. In addition to cash generated from its operations, the Grouphas maintained long-term relationships with a large number of domestic and international banks,including China Development Bank, Bank of China, Industrial and Commercial Bank of China, ChinaConstruction Bank, Agricultural Bank of China, Bank of Communications, China Minsheng Bank andThe Hongkong and Shanghai Banking Corporation Limited. As at 30 June 2021, the Group had a creditline of approximately CNY410.71 billion in aggregate, of which approximately CNY281.60 billionremained unutilised.

The Company has issued various debt securities. In particular, from 1 January 2017 to 31 December2020, the Company issued corporate bonds (including but not limited to medium-term notes and greenbonds) in an aggregate principal amount of approximately CNY47.5 billion and super short-termfinancing bills in an aggregate principal amount of approximately CNY43 billion, in each case in thePRC. The Group is also one of the pioneers in the mass transit railway transport industry in the PRCto issue medium-term notes, corporate bonds and commercial papers in the PRC. The Companybelieves that the Group’s ability to access diversified financing channels and raise funds in a costeffective manner enables it to implement its mass transit railway development strategies to upgradeits infrastructure and increase capacity in its network to further develop its business.

Experienced management team.

The Company’s chairman, directors and supervisors (other than those elected by the Company’semployees) are typically appointed directly by the Guangzhou Municipal Government or theGuangzhou SASAC and have extensive management skills, operating experience and industryexpertise in the mass transit railway sector with a proven track record.

96

The Company believes that the Group’s experienced management team enables it to continue toimprove the efficiency of its operations, the quality of its services and its ability to satisfy therequirements of efficient mass transit railways in Guangzhou. The Company believes that the Group’sstrong management and execution capacity is, and will continue to be, a solid foundation to thefurtherance of its business.

Business Strategies

Through effective management of the Group and delivery of quality services, the Group strives to

become a role model in the urban mass transit railway industry in the PRC. The Groups adopts the

following key strategies to capture future growth opportunities in the PRC’s urban mass transit

railway industry, enhance its competitiveness, maintain its industry leading position in Guangzhou

and to achieve its corporate mission of “The Metro, To Speed Up Guangzhou” and social

responsibility of “Serving the Society and Benefitting the Public”:

Enhance the Group’s leading position in the urban mass transit railway industry and the Group’s

operation and management of the Guangzhou Metro.

The Group strives to maintain its leading position in Guangzhou’s urban mass transit railway industry

by ensuring steady growth of its operation of the Guangzhou Metro. The Group will continue to

conduct preparation and construction work on the extended lines in the central areas of Guangzhou

and improve the mass transit railway construction management, including introducing more effective

project financing business models, such as “Design-Build-Operate”, “Engineering-Procurement-

Construction” and “Build-Transfer-Operate”. The Group aims to expand its network of railway lines

to over 800 kilometres by 2023. The Group will continue to raise cost effective financing for the

operation of the Guangzhou Metro, optimising its financing structure through various diversified

channels and reducing the financing costs. In addition, the Group may consider capitalising certain

assets of the mass transit railway system where appropriate.

The Company intends to increase the operational security and efficiency of the Guangzhou Metro. In

addition, the Group will promote a more standardised project replacement and upgrade investment and

monitor the process and increase cost efficiency. The Company also intends to establish a platform

to share and provide timely and effective information on state-owned assets, their value and changes

to such assets, for the benefit of the government and other minority owners of state-owned assets.

The Company intends to enhance the network systems used to control the mass transit railway

transport and the settlement of ticket revenue.

Further expand the Group’s rail related ancillary businesses.

Through the implementation of the “rail + property” business model, the Group will continue to

capitalise on the rapid development of property development and resources operation businesses,

establish its brand name in developing subway complexes and seek opportunities in developing

underground space. The Company aims to consolidate the Group’s resources and optimise the property

development profiles. The Group will continue to develop residential and commercial properties

located above or adjacent to the Railway Lines. The Company believes that revenue from property

development and resources operation will continue to provide a stable source of income for the Group.

97

The Group will continue to provide integrated professional services to external entities, ranging from

design, consultancy, construction, training to supervision. The Group strives to become a national

leader in urban railway consultancy services, and the Company aims to further expand and develop

the Group’s businesses in the overseas market.

In addition, the Group will further develop its financial services business to facilitate the financing

of the construction of mass transit railway in Guangzhou.

Continue to focus on the Group’s investment in industries related to railway transport.

The Group will continue to invest in industries related to railway transport, leveraging its extensive

knowledge and experience in this area. The Group will strategically select and invest in leading

companies that manufacture railway transport assets such as rolling stock, and cultivate small-to

medium-size enterprises that possess core technology and proprietary intellectual property rights in

relation to railway transport. In addition, the Group will selectively invest in financial projects

relevant to the railway transport industry with strong development potential, which the Company

believes will increase the Group’s competitiveness in the railway transport industry. The Group’s

investment will primarily focus on equity investment, supplemented by debt investment.

Enhance the Group’s research and development efforts to further enhance its competitiveness.

The Company believes that the Group’s continued development and growth is dependent on its

advancements in its research and development capabilities. The Group established the National Urban

Rail Transit Safety Operation and Maintenance Protection Engineering Lab in the Guangdong

Province. The Group also initiated the establishment of the Guangzhou Rail Transit Industry

Alliances. The Company’s subsidiary, Guangzhou Metro Design and Research Institute Co., Ltd., is

a national Class A comprehensive research institute engaging in the planning, surveying, design,

research and consulting of urban rail transport, municipal construction, environmental engineering

and civil defence. Through the Group’s research institutes, the Company plans to continue the Group’s

efforts in research and development and enhance the Group’s leading position in the urban mass

transit railway industry in terms of technology innovation. In addition, the Group will continue to

establish research partnerships and cooperation framework agreements with both domestic and

overseas universities, research institutes and manufacturers. Through these research cooperation

platforms, the Group will be able to better integrate the research and development resources and

further develop innovative products based on advanced technologies imported from overseas and

customise such technologies for the domestic market, thereby meeting the continued demand and

growth of the urban transit railway system in Guangzhou and enhancing the continued development

and competitiveness of the Group.

Business

The Group is principally engaged in the businesses of operation of the Guangzhou Metro, property

development, resources operation and provision of professional services to external entities.

The table below sets forth a breakdown of the operating income of the Group for the periods indicated:

For the year ended 31 December For the six months ended 30 June

(CNY in billions, exceptpercentages) 2018 % 2019 % 2020 % 2020 % 2021 %

Operation of theGuangzhou Metro . . . 4.99 54.98 5.52 45.08 5.91 45.82 1.73 32.68 2.35 46.85

Property development . . . 0.64 7.09 2.80 22.86 3.07 23.82 1.71 32.34 0.56 11.21Resources operation . . . . 1.18 12.94 1.14 9.29 0.80 6.19 0.39 7.46 0.37 7.34Provision of professional

services to externalentities. . . . . . . . . . . 1.89 20.78 2.05 16.75 2.52 19.55 1.18 22.32 1.43 28.51

Others . . . . . . . . . . . . 0.38 4.21 0.74 6.01 0.59 4.62 0.28 5.21 0.30 6.09

Total . . . . . . . . . . . . . 9.08 100 12.23 100 12.89 100 5.29 100 5.01 100

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Operation of the Guangzhou Metro

Overview

The Group is the sole construction and operation entity for the Guangzhou Metro. The Group is

responsible for the investment, financing, construction, operation and management of the Guangzhou

Metro. The Group’s principal business is the operation of the Guangzhou Metro. For the years ended

31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the operating

income derived from the Group’s operation of the Guangzhou Metro amounted to approximately

CNY4.99 billion, CNY5.52 billion, CNY5.91 billion, CNY1.73 billion and CNY2.35 billion,

respectively, representing approximately 54.98 per cent., 45.08 per cent., 45.82 per cent., 32.68 per

cent. and 46.85 per cent., respectively, of the Group’s total operating income. As at 30 June 2021, the

Guangzhou Metro comprised 15 inter-connecting railway lines in operation, with an approximately

531.1 kilometre network of tracks and a network of 283 stations.

The Group endeavours to provide a safe, reliable and integrated mass transit railway network that

meets the growing demand for urban railways services in Guangzhou. The Group is committed to

serving its customers, ensuring that they get to their destinations in a safe, comfortable, efficient and

reliable way. The Group has also developed detailed operating procedures and controls for all its main

divisions, including maintenance, traffic operations and corporate support services.

The table below sets out the starting and ending points, route lengths and numbers of stations of the

15 Railway Lines in operation in the Guangzhou Metro as at 30 June 2021:

Line Starting and ending points Route length

Number of

stations

(kilometres)Line 1 . . . . . . Xilang — Guangzhou East Railway Station 18.50 16

Line 2 . . . . . . Sanyuanli — Wanshengwei 20.20 16

Line 3 and

Line 3

(Northward

Extension) . .

Panyu Square — Tianhe Coach Terminal, Tiyu Xilu — Airport North 67.30 30

Line 4 . . . . . . Huangcun — Nansha Passenger Port 59.30 23

Line 5 . . . . . . Jiaokou — Wenchong 31.90 24

Line 6 . . . . . . Xunfenggang — Xiangxue 42.10 31

Line 7 . . . . . . Guangzhou South Railway Station — Higher Education Mega Centre

South

18.60 9

Line 2 and 8

(Extension) . .

Jiangnan West — Guangzhou South Railway Station, Sanyuanli —

Jiahewanggang, Xiaogang — Culture Park

29.20 23

Line 9 . . . . . . Fei’eling — Gaozeng 20.00 11

Line 13 . . . . . . Yuzhu — Xiangjingling 27.03 11

Line 14 and

Knowledge

City Line . . .

Jiahewanggang — Dongfeng, Xinhe — Zhenlong 76.30 22

Line 21 . . . . . . Yuancun — Zengcheng Square 61.50 21

APM Line . . . . Linhexi — Canton Tower 3.94 9

Guangfo Line . . Kuiqi Road — Lijiao, Kuiqi Road — Xincheng East 38.90 25

Line 8

(Northward

Extension) . . .

Cultural Park — Baiyun Lake 16.30 12

Total . . . . . . . 531.1 283

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Operations Performance

The table below sets out the key operations performance information of the Guangzhou Metro for the

periods indicated.

For the year ended 31 December

2018 2019 2020

Total passenger flow (million) . . . . . . . . . . . . . . . . . . . . . . 3,025.96 3,305.88 2,412.51Operation length (million) (kilometres) . . . . . . . . . . . . . . . 335.34 406.77 412.01Total number of trains . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 524 567Highest number of passengers in a day (million) . . . . . . . . 9.40 11.57 11.40Average daily passenger flow (million) . . . . . . . . . . . . . . . 8.29 9.06 6.59Total number of train trips (million) . . . . . . . . . . . . . . . . . . 2.32 2.59 2.49Average daily number of train trips . . . . . . . . . . . . . . . . . . 6,353 7,104 6,795.46Pre-paid card usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.78% 87.56% 89.10%Train punctuality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.97% 99.98% 99.99%

Safety Assurance

The Group has adopted an integrated management system to ensure the safety performance of the

Guangzhou Metro:

• established the comprehensive transportation production service evaluation system and the

operation safety indexation evaluation system to continuously improve its operational

production level;

• implemented the normalised “Manual Safety Inspection” security measure and established

a long-term mechanism for metro exit and entrance management to strengthen the

maintenance of the order and passenger safety in the metro stations;

• enhanced environmental monitoring of its railway lines. The Group was the first urban

mass transit railway company in the PRC to carry out gas detection system pilot study; and

• implemented the special normalised inspections for vehicles, signals, catenaries, rails and

other key equipment of the railway system.

As at 30 June 2021, the Guangzhou Metro had been under continuous and safe operation for a total

of 8,768 days.

Fares, Management Fee Income and Subsidies

Fares

The Group’s revenue for the operation of the Guangzhou Metro is derived primarily from fare revenue

and fare discount subsidies. As at 30 June 2021, the Guangzhou Metro adopted a distance-based fare

system for all the Railway Lines except for the APM Line:

• for the first four kilometres or any part thereof, the Guangzhou Metro charged CNY2 per

person per ride;

• after the total travelling distance has reached four kilometres, the Guangzhou Metro

charged an additional CNY1 per person per ride for every four kilometres or any part

thereof until the total travelling distance reaches 12 kilometres;

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• after the total travelling distance has reached 12 kilometres, the Guangzhou Metro chargedan additional CNY1 per person per ride for every six kilometres or any part thereof untilthe total travelling distance reaches 24 kilometres; and

• after the total travelling distance has reached 24 kilometres, the Guangzhou Metro chargedan additional CNY1 per person per ride for every eight kilometres or any part thereof.

As at 30 June 2021, the Guangzhou Metro charged CNY2 per person per ride for any trip on the APMLine.

For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and2021, the revenue from the sale of Railway Lines tickets and the management fee for the Group’soperation of the Guangfo Line amounted to approximately CNY4.99 billion, CNY5.52 billion,CNY5.91 billion, CNY1.73 billion and CNY2.35 billion, respectively.

Management fee income

The Group is engaged by Guangfo Rail Transit Company to operate the Guangfo Line since 2010. Asat 30 June 2021, the Company and Foshan Rail Transportation Development Co., Ltd. (佛山市軌道交通發展有限公司) held approximately 56.52 per cent. and 43.48 per cent., respectively, of the equityinterest in Guangfo Rail Transit Company. The Group is entitled to receive an annual management feefrom Guangfo Rail Transit Company for the Group’s operation of the Guangfo Line.

Subsidies

Despite the heavy passenger flow of the Guangzhou Metro, revenue from the sale of Railway Linestickets and management fee income from Guangfo Rail Transit Company are insufficient to cover theoperating costs of the Guangzhou Metro due to the low ticket price resulted from the implementationof the fare concession scheme by the Guangzhou Municipal Government in 2010. Since 2010, theGuangzhou Municipal Government has provided an operational subsidy to the Group to compensatefor the low ticket fare due to the fare concession scheme. For the years ended 31 December 2018, 2019and 2020, the Group received approximately CNY1.45 billion, CNY1.53 billion and CNY1.10 billion,respectively, of fare discount subsidies from the Guangzhou Municipal Government.

The amount of the fare discount subsidies granted by the Guangzhou Municipal Government isdetermined on the basis of the need to maintain the Group’s financial viability on the one hand andthe need to safeguard public interest on the other hand. For the years ended 31 December 2018, 2019and 2020 and the six months ended 30 June 2020 and 2021, the funding received from the GuangzhouMunicipal Government was sufficient to fully cover the difference between the discounted fares andthe regular fares.

Ticket Types

Single journey ticket

Single journey tickets can be purchased at a kiosk at every station or at the automatic ticket vendingmachines. The ticket itself is a contactless radio-frequency plastic token. The passenger has to tap iton the sensor on the turnstile when entering and insert it into a slot at the exit gate where the tokenis reclaimed. Full base fares are charged for single journey tickets for individuals.

Yang Cheng Tong and Lingnan Pass

Yang Cheng Tong is a contactless smartcard which can be used on the Guangzhou Metro and mostother forms of public transport in Guangzhou.

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The Guangzhou Metro offers discounts to passengers using Yang Cheng Tong. For example, for each

month, calculated on a combined basis of the total number of bus and Guangzhou Metro rides, a 40

per cent. discount is available for all journeys beyond the first 15 journeys. Full-time students

enrolled in primary, secondary, and vocational schools can also apply for student passes, which enable

them to take bus and Guangzhou Metro rides at half prices.

Yang Cheng Tong was rebranded in November 2010 as a type of Lingnan Pass, a new transport card

that is valid in multiple cities across the Pearl River Delta. Lingnan Pass cards issued in Guangzhou

are named Lingnan Pass — Yang Cheng Tong.

Day pass

The Guangzhou Metro introduced day passes in January 2013. A day pass enables its holder to travel

an unlimited number of times on the Guangzhou Metro system during a limited period of validity

starting from the first use. As at 30 June 2021, two types of day pass were available:

• One-day pass: CNY20 each and valid for 24 hours; and

• Three-day pass: CNY50 each and valid for 72 hours.

Day passes are not rechargeable. They can be fully refunded until the first use, at which time they

become non-refundable.

In recent years, the Guangzhou Metro has adopted a number of smart payment platforms which

support payment through internet, QR code scanning via Guangzhou Metro App, NFC-enabled cell

phones and UnionPay Mobile Quick Pass.

Stations

As at 30 June 2021, the 15 Railway Lines of the Guangzhou Metro comprised a network of 283

stations. Together with 143 additional stations under construction, there will be a total of 425 stations.

Generally, a station is equipped with automatic ticket machines and elevators. For security reasons,

security checks may be conducted on passengers and their personal belongings and luggage at the

stations.

Each station of the Guangzhou Metro is equipped with a warning system, a protection system and an

extinguishing system. Vulnerable areas, such as machine rooms, are installed with sprinkler systems

or carbon dioxide gas extinguishing systems. Each station has a back-up power supply system.

Each station has a station manager who is responsible for ensuring safe and efficient operations.

Station managers monitor the system through closed circuit television monitors and communicate with

passengers and train controllers.

Command Centre

The Group established a command centre to manage all the Railway Lines. The command centre

pioneers centralised command and management of transport network operation in the PRC.

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The command centre carries out two major functions:

• co-ordination of the Guangzhou Metro operation and response in emergency: the command

centre is responsible for monitoring the Guangzhou Metro to ensure operation in

accordance with daily time schedules and designed routes. As the command centre can

locate all trains in the Guangzhou Metro on closed circuit television monitors, it is able to

maintain effective control over the Guangzhou Metro at all times. In addition, the command

centre has radio communication equipment for the control centre to communicate with the

driver of each train and with the station manager at each station. It acts as the central

co-ordinator should any emergency arise. In addition, the command centre formulates and

prepares multiple systems and standards to ensure safe operation of the Guangzhou Metro.

• settlement of Railway Lines ticket fees and statistical analysis of passenger flow: the

command centre is responsible for settlement of the ticket fees from Railway Lines in a

timely manner. In addition, it collects various data of the Guangzhou Metro, such as trains

and passenger volume, and prepares statistical analysis to facilitate the Group’s operation

and planning.

Replacement and Upgrade

If any replacement or upgrade of the equipment of the Railway Lines is needed, the Group will

generally apply to the Guangzhou Municipal Bureau of Finance for financial subsidies to be granted

to the Group as part of the financial planning of that particular year when such replacement or upgrade

of equipment arises.

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Lines under Construction

As at 30 June 2021, the Group had 11 railway extensions and projects under construction with a total

length of approximately 291.73 kilometres. The table below sets out certain information of the

extensions and projects under construction as at 30 June 2021:

Line/ProjectStarting and endingpoints Route length

Expectedtotal

investment

Expectedyear of

completion ofconstruction

Status as at30 June 2021

(kilometres)(CNY

billions)Westward

Extension ofLine 7 . . . . . .

Meidi Dadao —Guangzhou SouthRailway Station

13.40 0.97 2021 About 91% of civilconstruction work hasbeen completed.

Line 14 Phase II . Guangzhou Train Station— Jiahewanggang

11.90 10.62 2022 About 20% of civilconstruction work hasbeen completed.

Line 11 . . . . . . . Loop Line 42.80 42.06 2022 About 59% of the civilconstruction work hasbeen completed.

Line 13 Phase II . Zhaoyang — Yuzhu 33.50 41.09 2022 About 33% of the civilconstruction work hasbeen completed.

Line 18 . . . . . . . Wanqingsha —Guangzhou East Station

61.30 49.30 2022 About 97% of the civilconstruction work of thefirst section has beencompleted.

Line 22 . . . . . . . Panyu Square — Baietan 30.80 26.49 2022 About 94% of the civilconstruction work of thefirst section has beencompleted.

EastwardExtension ofLine 5 . . . . . .

Wenchong — HuangpuPassenger Port

9.80 8.76 2022 About 29% of the civilconstruction work hasbeen completed.

EastwardExtension ofLine 3 . . . . . .

Panyu Square — Haibang 9.58 6.67 2023 About 35% of the civilconstruction work hasbeen completed.

Line 7 Phase II . . Higher Education MegaCentre South — Shuixi

21.90 16.93 2023 About 43% of the civilconstruction work hasbeen completed.

Line 10 . . . . . . . Xilang — Shipai Bridge 19.15 24.10 2023 About 24% of the civilconstruction work hasbeen completed.

Line 12 . . . . . . . Xunfenggang —Guangzhou ScienceCentre

37.60 37.44 2023 About 25% of the civilconstruction work hasbeen completed.

Total . . . . . . . . 291.73 264.41

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Construction management

The Group is fully responsible for the entire construction progress of the mass transit railways. It

implements a tracking mechanism covering initial design, project bidding, procurement, construction,

machinery installation, interior decoration, inspection and acceptance.

Investment and financial planning

The Group raises funding for the construction and development of its urban mass transit railway

projects in Guangzhou. One of the primary goals in planning and financing for these projects is to

ensure timely and sufficient funds are available for the project development and to reduce investment

costs and maximise efficiency in the use of funds.

Part of the Group’s financing for the construction of mass transit railways comes from the Guangzhou

Municipal Government. Each year the Guangzhou Municipal Government allocates certain fiscal

funds to the Group based on the project progress and the fiscal budget of the year. The fiscal funds

comprise of capital investment for new railway line construction, principal and interest repayment,

renovation funds and other project funds, which normally cover at least 40 per cent. of the financing

requirement of the Group for its urban railway projects and also fully cover the repayment of principal

and interest for the Group’s debt financing on urban railway projects each year. The fiscal funds are

granted to the Group in instalments in proportion to the planned route length of the Guangzhou Metro.

The amount of fiscal funds granted to the Group is linked to the planned route length of the whole

city, so that each year it will be in line with the construction progress of the Guangzhou Metro.

The Group submits monthly reports to the Guangzhou Municipal Commission of Development and

Reform and other relevant authorities on the progress of its projects under construction, to justify the

use of fiscal funds received from the Guangzhou Municipal Government.

In addition to government grants, the Group actively seeks alternative financing from other sources,

including bank loans, debt financing, equity financing and others. The Company believes that the

Group’s ability to raise funding from multiple channels in a cost effective manner is one of the

Group’s core competitive advantages.

• Bank loans

The Group has maintained long-term relationships with a large number of domestic and international

banks, including but not limited to China Development Bank, Bank of China, Industrial and

Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of

Communications, China Minsheng Bank and The Hongkong and Shanghai Banking Corporation

Limited. As at 30 June 2021, the Group had a credit line of approximately CNY410.71 billion in

aggregate, of which approximately CNY281.60 billion remained unutilised.

• Debt financing

The Company has issued various debt securities. In particular, from 1 January 2017 to 31 December

2020, the Company issued corporate bonds (including but not limited to medium-term notes and green

bonds) in an aggregate principal amount of CNY47.5 billion and super short-term financing bills in

an aggregate principal amount of CNY43 billion, in each case in the PRC. The Group is also one of

the pioneers in the mass transit railway transport industry in the PRC to issue medium-term notes,

corporate bonds and commercial papers in the PRC.

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Property Development

Overview

In conjunction with the Group’s railway construction activities, the Group is also engaged in thedevelopment of residential and commercial properties located above or adjacent to the Railway Linesor railway complex. Leveraging its expertise in mass transit railway development, the Group hasestablished a “rail + property” business model to achieve synergies among various business segmentsof the Group and to maximise its profits and investment return.

The Group’s property development projects can be categorised into two sub-categories, namelyprojects that are solely developed by the Group and projects that are jointly developed by the Groupand other real estate developers or investors.

For the projects that are solely developed by the Group, the Group engages independent contractorsto provide various types of services for its property development projects, including construction,piling and foundation, engineering, interior decoration and utilities installation. The Group generallyselects contractors through public tenders. The Group invites selected contractors to tender bidsaccording to their reputation for quality, track record and references, and supervises the constructionprogress once the contract is awarded. Following the completion of the construction, the Group willsell or lease such properties.

For the projects that are jointly developed by the Group and other real estate developers or investors,the Group typically acquires the land parcel and holds the interests thereof via a project company. TheGroup will transfer certain portion of the equity interests in the project company to its joint venturepartners at a consideration while retaining the remaining equity interests. Under this model ofdevelopment, the Group receives a premium in the price of equity transfer and is able to recover theinvestment capital more quickly. The Group formed strategic cooperation with leading real estatedevelopers such as Yuexiu Property Company Limited and New World China Land Limited. Forexample, the Company and Yuexiu Property Company Limited entered into a property equitycooperation agreement in 2021.

The Group’s property development businesses focuses on comprehensive properties development andmanagement, featuring development of properties along the Railway Lines and properties withspectacular views and high qualities.

The Group’s operating income from its property development business has attained steady growth inrecent years and has become a stable source of income for the Group. For the years ended 31December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the operatingincome derived from the Group’s property development business amounted to approximatelyCNY0.64 billion, CNY2.80 billion, CNY3.07 billion, CNY1.71 billion and CNY0.56 billion,respectively, representing approximately 7.09 per cent., 22.86 per cent., 23.82 per cent., 32.34 percent. and 11.21 per cent., respectively, of the Group’s total operating income. The table below setsforth a breakdown of the operating income of the Group’s property development business for theperiods indicated:

For the year ended 31 December For the six months ended 30 June

(CNY in billions, exceptpercentages) 2018 % 2019 % 2020 % 2020 % 2021 %

Sales of residentialproperties . . . . . . . . 0.42 65.39 2.52 90.09 1.90 61.76 1.59 92.98 0.37 66.07

Rental income and others 0.22 34.61 0.28 9.91 0.30 9.83 0.12 7.02 0.19 33.93

Agent constructionprojects . . . . . . . . . — — — — 0.87 28.41 — — — —

Total . . . . . . . . . . . . 0.64 100 2.80 100 3.07 100 1.71 100 0.56 100

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Completed Projects

The table below sets out certain information of the Group’s key completed property projects as at 30June 2021:

Project Location Property type Land area Construction area

(square metres) (square metres)Metro Financial Center

Square (地鐵金融城) . . . .Upper cover of the FinancialHi-tech Zone Station,Nanhai, Foshan

Residential, hotel,commercial andoffices

45,131 355,961

Guixian Shangpin(貴賢上品) . . . . . . . . . .

Huagui Road, Liwan District Residential,commercial andoffices

12,395 100,071

Ziwei Garden (紫薇花園)(Dapu Project (大埔項目))

Dapu, Xinshi Town, BaiyunDistrict

Residential andcommunitycommercial

29,899 142,575

Dongman Xingcheng(動漫星城) . . . . . . . . .

Zong Shan Wu Lu, YuexiuDistrict

Commercial 15,105 32,800

Wansheng Square (萬勝廣場) Wanshangwei Station,Haizhu District

Commercial andoffices

38,235 311,340

Lisheng Square (荔勝廣場) . Kengkou Station, LiwanDistrict

Commercial andoffices

30,891 175,518(subject to

inspection andacceptance)

Projects under Construction

The table below sets out certain information of the Group’s key property projects under constructionas at 30 June 2021:

Project Location Property typeDevelopmentmodel Land area

ConstructionArea

Total plannedinvestment

Actualinvestment

amount as at30 June 2021

Year ofconstruction

(squaremetres)

(squaremetres)

(CNY inbillions)

(CNY inbillions)

Yuejiang Shangpin(悅江上品) . .

Datansha, LiwanDistrict

Residential andcommunitycommercial

Solely developedby the Group

104,388.44 419,543.00 5.25 4.37 2014(1)

Pinxiu Xingtu(品秀•星圖) . .

Xintang Town,ZengchengDistrict

Residential,communitycommercial andothers

Jointly developed 323,348.30 1,331,448.00 21.16 18.37 2018(2)

Hanxi ChanglongProject(漢溪長隆項目).

Zhongcun Street,Panyu District

Commercial,residential, hotel,office andparking lot

Jointly developed 70,936.00 448,401.00 10.58 8.33 2019

Pinxiu Xinghan(品秀•星瀚) .

ChentougangParking Lot

Residential,rental housingand others

Jointly developed 242,094.00 1,030,864.30 13.98 10.22 2019(3)

Pinxiu Xingyue(品秀•星樾) .

Luogang Depot Residential Jointly developed 312,376.00 931,341.00 14.27 10.48 2019(4)

Pinshi YunhuFlower City(品實•雲湖花城)

Baiyun LakeDepot

Residential Jointly developed 222,886.00 521,230.00 11.61 10.11 2019(5)

Project Zhenlong(鎮龍項目) . .

Zhenlong MetroDepot

Residential andcommercial

Jointly developed 242,175.00 703,400.00 5.50 6.39 2019(6)

Project Shuixi(水西項目) . .

Shuixi ParkingLot, HuangpuDistrict

Residential andcommercial

Jointly developed 87,299.00 331,795.00 2.90 4.27 2019(7)

Project Chatouxi(槎頭西項目) .

Chatouxi, BaiyunDistrict

Residential andcommercial

Jointly developed 67,915.00 431,711.00 7.27 0.39 2020

Notes:

(1) The contracted sales of Yuejiang Shangpin (悅江上品) project as at 30 June 2021 amounted to approximately CNY6.91billion.

107

(2) The contracted sales of Pinxiu Xingtu (品秀•星圖) project as at 30 June 2021 amounted to approximately CNY8.16billion.

(3) The contracted sales of Pinxiu Xinghan (品秀•星瀚) project as at 30 June 2021 amounted to approximately CNY5.39billion.

(4) The contracted sales of Pinxiu Xingyue (品秀•星樾) project as at 30 June 2021 amounted to approximately CNY10.61billion.

(5) The contracted sales of Pinshi Yunhu Flower City (品實•雲湖花城) project as at 30 June 2021 amounted toapproximately CNY2.85 billion.

(6) The contracted sales of Project Zhenlong (鎮龍項目) as at 30 June 2021 amounted to approximately CNY0.91 billion.

(7) The contracted sales of Project Shuixi (水西項目) as at 30 June 2021 amounted to approximately CNY0.65 billion.

Property Management

The Group’s completed projects are typically managed by the Group’s project management companiesto ensure that the quality of such projects can be maintained. These companies would provideafter-sales services to purchasers of the Group’s properties, including rental agency, security,maintenance, operation of clubhouse, gardening and landscaping services.

Resources Operation

Under the resources operation business segment, the Group conducts businesses including metroadvertising, commercial leasing as well as underground communication in the areas along the RailwayLines.

For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and2021, the operating income derived from the Group’s resources operation business amounted toapproximately CNY1.18 billion, CNY1.14 billion, CNY0.80 billion, CNY0.39 billion and CNY0.37billion, respectively, representing approximately 12.94 per cent., 9.29 per cent., 6.19 per cent., 7.46per cent. and 7.34 per cent., respectively, of the Group’s total operating income.

Advertising

The Group derives its advertising revenue from the advertising units in the Guangzhou Metro’sstations (which primarily include light boxes, panels and advertising space inside trains) and themobile digital television advertising network (namely Guangzhou Metro Television). The Grouplaunches timely sales packages to attract and retain advertisers from time to time. The Group alsopromotes “Internet + Adverting” by implementing creative advertising with the usage of multimedia.The Group conducts its advertising business primarily through its non-wholly owned subsidiaries,namely Guangzhou Metro Media Co., Ltd. (廣州地鐵媒體有限公司) and Guangzhou Metro JCDecauxAdvertising Co., Ltd. (廣州地鐵德高廣告有限公司).

Commercial Leasing

As at 30 June 2021, the total lettable space of the Guangzhou Metro amounted to approximately734,000 square metres. As at 31 December 2020, the occupancy rate of station shops reachedapproximately 72.8 per cent. In 2020, a total of more than 160 shops and 340 sets of self-servicemachines were built on the existing railway lines to improve the images of the stations of theGuangzhou Metro and also to provide high-quality convenience services. The Group’s commercialretail space include shops (such as convenience stores), self-service machines (such as vendingmachines) and subway commercial streets. The Group has also collaborated with a number ofcorporations and brand owners to launch various cultural products to promote the corporate image andsocial influence of the Group.

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Underground Communication

The Group provides the passengers with mobile communication service and IC card telephone service

and provides the metro commercial tenants with wired telephones, data special lines and internet

services. To promote the Guangzhou Municipal Government’s plan to build a “Smart Guangzhou”, the

Group has supported the construction of the metro 3G, 4G and 5G communication system. In addition,

the Group has promoted the WLAN experimental and pilot construction and developed applications

of Bluetooth, WIFI and RFID technology, which fully demonstrated the feasibility of new civil

communication technology in the construction of metro space.

Provision of Professional Services to External Entities

The Group leverages its experience as a leading railway operator in the PRC to offer professional

services including design, consultancy, professional training and supervision to other operators of

railway lines in other cities in the PRC and overseas.

For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and

2021, the operating income derived from the Group’s provision of professional services to external

entities amounted to approximately CNY1.89 billion, CNY2.05 billion, CNY2.52 billion, CNY1.18

billion and CNY1.43 billion, respectively, representing approximately 20.78 per cent., 16.75 per cent.,

19.55 per cent., 22.32 per cent. and 28.51 per cent., respectively, of the Group’s total operating

income.

Design

As at 30 June 2021, the Group provided rail transit planning, design and consultation services to

operators in more than 40 cities in the PRC including Shenzhen, Dongguan, Foshan, Tianjin, Beijing,

Xi’an, Chengdu, Zhengzhou, Nanjing, Wuxi, Suzhou, Ningbo, Wuhan, Fuzhou, Nanchang, Changsha,

Nanning and Guangzhou. The Group has also implemented the “go abroad” overseas expansion policy

and plans to develop its business in overseas markets.

Consultancy

As at 30 June 2021, the Group had consultancy projects in over 21 cities in the PRC and provided

consultancy services for maintenance projects in Macau and Malaysia. The Group is also actively

exploring opportunities in overseas markets such as Israel.

Professional Training

The Group is also engaged in the training of skilled and managerial talents in urban rail transit

industry. The Group infused innovations into the models of professional training and created a smart

cloud platform that enhanced the efficiency in professional training. In 2020, the Group provided

professional training for 216 companies and/or entities, with more than one million people in total

attending the training. Through its professional training business, the Group has successfully nurtured

a number of technical, management and information technology personnel for other railway

companies in a number of cities in the PRC (including Chongqing, Ningbo, Foshan and Suzhou), as

well as in overseas markets including Malaysia and Macau.

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Supervision

The Group’s supervision business covers different stages of project constructions, including bidding,

construction, completion, settlement, trial operation and others. As at 30 June 2021, the Group

provided supervision services in 22 cities in the PRC. The Company was awarded the “2013-2014

Advanced Chinese Enterprise for Construction Project Supervision”. The Group is also engaged in the

businesses of provision of deep water tunnel construction and maglev rail supervision.

Others

The Group is also engaged in other businesses such as financial services business.

Financial Services

The Group’s financial services business segment provides convenient financing channels to the rail

transit construction in Guangzhou, promotes the financial leasing for advanced manufacturing

industry transformation in Guangzhou and creates a financial platform for the rail transit in

Guangzhou.

The Group conducts its financial services business through Guangzhou Metro Microfinance Co., Ltd.

As at 30 June 2021, the Company held 30 per cent. of the equity interest in Guangzhou Metro

Microfinance Co., Ltd.

Approved by the Guangzhou Municipal Finance Office, Guangzhou Metro Microfinance Co., Ltd. was

established in April 2014. As at 30 June 2021, Guangzhou Metro Microfinance Co., Ltd. had a

registered capital of CNY300.00 million.

Based in Guangzhou, Guangzhou Metro Microfinance Co., Ltd. focuses on providing microfinance

and financing consultation for clients in the core industry chain. It is also actively developing

financing service channels, exploring new partnership opportunities between commercial banks and

microfinance companies. Guangzhou Metro Microfinance Co., Ltd. adopts advanced microfinance

concepts and techniques to focus on the creditworthiness of borrowers, use of loan, repayment sources

and assurance measures. Guangzhou Metro Microfinance Co., Ltd. offers loans ranging from

approximately CNY50,000 to approximately CNY5.00 million to newly set up, expanding and other

medium, small and micro enterprises.

Guangzhou Metro Microfinance Co., Ltd.’s principal loan products include employees consumer

loans, industry chain factoring loans, market factoring loans, property market mortgages, industry

chain purchase order loans and market bridging loans.

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Corporate Governance Structure

The following diagram sets forth a simplified corporate governance structure of the Company showingdifferent operating management entities as at 30 June 2021:

Functional Departments Business Divisions

The Company

General O

ffice (Board O

ffice)

Strategic Developm

ent Departm

ent

Financial Managem

ent Departm

ent

Discipline and Supervision D

epartment

Audit D

epartment

Party Affaire D

epartment

Chief Engineer’s O

ffice

Labour Union

Legal and Contract M

anagement D

epartment

Hum

an Resources D

epartment

Marketing D

epartment

Departm

ent of Work Safety

Shared Service Centre

Work Safety and Em

ergency Response

Centre

Construction D

ivision

Operation D

ivision

Real Estate D

ivision

National Engineering Laboratory

Information M

anagement C

entre

Adm

inistration & Logistic C

entre

Resource Sharing &

Service Centre

Guangzhou M

etro Party School CPC

(U

niversity) ((

))

General Office

The General Office is primarily responsible for the provision of administrative and businessassistance to the board of directors, management and supervision including but not limited tosecretarial work and public relationship.

Financial Management Department

The Financial Management Department is primarily responsible for accounting and taxationmanagement, budgeting management, capital management and investment and financing management,etc.

Chief Engineer’s Office

The Chief Engineer’s Office is responsible for the development, planning and management of newrailway lines, civil engineering technology management, electromechanical technology management,inspection and delivery, quality management, production plan management, etc.

Strategic Development Department

The Strategic Development Department is primarily responsible for, including but not limited to, theformulation of yearly organisational plan and strategic development plan as well as the operation andmanagement of the Group’s invested entities.

Work Safety and Emergency Response Centre

The Work Safety and Emergency Response Centre is the emergency coordination command centre,order and instruction issuing centre, information receiving and processing centre of the Group, andis responsible for the daily management of the transport network of the Group.

Department of Work Safety

The Department of Work Safety is primarily responsible for public safety management, railwaymaintenance and management, law enforcement management and emergency management of theGroup.

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Internal Control System

The diagram below sets forth a simplified internal control system of the Company as at 30 June 2021:

Internal Control System

Budget M

anagement

Capital M

anagement

Internal Audit M

anagement

Hum

an Resources M

anagement

Related Party Transaction M

anagement Policy

Major O

peration Decision M

anagement

Subsidiaries Managem

ent Policy

Guarantee M

anagement System

Work Safety M

anagement

Financial Managem

ent

Accident Em

ergency Plan

Tender Managem

ent

Information D

isclosure Managem

ent

Competition

As the sole construction and operation entity for the Guangzhou Metro and due to the nature of the

Group’s operation of the Guangzhou Metro, which is principally intended for public interest, the

Group sees minimal commercial competition in this business sector.

For the Group’s property development and resources operation businesses, the Group primarily

competes with other real estate development enterprises in the PRC which may have more resources

and more established track records. Competition mainly focuses on price, quality of products,

construction time and services. The Company believes that the Group is well-positioned to compete

against other industry peers by leveraging the Group’s competitive advantages in the property

development and resources operation businesses.

Employees

As at 30 June 2021, the Group had approximately 29,385 employees. The Company considers the

Group’s relationship with its workforce to be good and the Group has not experienced any material

work stoppage or strike. In accordance with regulations applicable to enterprises and the relevant

requirements of various local governments in areas in which the Group operates, the Group makes

contributions to the pension contribution plan, employees’ medical insurance, unemployment

insurance, maternity insurance and workers’ compensation injury insurance.

Environmental Protection

The Group is subject to environmental laws and regulations governing air pollution, noise emissions,

hazardous substances, water and waste discharge and other environmental matters issued by relevant

governmental authorities in the jurisdictions in which it operates, including the PRC. The Company

believes that the Group is in compliance in all material respects with applicable environmental

regulations. As at 30 June 2021, the Company was not aware of any material environmental

proceedings or investigations to which the Group is or might become a party.

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Insurance

The Group purchases pension insurance, medical insurance, unemployment insurance, workplace

injury insurance and maternity insurance for its employees pursuant to the relevant PRC laws and

regulations. The Group purchases construction project all-risk insurance for most of the construction

projects it undertakes. The Group maintains insurance in relation to the operation of the Railway

Lines to the extent that the Company believes is in line with customary practice in the PRC. However,

the insurance carried by the Group may not be sufficient to cover claims in respect of personal injury

or property or environmental damage arising from accidents in relation to its operation of the

Guangzhou Metro, or to cover business interruption risks. Such insurance is not mandatory according

to the laws and regulations of the PRC. Please see “Risk Factors — Risks Relating to the Group’s

Businesses in General — The Group may not have adequate insurance to cover all potential liabilities

or losses” in this Offering Circular for a discussion of the risks associated with the Group’s insurance

coverage.

Legal Proceedings And Compliance

As at 30 June 2021, the Group obtained and maintained all the permits, licences and certificates

material to its operations.

As at 30 June 2021, except as disclosed in this Offering Circular, there were no current litigation or

arbitration proceedings and, to the best of the Company’s knowledge, after due and careful enquiry,

no pending litigation or proceedings against the Group that could have a material adverse effect on

its business, financial condition and results of operations.

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SENIOR MANAGEMENT OF THE COMPANY

The following table sets out the members of the senior management of the Company as at 30 June

2021.

Name Position

Ding Jianlong (丁建隆) . . . . . . . . . . . Chairman of the board of directors and party committeesecretary

Liu Zhicheng (劉智成). . . . . . . . . . . . General manager, vice chairman of the board of directors andparty committee deputy secretary

Mo Dongcheng (莫東成) . . . . . . . . . . Director and party committee deputy secretary

Zhang Huhang (張虎航) . . . . . . . . . . . Disciplinary committee secretary

Cai Changjun (蔡昌俊) . . . . . . . . . . . Deputy general manager

Liu Jing (劉靖) . . . . . . . . . . . . . . . . . Deputy general manager

Zhang Yibing (張貽兵) . . . . . . . . . . . Deputy general manager

Tan Wen (譚文) . . . . . . . . . . . . . . . . . Deputy general manager

Ma Renhong (馬仁洪) . . . . . . . . . . . . External director

Xing Yiqiang (邢益強) . . . . . . . . . . . . External director

Tan Yue (譚躍) . . . . . . . . . . . . . . . . . External director

Zhong Xuejun (鐘學軍) . . . . . . . . . . . Employee director and chairman of labour union

Zhang Zhiliang (張志良) . . . . . . . . . . Chief engineer

Ou Yang Changcheng (歐陽長城) . . . . Chief planner

Wang Ping (王苹) . . . . . . . . . . . . . . . Chief accountant and general counsel

Han Songling (韓松齡) . . . . . . . . . . . Marketing director

Huang Fei (黃飛). . . . . . . . . . . . . . . . Chief economist

Zhu Shiyou (朱士友) . . . . . . . . . . . . Production director

Chen Yanyan (陳豔豔) . . . . . . . . . . . . Board secretary

Chen Junmei (陳峻梅) . . . . . . . . . . . . External chairman of the supervisory board

Wu Qiong (武瓊) . . . . . . . . . . . . . . . . External full-time supervisor

Jin Weiqiong (金衛瓊) . . . . . . . . . . . . External full-time supervisor

Zhan Xiuli (占秀麗) . . . . . . . . . . . . . Employee supervisor

Yuan Liangliang (袁亮亮) . . . . . . . . . Employee supervisor

Ding Jianlong (丁建隆)

Mr Ding is the chairman of the board of directors and the secretary of party committee of the

Company. He held various positions at the Company since 1994. Mr Ding is a professor level senior

engineer and holds a doctorate degree.

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Liu Zhicheng (劉智成)

Mr Liu is the general manager, the vice chairman of the board of directors and the deputy secretaryof party committee of the Company. Mr Liu held various positions at the Company. He was also thegeneral manager, the vice chairman of the board of directors and a temporary deputy secretary of partycommittee of Guangzhou Railway Investment and Construction Group Co., Ltd. (廣州鐵路投資建設集團有限公司), a wholly-owned subsidiary of the Company. Mr Liu is a professor level seniorengineer and holds a bachelor’s degree.

Mo Dongcheng (莫東成)

Mr Mo is a director and a deputy secretary of party committee of the Company. He previously heldvarious positions at the Guangzhou Port Authority, Guangzhou Port Group Co., Ltd and GuangzhouRadio Group Co., Ltd.. Mr Mo is a senior political officer (高級政工師) and holds a master’s degree.

Zhang Huhang (張虎航)

Mr Zhang is the secretary of disciplinary committee of the Company. He held various positions atGuangzhou Municipal Construction Investment Group Co., Ltd (廣州市城市建設投資集團有限公司). Mr Zhang holds a master’s degree.

Cai Changjun (蔡昌俊)

Mr Cai is a deputy general manager of the Company. He held various positions at the Company since1995. Mr Cai is a professor level senior engineer and holds a doctorate degree.

Liu Jing (劉靖)

Mr Liu is a deputy general manager of the Company. He held various positions at the Company since1996. Mr Liu is a professor level senior engineer and holds a master’s degree.

Zhang Yibing (張貽兵)

Mr Zhang is a deputy general manager of the Company. He held various positions at GuangzhouMunicipal Planning Commission (廣州市計劃委員會), Guangzhou Development PlanningCommission (廣州市發展計劃委員會) and Guangzhou Municipal Development and ReformCommission (廣州市發展和改革委員會). He was also a director and a deputy general manager ofGuangzhou Railway Investment and Construction Group Co., Ltd. (廣州鐵路投資建設集團有限公司),a wholly-owned subsidiary of the Company. Mr Zhang holds a master’s degree.

Tan Wen (譚文)

Ms Tan is a deputy general manager of the Company. She held various positions at the Company since1988. She was also a deputy general manager of Guangzhou Railway Investment and ConstructionGroup Co., Ltd. (廣州鐵路投資建設集團有限公司), a wholly-owned subsidiary of the Company. MsTan is a professor level senior engineer and holds a master’s degree.

Ma Renhong (馬仁洪)

Mr Ma is an external director of the Company. He held various positions at Guangzhou MunicipalTransportation Bureau since 1986. Mr Ma was also the executive vice president of GuangdongLogistics Industry Association (廣東省物流行業協會) and holds a bachelor’s degree.

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Xing Yiqiang (邢益強)

Mr Xing is an external director of the Company. He is also a senior partner and director of the

management committee of Guangdong Global Jingwei Law Firm and the honorary president of the

Guangzhou Lawyers Association. Mr Xing is a lawyer and holds a doctorate degree.

Tan Yue (譚躍)

Mr Tan is an external director of the Company. He is also a professor and associate dean of School

of Management of Jinan University. He held various teaching positions at different institutions. Mr

Tan holds a doctorate degree.

Zhong Xuejun (鐘學軍)

Mr Zhong is an employee director and the chairman of labour union of the Company. He held various

positions at the Company since 1993. Mr Zhong is a senior political officer and an economist. He

holds a postgraduate degree.

Zhang Zhiliang (張志良)

Mr Zhang is the chief engineer of the Company. He held various positions at the Company since 1994.

Mr Zhang is a professor level senior engineer and holds a master’s degree.

Ou Yang Changcheng (歐陽長城)

Mr Ou Yang is the chief planner of the Company. He held various positions at the Company since

2007. Mr Ou Yang is a professor level senior engineer and holds a master’s degree.

Wang Ping (王苹)

Ms Wang is the chief accountant and the general counsel of the Company. Ms Wang held various

positions at the Company since 2000. She is a senior accountant and holds a master’s degree.

Han Songling (韓松齡)

Mr Han is the marketing director of the Company. He is also the dean of the Training Institute of

Guangzhou Metro Group Co., Ltd. and the general manger of Guangzhou Zhongzi Urban Rail

Engineering Consulting Co., Ltd. (廣州中諮城軌工程諮詢有限公司). Mr Han held various positions

at the Company since 1995. Mr Han is an economist and an engineer. He holds a master’s degree.

Huang Fei (黃飛)

Mr Huang is the chief economist of the Company. He held various positions at the Company since

1993. Mr Huang is an economist and holds a master’s degree.

Zhu Shiyou (朱士友)

Mr Zhu is the production director of the Company. He held various positions at the Company since

1997. Mr Zhu is a senior engineer and holds a bachelor’s degree.

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Chen Yanyan (陳豔豔)

Ms Chen is the board secretary and the office chief of the Company. Ms Chen held various positions

at the Company since 2000. Ms Chen is a political officer and holds a master’s degree.

Chen Junmei (陳峻梅)

Ms Chen is the external chairman of the supervisory board of the Company. She held various positions

at Guangzhou Municipal Finance Bureau, the Guangzhou SASAC and Guangzhou Municipal

Commission for Discipline Inspection. Ms Chen is an assistant accountant and holds a bachelor’s

degree.

Wu Qiong (武瓊)

Mr Wu is an external full-time supervisor of the Company. He was the deputy director of the press

office of the Guangzhou Municipal Government. He holds a master’s degree in public administration.

Jin Weiqiong (金衛瓊)

Ms Jin is an external full-time supervisor of the Company. She held various positions at the Company

since 2017. She is a senior accountant and holds a bachelor’s degree.

Zhan Xiuli (占秀麗)

Ms Zhan is an employee supervisor of the Company. She held various positions at the Company since

1995. She is a senior engineer and holds a master’s degree.

Yuan Liangliang (袁亮亮)

Mr Yuan is an employee supervisor of the Company. He held various positions at the Company since

2001. He is senior engineer and holds a doctorate degree.

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PRC REGULATIONS

This section summarises the principal PRC laws and regulations which are relevant to the Group’sbusiness and operations. As this is a summary, it does not contain a detailed analysis of the PRC lawsand regulations which are relevant to the Group’s business and operations.

Regulations Overview

SAFE Regulation

The Guarantor’s ability to satisfy its obligations under the Notes and the Guarantee mainly dependsupon the ability of the Guarantor’s PRC subsidiaries to obtain and remit sufficient foreign currencyto pay dividends to them and, if applicable, to repay shareholder loans. The PRC government imposescontrols on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittanceof currency to jurisdictions outside China. Under existing PRC foreign exchange regulations,payments of certain current account items can be made in foreign currencies without prior approvalfrom the local branch of the SAFE, by complying with certain procedural requirements. However,approval from the appropriate government authorities is required where Renminbi is to be convertedinto foreign currency and remitted to a jurisdiction outside China to pay capital expenses such as therepayment of bank loans denominated in foreign currencies. The PRC government may also, at itsdiscretion, restrict access to foreign currencies for current account transactions in the future. TheGuarantor’s PRC subsidiaries must present certain documents to the SAFE, its authorised branch, orthe designated foreign exchange bank, for approval before they can obtain and remit foreigncurrencies out of China, including, in the case of dividends, evidence that the relevant PRC taxes havebeen paid and, in the case of shareholder loans, evidence of the registration of the loan with the SAFE.Prior to payment of interest and principal on any shareholder loan that the Guarantor makes to its PRCsubsidiaries, the relevant PRC subsidiary must also present evidence of payment of the 10 per cent.withholding tax or lower tax treaty rate on the interest payable in respect of such shareholder loan.If the PRC foreign exchange control system prevents the Company from obtaining sufficient foreigncurrency, or if the Guarantor’s PRC subsidiaries for any reason fails to satisfy any of the PRC legalrequirements for remitting foreign currency payments, such PRC subsidiary will be unable to pay theGuarantor dividends or interest and principal on shareholder loans, which may affect the Guarantor’sability to satisfy their obligations under the Notes and the Guarantee.

SAFE Regulation on Current Account CNY Remittance

Under the applicable PRC foreign exchange control regulations, current account items refer to anytransaction for international receipts and payments involving goods, services, earnings and otherfrequent transfers.

Since July 2009, the PRC has commenced a pilot scheme pursuant to which Renminbi may be usedfor settlement of imports and exports of goods between approved pilot enterprises in five designatedcities in the PRC including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprisesin the designated offshore jurisdictions including Hong Kong and Macau. On 17 June 2010, the PRCgovernment promulgated the Circular on Issues concerning the Expansion of the Scope of the PilotProgramme of Renminbi Settlement of Cross-border Trades (Yin Fa [2010] No. 186) (關於擴大跨境貿易人民幣結算試點有關問題的通知), pursuant to which (i) Renminbi settlement of imports andexports of goods and of services and other current account items became permissible, (ii) the list ofdesignated pilot districts were expanded to cover 20 provinces and cities, and (iii) the restriction ondesignated offshore districts has been uplifted. Accordingly, any enterprise in the designated pilotdistricts and offshore enterprises are entitled to use Renminbi to settle imports and exports of goodsand services and other current account items between them. Renminbi remittance for exports of goodsfrom the PRC may only been effected by approved pilot enterprises in designated pilot districts in thePRC. In August 2011, the PRC government further expanded Renminbi cross-border trade settlement

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nationwide. In February 2012, the PRC government further promulgated the Notice on Issues Related

to the Administration of Enterprises Carrying Out CNY Settlement of Export Goods Trade (Yin Fa

[2012] No. 23) (關於出口貨物貿易人民幣結算企業管理有關問題的通知), any enterprise qualified for

the export and import business is permitted to use Renminbi as settlement currency for exports of

goods, provided that the relevant provincial government has submitted a list of key enterprises subject

to supervision (the “Supervision List”) to PBOC and five other PRC authorities (the “SixAuthorities”) and the Six Authorities have verified and signed off such list. On 5 July 2013, the

PBOC promulgated the Notice of the People’s Bank of China on Streamlining Cross-border CNY

Business Processes and Fine-tuning Relevant Policies (Yin Fa [2013] No.168) (中國人民銀行關於簡化跨境人民幣業務流程和完善有關政策的通知) (the “2013 PBOC Circular”), which simplifies the

operating procedures on current account cross-border Renminbi settlement; for example, where

automatic fund remittance occurs, the bank can debit the amount into the relevant account first and

subsequently verify the relevant transaction.

SAFE Regulation on Capital Account CNY Remittance

Under the applicable PRC foreign exchange control regulations, capital account items include

cross-border transfers of capital, direct investments, securities investments, derivative products and

loans. Capital account payments are generally subject to approval of the relevant PRC authorities.

Settlements for capital account items are generally required to be made in foreign currencies. For

instance, foreign investors (including any Hong Kong investors) are required to make any capital

contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out

in the relevant joint venture contracts and/or articles of association as approved by the relevant

authorities. Foreign invested enterprises or relevant PRC parties are also generally required to make

capital item payments including proceeds from liquidation, transfer of shares, reduction of capital,

interest and principal repayment to foreign investors in a foreign currency. The relevant PRC

authorities may grant approval for a foreign entity to make a capital contribution or a shareholder’s

loan to a foreign invested enterprise or to make payment for the transfer of equity interest of an

onshore enterprise with Renminbi lawfully obtained by it outside the PRC and for the foreign invested

enterprise to service interest and principal repayment to its foreign investor outside the PRC in

Renminbi. The foreign invested enterprise may be required to complete a registration and verification

process with the relevant PRC authorities before such Renminbi remittances.

On 7 April 2011, SAFE promulgated the SAFE Circular, which became effective on 1 May 2011.

According to the SAFE Circular, in the event that foreign investors intend to use cross-border

Renminbi (including offshore Renminbi and onshore Renminbi held in the capital accounts of

non-PRC residents) to make a contribution to an onshore enterprise or make payment for the transfer

of equity interest of an onshore enterprise by a PRC resident, such onshore enterprise shall be required

to submit the relevant MOFCOM’s prior written consent to the relevant local branches of SAFE of

such onshore enterprise and register for or modify a foreign invested enterprise status. Further, the

SAFE Circular clarifies that the foreign debts borrowed, and the external guarantee provided by

onshore entities (including financial institutions) in Renminbi shall, in principle, be regulated under

the current PRC foreign debt and external guarantee regime.

On 10 May 2013, SAFE promulgated the Provisions on Foreign Exchange Administration over Direct

Investment Made by Foreign Investors in China (外國投資者境內直接投資外匯管理規定) (the

“SAFE Provisions”), which became effective on 13 May 2013. According to the SAFE Provisions,

A foreign invested enterprise that needs to remit funds abroad due to capital reduction, liquidation,

advance recovery of investment, profit distribution, etc. may purchase foreign exchange and make

external payment with the relevant bank after going through corresponding registration.

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On 10 January 2014, SAFE promulgated the Notice of the State Administration of Foreign Exchange

on Further Improving and Adjusting the Policies on Capital Account Foreign Exchange Administration

(國家外匯管理局關於進一步改進和調整資本項目外匯管理政策的通知), which allows a domestic

enterprise to lend to overseas enterprises with equity affiliation, provided that the domestic enterprise

shall register the quotas of overseas lending with SAFE branch, and the cumulative overseas loan

amount may not exceed 30 per cent. of its owners’ equity; if the loan amount exceed the said

percentage, the SAFE branch shall decide on a case by case basis. In addition, according to the 2013

PBOC Circular, onshore non-financial enterprises can request the PRC bank to extend Renminbi loans

to offshore entities within the same group under Renminbi cash pooling arrangements and will no

longer need to apply for a quota from SAFE.

On 13 October 2011, PBOC promulgated the Measures for Administration of CNY Settlement

Business in Relation to Foreign Direct Investment (外商直接投資人民幣結算業務管理辦法) (the

“PBOC Renminbi FDI Measures”), pursuant to which, PBOC special approval for Renminbi FDI and

shareholder loans which was required by the PBOC Notice concerning Clarification of Certain Issues

on Cross-border Renminbi Settlement (中國人民銀行關於明確跨境人民幣業務相關問題的通知)

promulgated on 3 June 2011 is no longer necessary. The PBOC Renminbi FDI Measures provide that,

among others, foreign invested enterprises are required to conduct registrations with the local branchof PBOC within ten working days after obtaining the business licences for the purpose of Renminbisettlement, a foreign investor is allowed to open a Renminbi expense account (人民幣前期費用專用存款賬戶) to reimburse some expenses before the establishment of a foreign invested enterprise andthe balance in such an account can be transferred to the Renminbi capital account (人民幣資本金專用存款賬戶) of such foreign invested enterprise when it is established, commercial banks can remita foreign investor’s Renminbi proceeds from distribution (dividends or otherwise) by its PRCsubsidiaries out of the PRC after reviewing certain requisite documents, if a foreign investor intendsto use its Renminbi proceeds from distribution (dividends or otherwise) by its PRC subsidiaries, theforeign investor may open a Renminbi reinvestment account (人民幣再投資專用賬戶) to pool theRenminbi proceeds, and the PRC parties selling stake in domestic enterprises to foreign investors canopen Renminbi accounts and receive the purchase price in Renminbi paid by foreign investors. ThePBOC Renminbi FDI Measures also state that the foreign debt quota of a foreign invested enterpriseconstitutes its Renminbi debt and foreign currency debt from its offshore shareholders, offshoreaffiliates and offshore financial institutions, and a foreign invested enterprise may open a Renminbiaccount (人民幣一般存款賬戶) to receive its Renminbi proceeds borrowed offshore by submitting theRenminbi loan contract to the commercial bank and make repayments of principal of and interest onsuch debt in Renminbi by submitting certain documents as required to the commercial bank.

On 3 December 2013, MOFCOM promulgated the MOFCOM Renminbi FDI Circular, which becameeffective on 1 January 2014, to further facilitate FDI by simplifying and streamlining the applicableregulatory framework. Pursuant to the MOFCOM Circular, the appropriate office of MOFCOM and/orits local counterparts will grant written approval for each FDI and specify “Renminbi Foreign DirectInvestment” and the amount of capital contribution in the approval. Unlike previous MOFCOMregulations on FDI, the MOFCOM Circular removes the approval requirement for foreign investorswho intend to change the currency of its existing capital contribution from a foreign currency toRenminbi. In addition, the MOFCOM Circular also clearly prohibits the FDI funds from being usedfor any investment in securities and financial derivatives (except for investment in the PRC listedcompanies as strategic investors) or for entrustment loans in the PRC.

On 9 June, 2016, SAFE promulgated Circular of the State Administration of Foreign Exchange onReforming and Regulating Policies on the Control over Foreign Exchange Settlement of CapitalAccounts (Hui Fa [2016] No. 16) (國家外匯管理局關於改革和規範資本項目結匯管理政策的通知),which provides that, among other things, (i) domestic enterprises (including Chinese-fundedenterprises and foreign-invested enterprises, excluding financial institutions) may go through foreign

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exchange settlement formalities for their foreign debts at their own discretion; (ii) domesticinstitutions may, at their discretion, settle up to 100 per cent. of foreign exchange receipts undercapital accounts for the time being. The SAFE may adjust the above proportion in due time accordingto balance of payments.

NDRC Rules on Registration for Issuance of Foreign Debts

On 14 September 2015, NDRC issued the NDRC Circular, which became effective on the same date.The NDRC Circular provides that, among others, (i) the issuance of foreign debts by domesticenterprises shall be subject to the record-filing and the registration system as well as the quota reviewand approval system by NDRC; and (ii) the enterprises issuing foreign debts must complete therecord-filing and registration in respect of the foreign debts with NDRC before issuance and thenreport the details of such issuance to NDRC within 10 business days following the closing date of suchissuance. The term “foreign debts” referred to in the NDRC Circular means (i) CNY denominated orforeign currency denominated debt instruments with a maturity date of more than one year; (ii) issuedoverseas by the domestic enterprises, their controlled overseas enterprises or branches; and (iii) withagreed payment terms of principal and interest. It also include bonds issued overseas, long-term andmedium-term international commercial loans, etc.

The MOF Circular and the Joint Circular

The PRC government (including the Guangzhou Municipal Government) is not an obligor and shallunder no circumstances have any obligation arising out of or in connection with the Notes, theGuarantee, the Keepwell Deed or the Deed of Equity Interest Purchase Undertaking. This position hasbeen reinforced by the MOF Circular promulgated on 28 March 2018 and took effect on the same day,and the Joint Circular promulgated on 11 May 2018 and took effect on the same day.

CIT and Withholding Tax

Under the CIT Law, the Issuer or the Guarantor may be classified as a “resident enterprise” of China.Such classification could result in unfavourable tax consequences to the Issuer or the Guarantor andnon-PRC Noteholders. Under the CIT Law, an enterprise established outside of China with a “de factomanagement organisation” located within China will be considered a “resident enterprise”, andconsequently will be treated in a manner similar to a Chinese enterprise for CIT purposes. Theimplementing rules of the CIT Law define “de facto management” as “substantial and overallmanagement and control over the production and operations, personnel, accounting, and properties”of the enterprise. However, it is still unclear how the PRC tax authorities will determine whether anentity will be classified as a “resident enterprise”. As at the date of this Offering Circular, neither theIssuer nor the Guarantor has been notified or informed by the PRC tax authorities that it is consideredas a PRC tax resident enterprise for the purpose of the CIT Tax Law. However, there can be noassurance that the Issuer or the Guarantor will not be treated as a PRC tax resident enterprise underthe CIT Law and related implementation regulations in the future. If the PRC tax authorities determinethat either the Issuer or the Guarantor is a “resident enterprise” for PRC enterprise income taxpurposes, a number of unfavourable PRC tax consequences could follow. The Issuer or the Guarantormay be subject to CIT at a rate of 25 per cent. on its worldwide taxable income as well as PRC CITreporting obligations. In the present case, this would mean that income such as interest from anyinvestment of any portion of the offering proceeds and other income sourced outside the PRC wouldbe subject to PRC CIT at a rate of 25 per cent. If either the Issuer or Guarantor is considered a“resident enterprise”, interest payable to “non-resident enterprise” Noteholders may be treated asincome derived from sources within China and be subject to PRC withholding tax at a rate of 10 percent., and capital gains realised by “non-resident enterprise” Noteholders may be treated as incomederived from sources within China and be subject to a 10 per cent. PRC tax, in each case subject tothe provisions of any applicable tax treaty. Furthermore, if the Issuer or Guarantor is considered a“resident enterprise”, interest payable to non-PRC resident individual Noteholders may be treated as

121

income derived from sources within China and be subject to PRC withholding tax at a rate of 20 per

cent., and capital gains realised by non-PRC resident individual Noteholders may be treated as income

derived from sources within China and be subject to a 20 per cent. PRC tax, in each case subject to

the provisions of any applicable tax treaty.

There are significant uncertainties under the CIT Law relating to the withholding tax liabilities of the

Company’s PRC subsidiaries. Under the CIT Law, the profits of a foreign invested enterprise

generated in 2008 and onwards which are distributed to its immediate holding company outside the

PRC will be subject to a withholding tax rate of 10.0 per cent. or a lower treaty rate as contained in

any income tax treaty or agreement to which China is a party. Pursuant to a special arrangement

between Hong Kong and the PRC, such rate is lowered to 5.0 per cent. if a Hong Kong resident

enterprise owns 25 per cent. or more equity interest in a PRC company. Some of the Company’s PRC

subsidiaries are currently wholly-owned by Hong Kong subsidiaries.

Foreign Debt Laws

Under PRC regulations, the Issuer and the Guarantor may not be able to transfer to the Company’s

PRC subsidiaries proceeds from this offering, which could impair their respective ability to make

timely payments of interest and principal under the Notes and the Guarantee. Under PRC rules and

regulations relating to supervision of foreign debt, including policies of the SAFE, restrictions on the

incurrence of foreign debt (including intercompany debt that would be owed to the Issuer or the

Guarantor by the Company’s PRC subsidiaries) will require that the proceeds of this offering and

other funding the Issuer or the Guarantor provide to the Company’s PRC subsidiaries that will be used

for land acquisitions and developments in China may only be transferred to the Company’s PRC

subsidiaries as equity investments and not as loans. Equity contributions by the Guarantor or its

non-PRC subsidiaries to the Company’s PRC subsidiaries will require approvals from the PRC

governmental authorities, such as the approvals from the commerce department of the local

government and filing with the MOFCOM and the local branch of the SAFE, which may take

considerable time and delay the actual contribution to the PRC subsidiaries. This may adversely affect

the financial condition of the PRC subsidiaries and may cause delays to the development undertaken

by such PRC subsidiaries. There can be no assurance that the Company has obtained or will obtain

in a timely manner or at all relevant necessary approval certificates or filings for all its operating

subsidiaries in the PRC to comply with this regulation.

122

FORM OF PRICING SUPPLEMENT

The Pricing Supplement that will be issued in respect of each Tranche will be substantially in thefollowing form, duly supplemented if (necessary), amended (if necessary) and completed to reflect theparticular terms of the relevant Notes and their issue:

[This Pricing Supplement is for distribution to professional investors (as defined in Chapter 37 of theRules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “HongKong Stock Exchange”)) (“Professional Investors”) only.

Notice to Hong Kong investors: Each of the Issuer, the Guarantor and the Company confirms thatthe Notes are intended for purchase by Professional Investors only and will be listed on the HongKong Stock Exchange on that basis. Accordingly, each of the Issuer, the Guarantor and the Companyconfirms that the Notes are not appropriate as an investment for retail investors in Hong Kong.Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this Pricing Supplement, otherthan to ensure that the prescribed form disclaimer and responsibility statements, and astatement limiting distribution of this Pricing Supplement to Professional Investors only havebeen reproduced in this Pricing Supplement. Listing of the Programme and the Notes on theHong Kong Stock Exchange is not to be taken as an indication of the commercial merits or creditquality of the Programme, the Notes, the Issuer, the Guarantor or the Company, the Group orquality of disclosure in this Pricing Supplement. Hong Kong Exchanges and Clearing Limited andthe Hong Kong Stock Exchange take no responsibility for the contents of this Pricing Supplement,make no representation as to its accuracy or completeness and expressly disclaims any liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or any part of thecontents of this Pricing Supplement.

This Pricing Supplement, together with the Offering Circular (as defined below), includes particularsgiven in compliance with the Rules Governing the Listing of Securities on The Stock Exchange ofHong Kong Limited for the purpose of giving information with regard to the Issuer, the Guarantor,the Company, the Group and the Notes. Each of the Issuer, the Guarantor and the Company acceptsfull responsibility for the accuracy of the information contained in this Pricing Supplement andconfirms, having made all reasonable enquiries, that to the best of its knowledge and belief there areno other facts the omission of which would make any statement herein misleading.]1

[PRIIPs REGULATION — PROHIBITION OF SALES TO EEA RETAIL INVESTORS — TheNotes are not intended to be offered, sold or otherwise made available to and should not be offered,sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). Forthese purposes, a retail investor means a person who is one (or more) of: (i) a retail client as definedin point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); (ii) a customerwithin the meaning of Directive (EU) 2016/97 (the “Insurance Distribution Directive”), where thatcustomer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFIDII. Consequently, no key information document required by Regulation (EU) No 1286/2014 (asamended, the “Prospectus Regulation”) for offering or selling the Notes or otherwise making themavailable to retail investors in the EEA has been prepared and therefore offering or selling the Notesor otherwise making them available to any retail investor in the EEA may be unlawful under theProspectus Regulation.]2

1 Application for Notes to be listed on the Hong Kong Stock Exchange only.2 Legend to be included on front of the Pricing Supplement if the Notes potentially constitute “packaged” products and

no key information document will be prepared or the Issuer wishes to prohibit offers to EEA retail investors for any otherreason, in which case the selling restriction should be specified to be “Applicable”.

123

[UK PRIIPs REGULATION — PROHIBITION OF SALES TO UK RETAIL INVESTORS — The

Notes are not intended to be offered, sold or otherwise made available to and should not be offered,

sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these

purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in

point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of

the European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of the

provisions of the Financial Services and Markets Act 2000 (the “FSMA”) and any rules or regulations

made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify

as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it

forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in

Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA (the

“UK Prospectus Regulation”). Consequently no key information document required by Regulation

(EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPsRegulation”) for offering or selling the Notes or otherwise making them available to retail investors

in the UK has been prepared and therefore offering or selling the Notes or otherwise making them

available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.]3

[“MiFID II product governance / Professional investors and ECPs only target market — Solely

for the purposes of [the/each] manufacturer’s product approval process, the target market assessment

in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible

counterparties and professional clients only, each as defined in Directive 2014/65/EU (as amended,

“MiFID II”); and (ii) all channels for distribution of the Notes to eligible counterparties and

professional clients are appropriate. Any person subsequently offering, selling or recommending the

Notes (a “distributor”) should take into consideration the manufacturer[‘s/s’] target market

assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target

market assessment in respect of the Notes (by either adopting or refining the manufacturer[‘s/s’]

target market assessment) and determining appropriate distribution channels.”]

[UK MiFIR product governance / Professional investors and ECPs only target market — Solely

for the purposes of [the/each] manufacturer’s product approval process, the target market assessment

in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible

counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”), and

professional clients, as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by

virtue of the European Union (Withdrawal) Act 2018 (“UK MiFIR”); and (ii) all channels for

distribution of the Notes to eligible counterparties and professional clients are appropriate. Any

person subsequently offering, selling or recommending the Notes (a “distributor”) should take into

consideration the manufacturer[‘s/s’] target market assessment; however, a distributor subject to the

FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR ProductGovernance Rules”) is responsible for undertaking its own target market assessment in respect of the

Notes (by either adopting or refining the manufacturer[‘s/s’] target market assessment) and

determining appropriate distribution channels.]

3 Legend to be included on front of the Pricing Supplement if the Notes potentially constitute “packaged” products andno key information document will be prepared or the Issuer wishes to prohibit offers to UK retail investors for any otherreason, in which case the selling restriction should be specified to be “Applicable”.

124

[SINGAPORE SFA PRODUCT CLASSIFICATION — In connection with Section 309B of the

Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the

“SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the

“CMP Regulations 2018”), the Issuer has determined, and hereby notifies all relevant persons (as

defined in Section 309A(1) of the SFA), that the Notes are [prescribed capital markets products] /

[capital markets products other than prescribed capital markets products] (as defined in the CMP

Regulations 2018) and [are] [Excluded] / [Specified] Investment Products (as defined in MAS Notice

SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on

Recommendation on Investment Products).]4

WARNING

The contents of this Pricing Supplement have not been reviewed by any regulatory authority of any

jurisdiction. You are advised to exercise caution in relation to the offering of the Notes. If you are in

any doubt about any of the contents of this Pricing Supplement, you should obtain independent

professional advice.

4 For any Notes to be offered to Singapore investors, the Issuer to consider whether it needs to re-classify the Notespursuant to Section 309B of the SFA prior to the launch of the offer.

125

[Date]

Guangzhou Metro Investment Finance (BVI) Limited(廣州地鐵投融資(維京)有限公司)1

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] due [●]Guaranteed by Guangzhou Metro Investment Finance (HK) Limited

(廣州地鐵投融資(香港)有限公司)with the benefit of a Keepwell Deed and a Deed of Equity Interest Purchase

Undertaking by Guangzhou Metro Group Co., Ltd.(廣州地鐵集團有限公司)

under its U.S.$3,000,000,000Guaranteed Medium Term Note Programme (the “Programme”)

This document constitutes the Pricing Supplement relating to the issue of Notes described herein.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions

of the Notes (the “Conditions”) set forth in the Offering Circular dated [●] (the “Offering Circular”)

[and the Supplementary Offering Circular dated [●]]. This Pricing Supplement contains the final

terms of the Notes and must be read in conjunction with the Offering Circular [as so supplemented].

Full information on the Issuer, the Guarantor, the Company and the offer of the Notes is only available

on the basis of the combination of the Offering Circular[, the Supplementary Offering Circular dated

[●]] and this Pricing Supplement.

[N.B. If the Issuer, the Guarantor or the Company has prepared any unaudited, but reviewed,condensed consolidated financial statements dated as at a date, or for a period ending, subsequentto the financial statements appearing in the latest Offering Circular, ensure that such financialstatements are provided to potential investors of the relevant Series of Notes as soon as practicableupon announcement of the deal.]

[The following alternative language applies if the first tranche of an issue which is being increased

was issued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth

in the Offering Circular dated [●]. This Pricing Supplement contains the final terms of the Notes and

must be read in conjunction with the Offering Circular dated [●] [and the Supplementary Offering

Circular dated [●]], save in respect of the Conditions which are extracted from the Offering Circular

dated [●] and are attached hereto. Full information on the Issuer, the Guarantor, the Company and the

offer of the Notes is only available on the basis of the combination of the Offering Circular[, the

Supplementary Offering Circular dated [●]] and this Pricing Supplement.]

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the

numbering should remain as set out below, even if “Not Applicable” is indicated for individual

paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.]

[If the Notes have a maturity of less than one year from the date of their issue, the minimum

denomination may need to be £100,000 or its equivalent in any other currency.]

1 Incorporated in the British Virgin Islands with limited liability.

126

1 (i) Issuer: Guangzhou Metro Investment Finance (BVI) Limited(廣州地鐵投融資(維京)有限公司)

(ii) Guarantor: Guangzhou Metro Investment Finance (HK) Limited(廣州地鐵投融資(香港)有限公司)

(iii) Company/KeepwellProvider:

Guangzhou Metro Group Co., Ltd. (廣州地鐵集團有限公司)

2 (i) Series Number: [●]

(ii) Tranche Number: [●]

(iii) Date on which theNotes will beconsolidated and forma single Series:

[The Notes will be consolidated and form a single Serieswith [identify earlier Tranches] on [the IssueDate/exchange of the Temporary Global Note forinterests in the Permanent Global Note, as referred to inparagraph [l] below, which is expected to occur on orabout [date][Not Applicable]]

3 Specified Currency orCurrencies:

[●]

4 Aggregate Nominal Amount:

(i) Series: [●]

(ii) Tranche: [●]

5 (i) Issue Price: [●] per cent. of the Aggregate Nominal Amount [plusaccrued interest from [insert date] (if applicable)]

[(ii) Net proceeds: [●][Delete for unlisted issuances.]

6 (i) SpecifiedDenominations:

2, 3[●]

(ii) Calculation Amount: [●]

7 (i) Issue Date: [●]

(ii) InterestCommencement Date:

[specify/Issue Date/Not Applicable]

2 Notes (including Notes denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuerin the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA and which havea maturity of less than one year and must have a minimum redemption value of £100,000 (or its equivalent in othercurrencies).

3 If the specified denomination is expressed to be €100,000 or its equivalent and multiples of a lower principal amount(for example €1,000), insert the additional wording as follows: €100,000 and integral multiples of €1,000 in excessthereof up to and including €199,000. No notes in definitive form will be issued with a denomination above €199,000.In relation to any issue of Notes which are a “Global Note exchangeable to Definitive Notes” in circumstances other thanin the limited circumstances specified in the Global Note, such Notes may only be issued in denominations equal to, orgreater than, €100,000 (or equivalent) and multiples thereof.

127

8 Maturity Date: [Fixed rate — specify date/Floating rate —InterestPayment Date falling in or nearest to [specify month]]4

9 Interest Basis: [[●] per cent. Fixed Rate][[LIBOR/EURIBOR/HIBOR/CNH HIBOR] +/- [●] percent. Floating Rate][Zero Coupon][Index Linked Interest][Dual Currency Interest][specify other](further particulars specified below)

10 Redemption/Payment Basis: [Redemption at par][Index Linked Redemption][Dual Currency Redemption][Partly Paid][Instalment][specify other]

11 Change of Interest Basis orRedemption/Payment Basis:

[Specify details of any provision for change of Notesinto another Interest Basis or Redemption/PaymentBasis/Not Applicable]

12 Put/Call Options: [Investor Put]5

[Issuer Call][Change of Control Put Option][(further particulars specified below)]

13 Date of [Board] approval forissuance of Notes andGuarantee obtained:

[●] [and [●], respectively]](N.B. Only relevant where Board (or similar)authorisation is required for the particular tranche ofNotes or related Guarantee)

14 NDRC Registration: [Insert registration certificate number and date]

15 Listing: [The Stock Exchange of Hong Kong Limited/specifyother/None] (For Notes to be listed on the Hong KongStock Exchange, insert the expected effective listing dateof the Notes)

16 Method of distribution: [Syndicated/Non-syndicated]

4 Note that for Renminbi and Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates aresubject to modification it will be necessary to use the second option here and the following words should be added:“provided that if any Interest Payment Date falls on a day which is not a Business Day, the Interest Payment Date willbe the next succeeding Business Day unless it would thereby fall in the next calendar month in which event the InterestPayment Date shall be brought forward to the immediately preceding Business Day.”.

5 For as long as Bearer Notes issued in accordance with TEFRA D are represented by a Temporary Global Note, an InvestorPut shall not be available unless the certification required under TEFRA D with respect to non-U.S. beneficial ownershiphas been received by the Issuer or the Agent

128

Provisions Relating to Interest (if any) Payable

17 Fixed Rate Note Provisions: [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphsof this paragraph)

(i) Rate[(s)] of Interest: [●] per cent. per annum [payable[annually/semi-annually/quarterly/other (specify)] inarrear](If payable other than annually, consider amendingCondition [5])

(ii) Interest PaymentDate(s):

[[●] in each year [adjusted in accordance with [specifyBusiness Day Convention and any applicable BusinessCentre(s) for the definition of “Business Day”]/notadjusted](N.B.: This will need to be amended in the case of longor short coupons)

(iii) Fixed CouponAmount(s):(Applicable to Notes indefinitive form)

[●] per Calculation Amount6

(iv) Broken Amount(s):(Applicable to Notes indefinitive form)

[●] per Calculation Amount, payable on the InterestPayment Date falling [in/on] [●]

(v) Day Count Fraction: [30/360 or Actual/Actual (ICMA/ISDA) or Actual/365(Fixed)7 or [specify other]]

(vi) Determination Date(s): [●] in each year[Insert regular interest payment dates, ignoring issuedate or maturity date in the case of a long or short firstor last coupon](N.B.: This will need to be amended in the case ofregular interest payment dates which are not of equalduration)(N.B.: Only relevant where Day Count Fraction isActual/Actual (ICMA))

(vii) Other terms relating tothe method ofcalculating interest forFixed Rate Notes:

[None/Give details]

6 For Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject tomodification the following alternative wording is appropriate: “Each Fixed Coupon Amount shall be calculated bymultiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding theresultant figure to the nearest CNY0.01, CNY0.005 being rounded upwards in the case of Renminbi denominated FixedRate Notes and to the nearest HK$0.01, HK$0.005 for the case of Hong Kong dollar denominated Fixed Rate Notes,being rounded upwards.”

7 Applicable to Hong Kong dollar denominated Fixed Rate Notes and Renminbi denominated Fixed Rate Notes.

129

18 Floating Rate NoteProvisions:

[Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphsof this paragraph)

(i) Interest Period(s): [●][[, subject to adjustment in accordance with theBusiness Day Convention set out in (iv) below/, notsubject to any adjustment[, as the Business DayConvention in (v) below is specified to be NotApplicable]]]

(ii) Specified InterestPayment Dates:

[[●] in each year[, subject to adjustment in accordancewith the Business Day Convention set out in (iv) below/,not subject to any adjustment[, as the Business DayConvention in (iv) below is specified to be NotApplicable]]]

(iii) Interest Period Date: [Not Applicable]/ [●][in each year[, subject toadjustment in accordance with the Business DayConvention set out in (v) below/, not subject to anyadjustment[, as the Business Day Convention in (v)below is specified to be Not Applicable]]

(iv) First Interest PaymentDate:

[●]

(v) Business DayConvention:

[Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/[specifyother]]

(vi) Additional BusinessCentre(s):

[●]

(vii) Manner in which theRate of Interest andInterest Amount is tobe determined:

[Screen Rate Determination/ISDA Determination/specifyother]

(viii) Party responsible forcalculating the Rate ofInterest and InterestAmount (if not theIssuing and PayingAgent):

[●]

(ix) Screen RateDetermination:

— Reference Rate: [●](Either LIBOR, EURIBOR, HIBOR, CNH HIBOR orother, although additional information is required ifother — including fallback provisions in the AgencyAgreement)

130

— InterestDeterminationDate(s):

[●](Second London business day prior to the start of eachInterest Period if LIBOR (other than Sterling, HongKong dollar or euro LIBOR), second Hong Kongbusiness day prior to the start of each Interest period ifCNH HIBOR, first day of each Interest Period if SterlingLIBOR or Hong Kong dollar LIBOR or HIBOR and thesecond day on which the TARGET2 System is open priorto the start of each Interest Period if EURIBOR or euroLIBOR)

— Relevant ScreenPage:

[●](In the case of EURIBOR, if not Reuters EURIBOR01ensure it is a page which shows a composite rate oramend the fallback provisions appropriately)

(x) ISDA Determination:

— Floating RateOption:

[●]

— DesignatedMaturity:

[●]

— Reset Date: [●]

(xi) Margin(s): [+/-] [●] per cent. per annum

(xii) Minimum Rate ofInterest:

[●] per cent. per annum

(xiii) Maximum Rate ofInterest:

[●] per cent. per annum

(xiv) Day Count Fraction: [Actual/Actual or Actual/Actual (ISDA)Actual/365(Fixed)Actual/365(Sterling)Actual/36030/360, 360/360 or Bond Basis30E/360 or Eurobond Basis30E/360 (ISDA)Other](See Condition 5 for alternatives)

(xv) Fallback provisions,rounding provisionsand any other termsrelating to the methodof calculating intereston Floating RateNotes, if different fromthose set out in theConditions:

[●]

131

19 Zero Coupon NoteProvisions:

[Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphsof this paragraph)

(i) Amortisation Yield: [●] per cent. per annum

(ii) Any otherformula/basis ofdetermining amountpayable:

[●]

(iii) Day Count Fraction inrelation to EarlyRedemption Amountsand late payment:

[Condition 6(B)(i)] and Condition 7 apply/specify other](Consider applicable day count fraction if not U.S.dollar denominated)

20 Index Linked Interest NoteProvisions:

[Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphsof this paragraph)

(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [●]

(iii) Party responsible forcalculating the Rate ofInterest (if not theCalculation Agent) andInterest Amount (if notthe Issuing and PayingAgent):

[●]

(iv) Interest DeterminationDate(s):

[●]

(v) Provisions fordetermining Couponwhere calculation byreference to Indexand/or Formula isimpossible orimpracticable:

[need to include a description of market disruption orsettlement disruption events and adjustment provisions]

(vi) Interest or calculationperiod(s):

[●]

(vii) SpecifiedPeriod(s)/SpecifiedInterest PaymentDates:

[●]

(viii) Business DayConvention:

[Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/specifyother]

132

(ix) Additional BusinessCentre(s):

[●]

(x) Minimum Rate ofInterest:

[●] per cent. per annum

(xi) Maximum Rate ofInterest:

[●] per cent. per annum

(xii) Day Count Fraction: [●]

21 Dual Currency Interest NoteProvisions:

[Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphsof this paragraph)

(i) Rate ofExchange/method ofcalculating Rate ofExchange:

[give or annex details]

(ii) Party, if any,responsible forcalculating theprincipal and/orinterest due (if not theIssuing and PayingAgent):

[●]

(iii) Provisions applicablewhere calculation byreference to Rate ofExchange impossibleor impracticable:

[need to include a description of market disruption orsettlement disruption events and adjustment provisions]

(iv) Person at whose optionSpecified Currency(ies)is/are payable:

[●]

Provisions Relating to Redemption

22 Issuer Call: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphsof this paragraph)

(i) Optional RedemptionDate(s):

[●]

(ii) Optional RedemptionAmount and method, ifany, of calculation ofsuch amount(s):

[[●] per Calculation Amount/specify other/seeAppendix]

133

(iii) If redeemable in part:

(a) MinimumRedemptionAmount:

[●]

(b) MaximumRedemptionAmount:

[●]

(iv) Notice period (if otherthan as set out in theConditions):

[●](N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer is advisedto consider the practicalities of distribution ofinformation through intermediaries, for example,clearing systems and custodians, as well as any othernotice requirements which may apply, for example, asbetween the Issuer and the Issuing and Paying Agent orthe Trustee)

23 Investor Put: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphsof this paragraph)

(i) Optional RedemptionDate(s):

[●]

(ii) Optional RedemptionAmount and method, ifany, of calculation ofsuch amount(s):

[[●] per Calculation Amount/specify other/seeAppendix]

(iii) Notice period (if otherthan as set out in theConditions):

[●](N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer is advisedto consider the practicalities of distribution ofinformation through intermediaries, for example,clearing systems and custodians, as well as any othernotice requirements which may apply, for example, asbetween the Issuer and the Issuing and Paying Agent orthe Trustee)

24 Change of Control Put: [Applicable/Not Applicable]

25 Final Redemption Amount: [[●] per Calculation Amount/specify other/seeAppendix]]

26 Early Redemption Amountpayable on redemption fortaxation reasons or on eventof default and/or the methodof calculating the same (ifrequired or if different fromthat set out in theConditions):

[[●] per Calculation Amount/specify other/seeAppendix]]

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General Provisions Applicable to the Notes

27 Form of Notes: [Bearer Notes:[Temporary Global Note exchangeable for a PermanentGlobal Note which is exchangeable for Definitive Notesin the limited circumstances specified in the PermanentGlobal Note][Temporary Global Note exchangeable for DefinitiveNotes on [●] days’ notice8][Permanent Global Note exchangeable for DefinitiveNotes in the limited circumstances specified in thePermanent Global Note]

[Registered Notes:Global Certificate exchangeable for Individual NoteCertificates in the limited circumstances described in theGlobal Certificate]

28 Additional FinancialCentre(s) or other specialprovisions relating toPayment Dates:

[Not Applicable/give details](Note that this paragraph relates to the date of paymentand not the end dates of interest periods for the purposeof calculating the amount of interest, to whichsub-paragraphs [18 (iii)] and [20(ix) ]relate)

29 Talons for future Couponsor Receipts to be attached toDefinitive Bearer Notes (anddates on which such Talonsmature):

[Yes/No. If yes, give details]

30 Details relating to PartlyPaid Notes: amount of eachpayment comprising theIssue Price and date onwhich each payment is to bemade and consequences offailure to pay, including anyright of the Issuer to forfeitthe Notes and interest dueon late payment:

[Not Applicable/give details. N.B.: a new form ofTemporary Global Note and/or Permanent Global Notemay be required for Partly Paid issues]

31 Details relating toInstalment Notes:

(i) Instalment Amount(s): [Not Applicable/give details]

(ii) Instalment Date(s): [Not Applicable/give details]

8 If the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect:“€100,000 and integral multiples of [€1,000] in excess thereof up to and including €199,000”, the Temporary GlobalNote shall not be exchangeable on [●] days’ notice.

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32 Redenomination applicable: Redenomination [not] applicable[(If Redenomination is applicable, specify the applicableDay Count Fraction and any provisions necessary todeal with floating rate interest calculation (includingalternative reference rates)]

33 Consolidation provisions: [Not Applicable/The provisions] [annexed to this PricingSupplement] apply]

34 Other terms or specialconditions:

[Not Applicable/give details]

Distribution

35 (i) If syndicated, namesand addresses ofManagers andcommitments:

[Not Applicable/give names and addresses andcommitments]

(ii) Date of SubscriptionAgreement:

[●]

(iii) Stabilising Manager(s)(if any):

[Not Applicable/give name]

36 If non-syndicated, name ofrelevant Dealer:

[Not Applicable/give name and address]

37 Total commission andconcession:

[●] per cent. of the Aggregate Nominal Amount

38 U.S. Selling Restrictions: [Reg. S Category 1/Category 2; TEFRA D/TEFRAC/TEFRA not applicable9]

39 Additional sellingrestrictions:

[Not Applicable/give details]

40 Prohibition of Sales to EEAand UK Retail Investors:

[Applicable]/[Not Applicable](If the Notes clearly do not constitute “packaged”products, “Not Applicable” should be specified. If theNotes may constitute “packaged” products and no KIDwill be prepared, “Applicable” should be specified.)

Operational Information

41 Any clearing system(s) otherthan Euroclear orClearstream, Luxembourgand the relevantidentification number(s):

[CMU/Not Applicable/give name(s) and number(s)]

42 Delivery: Delivery [against/free of] payment

9 “TEFRA not applicable” is only available for Bearer Notes with a with a term of 365 days or less (taking into accountany unilateral extensions and rollovers) or Registered Notes.

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43 Additional Paying Agent(s)(if any):

[●]

ISIN: [●]

Common Code: [●]

(insert here any other relevant codes such as a CMU instrument number)

44 The aggregate principalamount of Notes issued hasbeen translated into U.S.dollars at the rate of [●],producing a sum of (forNotes not denominated inU.S. dollars):

[Not applicable/U.S.$[●]]

45 Programme Ratings: [●]

46 Notes Ratings: [●]

47 Legal Entity Identifier: [●]

[USE OF PROCEEDS

Give details if different from the “Use of Proceeds” section in the Offering Circular.]

[STABILISING

In connection with the issue, one or more of the Dealers named as Stabilising Manager in this Pricing

Supplement (the “Stabilising Manager(s)”) (or persons acting on behalf of any Stabilising

Manager(s)) may over-allot Notes or effect transactions with a view to supporting the market price

of the Notes at a level higher than that which might otherwise prevail for a limited period after the

Issue Date of the relevant Tranche of Notes. However, stabilisation may not necessarily occur. Any

stabilisation action may begin on or after the date on which adequate public disclosure of the terms

of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must

end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60

days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or

over-allotment must be conducted by the relevant Stabilisation Manager(s) (or person(s) acting on

behalf of any Stabilisation Manager(s)) in accordance with all applicable laws and rules.]

[MATERIAL ADVERSE CHANGE STATEMENT

[Except as otherwise disclosed in this document, there/There10] has been no adverse change (nor any

development or event involving a prospective change), in the condition (financial or other), prospects,

results of operations, business, management, performance, properties or general affairs of the Issuer,

the Guarantor, the Company or of the Group since [insert date of last published annual accounts]

which is material and adverse in the context of the issue and offering of the Notes and the Guarantee.]

10 If any change is disclosed in the Pricing Supplement, it will require approval by the Stock Exchange(s). Considerationshould be given as to whether or not such disclosure should be made by means of a supplemental Offering Circular ratherthan in a Pricing Supplement.

137

[LISTING APPLICATION

This Pricing Supplement comprises the final terms required for the issue of Notes described hereinpursuant to the U.S.$3,000,000,000 Guaranteed Medium Term Note Programme of Guangzhou MetroInvestment Finance (BVI) Limited (廣州地鐵投融資(維京)有限公司).]

Responsibility

The Issuer and the Guarantor accept responsibility for the information contained in this PricingSupplement.

Signed on behalf of the Issuer: Signed on behalf of the Guarantor:

By:Duly authorised

By:Duly authorised

138

TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions that, subject to completion and amendment andas supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, shallbe applicable to the Notes in definitive form (if any) issued in exchange for the Global Note(s) or theGlobal Certificate representing each Series. Either (i) the full text of these terms and conditionstogether with the relevant provisions of the Pricing Supplement or (ii) these terms and conditions asso completed, amended, supplemented or varied (and subject to simplification by the deletion ofnon-applicable provisions), shall be endorsed on such Bearer Notes or on the Certificates relating tosuch Registered Notes. All capitalised terms that are not defined in these Conditions will have themeanings given to them in Part A of the relevant Pricing Supplement. Those definitions will beendorsed on the definitive Notes or Certificates, as the case may be. References in the Conditions to“Notes” are to the Notes of one Series only, not to all Notes that may be issued under the Programme.

This Note is issued by Guangzhou Metro Investment Finance (BVI) Limited (廣州地鐵投融資(維京)有限公司) (the “Issuer”) pursuant to the Trust Deed (as defined below). The due payment of all sumsexpressed to be payable by the Issuer under the Notes and the Trust Deed is guaranteed by GuangzhouMetro Investment Finance (HK) Limited (廣州地鐵投融資(香港)有限公司) (the “Guarantor”) asspecified hereon.

The Notes are constituted by an amended and restated trust deed (as may be further amended,supplemented or restated from time to time, the “Trust Deed”) dated 7 December 2018 which amendsand restates the trust deed dated 20 November 2015 between the Issuer, the Guarantor, GuangzhouMetro Group Co., Ltd. (廣州地鐵集團有限公司) (the “Company”) and Citicorp International Limited(花旗國際有限公司) (the “Trustee”, which expression shall, where the context so permits, include allpersons for the time being the trustee or trustees under the Trust Deed) as trustee for the Noteholders(as defined below). These terms and conditions (the “Conditions”) include summaries of, and aresubject to, the detailed provisions of the Trust Deed, which includes the form of the Bearer Notes,Certificates, Receipts, Coupons and Talons referred to below. An amended and restated agencyagreement (as may be further amended, supplemented or restated from time to time, the “AgencyAgreement”) dated 7 December 2018 which amends and restates the agency agreement dated 20November 2015 has been entered into in relation to the Notes between the Issuer, the Guarantor, theTrustee, Citibank, N.A., London Branch as initial issuing and paying agent, Citicorp InternationalLimited (花旗國際有限公司) as CMU lodging and paying agent for Notes to be held in the CentralMoneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “CMU”) and theother agents named in it. The issuing and paying agent, the CMU lodging and paying agent, the otherpaying agents, the registrars, the transfer agents and the calculation agent(s) for the time being (ifany) are referred to below respectively as the “Issuing and Paying Agent”, the “CMU Lodging andPaying Agent”, the “Paying Agents” (which expression shall include the Issuing and Paying Agentand the CMU Lodging and Paying Agent), the “Registrars”, the “Transfer Agents” (which expressionshall include the Registrar) and the “Calculation Agent(s)” (such Issuing and Paying Agent, CMULodging and Paying Agent, Paying Agents, Registrars, Transfer Agents and Calculation Agent(s)being together referred to as the “Agents”). For the purposes of these Conditions, all references to theIssuing and Paying Agent shall, with respect to a Series of Notes to be held in the CMU, be deemedto be a reference to the CMU Lodging and Paying Agent and all such references shall be construedaccordingly.

An amended and restated keepwell and liquidity support deed dated 7 December 2018 (as may befurther amended, supplemented or restated from time to time, the “Keepwell Deed”) which amendsand restates the keepwell deed dated 20 November 2015 between the Issuer, the Guarantor, theCompany and the Trustee and a deed of equity interest purchase undertaking dated 7 December 2018(as may be further amended, supplemented or restated from time to time, the “Deed of EquityInterest Purchase Undertaking”) which amends and restates the deed of equity interest purchaseundertaking dated 20 November 2015 between the Company and the Trustee have been entered intofor the benefit of the Trustee on behalf of itself and the Noteholders.

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Copies of the Trust Deed, the Agency Agreement, the Keepwell Deed and the Deed of Equity Interest

Purchase Undertaking are available for inspection at all reasonable times during usual business hours

at the principal office of the Trustee (presently at 39/F, Champion Tower, Three Garden Road, Central,

Hong Kong) and at the specified office of the Issuing and Paying Agent.

The Noteholders, the holders of the interest coupons (the “Coupons”) relating to interest bearing

Notes in bearer form and, where applicable in the case of such Notes, talons for further Coupons (the

“Talons”) (the “Couponholders”) and the holders of the receipts for the payment of instalments of

principal (the “Receipts”) relating to Notes in bearer form of which the principal is payable in

instalments are entitled to the benefit of, are bound by, and (i) are deemed to have notice of, all the

provisions of the Trust Deed, the Keepwell Deed and the Deed of Equity Interest Purchase

Undertaking, and (ii) are deemed to have notice of those provisions applicable to them of the Agency

Agreement. The statements in the Conditions include summaries of, and are subject to, the detailed

provisions of the Trust Deed, the Agency Agreement, the Keepwell Deed and the Deed of Equity

Interest Purchase Undertaking.

As used in these Conditions, “Tranche” means Notes which are identical in all respects, and “Series”

means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i)

expressed to be consolidated and form a single series with such Tranche of Notes and (ii) identical

in all respects (including as to listing and admission to trading) except for their respective Issue Dates,

Interest Commencement Dates and/or issue prices.

1 Form, Denomination and Title

The Notes are issued in bearer form (“Bearer Notes”) or in registered form (“Registered Notes”) in

each case in the Specified Denomination(s) shown hereon. References to “hereon” is to the applicable

Pricing Supplement (or the relevant provisions thereof) attached to or endorsed on this Note.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest

Note, an Index Linked Redemption Note, an Instalment Note, a Dual Currency Note or a Partly Paid

Note, a combination of any of the foregoing or any other kind of Note, depending upon the Interest

and Redemption/Payment Basis shown hereon.

Bearer Notes are serially numbered and are issued with Coupons (and, where appropriate, a Talon)

attached, save in the case of Zero Coupon Notes in which case references to interest (other than in

relation to interest due after the Maturity Date), Coupons and Talons in these Conditions are not

applicable. Instalment Notes are issued with one or more Receipts attached.

Registered Notes are represented by registered certificates (“Certificates”) and, save as provided in

Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same

holder.

Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by delivery. Title to the

Registered Notes shall pass by registration in the register that the Issuer shall procure to be 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, the holder (as defined below) of

any Note, Receipt, Coupon or Talon shall be deemed to be and may be treated as its absolute owner

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 it (or on the Certificate representing it) or its theft or loss (or that of the

related Certificate) and no person shall be liable for so treating the holder.

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In these Conditions, “Noteholder” means the bearer of any Bearer Note and the Receipts relating to

it or the person in whose name a Registered Note is registered, as the case may be, and “holder” (in

relation to a Note, Receipt, Coupon or Talon) means the bearer of any Bearer Note, Receipt, Coupon

or Talon or the person in whose name a Registered Note is registered, as the case may be, and

capitalised terms have the meanings given to them hereon, the absence of any such meaning indicating

that such term is not applicable to the Notes.

2 No Exchange of Notes and Transfers of Registered Notes

(a) No Exchange of Notes: Registered Notes may not be exchanged for Bearer Notes. Bearer Notes

of one Specified Denomination may not be exchanged for Bearer Notes of another Specified

Denomination. Bearer Notes may not be exchanged for Registered Notes.

(b) Transfer of Registered Notes: One or more Registered Notes may be transferred upon the

surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate

representing such Registered Notes to be transferred, together with the form of transfer endorsed

on such Certificate (or another form of transfer substantially in the same form and containing

the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly

completed and executed and any other evidence as the Registrar or the relevant Transfer Agent

may require to prove the title of the transferor and the authority of the individuals that have

executed the form of transfer. In the case of a transfer of part only of a holding of Registered

Notes represented by one Certificate, a new Certificate shall be issued to the transferee in

respect of the part transferred and a further new Certificate in respect of the balance of the

holding not transferred shall be issued to the transferor. In the case of a transfer of Registered

Notes to a person who is already a holder of Registered Notes, a new Certificate representing

the enlarged holding shall only be issued against surrender of the Certificate representing the

existing holding. All transfers of Notes and entries on the Register will be made in accordance

with the detailed regulations concerning transfers of Notes scheduled to the Agency Agreement.

The regulations may be changed (i) by the Issuer, with the prior written approval of the Registrar

and the Trustee, or (ii) by the Registrar, with the prior written approval of the Trustee. A copy

of the current regulations will be made available by the Registrar to any Noteholder upon prior

written request and with satisfactory proof of holding.

Transfers of interests in the Notes evidenced by Global Certificates will be effected in

accordance with the rules of the relevant clearing systems.

(c) Exercise of Options or Partial Redemption in Respect of Registered Notes: In the case of an

exercise of an Issuer’s or Noteholders’ option in respect of, or a partial redemption of, a holding

of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the

holder to reflect the exercise of such option or in respect of the balance of the holding not

redeemed. In the case of a partial exercise of an option resulting in Registered Notes of the same

holding having different terms, separate Certificates shall be issued in respect of those Notes of

that holding that have the same terms. New Certificates shall only be issued against surrender

of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of

Registered Notes to a person who is already a holder of Registered Notes, a new Certificate

representing the enlarged holding shall only be issued against surrender of the Certificate

representing the existing holding.

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(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions 2(b) or2(c) shall be available for delivery within five business days of receipt of a duly completed formof transfer or Put Exercise Notice (as defined in Condition 6(f)) or the Exercise Notice (asdefined in Condition 6(e)) and surrender of the Certificate for exchange. Delivery of the newCertificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar, asthe case may be, to whom delivery or surrender of such form of transfer, Put Exercise Notice,Exercise Notice or Certificate shall have been made or, at the option of the holder making suchdelivery or surrender as aforesaid and as specified in the relevant form of transfer, Put ExerciseNotice, the Exercise Notice or otherwise in writing, be mailed by uninsured post at the risk ofthe holder entitled to the new Certificate to such address as may be so specified, unless suchholder requests otherwise and pays in advance to the relevant Transfer Agent or the Registrar,as the case may be, the costs of such other method of delivery and/or such insurance as it mayspecify. In this Condition 2(d), “business day” means a day, other than a Saturday or Sunday orpublic holiday, on which commercial banks are open for business in the place of the specifiedoffice of the relevant Transfer Agent or the Registrar, as the case may be.

(e) Transfers Free of Charge: Transfers of Notes and Certificates on registration, transfer, exerciseof an option or partial redemption shall be effected without charge by or on behalf of the Issuer,the Registrar or the Transfer Agents, but upon payment by the relevant Noteholders of any taxor other governmental charges that may be imposed in relation to them (or the giving of suchindemnity and/or security and/or pre-funding as the Registrar or the relevant Transfer Agent mayrequire).

(f) Closed Periods: No Noteholder may require the transfer of a Registered Note to be registered(i) during the period of 15 days ending on (and including) the due date for redemption of, orpayment of any Instalment Amount in respect of, that Note, (ii) after the exercise of the putoption in Condition 6(e), (iii) after the exercise of the put option in Condition 6(f), (iv) duringthe period of 15 days prior to any date on which Notes are being called for redemption in partby the Issuer at its option, (v) after any such Note has been called for redemption where not allthe Notes are being called for redemption or (vi) during the period of seven Business Daysending on (and including) any Record Date.

3 Guarantee and Status

(a) Guarantee: The Guarantor has unconditionally and irrevocably guaranteed the due payment ofall sums expressed to be payable by the Issuer under the Trust Deed, the Notes, the Receipts andthe Coupons. Its obligations in that respect (the “Guarantee”) are contained in the Trust Deed.

(b) Status of Notes and Guarantee: The Notes and the Receipts and the Coupons relating to themconstitute direct, unsubordinated, unconditional and (subject to Condition 4(a)) unsecuredobligations of the Issuer and shall at all times rank pari passu and without any preference amongthemselves. The payment obligations of the Issuer under such Notes and the Receipts and theCoupons relating to them and of the Guarantor under the Guarantee shall, save for suchexceptions as may be provided by applicable legislation and subject to Condition 4(a), at alltimes rank at least equally with all other present and future unsecured and unsubordinatedobligations of the Issuer and the Guarantor, respectively.

4 Negative Pledge and Other Covenants

(a) Negative Pledge:

(i) So long as any Note or Coupon remains outstanding (as defined in the Trust Deed), eachof the Issuer and the Guarantor will not, and will ensure that none of their respectivePrincipal Subsidiaries (other than a Listed Subsidiary and Subsidiaries of a ListedSubsidiary) will, create or, have outstanding, any Security Interest, upon the whole or anypart of its present or future undertaking, assets or revenues (including any uncalled capital)

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to secure any Relevant Indebtedness outside the PRC, or any guarantee or indemnity in

respect of any Relevant Indebtedness outside the PRC, without (A) at the same time or

prior thereto according to the Notes and the Coupons the same security as is created or

subsisting to secure any such Relevant Indebtedness, guarantee or indemnity, or (B) such

other security as shall be approved by an Extraordinary Resolution (as defined in the Trust

Deed) of the Noteholders.

(ii) So long as any Note or Coupon remains outstanding (as defined in the Trust Deed), the

Company has undertaken in the Keepwell Deed that the Company will not, and will ensure

that none of its Principal Subsidiaries (other than a Listed Subsidiary and Subsidiaries of

a Listed Subsidiary) will, create, or have outstanding, any 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 outside the PRC, or any guarantee or

indemnity in respect of any Relevant Indebtedness outside the PRC,

without at the same time or prior thereto according to the Notes and the Coupons (A) the same

security as is created or subsisting to secure any such Relevant Indebtedness, guarantee or

indemnity, or (B) such other security as shall be approved by an Extraordinary Resolution (as

defined in the Trust Deed) of the Noteholders.

(b) Information Rights: Under the Trust Deed, so long as any Note or Coupon remains outstanding

(as defined in the Trust Deed):

(i) the Company is obliged to furnish the Trustee with (A) a Compliance Certificate of the

Company (on which the Trustee may rely conclusively as to such compliance) and copies

of the Company Audited Financial Reports as soon as they are available, but in any event

within 120 days after the end of each Relevant Period, and if such statements shall be in

the Chinese language, together with an English translation of the same translated by (aa)

a nationally or internationally recognised firm of independent accountants or (bb) a

professional translation service provider and checked by a nationally or internationally

recognised firm of independent accountants, together with a certificate signed by any

Authorised Signatory of the Company certifying that such translation is complete and

accurate; and (B) copies of the Company Unaudited Financial Reports as soon as they are

available, but in any event within 60 days after the end of each Relevant Period, and if such

statements shall be in the Chinese language, together with an English translation of the

same translated by (aa) a nationally or internationally recognised firm of independent

accountants or (bb) a professional translation service provider and checked by a nationally

or internationally recognised firm of independent accountants, together with a certificate

signed by any Authorised Signatory of the Company certifying that such translation is

complete and accurate; provided that, if at any time the capital stock of the Company is

listed for trading on a recognised stock exchange, the Company may furnish to the Trustee,

as soon as they are available but in any event not more than 14 days after any financial or

other reports of the Company are filed with the exchange on which the Company’s capital

stock is at such time listed for trading, true and correct copies of any financial or other

report filed with such exchange in lieu of the reports identified in Condition 4(b)(i)(A) and

Condition 4(b)(i)(B) above (and if such financial or other reports shall be in the Chinese

language, together with an English translation of the same translated by (aa) a nationally

or internationally recognised firm of independent accountants or (bb) a professional

translation service provider and checked by a nationally or internationally recognised firm

of independent accountants, together with a certificate signed by any Authorised Signatory

of the Company certifying that such translation is complete and accurate);

143

(ii) the Guarantor is obliged to furnish the Trustee with (A) a Compliance Certificate of theGuarantor (on which the Trustee may rely conclusively as to such compliance) and copiesof the Guarantor Audited Financial Reports as soon as they are available, but in any eventwithin 120 days after the end of each Relevant Period, and if such statements shall be inthe Chinese language, together with an English translation of the same translated by (aa)a nationally or internationally recognised firm of independent accountants or (bb) aprofessional translation service provider and checked by a nationally or internationallyrecognised firm of independent accountants, together with a certificate signed by anyAuthorised Signatory of the Guarantor certifying that such translation is complete andaccurate; and (B) (if applicable) copies of the Guarantor Unaudited Financial Reports assoon as they are available, but in any event within 60 days after the end of each RelevantPeriod, and if such statements shall be in the Chinese language, together with an Englishtranslation of the same translated by (aa) a nationally or internationally recognised firm ofindependent accountants or (bb) a professional translation service provider and checked bya nationally or internationally recognised firm of independent accountants, together with acertificate signed by any Authorised Signatory of the Guarantor certifying that suchtranslation is complete and accurate; provided that, if at any time the capital stock of theGuarantor is listed for trading on a recognised stock exchange, the Guarantor may furnishto the Trustee, as soon as they are available but in any event not more than 14 days afterany financial or other reports of the Guarantor are filed with the exchange on which theGuarantor’s capital stock is at such time listed for trading, true and correct copies of anyfinancial or other report filed with such exchange in lieu of the reports identified inCondition 4(b)(ii)(A) and Condition 4(b)(ii)(B) above (and if such financial or otherreports shall be in the Chinese language, together with an English translation of the sametranslated by (aa) a nationally or internationally recognised firm of independentaccountants or (bb) a professional translation service provider and checked by a nationallyor internationally recognised firm of independent accountants, together with a certificatesigned by any Authorised Signatory of the Guarantor certifying that such translation iscomplete and accurate);

(iii) the Issuer is obliged to furnish the Trustee with a Compliance Certificate of the Issuer (onwhich the Trustee may rely conclusively as to such compliance) (A) within 120 days afterthe end of each Relevant Period in relation to the Company Audited Financial Reports or(B) within 14 days of any written request by the Trustee; and

(iv) the Issuer, the Guarantor and the Company are obliged to furnish the Trustee promptly withany notice, statement or circular issued, or which legally or contractually should be issued,to the members or creditors (or any class of them) of the Issuer, the Guarantor or theCompany generally in their capacity as such, and if any such notice, statement or circularshall be in the Chinese language, together with an English translation of the same translatedby (aa) a nationally or internationally recognised firm of independent accountants or (bb)a professional translation service provider and checked by a nationally or internationallyrecognised firm of independent accountants, together in either case with a certificatesigned by any Authorised Signatory of the Company certifying that such translation iscomplete and accurate.

(c) Issuer Activities: So long as any Note or Coupon remains outstanding (as defined in the TrustDeed):

(i) the Issuer will not, and the Guarantor and the Company shall procure that the Issuer willnot, carry on any business activity whatsoever other than in connection with theProgramme and the Notes and the Coupons (such activities in connection with theProgramme and the Notes and the Coupons shall, for the avoidance of doubt, include (A)the establishment and maintenance of the Programme, (B) the offering, sale or issuance ofthe Notes and the Coupons under the Programme, the incurrence of Relevant Indebtedness

144

represented by the Notes and Coupons issued under these Conditions, (C) the offering, sale

or issuance of Relevant Indebtedness as permitted under these Conditions, (D) the

activities directly related to the establishment and/or maintenance of the Issuer’s corporate

existence and (E) the on-lending of the proceeds of the issue of the Notes and/or the

Coupons (the “Proceeds of the Notes”) to any of the Guarantor or the Company or as any

of them may direct), and to cause such recipient of the Proceeds of the Notes to pay the

interest and principal in respect of such intercompany loan on time;

(ii) the Issuer will not, and the Guarantor and the Company shall procure that the Issuer will

not, take any action or fail to take any action, if such action or failure to take any action

may interfere with the enforcement of any rights of the Trustee and/or the Noteholders

under the Notes or Coupons or the Transaction Documents in any manner which could

materially and adversely affect the interests or entitlements of the Trustee or the

Noteholders or Couponholders; and

(iii) the Issuer will not, and the Guarantor and the Company shall procure that the Issuer will

not, amend or alter any of the provisions of its constitutive documents in a manner that will

(1) have an adverse effect on the ability of the Issuer to perform its obligations under the

Notes or Coupons or the Transaction Documents or (2) in the opinion of the Trustee, be

materially prejudicial to the interests of the Noteholders or Couponholders,

in each case without the prior written approval of the Trustee acting pursuant to an Extraordinary

Resolution of the Noteholders.

(d) Guarantor Activities: So long as any Note or Coupon remains outstanding (as defined in the

Trust Deed):

(i) the Guarantor will not, and the Company shall procure that the Guarantor will not, take any

action or fail to take any action, if such action or failure to take any action may interfere

with the enforcement of any rights of the Trustee and/or the Noteholders under the Notes

or Coupons, the Guarantee or the Transaction Documents in any manner which could

materially and adversely affect the interests or entitlements of the Trustee or the

Noteholders or Couponholders; and

(ii) the Guarantor will not, and the Company shall procure that the Guarantor will not, amend

or alter any of the provisions of its constitutive documents in a manner that will (1) have

an adverse effect on the ability of the Guarantor to perform its obligations under the Notes

or Coupons, the Guarantee or the Transaction Documents or (2) in the opinion of the

Trustee, be materially prejudicial to the interests of the Noteholders or Couponholders,

in each case without the prior written approval of the Trustee acting pursuant to an Extraordinary

Resolution of the Noteholders.

(e) Ownership of Shares: The Company has undertaken in the Keepwell Deed that it shall:

(i) directly or indirectly own and hold all the outstanding shares of each of the Issuer and the

Guarantor and shall not directly or indirectly pledge, grant a security interest, or in any way

encumber or otherwise dispose of any such shares unless required to dispose of any or all

such shares pursuant to law or regulation or a court decree or order of any government

authority which, in the opinion of a legal adviser to the Company, may not be successfully

challenged; and

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(ii) for so long as any Note or Coupon remains outstanding, the Guarantor will remain theprimary overseas platform of the Company for investment and offshore financing, and theCompany shall:

(A) directly or indirectly appoint all senior management of the Guarantor;

(B) directly or indirectly manage and supervise the business of the Guarantor;

(C) use its best efforts to ensure the long-term stability and liquidity of the Guarantor; and

(D) use its best efforts to directly and indirectly support the business operations of theGuarantor.

(f) Deed of Equity Interest Purchase Undertaking: Upon being notified of the occurrence of anyEvent of Default, the Trustee shall promptly give to the Company (with a copy to each of theIssuer and the Guarantor) a notice in writing in accordance with the Trust Deed notifying theCompany of its obligations to purchase under the Deed of Equity Interest Purchase Undertaking.The Company undertakes that it shall, and shall procure each Relevant Transferor (as defined inthe Deed of Equity Interest Purchase Undertaking) to, use their respective best efforts to do allsuch things and take all such actions as may be necessary or desirable to (i) within three monthsfrom the date of the Purchase Notice (as defined in the Deed of Equity Interest PurchaseUndertaking), procure the completion of the Purchase (as defined in the Deed of Equity InterestPurchase Undertaking) and (ii) procure the remittance of the sum of the Purchase Price to or tothe order of the Relevant Transferor(s) in accordance with the Deed of Equity Interest PurchaseUndertaking, whereupon the Relevant Transferor(s) shall take all actions necessary for the sumof the Purchase Price to be applied in and towards the payment in accordance with the Deed ofEquity Interest Purchase Undertaking of any outstanding amounts as they fall due under theDeed of Equity Interest Purchase Undertaking, the Trust Deed, the relevant Series of Notes(including any interest accrued but unpaid on the relevant Series of Notes) and the Coupons priorto any other use, disposal or transfer of the proceeds received.

(g) Irrevocable Cross-border RMB Standby Facility: The Trustee shall provide a written noticeto the Issuer, the Guarantor and the Company (a “Trigger Notice”) in accordance with the TrustDeed as soon as reasonably practicable (i) after the Trustee has received a written notice by theIssuer, the Guarantor and/or the Company that a Triggering Event has occurred pursuant to theKeepwell Deed, (ii) after the Trustee has given notice to the Issuer and the Guarantor pursuantto Condition 10 that the Notes are immediately due and payable, or (iii) after being notified inwriting by Noteholders holding at least 25 per cent. of the aggregate principal amount of theNotes then outstanding that a Triggering Event has occurred and if the Trustee is so requestedin writing by such Noteholders and upon the receipt of such Trigger Notice, the Company shallgrant a standby facility and procure remittance of an amount to the Issuer or the Guarantor inaccordance with the Keepwell Deed. Each of the Issuer and the Guarantor shall, and theCompany has undertaken in the Keepwell Deed to procure the Issuer to, take all actionsnecessary for the proceeds received under the standby facility pursuant to this Condition 4(g) tobe applied in and towards the payment in accordance with the Keepwell Deed of any outstandingamounts as they fall due under the Keepwell Deed, the Trust Deed and the relevant Series ofNotes (including any interest accrued but unpaid on the relevant Series Notes) and the Coupons,prior to any other use, disposal or transfer of the proceeds received.

In these Conditions:

“Approval Authorities” means any supranational, national, state, municipal, provincial or localgovernment (including any subdivision, court, administrative agency or commission or otherauthority thereof) or any quasi-governmental or private body exercising any regulatory, taxing,importing or other governmental or quasi-governmental authority whose licences,authorisations, registrations or other approvals are necessary for undertaking the transactionscontemplated by these Conditions;

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“Company Audited Financial Reports” means annual audited financial statements (on aconsolidated basis and as audited by a nationally or internationally recognised firm ofindependent accountants) of the Company, including a statement of comprehensive income,balance sheet, cash flow statement and statement of changes in owners’ equity, together with anystatements, reports (including any directors’ and auditors’ reports) and notes attached to orintended to be read with any of them;

“Company Unaudited Financial Reports” means semi-annual (or any other interim reportingperiod required by applicable law or regulations) unaudited financial statements (on aconsolidated basis) of the Company, including a statement of comprehensive income, balancesheet, cash flow statement and statement of changes in owners’ equity, together with anystatements, reports (including any directors’ and auditors’ review reports, if any) and notesattached to or intended to be read with any of them, as prepared on a basis consistent with theCompany Audited Financial Reports;

“Compliance Certificate” means a certificate of each of the Issuer, the Guarantor and theCompany signed by any one of their respective Authorised Signatories that, having made allreasonable enquiries, to the best of the knowledge, information and belief of the Issuer, theGuarantor or the Company, as the case may be, as at a date (the “Certification Date”) not morethan five days before the date of the certificate:

(i) no Event of Default (as defined in Condition 10) or Potential Event of Default had occurredsince the Certification 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) each of the Issuer, the Guarantor and the Company has complied with all its obligationsunder the Trust Deed, the Keepwell Deed, the Deed of Equity Interest PurchaseUndertaking, the Notes and the Coupons;

“Guarantor Audited Financial Reports” means annual audited financial statements (on aconsolidated basis and as audited by a nationally or internationally recognised firm ofindependent accountants) of the Guarantor, including a statement of comprehensive income,balance sheet, cash flow statement and statement of changes in owners’ equity, together with anystatements, reports (including any directors’ and independent accountants’ reports) and notesattached to or intended to be read with any of them;

“Guarantor Unaudited Financial Reports” means semi-annual (or any other interim reportingperiod required by applicable law or regulations) unaudited financial statements (on aconsolidated basis) of the Guarantor, including a statement of comprehensive income, balancesheet, cash flow statement and statement of changes in owners’ equity, together with anystatements, reports (including any directors’ and independent accountants’ review reports, ifany) and notes attached to or intended to be read with any of them, as prepared on a basisconsistent with the Guarantor Audited Financial Reports;

“Independent Investment Bank” means an independent investment bank of international repute(acting as an expert) selected by the Issuer (at the expense of the Issuer, failing whom theGuarantor) and notified in writing to the Trustee;

“Listed Subsidiary” means, at any time, any Subsidiary of the Company, the ordinary votingshares of which are at such time listed on The Stock Exchange of Hong Kong Limited or anyother recognised stock exchange;

“Potential Event of Default” means an event or circumstance which could with the giving ofnotice, lapse of time, issue of a certificate and/or fulfillment of any other requirement providedfor in Condition 10 become an Event of Default;

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“PRC” means the People’s Republic of China (for the purposes hereof not including Hong KongSpecial Administrative Region or Macau Special Administrative Region of the PRC or Taiwan);

“Relevant Indebtedness” means any present or future indebtedness which (1) is in the form of,or represented or evidenced by, any bonds, notes, debentures, debenture stock, loan stock orother securities, and which (2) for the time being is, or is intended to be or capable of being,quoted, listed or dealt in or traded on any stock exchange or over-the-counter or other securitiesmarket (which, for the avoidance of doubt, does not include bi-lateral loans, syndicated loans orclub deal loans);

“Relevant Period” means, in relation to the Company Audited Financial Reports, each periodof 12 months ending on the last day of the Company’s financial year (which, unless otherwisenotified to the Trustee and to the Noteholders in accordance with Condition 16, shall be 31December of that financial year) and, in relation to the Company Unaudited Financial Reports,each period of six months ending on the last day of the Company’s first semi-annual period(which, unless otherwise notified to the Trustee and to the Noteholders in accordance withCondition 16, shall be 30 June of that financial year);

“Security Interest” means any mortgage, charge, lien, pledge, encumbrance or other securityinterest of any kind (including, without limitation, any conditional sale or other title retentionagreement or lease in the nature thereof or any agreement to create any mortgage, charge, lien,pledge, security interest, easement or encumbrance of any kind);

a “Subsidiary” of any person means (a) any company or other business entity of which thatperson owns or controls (either directly or through one or more other Subsidiaries) more than50 per cent. of the issued share capital or other ownership interest having ordinary voting powerto elect directors, managers or trustees of such company or other business entity, or (b) anycompany or other business entity which at any time has its accounts consolidated with those ofthat person or which, under the law, regulations or generally accepted accounting principles ofthe jurisdiction of incorporation of such person from time to time, should have its accountsconsolidated with those of that person;

“Transaction Documents” means the Notes, Receipts, Coupons or Talons, the Trust Deed, theAgency Agreement, the Keepwell Deed and the Deed of Equity Interest Purchase Undertaking;and

“Triggering Event” means the occurrence of an Event of Default.

5 Interest and Other Calculations

(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest on its outstanding nominalamount from and including the Interest Commencement Date at the rate per annum (expressedas a percentage) equal to the Rate of Interest, such interest being payable in arrear on eachInterest Payment Date. The amount of interest payable shall be determined in accordance withCondition 5(h).

(b) Interest on Floating Rate Notes and Index Linked Interest Notes:

(i) Interest Payment Dates: Each Floating Rate Note and Index Linked Interest Note bearsinterest on its outstanding nominal amount from and including the Interest CommencementDate at the rate per annum (expressed as a percentage) equal to the Rate of Interest, suchinterest being payable in arrear on each Interest Payment Date. The amount of interestpayable shall be determined in accordance with Condition 5(h). Such Interest PaymentDate(s) is/are either shown hereon as Specified Interest Payment Dates or, if no Specified

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Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each datewhich falls the number of months or other period shown hereon as the Interest Period afterthe preceding Interest Payment Date or, in the case of the first Interest Payment Date, afterthe Interest Commencement Date.

(ii) Business Day Convention: If any date referred to in these Conditions that is specified tobe subject to adjustment in accordance with a Business Day Convention would otherwisefall on a day that is not a Business Day, then, if the Business Day Convention specified is(A) the Floating Rate Business Day Convention, such date shall be postponed to the nextday that is a Business Day unless it would thereby fall into the next calendar month, inwhich event (x) such date shall be brought forward to the immediately preceding BusinessDay and (y) each subsequent such date shall be the last Business Day of the month in whichsuch date would have fallen had it not been subject to adjustment, (B) the FollowingBusiness Day Convention, such date shall be postponed to the next day that is a BusinessDay, (C) the Modified Following Business Day Convention, such date shall be postponedto the next day that is a Business Day unless it would thereby fall into the next calendarmonth, in which event such date shall be brought forward to the immediately precedingBusiness Day or (D) the Preceding Business Day Convention, such date shall be broughtforward to the immediately preceding Business Day.

(iii) Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating RateNotes for each Interest Accrual Period shall be determined in the manner specified hereonand the provisions below relating to either ISDA Determination or Screen RateDetermination shall apply, depending upon which is specified hereon.

(A) ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified hereon as the manner in which the Rate ofInterest is to be determined, the Rate of Interest for each Interest Accrual Period shallbe determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. Forthe purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Accrual Periodmeans a rate equal to the Floating Rate that would be determined by the CalculationAgent under a Swap Transaction under the terms of an agreement incorporating theISDA Definitions and under which:

(x) the Floating Rate Option is as specified hereon;

(y) the Designated Maturity is a period specified hereon; and

(z) the relevant Reset Date is the first day of that Interest Accrual Period unlessotherwise specified hereon.

For the purposes of this sub-paragraph (A), “Floating Rate”, “Calculation Agent”,“Floating Rate Option”, “Designated Maturity”, “Reset Date” and “SwapTransaction” have the meanings given to those terms in the ISDA Definitions.

(B) Screen Rate Determination for Floating Rate Notes

(x) Where Screen Rate Determination is specified hereon as the manner in which theRate of Interest is to be determined, the Rate of Interest for each Interest AccrualPeriod will, subject as provided below, be either:

(1) the offered quotation; or

(2) the arithmetic mean of the offered quotations,

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(expressed as a percentage rate per annum) for the Reference Rate which appearsor appear, as the case may be, on the Relevant Screen Page as at either 11.00a.m. (London time in the case of LIBOR or Brussels time in the case ofEURIBOR or Hong Kong time in the case of HIBOR) or 11.15 a.m. (Hong Kongtime in the case of CNH HIBOR) or if, at or around that time it is notified thatthe fixing will be published at 2.30 p.m. (Hong Kong time), then as of 2.30 p.m.(Hong Kong time in the case of CNH HIBOR), as the case may be, on theInterest Determination Date in question as determined by the Calculation Agent.If five or more of such offered quotations are available on the Relevant ScreenPage, the highest (or, if there is more than one such highest quotation, one onlyof such quotations) and the lowest (or, if there is more than one such lowestquotation, one only of such quotations) shall be disregarded by the CalculationAgent for the purpose of determining the arithmetic mean of such offeredquotations.

If the Reference Rate from time to time in respect of Floating Rate Notes isspecified hereon as being other than LIBOR or EURIBOR or HIBOR or CNHHIBOR, the Rate of Interest in respect of such Notes will be determined asprovided hereon.

(y) if the Relevant Screen Page is not available or if sub-paragraph (x)(1) aboveapplies and no such offered quotation appears on the Relevant Screen Page or ifsub-paragraph (x)(2) above applies and fewer than three such offered quotationsappear on the Relevant Screen Page in each case as at the time specified above,subject as provided below, the Independent Investment Bank shall request, if theReference Rate is LIBOR, the principal London office of each of the ReferenceBanks or, if the Reference Rate is EURIBOR, the principal Euro-zone office ofeach of the Reference Banks or, if the Reference Rate is HIBOR or CNHHIBOR, the principal Hong Kong office of each of the Reference Banks, toprovide the Independent Investment Bank and the Calculation Agent with itsoffered quotation (expressed as a percentage rate per annum) for the ReferenceRate if the Reference Rate is LIBOR, at approximately 11.00 a.m. (Londontime), or if the Reference Rate is EURIBOR, at approximately 11.00 a.m.(Brussels time) or, if the Reference Rate is HIBOR or CNH HIBOR, atapproximately 11.00 a.m. (Hong Kong time) on the Interest Determination Datein question. If two or more of the Reference Banks provide the IndependentInvestment Bank and the Calculation Agent with such offered quotations, theRate of Interest for such Interest Accrual Period shall be the arithmetic mean ofsuch offered quotations as determined by the Calculation Agent; and

(z) if paragraph (y) above applies and the Calculation Agent has received offeredquotation from fewer than two Reference Banks, subject as provided below, theRate of Interest shall be the arithmetic mean of the rates per annum (expressedas a percentage) as communicated (and at the request of) to the IndependentInvestment Bank and the Calculation Agent by the Reference Banks or any twoor more of them, at which such banks were offered, if the Reference Rate isLIBOR, at approximately 11.00 a.m. (London time) or, if the Reference Rate isEURIBOR, at approximately 11.00 a.m. (Brussels time) or, if the Reference Rateis HIBOR or CNH HIBOR, at approximately 11.00 a.m. (Hong Kong time) onthe relevant Interest Determination Date, deposits in the Specified Currency fora period equal to that which would have been used for the Reference Rate byleading banks in, if the Reference Rate is LIBOR, the London inter-bank marketor, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market, or, ifthe Reference Rate is HIBOR or CNH HIBOR, the Hong Kong inter-bankmarket, as the case may be, or, if fewer than two of the Reference Banks provide

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the Calculation Agent with such offered rates, the offered rate for deposits in the

Specified Currency for a period equal to that which would have been used for

the Reference Rate, or the arithmetic mean of the offered rates for deposits in

the Specified Currency for a period equal to that which would have been used

for the Reference Rate, at which, if the Reference Rate is LIBOR, at

approximately 11.00 a.m. (London time) or, if the Reference Rate is EURIBOR,

at approximately 11.00 a.m. (Brussels time), or, if the Reference Rate is HIBOR

or CNH HIBOR, at approximately 11.00 a.m. (Hong Kong time) on the relevant

Interest Determination Date, any one or more banks (which bank or banks is or

are in the opinion of the Issuer suitable for such purpose) informs the

Independent Investment Bank and the Calculation Agent it is quoting to leading

banks in, if the Reference Rate is LIBOR, the London inter-bank market or, if

the Reference Rate is EURIBOR, the Euro-zone inter-bank market, or, if the

Reference Rate is HIBOR or CNH HIBOR, the Hong Kong inter-bank market,

as the case may be, provided that, if the Rate of Interest cannot be determined

in accordance with the foregoing provisions of this paragraph, the Rate of

Interest shall be determined as at the last preceding Interest Determination Date

(though substituting, where a different Margin or Maximum Rate of Interest or

Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period

from that which applied to the last preceding Interest Accrual Period, the Margin

or Maximum Rate of Interest or Minimum Rate of Interest relating to the

relevant Interest Accrual Period, in place of the Margin or Maximum Rate of

Interest or Minimum Rate of Interest relating to that last preceding Interest

Accrual Period).

(iv) Rate of Interest for Index Linked Interest Notes: The Rate of Interest in respect of Index

Linked Interest Notes for each Interest Accrual Period shall be determined in the manner

specified hereon and interest will accrue by reference to an Index or Formula as specified

hereon.

(c) Zero Coupon Notes: Where a Note the Interest Basis of which is specified to be Zero Coupon

is repayable prior to the Maturity Date and is not paid when due, the amount due and payable

prior to the Maturity Date shall be the Early Redemption Amount of such Note. As from the

Maturity Date, the Rate of Interest for any overdue principal of such a Note shall be a rate per

annum (expressed as a percentage) equal to the Amortisation Yield (as described in Condition

6(b)(i)).

(d) Dual Currency Notes: In the case of Dual Currency Notes, if the rate or amount of interest falls

to be determined by reference to a Rate of Exchange or a method of calculating Rate of

Exchange, the rate or amount of interest payable shall be determined in the manner specified

hereon.

(e) Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero

Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes

and otherwise as specified hereon.

(f) Accrual of Interest: Interest shall cease to accrue on each Note on the due date for redemption

unless, upon due presentation, payment is improperly withheld or refused, in which event

interest shall continue to accrue (both before and after judgment) at the Rate of Interest in the

manner provided in this Condition 5 to the Relevant Date (as defined in Condition 8).

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(g) Margin, Maximum Rate of Interest/Minimum Rate of Interest, Maximum InstalmentAmount/Minimum Instalment Amount and Maximum Redemption Amount/MinimumRedemption Amount and Rounding:

(i) If any Margin is specified hereon (either (x) generally, or (y) in relation to one or moreInterest Accrual Periods), an adjustment shall be made to all Rates of Interest, in the caseof (x), or the Rates of Interest for the specified Interest Accrual Periods, in the case of (y),calculated in accordance with Condition 5(b) above by adding (if a positive number) orsubtracting the absolute value (if a negative number) of such Margin, subject always toCondition 5(g)(ii) below.

(ii) If any Maximum Rate of Interest or Minimum Rate of Interest, Maximum InstalmentAmount or Minimum Instalment Amount or Maximum Redemption Amount or MinimumRedemption Amount is specified hereon, then any Rate of Interest, Instalment Amount orRedemption Amount shall be subject to such maximum or minimum, as the case may be.

(iii) For the purposes of any calculations required pursuant to these Conditions (unlessotherwise specified), (x) all percentages resulting from such calculations shall be rounded,if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005of a percentage point being rounded up), (y) all figures shall be rounded to sevensignificant figures (provided that if the eighth significant figure is a 5 or greater, theseventh significant shall be rounded up) and (z) all currency amounts that fall due andpayable shall be rounded to the nearest unit of such currency (with half a unit beingrounded up), save in the case of yen, which shall be rounded down to the nearest yen. Forthese purposes, “unit” means the lowest amount of such currency that is available as legaltender in the country or countries of such currency.

(h) Calculations: The amount of interest payable per Calculation Amount in respect of any Note forany Interest Accrual Period shall be equal to the product of the Rate of Interest, the CalculationAmount specified hereon, and the Day Count Fraction for such Interest Accrual Period, unlessan Interest Amount (or a formula for its calculation) is applicable to such Interest AccrualPeriod, in which case the amount of interest payable per Calculation Amount in respect of suchNote for such Interest Accrual Period shall equal such Interest Amount (or be calculated inaccordance with such formula). Where any Interest Period comprises two or more InterestAccrual Periods, the amount of interest payable per Calculation Amount in respect of suchInterest Period shall be the sum of the Interest Amounts payable in respect of each of thoseInterest Accrual Periods. In respect of any other period for which interest is required to becalculated, the provisions above shall apply save that the Day Count Fraction shall be for theperiod for which interest is required to be calculated.

(i) Determination and Publication of Rates of Interest, Interest Amounts, Final RedemptionAmounts, Early Redemption Amounts, Optional Redemption Amounts and InstalmentAmounts: The Calculation Agent shall, as soon as practicable on each Interest DeterminationDate, or such other time on such date as the Calculation Agent may be required to calculate anyrate or amount, obtain any quotation or make any determination or calculation, determine suchrate and calculate the Interest Amounts for the relevant Interest Accrual Period, calculate theFinal Redemption Amount, Early Redemption Amount, Optional Redemption Amount orInstalment Amount, obtain such quotation or make such determination or calculation, as the casemay be, and cause the Rate of Interest and the Interest Amounts for each Interest Accrual Periodand the relevant Interest Payment Date and, if required to be calculated, the Final RedemptionAmount, Early Redemption Amount, Optional Redemption Amount or any Instalment Amount tobe notified to the Trustee, the Issuer, each of the Paying Agents, the Noteholders, any otherCalculation Agent appointed in respect of the Notes that is to make a further calculation uponreceipt of such information and, if the Notes are listed on a stock exchange and the rules of suchexchange or other relevant authority so require, such exchange or other relevant authority as

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soon as possible after their determination but in no event later than (i) the commencement of therelevant Interest Period, if determined prior to such time, in the case of notification to suchexchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth BusinessDay after such determination. Where any Interest Payment Date or Interest Period Date is subjectto adjustment pursuant to Condition 5(b)(ii), the Interest Amounts and the Interest Payment Dateso published may subsequently be amended (or appropriate alternative arrangements made withthe consent of the Trustee by way of adjustment) without notice in the event of an extension orshortening of the Interest Period. If the Notes become due and payable under Condition 10, theaccrued interest and the Rate of Interest payable in respect of the Notes shall neverthelesscontinue to be calculated as previously in accordance with this Condition but no publication ofthe Rate of Interest or the Interest Amount so calculated need be made unless the Trusteeotherwise requires. The determination of any rate or amount, the obtaining of each quotation andthe making of each determination or calculation by the Calculation Agent(s) shall (in the absenceof manifest error) be final and binding upon all parties and the Noteholders.

(j) Definitions: In these Conditions, unless the context otherwise requires, the following definedterms shall have the meanings set out below:

“Business Day” means:

(i) in the case of a currency other than euro or Renminbi, a day (other than a Saturday orSunday) on which commercial banks and foreign exchange markets settle payments in theprincipal financial centre for such currency; and/or

(ii) in the case of euro, a day on which the TARGET System is operating (a “TARGETBusiness Day”); and/or

(iii) in the case of Renminbi, a day (other than a Saturday, Sunday or public holiday) on whichcommercial banks and foreign exchange markets are generally open for business andsettlement of Renminbi payments in Hong Kong; and/or

(iv) in the case of a currency and/or one or more Business Centres a day (other than a Saturdayor a Sunday) on which commercial banks and foreign exchange markets settle payments insuch currency in the Business Centre(s) or, if no currency is indicated, generally in eachof the Business Centres;

“Day Count Fraction” means, in respect of the calculation of an amount of interest on any Notefor any period of time (from and including the first day of such period to but excluding the last)(whether or not constituting an Interest Period or an Interest Accrual Period, the “CalculationPeriod”):

(i) if “Actual/Actual” or “Actual/Actual — ISDA” is specified hereon, the actual number ofdays in the Calculation Period divided by 365 (or, if any portion of that Calculation Periodfalls in a leap year, the sum of (A) the actual number of days in that portion of theCalculation Period falling in a leap year divided by 366 and (B) the actual number of daysin that portion of the Calculation Period falling in a non-leap year divided by 365);

(ii) if “Actual/365 (Fixed)” is specified hereon, the actual number of days in the CalculationPeriod divided by 365;

(iii) if “Actual/365 (Sterling)” is specified hereon, the actual number of days in the CalculationPeriod divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366;

(iv) if “Actual/360” is specified hereon, the actual number of days in the Calculation Perioddivided by 360;

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(v) if “30/360”, “360/360” or “Bond Basis” is specified hereon, the number of days in theCalculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =([360×(Y2-Y1)]+[30×(M2-M1)]+(D2-D1))

360

where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation Periodfalls;

“Y2” is the year, expressed as a number, in which the day immediately following the lastday included in the Calculation Period falls;

“M1”is the calendar month, expressed as a number, in which the first day of the CalculationPeriod falls;

“M2”is the calendar month, expressed as a number, in which the day immediately followingthe last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless suchnumber would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless such number would be 31 and D1 is greaterthan 29, in which case D2 will be 30;

(vi) if “30E/360” or “Eurobond Basis” is specified hereon, the number of days in theCalculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =([360×(Y2-Y1)]+[30×(M2-M1)]+(D2-D1))

360

where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation Periodfalls;

“Y2” is the year, expressed as a number, in which the day immediately following the lastday included in the Calculation Period falls;

“M1”is the calendar month, expressed as a number, in which the first day of the CalculationPeriod falls;

“M2”is the calendar month, expressed as a number, in which the day immediately followingthe last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless suchnumber would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless such number would be 31, in which caseD2 will be 30;

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(vii) if “30E/360 (ISDA)” is specified hereon, the number of days in the Calculation Perioddivided by 360, calculated on a formula basis as follows:

Day Count Fraction =([360×(Y2-Y1)]+[30×(M2-M1)]+(D2-D1))

360

where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation Periodfalls;

“Y2” is the year, expressed as a number, in which the day immediately following the lastday included in the Calculation Period falls;

“M1”is the calendar month, expressed as a number, in which the first day of the CalculationPeriod falls;

“M2”is the calendar month, expressed as a number, in which the day immediately followingthe last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i)that day is the last day of February or (ii) such number would be 31, in which caseD1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless (i) that day is the last day of February butnot the Maturity Date or (ii) such number would be 31, in which case D2 will be 30;

(viii) if “Actual/Actual-ICMA” is specified hereon,

(a) if the Calculation Period is equal to or shorter than the Determination Period duringwhich it falls, the number of days in the Calculation Period divided by the product of(x) the number of days in such Determination Period and (y) the number ofDetermination Periods normally ending in any year; and

(b) if the Calculation Period is longer than one Determination Period, the sum of:

(x) the number of days in such Calculation Period falling in the DeterminationPeriod in which it begins divided by the product of (1) the number of days insuch Determination Period and (2) the number of Determination Periodsnormally ending in any year; and

(y) the number of days in such Calculation Period falling in the next DeterminationPeriod divided by the product of (1) the number of days in such DeterminationPeriod and (2) the number of Determination Periods normally ending in anyyear,

where:

“Determination Period” means the period from and including a Determination Datein any year to but excluding the next Determination Date; and

“Determination Date” means the date(s) specified as such hereon or, if none is sospecified, the Interest Payment Date(s);

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“Euro-zone” means the region comprised of member states of the European Union that adopt thesingle currency in accordance with the Treaty establishing the European Community, asamended;

“Interest Accrual Period” means the period beginning on (and including) the InterestCommencement Date and ending on (but excluding) the first Interest Period Date and eachsuccessive period beginning on (and including) an Interest Period Date and ending on (butexcluding) the next succeeding Interest Period Date;

“Interest Amount” means:

(i) in respect of an Interest Accrual Period, the amount of interest payable per CalculationAmount for that Interest Accrual Period and which, in the case of Fixed Rate Notes, andunless otherwise specified hereon, shall mean the Fixed Coupon Amount or Broken Amountspecified hereon as being payable on the Interest Payment Date ending the Interest Periodof which such Interest Accrual Period forms part; and

(ii) in respect of any other period, the amount of interest payable per Calculation Amount forthat period;

“Interest Commencement Date” means the Issue Date or such other date as may be specifiedhereon;

“Interest Determination Date” means, with respect to a Rate of Interest and Interest AccrualPeriod, the date specified as such hereon or, if none is so specified, (i) the first day of suchInterest Accrual Period if the Specified Currency is Sterling or Hong Kong dollars or Renminbiother than where the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR or(ii) the day falling two Business Days in London for the Specified Currency prior to the first dayof such Interest Accrual Period if the Specified Currency is neither Sterling nor euro nor HongKong dollars nor Renminbi or (iii) the day falling two TARGET Business Days prior to the firstday of such Interest Accrual Period if the Specified Currency is euro or (iv) the day falling twoBusiness Days in Hong Kong prior to the first day of such Interest Accrual Period if theSpecified Currency is Renminbi and the Reference Rate is CNH HIBOR;

“Interest Period” means the period beginning on and including the Interest CommencementDate and ending on but excluding the first Interest Payment Date and each successive periodbeginning on and including an Interest Payment Date and ending on but excluding the nextsucceeding Interest Payment Date;

“Interest Period Date” means each Interest Payment Date unless otherwise specified hereon;

“ISDA Definitions” means the 2006 ISDA Definitions, as published by the International Swapsand Derivatives Association, Inc., unless otherwise specified hereon;

“Rate of Interest” means the rate of interest payable from time to time in respect of this Noteand that is either specified or calculated in accordance with the provisions hereon;

“Reference Banks” means, in the case of a determination of LIBOR, the principal London officeof four major banks in the London inter-bank market and, in the case of a determination ofEURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bankmarket and, in the case of a determination of HIBOR, the principal Hong Kong office of fourmajor banks in the Hong Kong inter-bank market and, in the case of a determination of CNHHIBOR, the principal Hong Kong office of four major banks dealing in Chinese Yuan in theHong Kong inter-bank market, in each case selected by the Calculation Agent and notified inwriting to the Trustee or as specified hereon;

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“Reference Rate” means the rate specified as such hereon;

“Relevant Screen Page” means such page, section, caption, column or other part of a particular

information service as may be specified hereon (or any successor or replacement page, section,

column or other part of a particular information service);

“Specified Currency” means the currency specified as such hereon or, if none is specified, the

currency in which the Notes are denominated; and

“TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express

Transfer (known as TARGET2) System which was launched on 19 November 2007 or any

successor thereto.

(k) Calculation Agent: The Issuer shall procure that there shall at all times be one or more

Calculation Agents if provision is made for it or them hereon and for so long as any Note is

outstanding (as defined in the Trust Deed). Where more than one Calculation Agent is appointed

in respect of the Notes, references in these Conditions to the Calculation Agent shall be

construed as each Calculation Agent performing its respective duties under the Conditions. If the

Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to

establish the Rate of Interest for an Interest Accrual Period or to calculate any Interest Amount,

Instalment Amount, Final Redemption Amount, Early Redemption Amount or Optional

Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer

shall (with the prior written approval of the Trustee) appoint a leading bank or financial

institution engaged in the interbank market (or, if appropriate, money, swap or over-the-counter

index options market) that is most closely connected with the calculation or determination to be

made by the Calculation Agent (acting through its principal London office or any other office

actively involved in such market) to act as such in its place. The Calculation Agent may not

resign its duties without a successor having been appointed as aforesaid.

6 Redemption, Purchase and Options

(a) Redemption by Instalments and Final Redemption:

(i) Unless previously redeemed, purchased and cancelled as provided in this Condition 6, each

Note that provides for Instalment Dates and Instalment Amounts shall be partially

redeemed on each Instalment Date at the related Instalment Amount specified hereon. The

outstanding nominal amount of each such Note shall be reduced by the Instalment Amount

(or, if such Instalment Amount is calculated by reference to a proportion of the nominal

amount of such Note, such proportion) for all purposes with effect from the related

Instalment Date, unless payment of the Instalment Amount is improperly withheld or

refused, in which case, such amount shall remain outstanding until the Relevant Date

relating to such Instalment Amount.

(ii) Unless previously redeemed, purchased and cancelled as provided below, each Note shall

be finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount

(which, unless otherwise provided hereon, is its outstanding nominal amount) or, in the

case of a Note falling within Condition 6(a)(i) above, its final Instalment Amount.

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(b) Early Redemption:

(i) Zero Coupon Notes:

(A) The Early Redemption Amount payable in respect of any Zero Coupon Note, the EarlyRedemption Amount of which is not linked to an index and/or a formula, uponredemption of such Note pursuant to Condition 6(c), Condition 6(e) or Condition 6(f)or upon it becoming due and payable as provided in Condition 10 shall be theAmortised Face Amount (calculated as provided below) of such Note unless otherwisespecified hereon.

(B) Subject to the provisions of sub-paragraph (C) below of this Condition 6(b)(i), theAmortised Face Amount of any such Note shall be the scheduled Final RedemptionAmount of such Note on the Maturity Date discounted at a rate per annum (expressedas a percentage) equal to the Amortisation Yield (which, if none is shown hereon,shall be such rate as would produce an Amortised Face Amount equal to the issueprice of the Notes if they were discounted back to their issue price on the Issue Date)compounded annually.

(C) If the Early Redemption Amount payable in respect of any such Note upon itsredemption pursuant to Condition 6(c), Condition 6(e) or Condition 6(f) or upon itbecoming due and payable as provided in Condition 10 is not paid when due, the EarlyRedemption Amount due and payable in respect of such Note shall be the AmortisedFace Amount of such Note as defined in sub-paragraph (B) above of this Condition6(b)(i), except that such sub-paragraph shall have effect as though the date on whichthe Note becomes due and payable were the Relevant Date. The calculation of theAmortised Face Amount in accordance with this sub-paragraph shall continue to bemade (both before and after judgment) until the Relevant Date, unless the RelevantDate falls on or after the Maturity Date, in which case the amount due and payableshall be the scheduled Final Redemption Amount of such Note on the Maturity Datetogether with any interest that may accrue in accordance with Condition 5(c).

Where such calculation is to be made for a period of less than one year, it shall be madeon the basis of the Day Count Fraction shown hereon.

(ii) Other Notes: The Early Redemption Amount payable in respect of any Note (other thanNotes described in Condition 6(b)(i) above), upon redemption of such Note pursuant toCondition 6(c), Condition 6(d), Condition 6(e) or Condition 6(f) or upon it becoming dueand payable as provided in Condition 10, shall be the Final Redemption Amount unlessotherwise specified hereon.

(c) Redemption for Taxation Reasons: The Notes may be redeemed at the option of the Issuer inwhole, but not in part, on any Interest Payment Date (if this Note is either a Floating Rate Noteor an Index Linked Interest Note) or at any time (if this Note is neither a Floating Rate Note noran Index Linked Interest Note), on giving not less than 30 nor more than 60 days’ notice to theNoteholders (which notice shall be irrevocable) and in writing to the Trustee and the Issuing andPaying Agent at their Early Redemption Amount (as described in Condition 6(b) above) (togetherwith interest accrued to the date fixed for redemption), if the Issuer (or, if the Guarantee wascalled, the Guarantor) satisfies the Trustee immediately prior to the giving of such notice that(i) it (or, if the Guarantee were called, the Guarantor) has or will become obliged to payAdditional Tax Amounts as provided or referred to in Condition 8 as a result of any change in,or amendment to, the laws or regulations of the British Virgin Islands, Hong Kong or the PRCor any political subdivision or any authority thereof or therein having power to tax, or anychange in the application or official interpretation of such laws or regulations, which change oramendment becomes effective on or after the date on which agreement is reached to issue thefirst Tranche of the Notes, and (ii) such obligation cannot be avoided by the Issuer (or the

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Guarantor, as the case may be) taking reasonable measures available to it, provided that no such

notice of redemption shall be given earlier than 90 days prior to the earliest date on which the

Issuer (or the Guarantor, as the case may be) would be obliged to pay such Additional Tax

Amounts were a payment in respect of the Notes (or the Guarantee, as the case may be) then due.

Prior to the publication of any notice of redemption pursuant to this Condition 6(c), the Issuer

shall deliver to the Trustee (A) a certificate signed by an Authorised Signatory of the Issuer (or

of the Guarantor, as the case may be) stating that the obligation referred to in (i) above of thisCondition 6(c) cannot be avoided by the Issuer (or the Guarantor, as the case may be) takingreasonable measures available to it and (B) an opinion of independent legal or tax advisors ofrecognised standing with respect to tax matters to the effect that such change or amendment hasoccurred (irrespective of whether such amendment or change is then effective), and the Trusteeshall be entitled to accept such certificate and opinion as sufficient evidence of the satisfactionof the condition precedent set out in (ii) above of this Condition 6(c), in which event the sameshall be conclusive and binding on the Noteholders and Couponholders. All Notes in respect ofwhich any notice of redemption is given under this Condition 6(c) shall be redeemed on the dateand in such manner as specified in such notice in accordance with this Condition 6(c).

(d) Redemption at the Option of the Issuer: If Call Option is specified hereon, the Issuer may, ongiving not less than 30 nor more than 60 days’ irrevocable notice to the Noteholders (or suchother notice period as may be specified hereon) and in writing to the Trustee and the Issuing andPaying Agent redeem all or, if so provided, some of the Notes on any Optional Redemption Date.Any such redemption of Notes shall be at their Optional Redemption Amount specified hereon(which may be the Early Redemption Amount (as described in Condition 6(b) above)), togetherwith interest accrued to the date fixed for redemption. Any such redemption or exercise mustrelate to Notes of a nominal amount at least equal to the Minimum Redemption Amount to beredeemed specified hereon and no greater than the Maximum Redemption Amount to beredeemed specified hereon.

All Notes in respect of which any such notice is given shall be redeemed on the date specifiedin such notice in accordance with this Condition 6(d).

In the case of a partial redemption the notice to Noteholders shall also contain the certificatenumbers of the Bearer Notes, or in the case of Registered Notes shall specify the nominal amountof Registered Notes drawn and the holder(s) of such Registered Notes, to be redeemed, whichshall have been drawn in such place and in such manner as determined by the Issuer and notifiedin writing to the Trustee, subject to compliance with any applicable laws and stock exchange orother relevant authority requirements.

(e) Redemption at the Option of Noteholders: If Put Option is specified hereon, the Issuer shall,at the option of the holder of any such Note, upon the holder of such Note giving not less than15 nor more than 30 days’ notice to the Issuer (or such other notice period as may be specifiedhereon) redeem such Note on the Optional Redemption Date(s) at its Optional RedemptionAmount specified hereon, together with interest accrued to the date fixed for redemption.

To exercise such option the holder must deposit (in the case of Bearer Notes) such Note (togetherwith all unmatured Receipts and Coupons and unexchanged Talons) with any Paying Agent or(in the case of Registered Notes) the Certificate representing such Note(s) with the Registrar orany Transfer Agent at its specified office, together with a duly completed option exercise notice(an “Exercise Notice”) in the form obtainable from any Paying Agent, the Registrar or anyTransfer Agent (as applicable) within the notice period. No Note or Certificate so deposited andoption exercised may be withdrawn (except as provided in the Agency Agreement) without theprior consent of the Issuer.

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(f) Redemption for Put Event: At any time following the occurrence of a Put Event, the holder ofany Note will have the right, at such holder’s option, to require the Issuer to redeem all, but notsome only, of that holder’s Notes on the Put Settlement Date at 101 per cent. of their principalamount, together with accrued interest up to but excluding such Put Settlement Date. In orderto exercise such right, the holder of the relevant Note must deposit at the specified office of theIssuing and Paying Agent or any other Paying Agent such Note (together with all unmaturedReceipts and Coupons and unexchanged Talons) (in the case of Bearer Notes) with any PayingAgent or the Certificates (in the case of Registered Notes) representing such Note(s) with theRegistrar or any Transfer Agent at its specified office together with a duly completed and signednotice of redemption, in the form for the time being current, obtainable from the specified officeof the Issuing and Paying Agent or any other Paying Agent (a “Put Exercise Notice”), by notlater than 30 days following the occurrence of a Put Event or, if later, 30 days following the dateupon which notice thereof is given to Noteholders by the Issuer in accordance with Condition16.

The “Put Settlement Date” shall be the 14th day after the expiry of such period of 30 days asreferred to above in this Condition 6(f).

A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Notessubject to the Put Exercise Notices delivered as aforesaid on the Put Settlement Date.

The Issuer shall give notice to Noteholders in accordance with Condition 16 and to the Trusteeand the Issuing and Paying Agent in writing by not later than 10 days following the first day onwhich it becomes aware of the occurrence of a Put Event, which notice shall specify theprocedure for exercise by holders of their rights to require redemption of the Notes pursuant tothis Condition 6(f).

None of the Trustee or any of the Agents shall be required to take any steps to ascertain whethera Put Event has occurred and shall not be responsible for or liable to the Noteholders, theCouponholders, the Issuer, the Guarantor or the Company for any loss arising from any failureto do so.

In this Condition 6(f):

a “Change of Control Put Event” means:

(i) the Guangzhou Municipal Government ceases to directly or indirectly hold or own not lessthan 75 per cent. of the issued share capital of the Company; or

(ii) the Company ceases to directly or indirectly hold or own not less than 100 per cent. of theissued share capital of each of the Issuer and the Guarantor; or

(iii) the Company consolidates with, merges into or sells or transfers all or substantially all ofthe Company’s assets to any other Person or Persons, acting together, unless such Person(s)are directly or indirectly Controlled by the Guangzhou Municipal Government;

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

“Credit Rating” means a credit rating from Moody’s, Fitch or S&P;

“Fitch” means Fitch Ratings Ltd. and its successors;

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“Moody’s” means Moody’s Investors Services, Inc. and its successors;

“Person” means any individual, company, corporation, firm, partnership, joint venture,

association, organisation, state or agency of a state or other entity, whether or not having

separate legal personality;

a “Put Event” will be deemed to occur if:

(i) there is a Change of Control Put Event; or

(ii) there is a Rating Withdrawal Put Event;

“Rating Withdrawal Put Event” means at any time the Credit Ratings for the Notes from any

of the Rating Agencies are withdrawn;

“Rating Agency” means any of Moody’s, Fitch or S&P or any of their respective successors and

assigns;

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies,

Inc. and its successors; and

“Voting Rights” means the right generally to vote at a general meeting of shareholders of a

person (irrespective of whether or not, at the time, stock of any other class or classes shall have,

or might have, voting power by reason of the happening of any contingency, and any such voting

power shall therefore be excluded for the purpose of this definition).

(g) Partly Paid Notes: Partly Paid Notes will be redeemed, whether at maturity, early redemption

or otherwise, in accordance with the provisions of this Condition and the provisions specified

hereon.

(h) Purchases: Each of the Issuer, the Guarantor, the Company and their respective Subsidiaries

may at any time purchase Notes (provided that all unmatured Receipts and Coupons and

unexchanged Talons relating thereto are attached thereto or surrendered therewith) in the open

market or otherwise at any price. The Notes so purchased, while held by or on behalf of the

Issuer, the Guarantor, the Company or any such Subsidiary, shall not entitle the holder to vote

at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes

of, among other things, calculating quorums at meetings of the Noteholders or for the purposes

of Conditions 10, 11(a) or 12 or when the Trustee is determining prejudice or material prejudice

to Noteholders.

(i) Cancellation: All Notes purchased by or on behalf of the Issuer, the Guarantor, the Company

or any of their respective Subsidiaries shall be surrendered for cancellation, in the case of Bearer

Notes, by surrendering each such Note together with all unmatured Receipts and Coupons and

all unexchanged Talons to the Issuing and Paying Agent and, in the case of Registered Notes,

by surrendering the Certificate representing such Notes to the Registrar and, in each case, if so

surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith

(together with all unmatured Receipts and Coupons and unexchanged Talons attached thereto or

surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold

and the obligations of the Issuer and the Guarantor in respect of any such Notes shall be

discharged.

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7 Payments and Talons

(a) Bearer Notes: Payments of principal and interest in respect of Bearer Notes shall, subject asmentioned below, be made against presentation and surrender of the relevant Receipts (in thecase of payments of Instalment Amounts other than on the due date for redemption and providedthat the Receipt is presented for payment together with its relative Note), Notes (in the case ofall other payments of principal and, in the case of interest, as specified in Condition 7(f)(vi)) orCoupons (in the case of interest, save as specified in Condition 7(f)(ii)), as the case may be:

(i) in the case of a currency other than Renminbi, at the specified office of any Paying Agentoutside the United States by a cheque payable in the relevant currency drawn on, or, at theoption of the holder, by transfer to an account denominated in such currency with, a Bank;and

(ii) in the case of Renminbi, by transfer from the relevant Paying Agent’s office outside theUnited States to a Renminbi account maintained by or on behalf of the Noteholder with aBank in Hong Kong.

In this Condition 7(a) and in Condition 7(b), “Bank” means a bank in the principal financialcentre for such currency or, in the case of euro, in a city in which banks have access to theTARGET System. (b) Payments in the United States: Notwithstanding the foregoing, if anyBearer Notes are denominated in U.S. dollars, payments in respect thereof may be made at thespecified office of any Paying Agent in New York City in the same manner as aforesaid if (i) theIssuer shall have appointed Paying Agents with specified offices outside the United States withthe reasonable expectation that such Paying Agents would be able to make payment of theamounts on the Notes in the manner provided above when due, (ii) payment in full of suchamounts at all such offices is illegal or effectively precluded by exchange controls or othersimilar restrictions on payment or receipt of such amounts and (iii) such payment is thenpermitted by United States law, without involving, in the opinion of the Issuer, any adverse taxconsequence to the Issuer.

(c) Registered Notes:

(i) Payments of principal (which for the purposes of this Condition 7(c) shall include finalInstalment Amounts but not other Instalment Amounts) in respect of Registered Notes shallbe made against presentation and surrender of the relevant Certificates at the specifiedoffice of any of the Transfer Agents or of the Registrar and in the manner provided inCondition 7(c)(ii).

(ii) Interest (which for the purpose of this Condition 7(c) shall include all Instalment Amountsother than final Instalment Amounts) on Registered Notes shall be paid to the person shownon the Register at the close of business on the fifteenth day before the due date for paymentthereof or in the case of Renminbi or otherwise specified, on the fifth day before the duedate for payment thereof (the “Record Date”). Payments of interest on each RegisteredNote shall be made:

(A) in the case of a currency other than Renminbi, in the relevant currency by chequedrawn on a Bank and mailed to the holder (or to the first named of joint holders) ofsuch Note at its address appearing in the Register. Upon application by the holder tothe specified office of the Registrar or any Transfer Agent before the Record Date,such payment of interest may be made by transfer to an account in the relevantcurrency maintained by the payee with a Bank; and

(B) in the case of Renminbi, by transfer to the registered account of the Noteholder.

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In this Condition 7(c), “registered account” means the Renminbi account maintained by or onbehalf of the Noteholder with a bank in Hong Kong, details of which appear on the Register atthe close of business on the fifth business day before the due date for payment.

(d) Payments subject to Fiscal Laws: All payments will be subject in all cases to (i) any applicablefiscal or other laws, regulations and directives applicable thereto in the place of payment, butwithout prejudice to the provisions of Condition 8 and (ii) any withholding or deduction requiredpursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code,any regulations or agreements thereunder, any official interpretations thereof, or (withoutprejudice to the provisions of Condition 8) any law implementing an intergovernmental approachthereto but no commission or expenses shall be charged to the Noteholders or Couponholders inrespect of such payments.

(e) Appointment of Agents: The Issuing and Paying Agent, the CMU Lodging and Paying Agent,the Paying Agents, the Registrars, the Transfer Agents and the Calculation Agent initiallyappointed by the Issuer and the Guarantor and their respective specified offices are listed below.The Issuing and Paying Agent, the CMU Lodging and Paying Agent, the Paying Agents, theRegistrars, the Transfer Agents and the Calculation Agent act solely as agents of the Issuer andthe Guarantor and do not assume any obligation or relationship of agency or trust for or with anyNoteholder or Couponholder. The Issuer and the Guarantor reserve the right at any time with theprior written approval of the Trustee (where required in accordance with the Agency Agreement)to vary or terminate the appointment of the Issuing and Paying Agent, the CMU Lodging andPaying Agent, any other Paying Agent, any Registrar, any Transfer Agent or the CalculationAgent(s) and to appoint additional or other Paying Agents or Transfer Agents, provided that theIssuer shall at all times maintain (i) an Issuing and Paying Agent, (ii) a Registrar in relation toRegistered Notes, (iii) a Transfer Agent in relation to Registered Notes, (iv) a CMU Lodging andPaying Agent in relation to Notes accepted for clearance through the CMU, (v) one or moreCalculation Agent(s) where the Conditions so require, (vi) such other agents as may be requiredby any other stock exchange on which the Notes may be listed.

In addition, the Issuer and the Guarantor shall forthwith appoint a Paying Agent in New YorkCity in respect of any Bearer Notes denominated in U.S. dollars in the circumstances describedin Condition 7(b) above.

Notice of any such termination or appointment or any change of any specified office of an Agentshall promptly be given by the Issuer to the Noteholders.

(f) Unmatured Coupons and Receipts and unexchanged Talons:

(i) Upon the due date for redemption of Bearer Notes which comprise Fixed Rate Notes (otherthan Dual Currency Notes or Index linked Notes), such Notes should be surrendered forpayment together with all unmatured Coupons (if any) relating thereto, failing which anamount equal to the face value of each missing unmatured Coupon (or, in the case ofpayment not being made in full, that proportion of the amount of such missing unmaturedCoupon that the sum of principal so paid bears to the total principal due) shall be deductedfrom the Final Redemption Amount, Early Redemption Amount or Optional RedemptionAmount, as the case may be, due for payment. Any amount so deducted shall be paid in themanner mentioned above against surrender of such missing Coupon within a period of 10years from the Relevant Date for the payment of such principal (whether or not suchCoupon has become void pursuant to Condition 9).

(ii) Upon the due date for redemption of any Bearer Note comprising a Floating Rate Note,Dual Currency Note or Index Linked Note, unmatured Coupons relating to such Note(whether or not attached) shall become void and no payment shall be made in respect ofthem.

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(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating tosuch Note (whether or not attached) shall become void and no Coupon shall be deliveredin respect of such Talon.

(iv) Upon the due date for redemption of any Bearer Note that is redeemable in instalments, allReceipts relating to such Note having an Instalment Date falling on or after such due date(whether or not attached) shall become void and no payment shall be made in respect ofthem.

(v) Where any Bearer Note that provides that the relative unmatured Coupons are to becomevoid upon the due date for redemption of those Notes is presented for redemption withoutall unmatured Coupons, and where any Bearer Note is presented for redemption withoutany unexchanged Talon relating to it, redemption shall be made only against the provisionof such indemnity as the Issuer may require.

(vi) If the due date for redemption of any Note is not a due date for payment of interest, interestaccrued from the preceding due date for payment of interest or the Interest CommencementDate, as the case may be, shall only be payable against presentation (and surrender ifappropriate) of the relevant Bearer Note or Certificate representing it, as the case may be.Interest accrued on a Note that only bears interest after its Maturity Date shall be payableon redemption of such Note against presentation of the relevant Note or Certificaterepresenting it, as the case may be.

(g) Talons: On or after the Interest Payment Date for the final Coupon forming part of a Couponsheet issued in respect of any Bearer Note, the Talon forming part of such Coupon sheet may besurrendered at the specified office of the Issuing and Paying Agent in exchange for a furtherCoupon sheet (and if necessary another Talon for a further Coupon sheet) (but excluding anyCoupons that may have become void pursuant to Condition 9).

(h) Non-Business Days: If any date for payment in respect of any Note, Receipt or Coupon is nota business day, the holder shall not be entitled to payment until the next following business daynor to any interest or other sum in respect of such postponed payment or if a cheque mailed inaccordance with Conditions 7(a)(i) or 7(c)(ii)(A) arrives after the due date for payment. In thisCondition 7, “business day” means a day (other than a Saturday or a Sunday) on which banksand foreign exchange markets are generally open for business in the relevant place ofpresentation, in such jurisdictions as shall be specified as “Financial Centres” hereon and:

(i) (in the case of a payment in a currency other than euro and Renminbi) where payment isto be made by transfer to an account maintained with a bank in the relevant currency, onwhich foreign exchange transactions may be carried on in the relevant currency in theprincipal financial centre of the country of such currency; or

(ii) (in the case of a payment in euro) which is a TARGET Business Day; or

(iii) (in the case of a payment in Renminbi) on which banks and foreign exchange markets areopen for business and settlement of Renminbi payments in Hong Kong.

8 Taxation

All payments of principal, premium and interest by or on behalf of the Issuer or the Guarantor inrespect of the Notes, the Receipts and the Coupons or under the Guarantee shall be made free and clearof, and without withholding or deduction for, any taxes, duties, assessments or governmental chargesof whatever nature imposed, levied, collected, withheld or assessed by or within the British VirginIslands, Hong Kong or the PRC or any authority therein or thereof having power to tax, unless suchwithholding or deduction is required by law.

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Where such withholding or deduction is made by the Issuer or, as the case may be, the Guarantor byor within the PRC at the rate of up to and including 10 per cent., the Issuer or, as the case may be,the Guarantor will increase the amounts paid by it to the extent required, so that the net amountreceived by Noteholders or Couponholders equals the amounts which would otherwise have beenreceivable by them had no such withholding or deduction been required.

If the Issuer or, as the case may be, the Guarantor is required to make a deduction or withholding inrespect of PRC tax in excess of 10 per cent., or any Hong Kong or British Virgin Islands deductionor withholding is required, in such event the Issuer or, as the case may be, the Guarantor shall paysuch additional amounts (“Additional Tax Amounts”) as will result in receipt by the Noteholders andCouponholders of such amounts as would have been received by them had no such withholding ordeduction been required, except that no Additional Tax Amounts shall be payable in respect of anyNote, Receipt or Coupon:

(a) Other connection: to, or to a third party on behalf of, a Noteholder or Couponholder whois liable to such taxes, duties, assessments or governmental charges in respect of such Note,Receipt or Coupon by reason of his having some connection with the British Virgin Islands,Hong Kong or the PRC other than the mere holding of the Note, Receipt or Coupon orwhere the withholding or deduction could be avoided by the holder making a declarationof non-residence or other similar claim for exemption to the appropriate authority; or

(b) Presentation more than 30 days after the Relevant Date: presented (or in respect ofwhich the Certificate representing it is presented) for payment more than 30 days after theRelevant Date except to the extent that the Noteholder or Couponholder would have beenentitled to such Additional Tax Amounts on presenting it for payment on the 30th day.

For the avoidance of doubt, the Issuer’s or the Guarantor’s obligation to pay additional amounts inrespect of taxes, duties, assessments and other governmental charges will not apply to (a) any estate,inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment or othergovernmental charge or (b) any tax, duty, assessment or other governmental charge which is payableotherwise than by deduction or withholding from payments of principal of, or interest on, the Notes.

As used in these Conditions, “Relevant Date” in respect of any Note, Receipt or Coupon means thedate on which payment 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 outstanding is madeor (if earlier) the date seven days after that on which notice is duly given to the Noteholders that, uponfurther presentation of the Note (or relative Certificate), Receipt or Coupon being made in accordancewith these Conditions, such payment will be made, provided that payment is in fact made upon suchpresentation. References in these Conditions to (i) “principal” shall be deemed to include anypremium payable in respect of the Notes, all Instalment Amounts, Final Redemption Amounts, EarlyRedemption Amounts, Optional Redemption Amounts, Amortised Face Amounts and all other amountsin the nature of principal payable pursuant to Condition 6 or any amendment or supplement to it, (ii)“interest” shall be deemed to include all Interest Amounts and all other amounts payable pursuant toCondition 5 or any amendment or supplement to it and (iii) “principal” and/or “interest” shall bedeemed to include any additional amounts that may be payable under this Condition 8 or anyundertaking given in addition to or in substitution for it under the Trust Deed.

9 Prescription

Claims against the Issuer and/or the Guarantor for payment in respect of the Notes, Receipts andCoupons (which, for this purpose, shall not include Talons) shall be prescribed and become voidunless made within 10 years (in the case of principal or premium) or five years (in the case of interest)from the appropriate Relevant Date in respect of them.

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10 Events of Default

If any of the following events (each an “Event of Default”) occurs, the Trustee at its discretion may,and if so requested in writing by holders of at least 25 per cent. in aggregate nominal amount of theNotes then outstanding or if so directed by an Extraordinary Resolution shall (subject in each case tothe Trustee first having been indemnified and/or secured and/or pre-funded to its satisfaction), givenotice to the Issuer and the Guarantor declaring that the Notes are, and they shall immediatelybecome, due and payable at their Early Redemption Amount together (if applicable) with accruedinterest:

(a) Non-Payment: there is a failure to pay (i) the principal of or any premium on any of theNotes when due; or (ii) any interest on any of the Notes within seven days after the duedate for such payment; or

(b) Breach of Other Obligations: the Issuer, the Guarantor or the Company does not performor comply with any one or more of its other obligations under the Notes, the Trust Deed,the Keepwell Deed or the Deed of Equity Interest Purchase Undertaking (other than whereit gives rise to a redemption pursuant to Condition 6(f) or an event of default pursuant toCondition 10(a)) and, which default is, in the opinion of the Trustee, incapable of remedyor, if in the opinion of the Trustee such default is capable of remedy, such default is notremedied within 30 days after notice of such default shall have been given to the Issuer,the Guarantor or the Company (as the case may be) by the Trustee; or

(c) Cross Default: (i) any other present or future indebtedness of the Issuer, the Guarantor orthe Company or any of their respective Principal Subsidiaries for or in respect of moneysborrowed or raised becomes (or becomes capable of being declared) due and payable priorto its stated maturity by reason of any actual or potential default, event of default or thelike (howsoever described), or (ii) any such indebtedness is not paid when due or, as thecase may be, within any originally applicable grace period, or (iii) the Issuer, the Guarantoror the Company or any of their respective Principal Subsidiaries fails to pay when due anyamount payable by it under any present or future guarantee for, or indemnity in respect of,any moneys borrowed or raised provided that the aggregate amount of the relevantindebtedness, guarantees and indemnities in respect of which one or more of the eventsmentioned above in this Condition 10(c) have occurred equals or exceeds U.S.$60,000,000or its equivalent in any other currency (on the basis of the middle spot rate for the relevantcurrency against the U.S. dollar as quoted by any leading bank on the day on which thisCondition 10(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, assets orrevenues of the Issuer, the Guarantor, the Company or any of their respective PrincipalSubsidiaries and is not discharged or stayed within 30 days; or

(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present orfuture, created or assumed by the Issuer, the Guarantor, the Company or any of theirrespective Principal Subsidiaries over the whole or any material part of the assets of theIssuer, the Guarantor, the Company or their respective Principal Subsidiaries, becomesenforceable and any step is taken to enforce it (including the taking of possession or theappointment of a receiver, manager or other similar person) and is not discharged within30 days; or

(f) Insolvency: the Issuer, the Guarantor, the Company or any of their respective PrincipalSubsidiaries is (or is, or could be, deemed by law or a court of competent jurisdiction tobe) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop orsuspend payment of all or a material part of its debts, proposes or makes any agreement forthe deferral, rescheduling or other readjustment of all of its debts, proposes or makes a

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general assignment or an arrangement or composition with or for the benefit of the relevantcreditors in respect of any of such debts or commences a voluntary case or proceedingunder any applicable bankruptcy law, consents to the entry of judgment, decree or order forrelief against it in an involuntary case or proceeding under any applicable bankruptcy law,consents to the appointment of receiver of it or for any material part of its property andassets, consents to or acquiesces in the institution of a bankruptcy or an insolvencyproceeding against it, or takes any corporate action to authorise or effect any of theforegoing, or a moratorium is agreed or declared in respect of or affecting all or anymaterial part of the debts of the Issuer, the Guarantor, the Company or any of theirrespective Principal Subsidiaries; or

(g) Winding-up: an administrator is appointed, an order is made by a court of competentjurisdiction or an effective resolution passed for the winding-up or dissolution of theIssuer, the Guarantor, the Company or any of their respective Principal Subsidiaries, or theIssuer, the Guarantor, the Company or any of their respective Principal Subsidiaries ceasesor threatens to cease to carry on all or a material part of its business or operations, exceptfor the purpose of and followed by a reconstruction, amalgamation, reorganisation, mergeror consolidation (i) on terms approved by an Extraordinary Resolution of the Noteholders,or (ii) in the case of a Principal Subsidiary, whereby the undertaking and assets of suchPrincipal Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor orthe Company, as the case may be, or any of their respective Principal Subsidiaries; or

(h) Nationalisation: any step is taken by any person with a view to the seizure, compulsoryacquisition, expropriation or nationalisation of all or a material part of the assets of theIssuer, the Guarantor, the Company or any of their respective Principal Subsidiaries; or

(i) Authorisation and Consents: any action, condition or thing (including the obtaining oreffecting of any necessary consent, approval, authorisation, exemption, filing, licence,order, recording or registration) at any time required to be taken, fulfilled or done in order(i) to enable the Issuer, the Guarantor and the Company lawfully to enter into, exercisetheir respective rights and perform and comply with their respective obligations under theNotes, the Trust Deed, the Keepwell Deed (other than with regard to the performance of andcompliance with obligations thereunder) and the Deed of Equity Interest PurchaseUndertaking (other than with regard to the performance of and compliance with obligationsthereunder); (ii) to ensure that those obligations referred to in (i) are legally binding andenforceable and (iii) to make the Notes, the Trust Deed, the Keepwell Deed and the Deedof Equity Interest Purchase Undertaking admissible in evidence in the courts of HongKong, is not taken, fulfilled or done; or

(j) Illegality: it is or will become unlawful for any of the Issuer, the Guarantor and theCompany to perform or comply with any one or more of their respective obligations underany of the Notes, the Coupons, the Trust Deed, the Agency Agreement, the Keepwell Deedand the Deed of Equity Interest Purchase Undertaking; or

(k) Keepwell Deed and Deed of Equity Interest Purchase Undertaking: the Keepwell Deedor the Deed of Equity Interest Purchase Undertaking is not or is claimed by the Issuer, theGuarantor or the Company not to be in full force and effect, or the Issuer, the Guarantoror the Company is in breach of its respective obligations thereunder, or the Keepwell Deedor the Deed of Equity Interest Purchase Undertaking is modified, amended or terminatedother than strictly in accordance with its terms; or

(l) Guarantee: the Guarantee is unenforceable or invalid or shall for any reason cease to bein full force and effect or is claimed to be unenforceable, invalid or not in full force andeffect by the Issuer or the Guarantor; or

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(m) Analogous Events: any event occurs which under the laws of any relevant jurisdiction hasan analogous effect to any of the events referred to in Condition 10(d) to Condition 10(g)(both inclusive).

For the purposes of this Condition 10, “Principal Subsidiary” means any Subsidiary of the Issuer,the Guarantor and/or the Company:

(i) whose gross revenue (consolidated in the case of a Subsidiary which itself hasSubsidiaries) attributable to the Issuer, the Guarantor or the Company, as the case may be,as shown by its latest audited income statement, are at least five per cent. of theconsolidated gross revenues as shown by the latest published audited income statement ofthe Issuer, the Guarantor or the Company, as the case may be, and their respectiveconsolidated Subsidiaries including, for the avoidance of doubt, the Issuer, the Guarantoror the Company, as the case may be, and their respective consolidated Subsidiaries’ shareof profits of Subsidiaries not consolidated and of jointly controlled entities and afteradjustments for minority interests; or

(ii) whose net profits (consolidated in the case of a Subsidiary which itself has Subsidiaries)attributable to the Issuer, the Guarantor or the Company, as the case may be, as shown byits latest audited income statement, are at least five per cent. of the consolidated net profitsas shown by the latest published audited income statement of the Issuer, the Guarantor orthe Company, as the case may be, and their respective consolidated Subsidiaries, including,for the avoidance of doubt, the Issuer, the Guarantor or the Company, as the case may be,and their respective consolidated Subsidiaries’ share of profits of Subsidiaries notconsolidated and of jointly controlled entities and after adjustments for minority interests;or

(iii) whose gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries)attributable to the Issuer, the Guarantor or the Company, as the case may be, as shown byits latest audited balance sheet, are at least five per cent. of the consolidated gross assetsas shown by the latest published audited balance sheet of the Issuer, the Guarantor or theCompany, as the case may be, and their respective consolidated Subsidiaries, including, forthe avoidance of doubt, the investment of the Issuer, the Guarantor or the Company, as thecase may be, in each Subsidiary whose accounts are not consolidated with the consolidatedaudited accounts of the Issuer, the Guarantor or the Company, as the case may be, and afteradjustments for minority interests; or

(iv) to which is transferred the whole or substantially the whole of the assets of a Subsidiarywhich immediately prior to such transfer was a Principal Subsidiary, provided that thePrincipal Subsidiary which so transfers its assets shall forthwith upon such transfer ceaseto be a Principal Subsidiary and the Subsidiary to which the assets are so transferred shallcease to be a Principal Subsidiary at the date on which the first published audited accounts(consolidated, if appropriate) of the Issuer, the Guarantor or the Company, as the case maybe, prepared as of a date later than such transfer are issued unless such Subsidiary wouldcontinue to be a Principal Subsidiary on the basis of such accounts by virtue 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 the endof the financial period to which the latest consolidated audited accounts of the Issuer, theGuarantor or the Company, as the case may be, relate, the reference to the then latestconsolidated audited accounts of the Issuer, the Guarantor or the Company, as the case maybe, for the purposes of the calculation above shall, until consolidated audited accounts ofthe Issuer, the Guarantor or the Company, as the case may be, for the financial period inwhich the relevant corporation or other business entity becomes a Subsidiary are published,

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be deemed to be a reference to the then latest consolidated audited accounts of the Issuer,the Guarantor or the Company, as the case may be, adjusted to consolidate the latest auditedaccounts (consolidated in the case of a Subsidiary which itself has Subsidiaries) of suchSubsidiary in such accounts;

(B) if at any relevant time in relation to the Issuer, the Guarantor, the Company or anySubsidiary which itself has Subsidiaries no consolidated accounts are prepared and audited,the gross revenue, net profits or gross assets of the Issuer, the Guarantor, the Companyand/or any such Subsidiary shall be determined on the basis of pro forma consolidatedaccounts prepared for this purpose by the Issuer, the Guarantor or the Company, as the casemay be, for the purposes of preparing a certificate thereon to the Trustee;

(C) if at any relevant time in relation to any Subsidiary, no accounts are audited, its grossrevenue, net profits or gross assets (consolidated, if appropriate) shall be determined on thebasis of pro forma accounts (consolidated, if appropriate) of the relevant Subsidiaryprepared for this purpose by the Issuer, the Guarantor or the Company, as the case may be,for the purposes of preparing a certificate thereon to the Trustee; and

(D) if the accounts of any Subsidiary (not being a Subsidiary referred to in proviso (A) above)are not consolidated with those of the Issuer, the Guarantor or the Company, as the casemay be, then the determination of whether or not such Subsidiary is a Principal Subsidiaryshall be based on a pro forma consolidation of its accounts (consolidated, if appropriate)with the consolidated accounts (determined on the basis of the foregoing) of the Issuer, theGuarantor or the Company, as the case may be.

A certificate signed by any one of the Authorised Signatories of the Issuer, the Guarantor or theCompany, respectively, stating that, in his/her opinion, a Subsidiary is or is not, or was or was not,a Principal Subsidiary of the Issuer, the Guarantor or the Company, as the case may be, shall, in theabsence of manifest error, be conclusive and binding on all parties and the Noteholders andCouponholders.

11 Meetings of Noteholders, Modification, Waiver and Substitution

(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings ofNoteholders to consider matters affecting their interests, including the sanctioning byExtraordinary Resolution of a modification of any of these Conditions or any provisions of theTrust Deed, the Agency Agreement, the Keepwell Deed or the Deed of Equity Interest PurchaseUndertaking. Such a meeting may be convened by the Issuer, the Guarantor or the Trustee andshall be convened by the Trustee if requested in writing to do so by Noteholders holding not lessthan 10 per cent. in aggregate nominal amount of the Notes for the time being outstanding(subject to it being indemnified and/or secured and/or pre-funded to its satisfaction against allcosts and expenses). The quorum for any meeting convened to consider an ExtraordinaryResolution will be two or more persons holding or representing more than 50 per cent. inaggregate principal amount of the Notes for the time being outstanding, or at any adjournedmeeting two or more persons being or representing Noteholders whatever the nominal amountof the Notes held or represented, unless the business of such meeting includes consideration ofproposals, inter alia, (i) to amend the dates of maturity or redemption of the Notes, anyInstalment Date or any date for payment of interest or Interest Amounts on the Notes, (ii) toreduce or cancel the principal amount of, or any Instalment Amount of, or any premium payableon redemption of, the Notes, (iii) to reduce the rate or rates of interest in respect of the Notesor to vary the method or basis of calculating the rate or rates or amount of interest or the basisfor calculating any Interest Amount in respect of the Notes, (iv) if a Minimum Rate of Interestand/or a Maximum Rate of Interest, Instalment Amount or Redemption Amount is shown hereon,to reduce any such Minimum Rate of Interest and/or Maximum Rate of Interest, (v) to vary anymethod of, or basis for, calculating the Final Redemption Amount, the Early Redemption Amountor the Optional Redemption Amount, including the method of calculating the Amortised Face

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Amount, (vi) to vary the currency or currencies of payment or denomination of the Notes, (vii)to modify the provisions concerning the quorum required at any meeting of Noteholders or themajority required to pass an Extraordinary Resolution or (viii) to modify or cancel theGuarantee, the Keepwell Deed or the Deed of Equity Interest Purchase Undertaking (subject toCondition 11(b)), in which case the necessary quorum will be two or more persons holding orrepresenting not less than 75 per cent. or at any adjourned meeting not less than 25 per cent. inaggregate nominal amount of the Notes for the time being outstanding. Any ExtraordinaryResolution duly passed shall be binding on Noteholders (whether or not they were present at themeeting at which such resolution was passed) and on all Couponholders.

The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of notless than 90 per cent. in aggregate principal amount of the Notes for the time being outstandingshall for all purposes be as valid and effective as an Extraordinary Resolution passed at ameeting of Noteholders duly convened and held. Such a resolution in writing may be containedin one document or several documents in the same form, each signed by or on behalf of one ormore Noteholders.

These Conditions may be amended, modified or varied in relation to any Series of Notes by theterms of the relevant Pricing Supplement in relation to such Series.

(b) Modification of Agreements and Deeds: The Trustee may (but shall not be obliged to) agree,without the consent of the Noteholders or Couponholders, to (i) any modification of any of theseConditions or any of the provisions of the Trust Deed, the Agency Agreement, the KeepwellDeed or the Deed of Equity Interest Purchase Undertaking that is, in the opinion of the Trusteeof a formal, minor or technical nature or is made to correct a manifest error or is to comply withany mandatory provision of applicable law, and (ii) any other modification (except as mentionedin the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any ofthese Conditions or any of the provisions of the Trust Deed, the Agency Agreement, theKeepwell Deed or the Deed of Equity Interest Purchase Undertaking that is in the opinion of theTrustee not materially prejudicial to the interests of the Noteholders. Any such modification,authorisation or waiver shall be binding on the Noteholders and the Couponholders and, unlessthe Trustee otherwise agrees, such modification, authorisation or waiver shall be notified by theIssuer to the Noteholders as soon as practicable.

(c) Substitution: The Trust Deed contains provisions permitting (but not obliging) the Trustee toagree, subject to such amendment of the Trust Deed and such other conditions as the Trustee mayrequire, but without the consent of the Noteholders or the Couponholders, to the substitution ofthe Issuer’s successor in business or any Subsidiary as defined in the Trust Deed of the Issueror its successor in business or of the Guarantor or its successor in business or any Subsidiaryof the Guarantor or its successor in business in place of the Issuer or the Guarantor, or of anyprevious substituted company, as principal debtor under the Trust Deed and the Notes. In thecase of such a substitution the Trustee may agree, without the consent of the Noteholders or theCouponholders, to a change of the law governing the Notes, the Receipts, the Coupons, theTalons and/or the Trust Deed provided that such change would not in the opinion of the Trusteebe materially prejudicial to the interests of the Noteholders.

(d) Entitlement of the Trustee: In connection with the exercise of its functions, rights, powers anddiscretions (including but not limited to those referred to in this Condition 11) the Trustee shallhave regard to the interests of the Noteholders as a class and shall not have regard to theconsequences of such exercise for individual Noteholders or Couponholders, and the Trusteeshall not be entitled to require on behalf of any Noteholder, nor shall any Noteholder orCouponholder be entitled to claim, from the Issuer or the Guarantor any indemnification orpayment in respect of any tax consequence of any such exercise upon individual Noteholders orCouponholders.

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12 Enforcement

At any time after the Notes become due and payable, the Trustee may, at its discretion and withoutfurther notice, take such actions and/or steps and/or institute such proceedings against the Issuer, theGuarantor and/or the Company as it may think fit to enforce the terms of the Trust Deed, the KeepwellDeed, the Deed of Equity Interest Purchase Undertaking, the Notes, the Receipts and the Coupons, butit need not take any such proceedings unless (a) it shall have been so directed by an ExtraordinaryResolution or so requested in writing by Noteholders holding at least 25 per cent. in aggregatenominal amount of the Notes then outstanding, and (b) it shall first have been indemnified and/orsecured and/or pre-funded to its satisfaction. No Noteholder, Receiptholder and/or Couponholder mayproceed directly against the Issuer, the Guarantor or the Company unless the Trustee, having becomebound so to proceed, fails to do so within a reasonable time and such failure is continuing.

13 Indemnification of the Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief fromresponsibility. The Trustee is entitled to enter into business transactions with the Issuer, theGuarantor, the Company and/or any entity related to the Issuer, the Guarantor or the Company withoutaccounting for any profit.

None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer, theGuarantor, the Company and any other person appointed by the Issuer in relation to the Notes of theduties and obligations on their part expressed in respect of the same and, unless it has express writtennotice from the Issuer, the Guarantor or the Company to the contrary, the Trustee and each Agent shallassume that the same are being duly performed. None of the Trustee or any Agent shall be liable toany Noteholder or any other person for any action taken by the Trustee or such Agent in accordancewith the instructions of the Noteholders. The Trustee shall be entitled to rely on any direction, requestor resolution of Noteholders given by holders of the requisite principal amount of Notes outstandingor passed at a meeting of Noteholders convened and held in accordance with the Trust Deed.Whenever the Trustee is required or entitled by the terms of the Trust Deed, the Keepwell Deed, theDeed of Equity Interest Purchase Undertaking or these Conditions to exercise any discretion or power,take any action, make any decision or give any direction, the Trustee is entitled, prior to its exercisingany such discretion or power, taking any such action, making any such decision, or giving any suchdirection, to seek directions from the Noteholders by way of an Extraordinary Resolution, and theTrustee is not responsible for any loss or liability incurred by any person as a result of any delay init exercising such discretion or power, taking such action, making such decision, or giving suchdirection where the Trustee is seeking such directions or in the event that no such directions arereceived. The Trustee shall not be under any obligation to monitor or supervise compliance with theprovisions of the Trust Deed, the Agency Agreement, the Keepwell Deed, the Deed of Equity InterestPurchase Undertaking or these Conditions.

The Trustee may rely without liability to Noteholders or Couponholders on any report, confirmationor certificate or any advice or opinion of any legal advisers, accountants, financial advisors, financialinstitution or any other expert, whether or not addressed to it and whether their liability in relationthereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trusteeor any other person or 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, confirmation,certificate, advice or opinion and, in such event, such report, confirmation, certificate, advice oropinion shall be binding on the Issuer, the Guarantor, the Company and the Noteholders.

14 Replacement of Notes, Certificates, Receipts, Coupons and Talons

If a Note, Certificate, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it maybe replaced, subject to applicable laws, regulations and stock exchange or other relevant authorityregulations, at the specified office of the Issuing and Paying Agent (in the case of Bearer Notes,Receipts, Coupons or Talons) and of the Registrar (in the case of Certificates) or such other Paying

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Agent or Transfer Agent, as the case may be, as may from time to time be designated by the Issuerfor that purpose and notice of whose designation is given to Noteholders, in each case on payment bythe claimant of the fees and costs incurred in connection therewith and on such terms as to evidence,security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyedNote, Certificate, Receipt, Coupon or Talon is subsequently presented for payment or, as the case maybe, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount payableby the Issuer in respect of such Notes, Certificates, Receipts, Coupons or further Coupons) andotherwise as the Issuer or the relevant Agent may require. Mutilated or defaced Notes, Certificates,Receipts, Coupons or Talons must be surrendered before replacements will be issued.

15 Further Issues

The Issuer may from time to time without the consent of the Noteholders or Couponholders create andissue further securities having the same terms and conditions as the Notes in all respects (or in allrespects except for the issue date and the first payment of interest on them) and so that such furtherissue shall be consolidated and form a single series with an outstanding Series. References in theseConditions to the Notes include (unless the context requires otherwise) any other securities issuedpursuant to this Condition 15 and forming a single series with the Notes.

16 Notices

Notices required to be given to the holders of Registered Notes pursuant to the Conditions shall bemailed to them at their respective addresses in the Register and deemed to have been given on thefourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing and, so longas the Notes are listed on a stock exchange and the rules of that exchange so require, published at theIssuer’s expense in a leading newspaper having general circulation in Asia (which is expected to bethe Wall Street Journal Asia). Notices required to be given to the holders of Bearer Notes pursuantto the Conditions shall be valid if published in a daily newspaper of general circulation in Asia and,so long as the Notes are listed on a stock exchange and the rules of that exchange so require, publishedat the Issuer’s expense in a daily newspaper with general circulation in Asia (which is expected to beThe Wall Street Journal Asia). If any such publication is not practicable, notice required to be givenpursuant to the Conditions shall be validly given if published in another leading daily Englishlanguage newspaper with general circulation in Asia. Any such notice shall be deemed to have beengiven on the date of such publication or, if published more than once or on different dates, on the firstdate on which publication is made, as provided above.

Couponholders shall be deemed for all purposes to have notice of the contents of any notice given tothe holders of Bearer Notes in accordance with this Condition 16.

17 Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Notes under the Contracts(Rights of Third Parties) Act 1999.

18 Governing Law and Jurisdiction

(a) Governing Law: The Trust Deed, the Notes, the Receipts, the Coupons and the Talons, theAgency Agreement, the Guarantee, the Keepwell Deed and the Deed of Equity Interest PurchaseUndertaking, and any non-contractual obligations arising out of or in connection with them aregoverned by, and shall be construed in accordance with, the laws of England.

(b) Jurisdiction: The courts of Hong Kong are to have exclusive jurisdiction to settle any disputesthat may arise out of or in connection with the Notes, Receipts, Coupons or Talons, theGuarantee, the Keepwell Deed, the Deed of Equity Interest Purchase Undertaking and the TrustDeed. Accordingly, any legal action or proceedings arising out of or in connection with anyNotes, Receipts, Coupons or Talons, the Guarantee, the Keepwell Deed, the Deed of Equity

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Interest Purchase Undertaking and the Trust Deed (“Proceedings”) shall be brought in the courts

of Hong Kong. Each of the parties irrevocably submits to the jurisdiction of such courts and

waives any objection to Proceedings in such courts whether on the ground of venue or on the

ground that the Proceedings have been brought in an inconvenient forum.

(c) Agent for Service of Process: Each of the Issuer and the Company has irrevocably appointed

the Guarantor at its registered office, currently at 25/F, Yue Xiu Building, 160 Lockhart Road,

Wanchai, Hong Kong, to receive service of process in any Proceedings in Hong Kong. Such

service shall be deemed completed on delivery to such agent (whether or not, it is forwarded to

and received by the Issuer or the Company). If for any reason such agent ceases to be able to

act as such or no longer has an address in Hong Kong, each of the Issuer and the Company

irrevocably agrees to forthwith appoint a substitute process agent in Hong Kong and deliver to

the Trustee a copy of the agent’s acceptance of that appointment within 30 days of such

cessation. Nothing shall affect the right to serve process in any manner permitted by law.

(d) Independence and Waiver of Immunity: Each of the Issuer, the Guarantor and the Company

hereby waives any right to claim sovereign or other immunity from jurisdiction or execution and

any similar defence, and irrevocably consents to the giving of any relief or the issue of any

process, including, without limitation, the making, enforcement or execution against any

property whatsoever (irrespective of its use or intended use) of any order or judgment made or

given in connection with any Proceedings.

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SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM

Terms used in this section that are not otherwise defined shall have the meanings given to them in“Terms of Conditions of the Notes”.

Initial Issue of Notes

Global Notes and Global Certificates may be delivered on or prior to the original issue date of theTranche to a common depositary for Euroclear and Clearstream, Luxembourg (the “CommonDepositary”) or a sub-custodian for the CMU.

Upon the initial deposit of a Global Note or a Global Certificate with the Common Depositary or witha sub-custodian for the CMU or registration of Registered Notes in the name of (i) any nominee forthe Common Depositary or for Euroclear and Clearstream, Luxembourg or (ii) the Hong KongMonetary Authority as operator of the CMU and delivery of the relevant Global Note or GlobalCertificate to the Common Depositary or the sub-custodian for the CMU (as the case may be),Euroclear or Clearstream, Luxembourg or the CMU (as the case may be) will credit each subscriberwith a nominal amount of Notes equal to the nominal amount thereof for which it has subscribed andpaid.

Notes that are initially deposited with the Common Depositary may also be credited to the accountsof subscribers with (if indicated in the relevant Pricing Supplement) other clearing systems throughdirect or indirect accounts with Euroclear and Clearstream, Luxembourg held by such other clearingsystems. Conversely, Notes that are initially deposited with any other clearing system may similarlybe credited to the accounts of subscribers with Euroclear, Clearstream, Luxembourg or other clearingsystems.

Relationship of Accountholders with Clearing Systems

Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any other clearingsystem (an “Alternative Clearing System”) as the holder of a Note represented by a Global Note ora Global Certificate must look solely to Euroclear, Clearstream, Luxembourg or any such AlternativeClearing System (as the case may be) for his share of each payment made by the Issuer to the bearerof such Global Note or the holder of the underlying Registered Notes, as the case may be, and inrelation to all other rights arising under the Global Notes or Global Certificates, subject to and inaccordance with the respective rules and procedures of Euroclear, Clearstream, Luxembourg or suchAlternative Clearing System (as the case may be). Such persons shall have no claim directly againstthe Issuer in respect of payments due on the Notes for so long as the Notes are represented by suchGlobal Note or Global Certificate and such obligations of the Issuer will be discharged by paymentto the bearer of such Global Note or the holder of the underlying Registered Notes, as the case maybe, in respect of each amount so paid.

If a Global Note or a Global Certificate is lodged with a sub-custodian for or registered with the CMU,the person(s) for whose account(s) interests in such Global Note or Global Certificate are credited asbeing held in the CMU in accordance with the CMU Rules shall be the only person(s) entitled or inthe case of Registered Notes, directed or deemed by the CMU as entitled to receive payments inrespect of Notes represented by such Global Note or Global Certificate and the Issuer will bedischarged by payment to, or to the order of, such person(s) for whose account(s) interests in suchGlobal Note or Global Certificate are credited as being held in the CMU in respect of each amountso paid. Each of the persons shown in the records of the CMU as the beneficial holder of a particularnominal amount of Notes represented by such Global Note or Global Certificate must look solely tothe CMU for his share of each payment so made by the Issuer in respect of such Global Note or GlobalCertificate.

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Exchange

Temporary Global Notes

Each Temporary Global Note will be exchangeable, free of charge to the holder, on or after its

Exchange Date:

(i) if the relevant Pricing Supplement indicates that such Global Note is issued in compliance

with TEFRA C or in a transaction to which TEFRA is not applicable (as to which, see

“Summary of the Programme — Selling Restrictions”), in whole, but not in part, for the

Definitive Notes defined and described below; and

(ii) otherwise, in whole or in part upon certification as to non-U.S. beneficial ownership in the

form set out in the Agency Agreement for interests in a Permanent Global Note or, if so

provided in the relevant Pricing Supplement, for Definitive Notes.

The CMU may require that any such exchange for a Permanent Global Note is made in whole and not

in part and in such event, no such exchange will be effected until all relevant account holders (as set

out in a CMU Issue Position Report or any other relevant notification supplied to the CMU Lodging

and Paying Agent by the CMU) have so certified.

The holder of a Temporary Global Note will not be entitled to collect any payment of interest,

principal or other amount due on or after the Exchange Date unless, upon due certification as to

non-U.S. beneficial ownership in the form set out in the Agency Agreement, exchange of the

Temporary Global Note for an interest in a Permanent Global Note or for Definitive Notes is

improperly withheld or refused. The payments in respect of a Note issued under TEFRA D pursuant

to Condition 6(e) of the Conditions may not be collected without certificate as to non-U.S. beneficial

ownership.

Further Issues

In respect of a Note issued under TEFRA D, for the purpose of dealing in Euroclear or Clearstream,

Luxembourg or the CMU, any further issue of Notes by the Issuer pursuant to Condition 15 of the

Conditions may not be consolidated and form a single series with the outstanding securities of any

series (including the Notes) until the exchange of interests in a Temporary Global Note for interests

in a Permanent Global Note upon the relevant Certification.

Permanent Global Notes

Each Permanent Global Note will be exchangeable, free of charge to the holder, on or after its

Exchange Date in whole but not in part for Definitive Notes if the Permanent Global Note is held on

behalf of Euroclear, Clearstream, Luxembourg, the CMU or an Alternative Clearing System and anysuch clearing system is closed for business for a continuous period of 14 days (other than by reasonof holidays, statutory or otherwise) or announces an intention permanently to cease business or in factdoes so.

In the event that a Global Note is exchanged for Definitive Notes, such Definitive Notes shall beissued in Specified Denomination(s) only. A Noteholder who holds a principal amount of less than theminimum Specified Denomination will not receive a Definitive Note in respect of such holding andwould need to purchase a principal amount of Notes such that it holds an amount equal to one or moreSpecified Denominations.

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Global Certificates

The following will apply in respect of transfers of Notes held in Euroclear, Clearstream, Luxembourg,

the CMU or an Alternative Clearing System. These provisions will not prevent the trading of interests

in the Notes within a clearing system whilst they are held on behalf of such clearing system, but will

limit the circumstances in which the Notes may be withdrawn from the relevant clearing system.

Transfer of the holding of Notes represented by any Global Certificate pursuant to Condition 2(b) of

the Conditions may only be made in part if the relevant clearing system is closed for business for a

continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces

an intention permanently to cease business or does in fact do so.

In the event that a Global Certificate is exchanged for a definitive certificate, such definitive

certificate shall be issued in Specified Denomination(s) only. A Noteholder who holds a principal

amount of less than the minimum Specified Denomination will not receive a definitive certificate in

respect of such holding and would need to purchase a principal amount of Notes such that it holds an

amount equal to one or more Specified Denominations.

Delivery of Notes

On or after any due date for exchange, the holder of a Global Note may surrender such Global Note

or, in the case of a partial exchange, present it for endorsement to or to the order of the Issuing and

Paying Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and Paying Agent).

In exchange for any Global Note, or the part thereof to be exchanged, the Issuer will (i) in the case

of a Temporary Global Note exchangeable for a Permanent Global Note, deliver, or procure the

delivery of, a Permanent Global Note in an aggregate nominal amount equal to that of the whole or

that part of a Temporary Global Note that is being exchanged or, in the case of a subsequent exchange,

endorse, or procure the endorsement of, a Permanent Global Note to reflect such exchange or (ii) in

the case of a Global Note exchangeable for Definitive Notes, deliver, or procure the delivery of, an

equal aggregate nominal amount of duly executed and authenticated Definitive Notes. Global Notes,

Global Certificates and Definitive Notes will be delivered outside the United States and its

possessions.

In this Offering Circular, “Definitive Notes” means, in relation to any Global Note, the definitive

Bearer Notes for which such Global Note may be exchanged (if appropriate, having attached to them

all Coupons and Receipts in respect of interest or Instalment Amounts that have not already been paid

on the Global Note and a Talon). Definitive Notes will be security printed in accordance with any

applicable legal and stock exchange requirements in or substantially in the form set out in the

Schedules to the Trust Deed. On exchange in full of each Permanent Global Note, the Issuer will, if

the holder so requests, procure that it is cancelled and returned to the holder together with the relevant

Definitive Notes.

Exchange Date

“Exchange Date” means, in relation to a Temporary Global Note, the day falling after the expiry of

40 days after its issue date and, in relation to a Permanent Global Note, a day falling not less than

60 days, or in the case of failure to pay principal in respect of any Notes when due 30 days, after that

on which the notice requiring exchange is given and on which banks are open for business in the city

in which the specified office of the Issuing and Paying Agent is located and in the city in which the

relevant clearing system is located.

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Amendment to Conditions

The Temporary Global Notes, the Permanent Global Notes and the Global Certificates containprovisions that apply to the Notes that they represent, some of which modify the effect of theConditions set out in this Offering Circular. The following is a summary of certain of thoseprovisions:

Payments

No payment falling due after the Exchange Date will be made on any Global Note unless exchangefor an interest in a Permanent Global Note or for Definitive Notes is improperly withheld or refused.

Payments on any Temporary Global Note issued in compliance with TEFRA D before the ExchangeDate will only be made against presentation of certification as to non-U.S. beneficial ownership in theform set out in the Agency Agreement. All payments in respect of Notes represented by a Global Note(except with respect to a Global Note held through the CMU) will be made against presentation forendorsement and, if no further payment falls to be made in respect of the Notes, surrender of thatGlobal Note to or to the order of the Issuing and Paying Agent as shall have been notified to theNoteholders for such purpose. A record of each payment so made will be enfaced on each Global Note,which endorsement will be prima facie evidence that such payment has been made in respect of theNotes. Conditions 7(f)(vi) and 8(d) of the Conditions will apply to the Definitive Notes only. For thepurpose of any payments made in respect of a Global Note, the relevant place of presentation (ifapplicable) shall be disregarded in the definition of “business day” set out in Condition 7(h) of theConditions.

All payments in respect of Notes represented by a Global Certificate (other than a Global Certificateheld through the CMU) will be made to, or to the order of, the person whose name is entered on theRegister at the close of business on the record date which shall be the Clearing System Business Dayimmediately prior to the date for payment, where “Clearing System Business Day” means Mondayto Friday inclusive except 25 December and 1 January.

In respect of a Global Note or Global Certificate representing Notes held through the CMU, anypayments of principal, interest (if any) or any other amounts shall be made to the person(s) for whoseaccount(s) interests in the relevant Global Note or Global Certificate are credited (as set out in therecords of the CMU) at the close of business on the Clearing System Business Day immediately priorto the date for payment and, save in the case of final payment, no presentation of the relevant bearerGlobal Note or Global Certificate shall be required for such purpose. For the purposes of thisparagraph, “Clearing System Business Day” means a day on which the CMU is operating and openfor business.

Prescription

Claims against the Issuer in respect of Notes that are represented by a Permanent Global Note willbecome void unless it is presented for payment within a period of 10 years (in the case of principal)and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition9 of the Conditions).

Meetings

The holder of a Permanent Global Note or of the Notes represented by a Global Certificate shall(unless such Permanent Global Note or Global Certificate represents only one Note) be treated asbeing two persons for the purposes of any quorum requirements of a meeting of Noteholders and, atany such meeting, the holder of a Permanent Global Note or of the Notes represented by a Global

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Certificate shall be treated as having one vote in respect of each integral currency unit of the Specified

Currency of the Notes. All holders of Registered Notes are entitled to one vote in respect of each

integral currency unit of the Specified Currency of the Notes comprising such Noteholders holding,

whether or not represented by a Global Certificate.

Cancellation

Cancellation of any Note represented by a Permanent Global Note that is required by the Conditions

to be cancelled (other than upon its redemption) will be effected by reduction in the nominal amount

of the relevant Permanent Global Note or its presentation to or to the order of the Issuing and Paying

Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and Paying Agent) for

endorsement in the relevant schedule of such Permanent Global Note or, in the case of a Global

Certificate, by reduction in the aggregate principal amount of the Certificates in the Register,

whereupon the principal amount thereof shall be reduced for all purposes by the amount so cancelled

and endorsed.

Purchase

Notes represented by a Permanent Global Note or by a Global Certificate may only be purchased by

the Issuer, the Guarantor, the Company or any of their respective subsidiaries if they are purchased

together with the rights to receive all future payments of interest and Instalment Amounts (if any)

thereon.

Issuer’s Option

Any option of early redemption of the Issuer provided for in the Conditions of any Notes while such

Notes are represented by a Permanent Global Note or by a Global Certificate shall be exercised by

the Issuer giving notice to the Noteholders within the time limits set out in and containing the

information required by the Conditions, except that the notice shall not be required to contain the

serial numbers of Notes drawn in the case of a partial exercise of an option and accordingly no

drawing of Notes shall be required. In the event that any option of the Issuer is exercised in respect

of some but not all of the Notes of any Series, the rights of accountholders with a clearing system in

respect of the Notes will be governed by the standard procedures of Euroclear, Clearstream,

Luxembourg, the CMU or any other clearing system (as the case may be).

Noteholders’ Options

Any option of the Noteholders provided for in the Conditions of any Notes while such Notes are

represented by a Permanent Global Note may be exercised by the holder of the Permanent Global Note

giving notice to the Issuing and Paying Agent (or, in the case of Notes lodged with the CMU, the CMU

Lodging and Paying Agent) within the time limits relating to the deposit of Notes with a Paying Agent

set out in the Conditions substantially in the form of the notice available from any Paying Agent,

except that the notice shall not be required to contain the serial numbers of the Notes in respect of

which the option has been exercised and the option may be exercised in respect of the whole or any

part of the Permanent Global Note, and stating the nominal amount of Notes in respect of which the

option is exercised and at the same time presenting the Permanent Global Note to the Issuing and

Paying Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and Paying Agent),

for notation. Any option of the Noteholders provided for in the Conditions of any Notes while such

Notes are represented by a Global Certificate may be exercised in respect of all or some of the Notes

represented by the Global Certificate.

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Trustee’s Powers

In considering the interests of Noteholders while any Global Note is held on behalf of, or Registered

Notes are registered in the name of, or in the name of any nominee for, a clearing system, the Trustee

may have regard to any information provided to it by such clearing system or its operator as to the

identity (either individually or by category) of its accountholders with entitlements to such Global

Note or Registered Notes and may consider such interest if such accountholders were the holders of

the Notes represented by such Global Note or the relevant Global Certificate, as the case may be.

Notices

So long as any Notes are represented by a Global Note or a Global Certificate and such Global Note

or Global Certificate is held on behalf of (i) Euroclear and/or Clearstream, Luxembourg or any other

clearing system (except as provided in (ii) below), notices to the holders of Notes of that Series may

be given by delivery of the relevant notice to that clearing system for communication by it to entitled

accountholders in substitution for publication as required by the Conditions or by delivery of the

relevant notice to the holder of the Global Note or (ii) the CMU, notices to the holders of Notes of

that Series may be given by delivery of the relevant notice to the CMU in substitution for publication

as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note

or Global Certificate, and any such notice shall be deemed to have been given to the Noteholders on

the day on which such notice is delivered to the CMU.

Partly Paid Notes

The provisions relating to Partly Paid Notes are not set out in this Offering Circular, but will be

contained in the relevant Pricing Supplement and thereby in the Global Notes. While any instalments

of the subscription moneys due from the holder of Partly Paid Notes are overdue, no interest in a

Global Note representing such Notes may be exchanged for an interest in a Permanent Global Note

or for Definitive Notes (as the case may be). If any Noteholder fails to pay any instalment due on any

Partly Paid Notes within the time specified, the Issuer may forfeit such Notes and shall have no further

obligation to their holders in respect of them.

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DESCRIPTION OF THE KEEPWELL DEED

The following contains summaries of certain key provisions of the Keepwell Deed. Such statements donot purport to be complete and are qualified in their entirety by reference to the Keepwell Deed.Defined terms used in this section shall have the meanings given to them in the Keepwell Deed.

Under the Keepwell Deed, the Company will undertake with the Issuer, the Guarantor and the Trusteethat it shall, directly or indirectly, own and hold all the outstanding shares of each of the Issuer andthe Guarantor and will not directly or indirectly pledge, grant a security interest, or in any wayencumber or otherwise dispose of any such shares.

In addition, the Company will undertake that it shall cause:

• each of the Issuer and the Guarantor to remain validly existing and remain solvent at alltimes under the laws of their respective jurisdictions of incorporation; and

• each of the Issuer and the Guarantor to have sufficient liquidity to ensure timely paymentby the Issuer or the Guarantor, as the case may be, of any amounts payable under or inrespect of any of its indebtedness (including under the Notes and the Coupons or theGuarantee, as the case may be, in accordance with the Conditions and/or the Trust Deed andotherwise under the Trust Deed and the Agency Agreement).

If the Issuer or the Guarantor at any time determines that it will have insufficient liquidity or cashflow to meet its payment obligations in respect of the Notes and the Coupons or the Guarantee, as thecase may be, or otherwise under the Trust Deed and the Agency Agreement as they fall due, then theIssuer or the Guarantor shall promptly notify the Company of the shortfall and the Company will makeavailable to the Issuer or the Guarantor, as the case may be, before the due date of the relevantpayment obligations, funds sufficient to enable the Issuer or the Guarantor, as the case may be, to paysuch payment obligations in full as they fall due. The Issuer or the Guarantor shall use any funds madeavailable to it by the Company in accordance with the Keepwell Deed solely for the payment whendue of such payment obligations under the Notes, the Coupons, the Guarantee, the Trust Deed or theAgency Agreement, as the case may be.

The Keepwell Deed may be modified, amended or terminated by the written agreement of the partiesthereto.

The Company will undertake to the Trustee in the Keepwell Deed that at all times during the term ofthe Keepwell Deed neither the Company nor any of its Principal Subsidiaries (other than a ListedSubsidiary and Subsidiary of a Listed Subsidiary) will, create, or have outstanding, any SecurityInterest upon the whole or any part of its present or future undertaking, assets or revenues (includingany uncalled capital) to secure any Relevant Indebtedness outside the PRC, or any guarantee orindemnity in respect of any Relevant Indebtedness outside the PRC, without at the same time or priorthereto according to the Notes and the Coupons (aa) the same security as is created or subsisting tosecure any such Relevant Indebtedness, guarantee or indemnity, or (bb) such other security as shallbe approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders.

Relevant Indebtedness is defined in the Keepwell Deed to mean any present or future indebtednesswhich (1) is in the form of, or represented or evidenced by, any bonds, notes, debentures, debenturestock, loan stock or other securities, and which (2) for the time being is, or is intended to be or capableof being, quoted, listed or dealt in or traded on any stock exchange or over-the-counter or othersecurities market (which for the avoidance of doubt, does not include bilateral loans, syndicated loansor club deal loans).

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The Company will further undertake for so long as any Notes and Coupons are outstanding:

• to procure that the articles of association of each of the Issuer and the Guarantor shall notbe amended in a manner that is, directly or indirectly, adverse to holders of the Notes andCoupons;

• to cause each of the Issuer and the Guarantor to remain in full compliance with theConditions, the Guarantee, the Trust Deed and all applicable rules and regulations in HongKong;

• promptly to take any and all action necessary to comply with its obligations under theKeepwell Deed;

• to cause each of the Issuer and the Guarantor to take all action necessary in a timely mannerto comply with its obligations under the Keepwell Deed; and

• to procure that the Issuer will not carry on any business activity whatsoever other than inconnection with the Programme and the Notes and Coupons (such activities in connectionwith the Programme and the Notes and Coupons shall, for the avoidance of doubt, include(i) the establishment and maintenance of the Programme; (ii) the offering, sale or issuanceof the Notes and Coupons under the Programme, the incurrence of Relevant Indebtednessrepresented by the Notes and Coupons issued under the Conditions; (iii) the offering, saleor issuance of Relevant Indebtedness as permitted under the Conditions; (iv) the activitiesdirectly related to the establishment and/or maintenance of the Issuer’s corporate existence;(v) the on-lending of the proceeds of the issue of the Notes and/or the Coupons (the“Proceeds of the Notes”) to the Guarantor or the Company or as any of them may direct),and to cause such recipient of the Proceeds of the Notes to pay the interest and principalin respect of such intercompany loan on time.

Notwithstanding and without prejudice to the other provisions in the Keepwell Deed, in the event thatthe Trustee has provided a Trigger Notice (as defined in the Keepwell Deed) to the Issuer, theGuarantor and the Company, the Company agrees to:

(a) as soon as practicable grant to the Issuer or the Guarantor, as the case may be, a standbyfacility (the “Standby Facility”) pursuant to which the Company will remit an amount inRMB that can be converted by the Issuer or the Guarantor, as the case may be, into theRelevant Amount (the “RMB Amount”);

(b) as soon as practicable open with a PRC commercial bank (the “Settlement Bank”) aspecial RMB account for the transfer and remittance of the RMB Amount for the relevantSeries of Notes to the Issuer or the Guarantor, as the case may be, in accordance with therelevant PRC laws and regulations;

(c) remit the RMB Amount to a specified account of the Issuer in Hong Kong through thespecial RMB account as soon as practicable; and

(d) cause the Issuer to use the RMB Amount to discharge its obligations under the Notes, theCoupons, the Trust Deed, the Agency Agreement, the Deed of Equity Interest PurchaseUndertaking and the Keepwell Deed on the due date therefor,

provided that the Company’s obligations shall be subject to prevailing laws, regulations andgovernment policies at such time and if required, the approvals from or registration with competentPRC government authorities.

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Each of the Company and the Issuer agrees and acknowledges that the terms of the Standby Facility

shall be at arm’s length (or more favourable to the Issuer) and shall not require any security from the

Issuer.

The Keepwell Deed is not, and nothing therein contained and nothing done pursuant thereto by the

Company shall be deemed to constitute, or shall be construed as, or shall be deemed an evidence of,

a guarantee by, or any legal binding obligation of, the Company of the payment of any obligation,

responsibilities, indebtedness or liability, of any kind or character whatsoever, of the Issuer or the

Guarantor under the laws of any jurisdiction, including the PRC.

The parties to the Keepwell Deed will acknowledge that in order for each of the Issuer, the Company

and the Guarantor to comply with its respective obligations under the Keepwell Deed, it may be

subject to Regulatory Approvals.

The Keepwell Deed will be governed by and construed in accordance with English law. The courts of

Hong Kong are to have exclusive jurisdiction to settle any disputes which may arise out of or in

connection with the Keepwell Deed.

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DESCRIPTION OF THE DEED OF EQUITY INTEREST PURCHASE UNDERTAKING

The following contains summaries of certain key provisions of the Deed of Equity Interest PurchaseUndertaking. Such statements do not purport to be complete and are qualified in their entirety byreference to the Deed of Equity Interest Purchase Undertaking. Defined terms used in this sectionshall have the meanings given to them in the Deed of Equity Interest Purchase Undertaking.

The Company intends to assist the Issuer and the Guarantor in meeting their respective obligationsunder the Notes and the Guarantee. Pursuant to the terms of the Deed of Equity Interest PurchaseUndertaking entered into between the Trustee and the Company, the Company agrees to purchase,either by itself or through a PRC incorporated subsidiary of the Company (the “DesignatedPurchaser”), all or any equity interests upon receiving a written purchase notice (the “PurchaseNotice”) from the Trustee (the “Purchase”). The equity interests comprise the equity interests heldby the Guarantor and/or the Issuer and/or any other subsidiaries of the Company incorporated outsidethe PRC (the “Relevant Transferor(s)”) (the “Equity Interest”).

Following written notice being received by the Trustee from the Issuer, the Guarantor or the Companyof the occurrence of an Event of Default under any one or more series or tranches of the Notes, theTrustee shall issue a Purchase Notice to the Company as soon as reasonably practicable. Within 10Business Days after the date of the Purchase Notice, the Company shall determine (i) the purchaseprice of the Equity Interest(s) subject to the Purchase (the “Purchase Price”) in accordance with anyapplicable PRC laws and regulations effective at the time of determination; and (ii) the otherapplicable terms relating to the Purchase. Provided that the Purchase Price shall be no less than thefollowing amount (the “Shortfall Amount”):

(a) the amount sufficient to enable the Issuer and the Guarantor to discharge in full theirrespective obligations under the relevant series of Notes, the Guarantee and the Trust Deed(including without limitation the principal amount of the relevant series of Notes thenoutstanding as at the date of such Purchase Notice and any interest due and unpaid and/oraccrued but unpaid on such Notes up to but excluding the date of such Purchase Notice),plus

(b) an amount equivalent to the interest payable at the stated rate of interest on the relevantseries of Notes for one interest period, plus

(c) all fees, costs, expenses, indemnity payments and other amounts payable to the Trusteeand/or the Agents under or in connection with the relevant series of Notes, the Trust Deed,the Agency Agreement, the Keepwell Deed and/or the Deed of Equity Interest PurchaseUndertaking as at the date of such Purchase Notice plus provisions for fees, costs,expenses, indemnity payments and other amounts which may be incurred after the date ofsuch Purchase Notice, as notified by the Trustee in such Purchase Notice,

provided that if any amounts referred to in paragraphs (a) to (c) above in respect of the ShortfallAmount are likely to be subject to deduction or withholding for or on account of any tax, then theShortfall Amount shall be equal to the amount required to be paid to ensure that the Purchase Pricereceived is equal to the aggregate sum of the amounts referred to in paragraphs (a) to (c) above hadsuch deduction or withholding not been required to be made.

In relation to the Purchase of any Equity Interest relating to a Target Subsidiary incorporated in thePRC held by any Relevant Transferor, the Company agrees that:

(a) within 15 Business Days after the date of the Purchase Notice, the Company shall, and shallprocure each Relevant Transferor to, execute, and the Company shall procure the board ofdirectors of each such Target Subsidiary to execute (where applicable), an Equity InterestTransfer Agreement and all other application documents required by applicable laws andregulations of the PRC and file such agreements and/or documents as required by

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applicable laws and regulations with the Ministry of Commerce of the PRC (“MOFCOM”),the National Development and Reform Commission of the PRC (“NDRC”), theState-owned Assets Supervision and Administration Commission of the State Council ofthe PRC (“SASAC”) and other applicable Approval Authorities for approval of the transferof the Equity Interest as being subject to the Purchase;

(b) within five Business Days after the receipt of approval from MOFCOM, NDRC, SASACand other applicable Approval Authorities, the Company shall submit all applicationdocuments to the competent PRC State Administration for Industry and Commerce (the“AIC”) for AIC registration of the transfer of the Equity Interest of each RelevantTransferor;

(c) as soon as reasonably practicable after receipt of AIC registration from the competent AIC,the Company shall complete the procedures in respect of withholding tax for the RelevantTransferor required by applicable laws and regulations of the PRC with the competent taxauthority to obtain the tax clearance certificate from such tax authority; and

(d) within five Business Days after completion of the change of AIC registration and thereceipt of the tax clearance certificate, the Company shall submit all required applicationdocuments to the State Administration of Foreign Exchange of the PRC (“SAFE”) (a) tochange the SAFE registration of such Target Subsidiaries and (b) for the purchase of theamount of the Purchase Price (if applicable) and the outbound remittance of the PurchasePrice (if applicable).

Closing of such purchase shall take place on or prior to the fifth Business Day after the date of receiptof the approvals from SAFE and all other applicable regulatory approvals (the “Onshore PurchaseClosing Date”), and on the Onshore Purchase Closing Date the Company shall pay to, or procure therelevant Designated Purchaser to pay to, or to the order of, each Relevant Transferor the PurchasePrice payable in immediately available funds to such account in Hong Kong or such other jurisdictionoutside the PRC as may be designated by such Relevant Transferor.

In relation to the Purchase of any Equity Interest relating to a Target Subsidiary incorporated outsidethe PRC held by any Relevant Transferor, the Company agrees that:

(a) within 15 Business Days after the date of the Purchase Notice, the Company shall (a)submit a project information report and other required documents to the SASAC, NDRC ortheir competent local counterparts (where applicable), and (b) submit the preliminaryreport and other required documents for overseas mergers and acquisitions, to MOFCOMand SAFE;

(b) within 15 Business Days after obtaining the confirmation of NDRC, SASAC, MOFCOM,SAFE and other applicable Approval Authorities, the Company shall, and shall procureeach Relevant Transferor to, execute, and the Company shall procure the board of directorsof each such Target Subsidiary to execute (where applicable), an Equity Interest TransferAgreement and all other application documents required by applicable laws andregulations, and shall file such agreements and/or documents as required by applicablelaws and regulations with NDRC, MOFCOM, SAFE and authorities of other jurisdiction incharge of the Purchase (where applicable), for approval or registration of the transfer of theEquity Interests as being the subject of the Purchase;

(c) within five Business Days after the receipt of approval from MOFCOM, NDRC, SASACand other applicable Approval Authorities, the Company shall submit all applicationdocuments required by applicable laws and regulations of the PRC to SAFE for registrationof the transfer of the Equity Interests as being the subject of the Purchase; and

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(d) closing of such purchase shall take place on or prior to the fifth Business Day after the date

of receipt of the approvals or registration from NDRC, SASAC, MOFCOM, SAFE, other

applicable Approval Authorities and authorities of other jurisdictions in charge of the

Purchase (the “Offshore Purchase Closing Date”), and on the Offshore Purchase Closing

Date, the Company shall pay to, or procure the relevant Designated Purchaser to pay to, or

to the order of each Relevant Transferor the Purchase Price payable in immediately

available funds to such account in Hong Kong or such other jurisdiction outside the PRC

as may be designated by such Relevant Transferor.

The Company may discharge its obligations either by itself or through the Designated Purchaser.

The Deed of Equity Interest Purchase Undertaking shall remain in full force and effect so long as any

Notes remain outstanding.

The Deed of Equity Interest Purchase Undertaking will be governed by and construed in accordance

with English law. The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes

which may arise out of or in connection with the Deed of Equity Interest Purchase Undertaking.

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TAXATION

The following summary of certain British Virgin Islands, Hong Kong, PRC, EU and US taxconsequences of the purchase, ownership and disposition of Notes is based upon applicable laws,regulations, rulings and decisions in effect as at the date of this Offering Circular, all of which aresubject to change (possibly with retroactive effect). This discussion does not purport to be acomprehensive description of all the tax considerations that may be relevant to a decision to purchase,own or dispose of Notes and does not purport to deal with consequences applicable to all categoriesof investors, some of which may be subject to special rules. Neither these statements nor any otherstatements in this Offering Circular are to be regarded as advice on the tax position of any Noteholderor any persons acquiring, selling or otherwise dealing in the Notes or on any tax implications arisingfrom the acquisition, sale or other dealings in respect of the Notes. Persons considering the purchaseof the Notes should consult their own tax advisers concerning the tax consequences of the purchase,ownership and disposition of Notes. Prospective investors should consult their professional adviserson the possible tax consequences of buying, holding or selling any Notes under the laws of theircountry of citizenship, residence or domicile.

British Virgin Islands

Income Tax

As at the date of this Offering Circular, the Issuer is exempt from all provisions of the Income TaxAct of the British Virgin Islands, including with respect to all interest payable by the Issuer to personswho are not persons resident in the British Virgin Islands. No income, capital gain, estate, inheritance,succession or gift tax, rate, duty, levy or other charge is payable by persons who are not personsresident in the British Virgin Islands with respect to any debt obligations or other securities of theIssuer.

Hong Kong

Withholding Tax

No withholding tax is payable in Hong Kong in respect of payments of principal or interest in respectof the Notes or in respect of any capital gains arising from the sale of the Notes.

Profits Tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business inHong Kong in respect of profits arising in or derived from Hong Kong from such trade, professionor business (excluding profits arising from the sale of capital assets).

Interest on the Notes may be deemed to be profits arising in or derived from Hong Kong from a trade,profession or business carried on in Hong Kong in the following circumstances:

(i) interest on the Notes is derived from Hong Kong and is received by or accrues to acorporation carrying on a trade, profession or business in Hong Kong;

(ii) interest on the Notes is derived from Hong Kong and is received by or accrues to a person,other than a corporation, carrying on a trade, profession or business in Hong Kong and isin respect of the funds of that trade, profession or business;

(iii) interest on the Notes is received by or accrues to a financial institution (as defined in theInland Revenue Ordinance (Cap. 112) of Hong Kong (the “IRO”)) and arises through orfrom the carrying on by the financial institution of its business in Hong Kong; or

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(iv) interest on the Notes is received by or accrues to a corporation, other than a financialinstitution, and arises through or from the carrying on in Hong Kong by the corporation ofits intra-group financing business (within the meaning of Section 16(3) of the IRO).

Sums received by or accrued to a financial institution by way of gains or profits arising through orfrom the carrying on by the financial institution of its business in Hong Kong from the sale, disposaland redemption of Notes will be subject to Hong Kong profits tax. Sums received by or accrued toa corporation, other than a financial institution, by way of gains or profits arising through or from thecarrying on in Hong Kong by the corporation of its intra-group financing business (within the meaningof Section 16(3) of the IRO) from the sale, disposal or other redemption of Notes will be subject toHong Kong profits tax.

Sums derived from the sale, disposal or redemption of Notes will be subject to Hong Kong profits taxwhere received by or accrued to a person, other than a corporation, who carries on a trade, professionor business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. Thesource of such sums will generally be determined by having regard to the manner in which the Notesare acquired and disposed of.

In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may beavailable. Investors are advised to consult their own tax advisors to ascertain the applicability of anyexemptions to their individual position.

Stamp Duty

Stamp duty will not be payable on the issue of Bearer Notes provided that either:

(i) such Bearer Notes are denominated in a currency other than the currency of Hong Kong andare not repayable in any circumstances in the currency of Hong Kong; or

(ii) such Bearer Notes constitute loan capital (as defined in the Stamp Duty Ordinance (Cap.117) of Hong Kong (the “SDO”)).

If stamp duty is payable, it is payable by the Issuer on the issue of Bearer Notes at a rate of 3 per cent.of the market value of the Bearer Notes at the time of issue. No stamp duty will be payable on anysubsequent transfer of Bearer Notes.

No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transferof Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will,however, not be payable on any transfer of Registered Notes provided that either:

(i) such Registered Notes are denominated in a currency other than the currency of Hong Kongand are not repayable in any circumstances in the currency of Hong Kong; or

(ii) such Registered Notes constitute loan capital (as defined in the SDO).

If stamp duty is payable in respect of the transfer of Registered Notes it will be payable at the rateof 0.26 per cent. (of which 0.13 per cent. is payable by the seller and 0.13 per cent. is payable by thepurchaser) normally by reference to the consideration or its value, whichever is higher. In addition,stamp duty is payable at the fixed rate of HK$5 on each instrument of transfer executed in relationto any transfer of the Registered Notes if the relevant transfer is required to be registered in HongKong.

Estate Duty

No Hong Kong estate duty is payable in respect of the Notes.

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PRC

The following summary describes the principal PRC tax consequences of ownership of the Notes bybeneficial owners who, or which, are not residents of mainland China for PRC tax purposes. Thesebeneficial owners are referred to as non-PRC Noteholders in this “Taxation — PRC” section. Inconsidering whether to invest in the Notes, investors should consult their individual tax advisers withregard to the application of PRC tax laws to their particular situations as well as any tax consequencesarising under the laws of any other tax jurisdiction.

Pursuant to the EIT Law and its implementation regulations, enterprises that are established underlaws of foreign countries and regions (including Hong Kong, Macau and Taiwan) but whose “de factomanagement body” are within the territory of China are treated as PRC tax resident enterprises for thepurpose of the EIT Law and must pay PRC enterprise income tax at the rate of 25 per cent. in respectof their taxable income. If relevant PRC tax authorities decide, in accordance with applicable tax rulesand regulations, that the “de facto management body” of the Issuer or the Guarantor is within theterritory of PRC, the Issuer or the Guarantor may be held to be a PRC tax resident enterprise for thepurpose of the EIT Law and be subject to PRC enterprise income tax at the rate of 25 per cent. onits taxable income. At the date of this Offering Circular, neither the Issuer nor the Guarantor has beennotified or informed by the PRC tax authorities that it is considered as a PRC tax resident enterprisefor the purpose of the EIT Tax Law.

However, there can be no assurance that the Issuer or the Guarantor will not be treated as a PRC taxresident enterprise under the EIT Law and related implementation regulations in the future. Pursuantto the EIT Law and its implementation regulations, any non-resident enterprise without anestablishment within the PRC or whose income has no connection to its establishment inside the PRCmust pay enterprise income tax on income sourced within the PRC, and such income tax must bewithheld at source by the PRC payer acting as a withholding agent, who must withhold the tax amountfrom each payment. Accordingly, in the event the Issuer or the Guarantor is deemed to be a PRC taxresident enterprise by the PRC tax authorities in the future, the Issuer or the Guarantor may berequired to withhold income tax from the payments of interest in respect of the Notes to any non-PRCNoteholder, and gain from the disposition of the Notes may be subject to PRC tax, if the income orgain is treated as PRC-source. The tax rate is generally 10 per cent. for non-resident enterpriseNoteholders and 20 per cent. in the case of non-resident individuals. The Issuer and the Guarantorhave agreed to pay additional amounts to Noteholders, subject to certain exceptions, so that theywould receive the full amount of the scheduled payment, as further set out in the Conditions.

EU

The proposed financial transactions tax (“FTT”)

On 14 February 2013, the European Commission published a proposal (the “Commission’sProposal”) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France,Italy, Austria, Portugal, Slovenia and Slovakia (the “Participating Member States”).

The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealingsin Notes (including secondary market transactions) in certain circumstances. The issuance andsubscription of Notes should, however, be exempt.

Under the Commission’s Proposal, the FTT could apply in certain circumstances to persons bothwithin and outside of the Participating Member States. Generally, it would apply to certain dealingsin Notes where at least one party is a financial institution, and at least one party is established in aparticipating Member State. A financial institution may be, or be deemed to be, “established” in aparticipating Member State in a broad range of circumstances, including (a) by transacting with aperson established in a participating Member State or (b) where the financial instrument which issubject to the dealings is issued in a participating Member State.

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Joint statements issued by Participating Member States (other than Slovenia) indicate an intention to

implement the FTT by 1 January 2016.

However, the FTT proposal remains subject to negotiation between the Participating Member States,

and the scope of any such tax is uncertain. Additional EU Member States may decide to participate.

Prospective holders of Notes are advised to seek their own professional advice in relation to the FTT.

FATCA Withholding

Pursuant to certain provisions to U.S. law commonly referred to as “FATCA”, non-U.S. financial

institutions that enter into agreements with the U.S. Internal Revenue Service (each an “IRSAgreement”) or become subject to provisions of local law intended to implement an

intergovernmental agreement entered into pursuant to FATCA (“IGA Legislation”), may be required

to identify “financial accounts” held by U.S. persons or entities with substantial U.S. ownership, as

well as accounts of other financial institutions that are not themselves participating in (or otherwise

exempt from) the FATCA reporting regime.

In order (a) to obtain an exemption from FATCA withholding on payments it receives and/or (b) to

comply with any applicable laws in its jurisdiction, a financial institution that enters into an IRS

Agreement or is subject to IGA Legislation may be required to (i) report certain information on its

U.S. account holders to the government of the United States or another relevant jurisdiction and (ii)

withhold 30 per cent. from all, or a portion of, certain payments made to other financial institutions

that are not themselves participating in (or otherwise exempt from) the FATCA reporting regime and

persons that fail to provide the financial institution information and forms or other documentation that

may be necessary for such financial institution to determine whether such person is compliant with

FATCA or otherwise exempt from FATCA withholding.

Under FATCA, withholding is required with respect to payments to persons that are not compliant

with (or exempt from) FATCA or that do not provide the necessary information or documentation

made on or after (i) 1 July 2014, in respect of certain U.S. source payments, (ii) 1 January 2017, in

respect of payments of gross proceeds (including principal repayments) on certain assets that produce

U.S. source interest or dividends and (iii) 1 January 2017 (at the earliest), in respect of “foreign

passthru payments”. In the case of “obligations” that are not treated as equity for U.S. federal income

tax purposes, such withholding will only be required where the obligation is issued or materially

modified on or after the date that is six months after the date on which the final regulations applicable

to “foreign passthru payments” are filed in the Federal Register.

Whilst the Notes are in global form and held within the ICSDs or the CMU, it is expected that FATCA

will not affect the amount of any payments made under, or in respect of, the Notes by the Issuer, any

paying agent, the Common Depositary and any CMU participant, given that each of the entities in the

payment chain between the Issuer and the participants in the ICSDs or the CMU is a major financial

institution whose business is dependent on compliance with FATCA and that any alternative approach

introduced under an intergovernmental agreement will be unlikely to affect the securities. The Global

Notes and the Global Certificates expressly contemplate the possibility that the Notes may go into

definitive form and therefore that they may be taken out of the ICSDs or the CMU. If this were to

happen, then a non-FATCA compliant holder could be subject to withholding. However, definitive

notes will only be printed in remote circumstances.

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PRC CURRENCY CONTROLS

Renminbi is not a freely convertible currency. The remittance of Renminbi into and outside the PRCis subject to control imposed under PRC law.

Current Account Items

Under the PRC foreign exchange control regulations, current account item payments include paymentsfor imports and exports of goods and services, payments of income and current transfers into andoutside the PRC.

Prior to July 2009, all current account items were required to be settled in foreign currencies. SinceJuly 2009, the PRC has commenced a pilot scheme pursuant to which Renminbi may be used forsettlement of imports and exports of goods between approved pilot enterprises in five designatedcities in the PRC including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprisesin designated offshore jurisdictions including Hong Kong and Macau. In June 2010, August 2011 andFebruary 2012 respectively, the PRC government promulgated the Circular on Issues concerning theExpansion of the Scope of the Pilot Programme of Renminbi Settlement of Cross-border Trades, theCircular on Expanding the Regions of Cross-border Trade Renminbi Settlement and the Notice onIssues Related to the Administration of Enterprises Carrying Out CNY Settlement of Export GoodsTrade, Circulars with regard to the expansion of designated cities and offshore jurisdictionsimplementing the pilot Renminbi settlement scheme for cross-border trades. Pursuant to theseCirculars, (i) Renminbi settlement of imports and exports of goods and of services and other currentaccount items became permissible, (ii) the list of designated pilot districts were expanded to cover allprovinces and cities in the PRC, (iii) the restriction on designated offshore districts has been liftedand (iv) any enterprise qualified for the export and import business is permitted to use Renminbi assettlement currency for exports of goods, provided that the relevant provincial government hassubmitted the Supervision List to the Six Authorities and the Six Authorities have verified and signedoff such list.

Accordingly, offshore enterprises are entitled to use Renminbi to settle imports of goods and servicesand other current account items between them. Renminbi remittance for exports of goods from thePRC may only be effected by (a) enterprises with the foreign trading right and incorporated in aprovince which has already submitted the Supervision List (for the avoidance of doubt, that PRCenterprise does not necessarily need to be included in the Supervision List) or (b) enterprises that havebeen approved as a pilot enterprise for using Renminbi for exports if the relevant province has notsubmitted the Supervision List.

As new regulations, the circulars will be subject to interpretation and application by the relevant PRCauthorities. Local authorities may adopt different practices in applying these circulars and imposeconditions for settlement of current account items.

Capital Account Items

Under the applicable PRC foreign exchange control regulations, capital account items includecross-border transfers of capital, direct investments, securities investments, derivative products andloans. Capital account payments are generally subject to approval of the relevant PRC authorities.

On 7 April 2011, SAFE promulgated the SAFE Circular, which clarifies that the borrowing by anonshore entity (including a financial institution) of Renminbi loans from an offshore creditor shall inprinciple follow the current regulations on borrowing foreign debts and the provision by an onshoreentity (including a financial institution) of external guarantees in Renminbi shall in principle followthe current regulations on the provision of external guarantees in foreign currencies.

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On 3 December 2013, MOFCOM promulgated the MOFCOM Renminbi FDI Circular which became

effective on 1 January, 2014, and pursuant to which, foreign investors shall handle the relevant

procedures for the cross-border CNY FDI in accordance with the existing laws, administrative

regulations, rules and policies relating to foreign investment, and when granting approvals for CNY

FDI, the appropriate office of MOFCOM and/or its local counterparts will grant written approval for

each FDI and specify “Renminbi Foreign Direct Investment” and the amount of capital contribution

in the approval. The MOFCOM Renminbi FDI Circular also clearly prohibits the FDI funds from

being used for any investment in securities and financial derivatives (except for investment in the

PRC listed companies as strategic investors) or for entrustment loans in the PRC.

On 13 October 2011, PBOC issued the PBOC Renminbi FDI Measures which set out operating

procedures for PRC banks to handle CNY settlement relating to CNY FDI and borrowing by foreign

invested enterprises of offshore CNY loans. Prior to the PBOC Renminbi FDI Measures, cross-border

CNY settlement for CNY FDI has required approvals on a case-by-case basis from PBOC. The new

rules replace PBOC approval requirement with less onerous post-event registration and filing

requirements. Foreign invested enterprises, whether established or acquired by foreign investors, shall

complete the corporate information registration after the completion of relevant CNY FDI

transactions, and shall make post-event registration or filing with PBOC of increases or decreases in

registered capital, equity transfers or swaps, merger or acquisition or other changes to registered

information.

The Circular on Reforming Foreign Exchange Capital Settlement for Foreign Invested Enterprises (關於改革外商投資企業外匯資本金結匯管理方式的通知) which became effective on 1 June 2015,

allows foreign invested enterprises to settle 100 per cent. (subject to future adjustment at discretion

of SAFE) of the foreign currency capital (which has been processed through the SAFE’s equity

interest confirmation procedure for capital contribution in cash or registered by a bank on the SAFE’s

system for account-crediting for such capital contribution) into Renminbi according to their actual

operational needs. Furthermore, SAFE promulgated the Circular on Reforming and Unifying Capital

Account Settlement Policies (關於改革和規範資本項目結匯管理政策的通知) on 9 June 2016 (the “9June Circular”), which expanded the scope of discretionary settlement of foreign currency income

to include foreign debt raised by both domestic-owned enterprises and foreign invested companies,

and other foreign currency income for which discretionary settlement is explicitly permitted. A

negative list with respect to the usage of the capital and the Renminbi proceeds through the

aforementioned settlement procedure is set forth under the Circular and the 9 June Circular. In

particular, a foreign invested enterprise with investment as its main business is permitted to use such

Renminbi proceeds to make equity contribution to its invested enterprises directly, without further

fillings with SAFE.

As new regulations, such notices will be subject to interpretation and application by the relevant PRC

authorities. There can be no assurance that approval of such remittances, borrowing or provision of

external guarantee in Renminbi will continue to be granted or will not be revoked in the future.

Further, since the remittance of Renminbi by way of investment or loans are now categorised as

capital account items, such remittances will need to be made subject to the specific requirements or

restrictions set out in the relevant SAFE rules.

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SUBSCRIPTION AND SALE

The Arrangers have, in an amended and restated dealer agreement dated 10 September 2021 as further

amended and/or supplemented from time to time (the “Dealer Agreement”), agreed with the Issuer,

the Guarantor and the Company a basis on which they or any of them may from time to time agree

to subscribe Notes. Any such agreement will extend to those matters stated under “Terms and

Conditions of the Notes”. Under the terms of the Dealer Agreement, the Issuer, the Guarantor and the

Company will pay each relevant Dealer(s) a commission as agreed between them in respect of Notes

subscribed by it. The Issuer, the Guarantor and the Company have agreed to reimburse the Arrangers

for certain of their expenses properly incurred in connection with the establishment of the Programme

and any future update of the Programme and the Dealers for certain of their activities in connection

with the Programme.

The Issuer, the Guarantor and the Company have agreed to indemnify the Dealers against certain

liabilities in connection with the offer and sale of the Notes. The Dealer Agreement entitles the

Dealers to terminate any agreement that they make to subscribe Notes in certain circumstances prior

to payment for such Notes being made to the Issuer.

The Dealers and their affiliates are full service financial institutions engaged in various activities

which may include securities trading, commercial and investment banking, financial advice,

investment management, principal investment, hedging, financing and brokerage activities. Each of

the Dealers may have engaged in, and may in the future engage in, investment banking, advisory

services and other commercial dealings in the ordinary course of business with the Issuer, the

Guarantor, the Company and/or their respective subsidiaries, jointly controlled entities or associated

companies and may be paid fees in connection with such services from time to time. In the ordinary

course of their various business activities, the Dealers and their affiliates may make or hold (on their

own account, on behalf of clients or in their capacity of investment advisers) a broad array of

investments and actively trade debt and equity securities (or related derivative securities) and

financial instruments (including bank loans) for their own account and for the accounts of their

customers and may at any time hold long and short positions in such securities and instruments and

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

default swaps) in relation thereto.

Such transactions, investments and securities activities may involve securities and instruments of the

Issuer, the Guarantor, the Company and/or their respective subsidiaries, jointly controlled entities or

associated companies, including each Tranche of Notes issued under the Programme, may be entered

into at the same time or proximate to offers and sales of Notes or at other times in the secondary

market and be carried out with counterparties that are also purchasers, holders or sellers of Notes.

Such transactions, investments and securities activities would be carried out as bilateral trades with

selected counterparties and separately from any existing sale or resale of the Tranche of Notes to

which a particular Pricing Supplement relates (notwithstanding that such selected counterparties may

also be purchasers of such Tranche of Notes). Notes issued under the Programme may be purchased

by or be allocated to any Dealer or an affiliate for asset management and/or proprietary purposes

whether or not with a view to later distribution and such purchases or allocation may amount to a

material portion of a Tranche of Notes. Such persons do not intend to disclose the extent of any such

investment or transactions otherwise than in accordance with any legal or regulatory obligation to do

so.

If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Dealers or

any affiliate of the Dealers is a licensed broker or dealer in that jurisdiction, the offering shall be

deemed to be made by that Dealer or its affiliate on behalf of the Issuer in such jurisdiction.

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United States of America

In respect of Notes offered or sold in reliance on Category 1 as specified in the applicable PricingSupplement, the Notes and the Guarantee have not been and will not be registered under the SecuritiesAct, and may not be offered or sold or, in the case of Bearer Notes, delivered within the United Statesexcept in accordance with Regulation S or pursuant to an exemption from, or in a transaction notsubject to, the registration requirements of the Securities Act. Each Dealer has represented, warrantedand agreed, and each further Dealer appointed under the Programme will be required to represent,warrant and agree, that it has not offered or sold or, in the case of Bearer Notes, delivered, and willnot offer or sell or, in the case of Bearer Notes, deliver, any Notes and the Guarantee constituting partof its allotment within the United States. The Notes and the Guarantee are being offered and soldoutside the United States in reliance on Regulation S.

In respect of Notes offered or sold in reliance on Category 2 as specified in the applicable PricingSupplement, the Notes and the Guarantee have not been and will not be registered under the SecuritiesAct, and may not be offered or sold within the United States or to, or for the account or benefit of,U.S. persons except in accordance with Regulation S or pursuant to an exemption from, or in atransaction not subject to, the registration requirements of the Securities Act. The Notes are beingoffered and sold outside the United States to non-U.S. persons in reliance on Regulation S. EachDealer has represented, warranted and agreed, and each further Dealer appointed under theProgramme will be required to represent, warrant and agree, that it has not offered or sold or, in thecase of Bearer Notes, delivered, any Notes, and will not offer or sell or, in the case of Bearer Notes,deliver, any Notes (i) as part of their distribution at any time and (ii) otherwise until 40 days afterthe completion of the distribution of all Notes of the Tranche of which such Notes are a part, asdetermined and certified as provided below, within the United States or to, or for the account orbenefit of, U.S. persons. Each Dealer who has subscribed for Notes of a Tranche (or in the case ofa sale of a Tranche of Notes issued to or through more than one Dealer, each of such Dealers as tothe Notes of such Tranche purchased by or through it or, in the case of a syndicated issue, the relevantlead manager) shall determine and certify to the Issuing and Paying Agent the completion of thedistribution of the Notes of such Tranche. Each Dealer has also agreed, and each further Dealerappointed under the Programme will be required to agree, that, at or prior to confirmation of sale ofNotes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or otherremuneration that purchases Notes from it during the distribution compliance period a confirmationor notice setting out the restrictions on offers and sales of the Notes within the United States or, to,or for the account or benefit of U.S. persons.

Terms used in the above provision have the meanings given to them by Regulation S.

In addition, until 40 days after the commencement of the offering of any identifiable tranche of suchNotes, an offer or sale of Notes within the United States by any dealer (whether or not participatingin the offering) may violate the registration requirements of the Securities Act.

Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered withinthe United States or its possessions or to a United States person, except in certain transactionspermitted by U.S. tax regulations.

Terms used in this paragraph have the meanings given to them by the Code and regulations thereunder.

This Offering Circular has been prepared by the Issuer for use in connection with the offer and saleof the Notes outside the United States. The Issuer and the Dealers reserve the right to reject any offerto purchase the Notes, in whole or in part, for any reason. This Offering Circular does not constitutean offer to any person in the United States. Distribution of this Offering Circular by any non-U.S.person outside the United States to any U.S. person or to any other person within the United States,is unauthorised and any disclosure without the prior written consent of the Issuer of any of its contentsto any such U.S. person or other person within the United States, is prohibited.

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Prohibition of Sales to EEA Retail Investors

Unless the Pricing Supplement in respect of the Notes specify the “Prohibition of Sales to EEA RetailInvestors” as “Not Applicable”, each Dealer has represented, warranted and agreed, and each furtherDealer appointed under the Programme will be required to represent, warrant and agree, that it has notoffered, sold or otherwise made available and will not offer, sell or otherwise make available anyNotes which are the subject of the offering contemplated by this Offering Circular as completed bythe Pricing Supplement in relation thereto to any retail investor in the EEA. For the purposes of thisprovision:

(a) the expression “retail investor” means a person who is one (or more) of the following:

i. a retail client as defined in point (11) of Article 4(1) of MiFID II; or

ii. a customer within the meaning of the Insurance Distribution Directive, where thatcustomer would not qualify as a professional client as defined in point (10) of Article4(1) of MiFID II; and

(b) the expression “offer” includes the communication in any form and by any means ofsufficient information on the terms of the offer and the Notes to be offered so as to enablean investor to decide to purchase or subscribe for the Notes.

Prohibition of Sales to UK Retail Investors

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme willbe required to represent and agree, that it has not offered, sold or otherwise made available and willnot offer, sell or otherwise make available any Notes which are the subject of the offeringcontemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto toany retail investor in the UK. For the purposes of this provision:

(a) the expression “retail investor” means a person who is one (or more) of:

(i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 asit forms part of domestic law by virtue of the EUWA; or

(ii) a customer within the meaning of the provisions of the FSMA and any rules orregulations made under the FSMA to implement Directive (EU) 2016/97, where thatcustomer would not qualify as a professional client, as defined in point (8) of Article2(1) of UK MiFIR; or

(iii) not a qualified investor as defined in Article 2 of the UK Prospectus Regulation, and

(b) the expression “offer” includes the communication in any form and by any means ofsufficient information on the terms of the offer and the Notes to be offered so as to enablean investor to decide to purchase or subscribe for the Notes.

United Kingdom

Each Dealer has represented, warranted and agreed, and each further Dealer appointed under theProgramme will be required to represent, warrant and agree, that:

(a) in relation to any Notes which have a maturity of less than one year, (i) it is a person whoseordinary activities involve it in acquiring, holding, managing or disposing of investments(as principal or agent) for the purposes of its business and (ii) it has not offered or sold andwill not offer or sell any Notes other than to persons whose ordinary activities involve themin acquiring, holding, managing or disposing of investments (as principal or as agent) for

194

the purposes of their businesses or who it is reasonable to expect will acquire, hold, manageor dispose of investments (as principal or agent) for the purposes of their businesses wherethe issue of the Notes would otherwise constitute a contravention of Section 19 of theFSMA by the Issuer or the Guarantor;

(b) it has only communicated or caused to be communicated and will only communicate orcause to be communicated an invitation or inducement to engage in investment activity(within the meaning of Section 21 of the FSMA) received by it in connection with the issueor sale of any Notes in circumstances in which Section 21(1) of the FSMA does not applyto the Issuer or the Guarantor; and

(c) it has complied and will comply with all applicable provisions of the FSMA with respectto anything done by it in relation to any Notes in, from or otherwise involving the UnitedKingdom.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Actof Japan (Act No. 25 of 1948, as amended, the “Financial Instruments and Exchange Act”).Accordingly, each Dealer has represented, warranted and agreed, and each further Dealer appointedunder the Programme will be required to represent, warrant and agree, that it has not, directly orindirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to,or for the benefit of, any resident of Japan (which term as used herein means any person resident inJapan, including any corporation or other entity organised under the laws of Japan.), or to others forreoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan,except pursuant to an exemption from the registration requirements of, and otherwise in compliancewith, the Financial Instruments and Exchange Act and any other applicable laws, regulations andministerial guidelines of Japan.

Hong Kong

Each Dealer has represented, warranted and agreed, and each further Dealer appointed under theProgramme will be required to represent, warrant and agree, that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of anydocument, any Notes except for Notes which are a “structured product” as defined in theSFO other than (i) to “professional investors” as defined in the SFO and any rules madeunder the SFO; or (ii) in other circumstances which 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 (the “C(WUMP)O”) or which do not constitute an offerto the public within the meaning of the C(WUMP)O; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or havein its possession for the purposes of issue, whether in Hong Kong or elsewhere, anyadvertisement, invitation or document relating to any Notes, which is directed at, or thecontents of which are likely to be accessed or read by, the public of Hong Kong (except ifpermitted to do so under the securities laws of Hong Kong) other than with respect to Noteswhich are or are intended to be disposed of only to persons outside Hong Kong or only to“professional investors” as defined in the SFO and any rules made under the SFO.

PRC

Each Dealer has represented, warranted and agreed, and each further Dealer appointed under theProgramme will be required to represent, warrant and agree, that the Notes are not being offered orsold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, notincluding Hong Kong, the Macau Special Administrative Region or Taiwan), except as permitted bythe securities laws of the PRC.

195

Singapore

Each Dealer has acknowledged, and each further Dealer appointed under the Programme will berequired to acknowledge, that the Offering Circular has not been registered as a prospectus with theMonetary Authority of Singapore. Accordingly, each Dealer represents, warrants and agrees, and eachfurther Dealer appointed under the Programme will be required to represent, warrant and agree, thatit has not offered or sold any Notes or caused the Notes to be made the subject of an invitation forsubscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subjectof an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulateor distribute, the Offering Circular or any other document or material in connection with the offer orsale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to anyperson in Singapore other than (i) to an institutional investor (as defined in Section 4A of the SFA)pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA)pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and inaccordance with the conditions specified in Section 275 of the SFA and (where applicable) Regulation3 of the Securities and Futures (Classes of Investors) Regulations 2018, or (iii) otherwise pursuant to,and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person whichis:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA))the sole business of which is to hold investments and the entire share capital of which isowned by one or more individuals, each of whom is an accredited investor; 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 accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA)of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shallnot be transferred within six months after that corporation or that trust has acquired the Notespursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person, or to any person arising from an offerreferred to in Section 275(1A) or Section 276(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 37A of the Securities and Futures (Offers of Investments)(Securities and Securities-based Derivatives Contracts) Regulations 2018.

Any reference to the SFA is a reference to the Securities and Futures Act, Chapter 289 of Singaporeand a reference to any term as defined in the SFA or any provision in the SFA is a reference to thatterm or provision as modified or amended from time to time including by such of its subsidiarylegislation as may be applicable at the relevant time.

British Virgin Islands

Each Dealer has represented, warranted and agreed, and each further Dealer appointed under theProgramme will be required to represent, warrant and agree, that it has not made and will not makeany offer to the public or any person resident in the British Virgin Islands to purchase or subscribefor any of the Notes but the Notes may be acquired by British Virgin Islands persons who receive theoffer of the Notes outside of the British Virgin Islands and in a manner which does not contravene thelaws of the jurisdiction in which such offer is received.

196

General

Each Dealer has agreed, and each further Dealer appointed under the Programme will be required toagree, that it will (to the best of its knowledge and belief) comply with all applicable securities laws,regulations and directives in force in any jurisdiction in which it purchases, offers, sells or deliversNotes or possesses or distributes the Offering Circular and any applicable Pricing Supplement andwill obtain any consent, approval or permission required by it for the purchase, offer, sale or deliveryby it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or inwhich it makes such purchases, offers, sales or deliveries and none of the Issuer, the Guarantor, theCompany, the Trustee and any other Dealer shall have any responsibility therefor.

None of the Issuer, the Guarantor, the Company, the Trustee or any of the Dealers represent that Notesmay at any time lawfully be sold in compliance with any applicable registration or other requirementsin any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibilityfor facilitating such sale. With regard to each Tranche, the relevant Dealer(s) will be required tocomply with any additional restrictions agreed between the Issuer and the relevant Dealer(s) and setout in the applicable Pricing Supplement.

197

GENERAL INFORMATION

1. Listing: Application has been made to the Hong Kong Stock Exchange for the listing of theProgramme under which Notes may be issued by way of debt issues to Professional Investorsonly during the 12-month period after the date of this Offering Circular. Separate applicationwill be made for the listing of the Notes on the Hong Kong Stock Exchange. The issue price ofNotes listed on the Hong Kong Stock Exchange will be expressed as a percentage of theirnominal amount. It is expected that dealings will, if permission is granted to deal in and for thelisting of such Notes, commence on or about the next business day following the date of issueof the relevant Notes.

2. Authorisations: The Issuer has obtained all necessary consents, approvals and authorisations (ifany) in connection with the establishment and update of the Programme. The establishment ofthe Programme was authorised by written resolutions of all the directors of the Issuer dated 17November 2015. The update of the Programme was authorised by written resolutions of all thedirectors of the Issuer dated 8 September 2021. The Guarantor has obtained all necessaryconsents, approvals and authorisations (if any) in connection with the giving and performanceof the Guarantee. The giving of the Guarantee was authorised by resolutions in writing signedby all directors of the Guarantor dated 17 August 2021. The Company has obtained all necessaryconsents, approvals and authorisations (if any) in connection with the entry into the transactiondocuments in connection with the Programme. PRC counsels to the Company and the Arrangershave advised that no other approvals or consents are required from any regulatory authorities orother relevant authorities in the PRC for the Company to enter into the Deed of Equity InterestPurchase Undertaking and the Keepwell Deed.

3. NDRC Registration: With respect to any applicable Tranche of the Notes, registration will becompleted, or application for registration will be made, by the Company in accordance with theNDRC Circular requirement. After issuance of any applicable Tranche of the Notes, theCompany shall report the issuance information to NDRC within the time period prescribed in theNDRC Circular.

4. No Material Adverse Change: Other than as disclosed in this Offering Circular, there has beenno material adverse change in the financial or trading position or prospects of the Issuer, theGuarantor, the Company or the Group since 30 June 2021.

5. Litigation: Except as disclosed in this Offering Circular, none of the Issuer, the Guarantor, theCompany or any of their respective subsidiaries is involved in any litigation or arbitrationproceedings that the Issuer, the Guarantor or the Company believes are material in the contextof the issue of the Notes nor is any of the Issuer, the Guarantor or the Company aware that anysuch proceedings are pending or threatened.

6. Bearer Notes, Receipts, Coupons and Talons: Notes issued pursuant to TEFRA D and anyReceipts, Coupons or Talons appertaining thereto will bear the following legend: “ANYUNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TOLIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THELIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNALREVENUE CODE”.

7. Clearing of the Notes: The Notes may be accepted for clearance through Euroclear,Clearstream, Luxembourg and the CMU. The appropriate ISIN and common code or CMUInstrument Number in relation to the Notes of each Tranche will be specified in the relevantPricing Supplement. If the Notes are to be cleared through any additional or alternative ClearingSystem, the appropriate information will be specified in the applicable Pricing Supplement.

198

8. Available Documents: For so long as Notes may be issued pursuant to this Offering Circular,

copies of the following documents will be available, at all reasonable times during usual

business hours on any weekday (Saturdays, Sundays and public holidays excepted), upon prior

written request and with satisfactory proof of holding, for inspection at the principal place of

business of the Trustee, being at the date of this Offering Circular, at 20/F, Citi Tower, One Bay

East, 83 Hon Bun Road, Kwun Tong, Kowloon, Hong Kong:

(i) the Trust Deed (which includes the form of the Global Notes, the Global Certificates, the

Notes in definitive form, the Coupons, the Receipts and the Talons);

(ii) the Agency Agreement;

(iii) the Deed of Equity Interest Purchase Undertaking;

(iv) the Keepwell Deed;

(v) the constitutive documents of each of the Issuer, the Guarantor and the Company;

(vi) the Guarantor’s audited consolidated financial statements as at and for the years ended 31

December 2019 and 2020;

(vii) the Guarantor’s unaudited but reviewed consolidated financial statements as at and for the

six months ended 30 June 2021;

(viii) the Company’s audited consolidated financial statements as at and for the years ended 31

December 2019 and 2020;

(ix) the Company’s unaudited but reviewed consolidated financial statements as at and for the

six months ended 30 June 2021;

(x) each Pricing Supplement (save that a Pricing Supplement related to an unlisted Series of

Notes will only be available for inspection by a holder of any such Notes and such holder

must produce evidence satisfactory to the Issuer, the Guarantor or the Trustee as to its

holding of Notes and identity); and

(xi) a copy of this Offering Circular together with any supplement to this Offering Circular and

any other documents incorporated herein or therein referenced.

9. Audited Financial Statements: The Guarantor’s audited consolidated financial statements as at

and for the years ended 31 December 2019 and 2020, which are included elsewhere in this

Offering Circular, have been audited by BDO Hong Kong, as stated in its respective reports

appearing herein. The Company’s audited consolidated financial statements as at and for the

years ended 31 December 2019 and 2020, which are included elsewhere in this Offering Circular,

have been audited by BDO China and Grant Thornton, respectively, as stated in their respective

reports appearing herein. The Guarantor’s unaudited but reviewed consolidated financial

statements as at and for the six months ended 30 June 2021, and the Company’s unaudited but

reviewed consolidated financial statements as at and for the six months ended 30 June 2021,

which are included elsewhere in this Offering Circular, have been reviewed by BDO China.

199

INDEX TO FINANCIAL STATEMENTS

Page

The Company’s Consolidated Financial Statements(1)

Unaudited but Reviewed Consolidated Financial Statements and Review Report

as at and for the six months ended 30 June 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Audited Consolidated Financial Statements and Independent Auditors’ Report as at

and for the year ended 31 December 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-97

Audited Consolidated Financial Statements and Independent Auditors’ Report as at

and for the year ended 31 December 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-256

The Guarantor’s Consolidated Financial Statements(2)

Unaudited but Reviewed Consolidated Financial Statements and Review Report

as at and for the six months ended 30 June 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-415

Audited Financial Statements and Independent Auditors’ Report as at

and for the year ended 31 December 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-455

Audited Financial Statements and Independent Auditors’ Report as at

and for the year ended 31 December 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-507

Notes:

(1) References to page numbers in the consolidated financial statements of the Company refer to the original page numbers

in the independent auditors’ reports for the years ended 31 December 2019 and 2020 or the review report for the six

months ended 30 June 2021 (as the case may be) of the Company, and cross-references to page numbers included in the

relevant independent auditors’ reports and the review report (as the case may be) are to such original page numbering.

(2) References to page numbers in the consolidated financial statements of the Guarantor refer to the original page numbers

in the independent auditors’ report for the years ended 31 December 2019 and 2020 or the review report for the six

months ended 30 June 2021 (as the case may be) of the Guarantor, and cross-references to page numbers included in the

relevant independent auditors’ reports and the review report (as the case may be) are to such original page numbering.

F-1

F-2

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

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Guangzhou Metro Group Co., Ltd. Notes to Financial Statements for the six months ended

30 June 2021 (Amounts are expressed in RMB unless otherwise stated)

I. General condition

1. The History, Registered Address, Institution Information and Headquarters

Address Institution Information

Guangzhou Metro Group Co., Ltd. (hereinafter referred to as “the Company”) was

established on November 21, 1992. On June 30, 2015, the company has restructured into

the Limited Liability Company (solely state-owned). Registered address: Tower A,

Wansheng Plaza, No. 1238 Xingang East Road, Haizhu District, Guangzhou. The registered

capital is RMB58,425,396,737.00 yuan. Unified social credit code: 91440101190478645G.

Legal representative: Ding Jianlong.

2. Business Nature and Scope of Business

The Company’s principal businesses are in urban rail transit industry.

The Company has a wide range of business scope which includes construction, maintenance

and operation of the rail transport system. It also engages in a diversified industry that

focuses on the development of metro-related resources, including imports and exports of

the Metro related goods (special projects required the testimonial from corresponding

government departments), real estates (operating as acquired certifications), rail transit

technology consulting and training. Others include office rental, advertisement, parking

services, channel setting and instalment, train maintenance, waterproof construction

engineering, landscape engineering, wholesale and retail trade business (exclusively

controlled and sold merchandise are not covered), storage (excepted danger goods),

construction and metal materials manufacture, computer technology services, cleaning

services.

3. Name of Controlling Shareholder

The ultimate controller of the Company is the state owned assets supervision and

Administration Commission of Guangzhou Municipal People's government.

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 2

4. Business term

The business term of the company is from November 21, 1992 to long term.

II. Preparation Basis of the Consolidated Financial Statements

The financial statements of the Company are prepared on the basis of going concern.

According to the actual transactions and events, the financial statements of the Company

are preared in compliance with the Accounting Standards for Business Enterprises – Basic

Standards and the specific rules, application guildlines, explanations and relevant

regulations of the Standards issue by the Ministry of Financ of China.

III. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements of the Company are prepared in compliance with the requirements

of the Accounting Standards for Business Enterprises and the Financial Accounting System.

They have truthfully and completely reflected the financial position of the Company on 30

June 2021, and the results of their operations and their cash flows for ended 30 June 2021.

IV. Significant Accounting Policy and Accounting Estimates

1. Accounting Period

The accounting period of the Company is divided into annual and interim periods. The

fiscal year adopts the calendar year, that is, from 1st January to 31st December, and the

interim periods refers to the reporting period shorter than one full fiscal year.

2. Reporting Currency

Renminbi, in which the financial statements are presented, is used as the Group’s recording

and functional currency.

3. Basis of Accounting and Pricing Principles

Accounting is based on the accrual basis, with historical cost as the valuation principle,

except for the specified valuation basis.

4. Business Combination

A business combination is a transaction or event that brings together two or more than two

separate entities into one reporting entity. Business combinations are classified into

“Business combination involving entities under common control” and “Business

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 3

combination involving entities not under common control”.

(1) Business combination involving entities under common control

A business combination under the same control is a business combination in which all of

the combining enterprises are ultimately controlled by the same party or parties both before

and after the combination, and that control is not transitory. On the date of merger, the

merger party is the one who gains control over the other enterprises involved in the merger,

and the other enterprises involved in the merger are the merged party.

For the merger of enterprises under the same control, if the consideration of the merging

enterprise is that it makes payment in cash, transfers non-cash assets or bears its debts, it

shall, on the date of merger, regard the share of the book value of the owner's equity of the

merged enterprise as the initial cost of the long-term equity investment. The difference

between the initial cost of the long-term equity investment and the payment in cash, non-

cash assets transferred as well as the book value of the debts borne by the merging party

shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the

retained earnings shall be adjusted.

(2) Business combination involving entities not under common control

A business combination involving enterprises not under common control is a business

combination in which all of the combining enterprises are not ultimately controlled by the

same party or parties both before and after the business combination. For a business

combination not involving enterprises under common control, the party that, on the

acquisition date, obtains control of another enterprise participating in the combination is

the acquirer, while the other enterprise participating in the combination is the acquiree.

Acquisition date is the date on which the acquirer effectively obtains control of the acquiree.

For a business combination not involving enterprise under common control, the

combination cost including the sum of fair value, at the acquisition date, of the assets given,

liabilities incurred or assumed, and equity securities issued by the acquirer. The

intermediary expense incurred by the acquirer in respect of auditing, legal services,

valuation and consultancy services etc. and other associated administrative expenses

attributable to the business combination are recognized in profit or loss when they are

incurred. The transaction cost arose from issuing of equity securities or liability securities

shall be initially recognized as equity securities or liability securities. The contingent

consideration related to the combination shall be booked as combination cost at the fair

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 4

value at the acquisition date. If, within the 12 months after acquisition, additional

information can prove the existence of related information at acquisition date and the

contingent consideration need to be adjusted, goodwill can be adjusted.

Combination cost of the acquirer’s interest and identifiable net assets of the acquirer

acquired through the business combination shall be measured by the fair value at the

acquisition date. When the cost of combination exceeds the acquirer’s interest in the fair

value of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill.

When the merger cost is less than the fair value share of the purchased party's identifiable

net assets obtained in the merger, the fair value of the acquired party's identifiable assets,

liabilities and contingent liabilities and the measurement of the merger cost shall be

reviewed first. If the merger cost is still less than the fair value share of the purchased party's

identifiable net assets obtained in the merger, the acquirer shall recognize the remaining

difference immediately in profit or loss for the current period.

5. Method of preparing the Consolidated Financial Statements

The scope of consolidation includes the company and all of the subsidiaries.

The company's consolidated financial statements are prepared in accordance with the

requirements of Accounting Standards for Enterprises No. 33 - Consolidated Financial

Statements and related provisions. All major internal transactions and transactions within

the scope of consolidation at the time of consolidation have been offset. The

shareholders'rights and interests of a subsidiary company which are not owned by the parent

company are listed separately as minority shareholders' rights and interests in the

consolidated financial statements.

When the accounting period or accounting policies of a subsidiary are different from those

of the company, the company makes necessary adjustments to the financial statements of

the subsidiary based on the company’s own accounting period or accounting policies.

Where a subsidiary was acquired during the reporting period through a business

combination not under common control, the financial statements was reconciliated on the

basis of the fair value of identifiable net assets at the date of acquisition. Where a subsidiary

and a party being absorbed in a merger by absorption was acquired during the reporting

period, through a business combination involving enterprises under common control, the

financial statements of the subsidiary are included in the consolidated financial statements.

The results of operations and cash flow are included in the consolidated balance sheet and

the consolidated income statement, respectively, based on their carrying amounts, from the

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Notes to Financial Statements Page 5

date that common control was established, and the opening balances and the comparative

figures of the consolidated financial statements are restated.

6. Classification of Joint Arrangements and Accounting Procedures for Joint

Venture

A joint arrangement is an arrangement of which two or more parties have joint control. A

joint arrangement is either a joint operation or a joint venture, depending of the rights and

obligation of the company in the joint arrangement. A joint operation is a joint arrangement

whereby the company has rights to the assets, and obligations for the liabilities, relating to

the arrangement. A joint venture is a joint arrangement whereby the company has rights to

the net assets of the arrangement.

When the company is a joint venture, the following items related to the share of the common

operating interests shall be recognized:

(1) Its assets, including its share of any assets held jointly;

(2) Its liabilities, including its share of any liabilities incurred jointly;

(3) Its revenue from the sale of its share of the output arising from the joint operation;

(4) Its share of the revenue from the sale of the output by the joint operation;

(5) Its expenses, including its share of any expenses incurred jointly.

When the company is a joint venture, the investment of the joint venture shall be recognized

as long-term equity investment and shall be accounted for in accordance with the method

described in the notes to the financial statements.

7. Cash and Cash Equivalents

The cash equivalents determined by the company in preparing for the cash flow statement

refer to the investments that the company holds for a short period of time, have strong

liquidity, and are easy to convert into cash of known amount with little risk of value change.

8. Foreign Currency Translation

Foreign currency transaction of the Company is translated into RMB for recording at spot

exchange rate at the transaction date.

Foreign currency monetary items are translated using the spot exchange rate at the balance

sheet date. Exchange differences arising thereby are recorded as exchange gains or losses

for the current year. Exchange differences arising from foreign currency borrowings for the

acquisition or construction of qualifying assets are dealt with according to the standard of

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 6

capitalization of borrowing costs.

9. Financial Instruments

Financial instruments include financial assets, financial liabilities and equity instruments.

(1) Classification of financial instruments

According to the company's business model for managing financial assets and the

contractual cash flow characteristics of financial assets, financial assets are initially

classified as: financial assets measured at amortized cost, financial assets measured at fair

value with changes included in other comprehensive income (debt instruments) and

financial assets measured at fair value through profit or loss.

The business model is to collect contractual cash flow as the goal and the contractual cash

flow is only the payment of principal and interest based on the outstanding principal amount,

which is classified as a financial asset measured at amortized cost; the business model aims

both to receive the contract cash flow and sell the financial assets, and the contract cash

flow is only the payment of the principal and the interest based on the outstanding principal

amount, it is classified as a financial asset measured at fair valuewith changes included in

other comprehensive income (debt instruments); Other financial assets other than those are

classified as financial assets measured at fair value through profit or loss.

For investment in non-trading equity instruments, the company determines whether to

designate it as a financial asset measured at fair value with changes included in other

comprehensive income (equity instruments) at initial recognition.

Financial liabilities are classified at initial recognition as financial liabilities measured at

fair value through profit or loss and financial liabilities measured at amortized cost.

(2) Confirmation basis and measurement method of financial instruments

a) Financial assets measured at amortized cost

Financial assets measured at amortized cost include bills receivable, accounts receivable,

other receivables, long-term receivables, debt investment, etc., are initially measured at fair

value, and related transaction costs are included in the initial confirmation amount; not

included the accounts receivable of major financing components and receivables that the

company decides not to consider financing components for no more than one year shall be

initially measured at the contract transaction price.

Interest calculated using the effective interest rate method during the holding period is

included in the current profit and loss.

When recovering or disposing, the difference between the acquired price and the book value

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Notes to Financial Statements Page 7

of the financial asset is included in the current profit and loss.

b) Financial assets (debt instruments) measured at fair value with changes included in other

comprehensive income

Financial assets (debt instruments) measured at fair value with changes included in other

comprehensive income include receivables financing, other debt investment, etc., are

initially measured at fair value, and related transaction costs are included in the initial

recognition amount. The financial assets are subsequently measured at fair value. Changes

in fair value are included in other comprehensive income except for interest, impairment

losses or gains calculated using the actual interest rate method, and exchange gains and

losses.

At the time of derecognition, the cumulative gains or losses previously included in other

comprehensive income are transferred out of other comprehensive income and included in

the current profit and loss.

c) Financial assets (equity instruments) measured at fair value with changes included in

other comprehensive income

Financial assets (equity instruments) measured at fair value with changes included in other

comprehensive income include other equity instrument investment, etc., they are initially

measured at fair value, and related transaction costs are included in the initial recognition

amount. The financial assets are subsequently measured at fair value, and changes in fair

value are reckoned in other comprehensive income. The dividends obtained are included in

the current profit and loss.

At the time of derecognition, the previously cumulative gains or losses included in other

comprehensive income are transferred out of other comprehensive income and included in

retained earnings.

d) Financial assets measured at fair value through profit or loss

Financial assets measured at fair value through profit or loss include transactional financial

assets, derivative financial assets, and other non-current financial assets. The initial

measurement is based on fair value, and related transaction costs are included in the current

profit and loss. The financial assets are subsequently measured at fair value, and changes

in fair value are included in the current profit and loss.

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e) Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value through profit or loss include transactional

financial liabilities, derivative financial liabilities, etc., are initially measured at fair value,

and related transaction costs are included in current profit or loss. The financial liabilities

are subsequently measured at fair value, and changes in fair value are included in the current

profit and loss.

When the confirmation is terminated, the difference between the book value and the

consideration paid is included in the current profit and loss.

f) Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include short-term borrowings, bills

payable, accounts payable, other payables, long-term borrowings, bonds payable, and long-

term payables. The initial measurement is based on fair value, and related transaction costs

are included in the initial recognition amount.

Interest calculated using the effective interest rate method during the holding period is

included in the current profit and loss.

At the time of derecognition, the difference between the consideration paid and the book

value of the financial liability is included in the current profit and loss.

(3) Confirmation basis and measurement method of financial asset transfer

When the company transfers financial assets, if almost all the risks and rewards of the

ownership of the financial assets have been transferred to the transferee, the financial asset

will be derecognized; If almost all the risks and rewards in the ownership of the financial

asset are retained, the recognition of the financial asset will not be terminated.

When judging whether the transfer of financial assets meets the above conditions for

derecognition of financial assets, the principle of substance over form is adopted. The

company distinguishes the transfer of financial assets into overall transfer and partial

transfer of financial assets. If the overall transfer of financial assets meets the conditions

for termination of confirmation, the difference between the following two amounts shall be

included in the current profit and loss:

a) The book value of the transferred financial assets;

b) The sum of the consideration received due to the transfer and the accumulated amount

of the changes in the fair value originally included in the owner's equity (the financial assets

involved in the transfer are the financial assets (debt instruments) measured at the fair value

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 9

and the changes are included in other comprehensive income).

If the partial transfer of financial assets meets the conditions for termination of confirmation,

the entire book value of the transferred financial assets shall be apportioned between the

termination of confirmation and the portion of non-termination confirmation according to

their relative fair values, and the difference between the following two amounts Into the

current profit and loss:

(1) The book value of the termination confirmation part;

(2) The consideration for the termination confirmation part corresponds to the amount of

the termination confirmation part in the cumulative amount of the fair value change that

was originally directly included in the owners' equity (the financial assets involved in the

transfer are measured at fair value and their changes are included in other comprehensive

income The sum of financial assets (debt instruments).

If the transfer of financial assets does not satisfy the conditions for termination of

confirmation, continue to confirm the financial asset, and the received consideration is

recognized as a financial liability.

(4) Conditions for termination of financial liabilities

If all or part of the current obligations of financial liabilities have been discharged, the

financial liabilities or part of them will be derecognized; if the company signs an agreement

with creditors to replace existing financial liabilities with new financial liabilities, the new

financial liabilities and existing financial liabilities If the contract terms of the contract are

substantially different, the existing financial liabilities shall be derecognized and the new

financial liabilities shall be recognized at the same time.

If substantial changes are made to all or part of the contract terms of the existing financial

liabilities, the existing financial liabilities or part of them will be derecognized, and the

financial liabilities with the revised terms will be recognized as a new financial liability.

When all or part of financial liabilities are derecognized, the difference between the book

value of derecognized financial liabilities and the consideration paid (including non-cash

assets transferred out or new financial liabilities assumed) is included in the current profit

and loss.

If the company repurchases part of its financial liabilities, it will allocate the entire book

value of the financial liabilities on the repurchase date according to the relative fair value

of the part that continues to be recognized and the part that is terminated. The difference

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between the book value allocated to the derecognized portion and the consideration paid

(including non-cash assets transferred out or new financial liabilities assumed) is included

in the current profit and loss.

(5) The method for determining the fair value of financial assets and financial

liabilities

For financial instruments that have an active market, the fair value is determined based on

the quotation in the active market. For financial instruments that do not have an active

market, valuation techniques are used to determine their fair value. In the valuation, the

company adopts valuation techniques that are applicable in the current situation and have

sufficient available data and other information to support, and choose to be consistent with

the characteristics of assets or liabilities considered by market participants in transactions

of related assets or liabilities Input value, and give priority to the relevant observable input

value. The unobservable input value is used only when the relevant observable input value

cannot be obtained or is not feasible.

(6) Test methods and accounting treatment methods for impairment of financial

assets

The company considers all reasonable and evidence-based information, including forward-

looking information, in a single or combined manner for financial assets measured at

amortized cost and financial assets measured at fair value with changes included in other

comprehensive income (debt instruments) to estimate the expected credit loss. The

measurement of expected credit losses depends on whether a significant increase in credit

risk has occurred in financial assets since initial recognition.

If the credit risk of the financial instrument has increased significantly since the initial

confirmation, the company measures its loss preparation in accordance with the expected

credit loss for the entire duration of the financial instrument; if the credit risk of the financial

instrument has not been increased significantly since the initial recognition, the company

measures its loss reserves in accordance with the expected credit loss of the financial

instrument in the next 12 months. The resulting increase or reversal of the loss provision is

included in the current profit and loss as an impairment loss or gain

Generally, the company believes that the credit risk of the financial instrument has

significantly increased over 30 days after the due date, unless there is solid evidence that

the credit risk of the financial instrument has not increased significantly since initial

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recognition.

If the credit risk of a financial instrument is low on the balance sheet date, the company

considers that the credit risk of the financial instrument has not increased significantly since

its initial recognition.

If there is objective evidence that a financial asset has suffered credit impairment, the

company shall make provision for impairment of the financial asset on a single basis.

Regarding accounts receivable, whether or not it contains a significant financing

component, the company always measures its loss provisions in accordance with the

expected credit losses for the entire duration.

For lease receivables, long-term receivables formed by the company through the sale of

commodities or the provision of labor services, the company chooses to always measure its

loss reserves in accordance with the expected credit losses for the entire duration.

10. Receivables

(1) Recognition method of accounts receivable

Receivables include accounts receivable, other receivables, etc. Accounts receivable

formed by selling goods or providing services shall be initially recognized as the fair value

of the contract or agreement price receivable from the purchaser. Receivables are presented

at amortized cost less provision for bad debts using the effective interest method.

(2) Confirmation method of expected credit loss of accounts receivable and accounting

treatment method

For details, please refer to "IV. 9 financial instruments 6 . Test methods and accounting

treatment methods for impairment of financial assets".

11. Inventoires

(1) Classification of inventory

The company’s inventory includes raw materials, products in process, finished goods and

low value consumables, etc.

(2) Valuation method of inventory acquisition and delivery, inventory system and

amortization

The company's inventory is valued at the actual cost when it is obtained. Raw materials,

products in process and goods in stock are priced by weighted average method when they

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are issued; low value consumables are amortized by one-off write off method when they

are Consuming. The perpetual inventory system is adopted for the inventory system.

(3) Basis for determining net realizable value of inventories and provision methods for

decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business less the

estimated costs of completion, the estimated costs necessary to make the sale and relevant

taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes

into consideration the purpose of holding inventories and effect of post balance sheet events.

At the balance sheet date, inventories are measured at the lower of the cost and net realizable

value. If the net realizable value is below the cost of inventories, a provision for decline in

value of inventories is made. The provisions for inventories decline in value is determined

normally by the difference of the costs of individual Items less its realizable value. For large

quantity and low value Itemss of inventories, provision for decline in value is made based

on categories of inventories. For Itemss of inventories relating to a product line that are

produced and marketed in the same geographical area, have the same or similar end users

or purposes, and cannot be practicably evaluated separately from other Itemss in that

product line provision for decline in value is determined on an aggregate basis.

After the provisions for decline in value of inventories is made, if the circumstances that

previously caused inventories to be written down below cost no longer exist so that the net

realizable value of inventories is higher than their cost, the original provision for decline in

value is reversed and the reversal is included in profit or loss for the period.

12. Contract Assets

(1) Recognition method and standard of contract assets

Confirmation methods and standards of contract assets If the Company has transferred

goods to customers and has the right to receive consideration, and the right depends on

factors other than the time lapses, it is recognized as contract assets. The Company's

unconditional (that is, only depending on the time lapses) right to collect consideration from

customers are separately listed as receivables.

(2) Confirmation method of expected credit loss of contract assets and accounting

treatment method

The Company's confirmation method of expected credit loss of contract assets and

accounting treatment method are detailed in Note “IX 6 ContingenciesTest method and

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accounting treatment method of financial assets impairment”.

13. Long-Term Equity Investments

(1) Classification of long-term equity investments

Long-term equity investments consist of equity investments in subsidiaries, joint ventures

and associates.

(2) Determination of initial investment cost

a) For the merger of enterprises under the same control, if the consideration of the merging

enterprise is that it makes payment in cash, transfers non-cash assets, issuing equity

securities or bearing its debts, it shall, on the date of merger, regard the share of the book

value stated in the ultimate control parties’ consolidated financial statement of the owner's

equity of the merged enterprise as the initial cost of the long-term equity investment. The

difference between the initial undefined cost of the long-term equity investment and the

payment in cash, non-cash assets transferred as well as the book value of the debts borne

by the merging party shall offset against the capital reserve. If the capital reserve is

insufficient to dilute, the retained earnings shall be adjusted.

For the equity of the combined party under common control obtained step-by-step through

multiple transactions and the business combination under common control ultimately

formed, the shares of the book value of the owners’ equity of the combined party in the

consolidated financial statements of the ultimate control party shall be as the initial

investment cost of the long-term equity investment. The capital reserves shall be adjusted

for the difference between the initial investment cost of long- term equity investment and

the sum of the book value of long-term equity investment before merging and that of new

consideration payment obtained on the merger date. The retained earnings shall be adjusted

if the capital reserves are insufficient to offset.

b) For the equity of the combined party not under common control, the fair value of the

consideration on the acquisition date shall be recognized as initial investment cost. For the

equity of the combined party not under common control obtained step-by-step through

multiple transactions, the relevant accounting treatment for separate and consolidated

financial statements are different.

(i) In the separate financial statement, the initial investment cost are the sum of the book

value of the acquirer’s share of the acquiree’s net equity before the acquisition date. The

equity investment which relevant to other comprehensive income held before the

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acquisition date shall be transferred into the current profit and loss with the other

comprehensive income.

(ii) In the consolidated financial statement, the equity investment before the acquisition date

will be re-calculated according to the fair value of the equity on the acquisition date, the

difference between the fair value and its book value shall be transferred to the current profits;

The equity investment which relevant to other comprehensive income held before the

acquisition date shall be transferred into the current profit and loss with the other

comprehensive income.

c) Long-term equity investments acquired not through business combination are measured

at cost on initial recognition. Depending on the way of acquisition, the cost of acquisition

can be the total cash paid, the fair value of equity instrument issued, the contract price, the

fair value or book value of the assets given away in the case of non-monetary asset exchange,

or the fair value of the relevant long-term equity investments. The cost of acquisition of a

long-term equity investment acquired not through business combination also includes all

directly associated expenses, applicable taxes and fees, and other necessary expenses.

(3) Subsequent measurement and profit and loss confirmation

Long-term equity investments that can be controlled by the investee are accounted for using

the cost method; long-term equity investments with joint control and significant influence

are accounted for using the equity method.

(4) Recognition standard and accrual method of long-term equity investment

depreciation

At the end of each period, the company judges whether there is any sign of impairment of

long-term equity investment.

If there are signs of impairment in long-term equity investment, such as when the book

value of long-term equity investment is greater than the share of the book value of the

owner's equity of the invested entity, the company shall conduct impairment test on long-

term equity investment and estimate its recoverable amount.

Provision for impairment shall be made according to the difference between the recoverable

amount and the book value of long-term equity investment. Once the impairment provision

is confirmed, it will not be reversed in the future accounting period.

14. Investment Properties

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Investment properties are interests in land and buildings (including the leasehold interest

under an operating lease for a property) held to earn rental income and/or for capital

appreciation.

Investment properties are measured initially at cost. As for the subsequent expenses related

to investment properties, if the economic benefits of the assets are likely to flow into the

Company and its cost can be measured reliably, then it will be included in the cost of

investment property. Otherwise, the subsequent cost will be calculated in the current profits

and losses when it occurs.

If there is any sign of impairment, the company estimates the recoverable amount. If the

recoverable amount is lower than the book value, the corresponding impairment loss shall

be recognized.

Once the impairment loss of investment real estate is recognized, it will not be reversed.

15. Fixed Assets

(1) Recognition of Fixed Assets

The fixed assets of the company refer to the tangible assets held for the purpose of

producing commodities, providing labor services, leasing or operating management, with a

service life of more than one accounting year.

When the economic benefits related to the fixed assets are likely to flow into the enterprise,

and the cost of the fixed assets can be reliably measured, the fixed assets can be recognized.

The fixed assets of the company are initially measured according to the actual cost at the

time of acquisition.

(2) Classification and depreciation policy of fixed assets

According to the opinions on depreciation policies of subway stations and tunnel buildings

(sczh [2019] No. 18) issued by Guangzhou Municipal Bureau of Finance, The company

continues to use depreciation methods approved by the office of the people's Government

of Guangzhou document [Project(2007) 281], considering characteristics of the rail transit,

the subway assets are divided into three kinds using different depreciation methods: stations,

tunnel buildings, operation equipments and management equipments:

(1) The station and tunnel buildings will not be depreciated.

(2) The depreciation of operating equipment assets is accrued by the workload

method, which is implemented from 2007. The depreciation that accrued in previous

years will no longer be retroactively adjusted by the workload method.

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(3) For management equipments, the straight-line method is used to allocate

depreciation.

By using the straight-line method, the depreciation life and annual depreciation rate

of fixed assets are as follows:

Category Useful life Residuals rate (%) Annual depreciation rate (%)

Buildings and structures 10-100 5 0.95-9.50

Transportation instrument 10-30 5 3.17-9.50

Machinery equipment 3-30 5 3.17-31.67

Office equipment 5-10 5 9.50-19.00

Electronic equipment 5-20 5 4.75-19.00

Other equipment 5-10 5 9.50-19.00

(3) Accounting treatment of subsequent expenditure of fixed assets

The follow-up expenditure of fixed assets refers to the expenditure for renovation and repair

of fixed assets in the process of use.

If the subsequent expenditure for the renewal and transformation of fixed assets meets the

recognition conditions of the company's fixed assets, it shall be included in the cost of fixed

assets after deducting the book value of the replaced part; if the fixed assets repair expense

fails to meet the recognition conditions of the company's fixed assets, it shall be included

in the current profit and loss at the time of occurrence.

(4) Recognition standard and accrual method of the impairment of fixed assets

The company would exam every fixed asset, if an asset’s recoverable amount is lower than

its carrying value, a provision for the asset impairment shall be made according to the

difference, and once any loss of asset impairment is recognized, it shall not be switched

back in the future accounting periods. The recoverable amount of an asset group shall be

determined on the basis of the higher one of the net amount of the fair value of the asset

minus the disposal expenses and the current value of the expected future cash flow of the

asset. The current value of the expected future cash flow of an asset shall be determined by

the discounted cash with an appropriate discount rate, on the basis of the expected future

cash flow generated during the continuous use or final disposal of an asset.

The total amount of the fixed asset’s impairment of provision will be made if it has one of

the condition stated below:

a) It has not being used in a long-term, and it will not be used in the foreseeable future, and

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there is no transfer value of the fixed asset.

b) The fixed asset cannot be used any more due to reasons such as technology development

c) Even though the fixed asset can still be used, but it produced large amount of disqualified

products after usage.

d) The fixed asset has been destroyed and it no longer has any use value and transfer value.

e) Other fixed asset that cannot substantially bring financial benefit to the company.

f) The total amount of the fixed asset s impairment of provision has already been made, no

provision need to be made anymore.

16. Construction in Progress

(1) Types of construction in progress

Construction in progress shall be detailed accounting by project item, including:

construction engineering, installation engineering, installation equipment, pending

expenditure and so on.

(2) Measurement of construction in progress

The project under construction is valued at actual cost, and the project cost is determined

according to the actual expenditure. Net expenditure incurred before the project reaches its

intended operational status is included in the project cost. The costs incurred in the trial

operation of products that can be sold before the project reaches its intended usable state

shall be included in the cost of the construction in progress, and the cost of the construction

in progress shall be reduced according to the actual sales revenue or the expected selling

price when the project is sold or transferred into inventory goods. If the borrowing expenses

incurred in a construction project meet the conditions for capitalization, they shall be

included in the construction cost before the fixed assets reach the intended usable state.

(3) Standards and time points for transferring construction in progress into fixed

assets

Construction in progress is transferred to fixed asset when it is ready for intended use. All

the expenditures that bring the construction in process to the expected condition for use

shall be the credit value of the fixed asset. If the construction in process has already reached

the expected condition for use, but hasn’t been made the final account; it shall be carried

forward to a fixed asset according to its estimated value based on the budget, cost or actual

cost of the construction starting from the date when it reaches the expected condition for

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use, and the fixed asset shall be depreciated according to the company’s depreciation policy

for fixed asset. After the final account has been made, the original provisional estimated

value shall be adjusted according to the actual cost, but the depreciation which has

originally been counted and drawn shall not be adjusted.

(4) Confirmation standard and calculation method to impairment of construction in

progress

At the end of the year, the company conducts a comprehensive inspection of the

construction in progress. If there is evidence that the value of the construction in progress

has been impaired, the company shall make provision for the value impairment. Once the

loss of impairment of construction in progress has been confirmed, it shall not be reversed

in the future accounting period. Provision for impairment of construction in progress shall

be made, if it has one or more conditions exist as follows:

a) Construction projects that have been suspended for a long time and are not expected to

be restarted in the next three years.

b) The project has lagged behind both in performance and technology, and the economic

benefits brought to enterprises are uncertain.

c) Other situations demonstrating that impairment has occurred in construction projects.

17. Borrowing Costs

The borrowing costs that are directly attributable to the acquisition, construction or

production of a qualifying asset are capitalized. The amounts of other borrowing costs

incurred are recognized as an expense in the period in which they are incurred. Qualifying

assets are asset (fixed asset, investment property and inventories, etc.) that necessarily take

a substantial period of time for acquisition, construction or production to get ready for their

intended use or sale. Meanwhile, the borrowing costs begin to capitalize when the following

conditions are met:

a) Asset expenditure has occurred, which includes expenditure in the form of cash payments,

transfer of non-cash assets or interest-bearing liabilities; b)Borrowing costs have occurred;

c) The acquisition, construction and production activities necessary to make the assets

available or marketable have begun.

When funds are borrowed for a specific-purpose, the amount of interest to be capitalized is

the actual interest expense incurred on that borrowing for the period less any bank interest

earned from depositing the borrowed funds before being used on the asset or any investment

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income on the temporary investment of those funds.

When funds are borrowed for a general-purpose, the amount of interest to be capitalized on

such borrowings is determined by applying a weighted average interest rate to the weighted

average of the excess amounts of accumulated expenditure on the asset over and above the

amounts of specific- purpose borrowings.

Capitalization of borrowing costs is suspended during periods in which the acquisition,

construction or production of a qualifying asset is interrupted by activities other than those

necessary to prepare the asset for its intended use or sale, when the interruption is for a

continuous period of more than 3 months. Borrowing costs incurred during these periods

recognized as an expense for the current period until the acquisition, construction or

production is resumed. If the interruption is the necessary procedure for the acquisition,

construction or production of capitalized assets to reach the intended usable or saleable

state, the borrowing costs will continue to be capitalized.

The capitalization of borrowing costs shall be stopped when the assets that eligible for

capitalization are qualified for usable or saleable state.

18. Intangible Assets

(1) Recognition of intangible assets

Intangible assets refer to identifiable non-monetary assets owned or controlled by the

company without physical form. Intangible assets are recognized only when the following

conditions are met:

(1) The economic benefits related to the intangible assets are likely to flow into the

company;

(2) The cost of the intangible assets can be measured reliably.

(2) Valuation of intangible assets

The intangible assets are initially measured by their costs. The difference between the actual

payment and the current value of the purchase price shall be recorded into profit or loss for

the credit period.

a) The cost of purchasing intangible assets are the actual expenditure when the expected

purposes of the use are realized.

b) The expenditures for its internal research and development projects are recorded to

current profit and loss when it incur. The development expenditures for its internal research

and development projects may be confirmed as intangible assets if it meets capitalization

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condition.

c) The cost invested into intangible assets by investors shall be determined according to the

conventional value in the investment contract or agreement, except for those of unfair value

in the contract or agreement.

d) The cost of intangible assets acquired from non-cash assets to cover debts or debts

receivables to exchange intangible assets are the fair value of the intangible assets.

e) The cost of intangible assets acquired from non-monetary assets transaction shall be the

fair value of the property, plant and equipment and the tax payables.

f) For the intangible asset that is donated, donor need to provide relevant credentials, the

cost is the amount stated in the credential and the tax payables. If the donor fails to provide

relevant evidence, the estimated amount will base on the market price of the same or similar

intangible assets if there is an active market, together with the relevant tax payables, shall

be used as the actual cost. If there are no same or similar types of intangible assets in the

active market, the actual cost would be the current value of the expected future cash flow;

The self-developed intangible asset that acquired through application of legal process, the

actual cost would be the registered cost and the attorney’s fee when legally acquire the asset.

(3) Judgment basis of intangible assets with uncertain service life

As of the balance sheet date, the company has no intangible assets with uncertain service

life.

(4) Impairment of intangible assets

The company would exam the estimated ability to bring the future economic interest of

every intangible asset at the end of the year, if estimated recoverable amount is lower than

its carrying value, a provision for the asset impairment shall be made according to the

difference, and once any loss of asset impairment is recognized, it shall not be switched

back in the future accounting periods.

(5) The expenditure of research and development

The expenditures for its internal research and development projects of the company shall

be classified into research expenditures and development expenditures.

The research expenditures shall be recorded into the profit and loss of the current period

when they are incurred.

Development expenditures in internal research and development projects shall be

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recognized as intangible assets where they satisfy all of the following conditions:

a) Technical feasibility of completing the intangible asset so that it will be available for use

or sale;

b) Intention to complete the intangible asset and use or sell it;

c) How the intangible asset will generate economic benefits, including the ability to

demonstrate the existence of a market for the output of the intangible asset or the intangible

asset itself or, if it is to be used internally, the usefulness of the intangible asset;

d) Availability of adequate technical, financial and other resources to complete the

development and to use or sell the intangible asset;

e) Ability to measure reliably the expenditure that is attributable to the intangible asset

during its development.

19. Long-Term Deferred Expenses

The long-term deferred expenses refer to all the expenses that occurred and undertaken in

the current year or with the amortization limit of more than one year for the company. The

long-term deferred expenses shall be amortized within the benefit period according to the

direct method.

20. Contract liabilities

The company presents contract assets or contractual liabilities in the balance sheet

according to the relationship between performance obligations and customer payment.

Contract liabilities refer to the Group’s obligation to transfer goods or services to a customer

for which the Group has received consideration or the amount is due from the customer.

The Group will present the net amount of contract assets and contract liabilities under the

same contract.

21. Employee benefits

The employee benefits of the company include short-term employee benefits, post-

employment benefits, termination benefits and other long-term employee benefits:

Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare,

health insurance, maternity insurance, work injury insurance, housing funds, labour union

funds, employee education funds, non-monetary benefits and etc. Short-term employee

benefits are recognised as liabilities and profit or loss account or the costs associated with

the asset during the accounting period when employees actually provide services. The non

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-monetary benefits are measured at fair value.

Post-employment benefit include defined contribution plans and defined benefit plans.

Defined contribution plan which includes the basic pension, unemployment insurance and

annuities shall be recognized as cost of related assets or profit or loss. Projected unit credit

cost method (“PUC”) was used by independent actuaries engaged by the company to

determine the present value of the defined benefit obligations with unbiased and consistent

actuarial assumptions regarding population variables and financial variables. Defined

benefit obligation was presented with the present value and the related current service cost

was accounted into current profit or loss.

When the company terminates the labour relationship with employees prior to the

employment contracts, or encourages employees to accept voluntary redundancy

compensation proposals in this company, a provision shall be recognized for the

compensation arising from the termination of employment relationship with employees at

the time when the company cannot unilaterally withdraw layoff proposal termination

benefits provided due to termination of employment, or the company ensures the costs

related to the payment for termination benefits related to the restructuring, which one is

early to confirm employee benefits liabilities, and recorded as profit or loss.

However, if termination benefits cannot be fully paid after twelve months of the reporting

date, the liability shall be processed in accordance with other long-term employee benefits.

Retirement plan adopts the same principles as the termination benefits. The salaries and

insurance to be paid from the date when employees stop providing services to the date of

normal retirement shall be recognized in profit or loss (termination benefits) when

satisfying the requirements of a provision.

Other long-term employee benefits provided by the company to employees that is in line

with defined contribution plans shall adopt the accounting treatment in accordance with

defined contribution plans, otherwise the accounting treatment of defined benefit plans.

22. Revenue

The Company recognises revenue when it satisfies a performance obligation in the contract,

i.e. when the customer obtains control of the relevant goods or services.

Where a contract has two or more performance obligations, the Group allocates the

transaction price to each performance obligation based on the percentage of respective unit

price of goods or services guaranteed by each performance obligation and recognises as

revenue based on the transaction price that is allocated to each performance obligation.

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If one of the following conditions is fulfilled, the Group performs its performance

obligation within a certain period; otherwise, it performs its performance obligation at a

point of time:

when the customer simultaneously receives and consumes the benefits provided by the

Group when the Group performs its obligations under the contract;

when the customer is able to control the goods in progress in the course of performance

by the Group under the contract;

when the goods produced by the Group under the contract are irreplaceable and the

Group has the right to payment for performance completed to date during the whole contract

term.

For performance obligations performed within a certain period, the Group recognises

revenue by measuring the progress towards complete of that performance obligation within

that certain period. When the progress of performance cannot be reasonably determined, if

the costs incurred by the Group are expected to be compensated, the revenue shall be

recognised at the amount of costs incurred until the progress of performance can be

reasonably determined.

For performance obligation performed at a point of time, the Group recognises revenue at

the point of time at which the customer obtains control of relevant goods or services. To

determine whether a customer has obtained control of goods or services, the Group

considers the following indications:

the Group has the current right to receive payment for the goods, which is when the

customers have the current payment obligations for the goods;

the Group has transferred the legal title of the goods to the customer, which is when the

client possesses the legal title of the goods;

the Group has transferred the physical possession of goods to the customer, which is

when the customer obtains physical possession of the goods;

the Group has transferred all of the substantial risks and rewards of ownership of the

goods to the customer, which is when the customer obtain all of the substantial risks and

rewards of ownership of the goods to the customer;

the customer has accepted the goods;

other information indicates that the customer has obtained control of the goods.

23. Contract costs

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Contract costs are divided into contract performance costs and contract acquisition costs.

The cost incurred by the Company to perform the contract is recognized as an asset as the

contract performance cost when meeting the following conditions:

(1) The cost is directly related to a current or expected contract. (2) The cost increases the

Company's future resources for fulfilling contract performance obligations. (3) The cost is

expected to be recovered.

The incremental cost incurred by the Company for obtaining the contract is expected to be

recovered, and it is recognized as an asset as the cost of obtaining the contract.

Assets related to contract costs are amortized on the same basis as the revenue of goods or

services related to the asset; however, if the amortization period of contract acquisition costs

does not exceed one year, the Company will include them in the current profits and losses

when they occur.

If the book value of assets related to contract costs is higher than the difference between the

following two items, the Company will make provisions for impairment for the excess part

and recognize it as an asset impairment loss:

The remaining consideration expected to be obtained due to the transfer of goods or

services related to the asset;

Costs estimated to incur for the transfer of the related goods or services.

If the aforementioned asset impairment provision is subsequently reversed, the book value

of the asset after reversal shall not exceed the book value of the asset on the date of reversal

dunder the assumption that no impairment provision is made.

24. Government Grants

(1) Classification of Government grant

Government grants are transfer of monetary assets and non-monetary assets from the

government to the company at no consideration. Government grant can be classified as

grant related to the assets and grants related to the income.

Government grants obtained by the company which are relevant to construction or

acquisition of long-term assets are classified as asset-related government grants.

Government grant related to income refers to government grants except government grant

related to the asset.

F-39

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 25

(2) Measurement and derecognition of government subsidies

The company's government subsidies are recognized when they meet the conditions

attached to government subsidies and can be received.

Government subsidies for monetary assets shall be measured according to the amount

received or receivable. Government subsidies for non-monetary assets shall be measured at

fair value; if the fair value cannot be obtained reliably, it shall be measured at nominal

amount.

Government grant related to the assets are written down the book value of relevant assets

or recognised as deferred income. A government grant related to an asset is recognized as

deferred income, and evenly Government grant related to the assets are written down the

book value of relevant assets or recognised as deferred income. A government grant related

to an asset is recognized as deferred income, and evenly amortized to profit or loss over the

useful life of the related asset according to a reasonable and systematic approach.

(Amortized to other income if refer to the principal activities of companies; Amortized to

non-operating revenue if refer to the other operating activitie of companies)

For a government grant related to income, if the grant is a compensation for related

expenses or losses to be incurred in subsequent period, the grant is recognized as deferred

income, and recognized in profit or loss over the periods in which the related costs are

recognized (Amortized to other income if refer to the principal activities of companies;

Amortized to non-operating revenue if refer to the other operating activitie of companies)

or written down the relevant cost or loss. If the grant is a compensation for related expenses

or losses already incurred, the grant is recognized immediately in profit or loss for the

period. (Amortized to other income if refer to the principal activities of companies;

Amortized to non-operating revenue if refer to the other operating activitie of companies)

or written down the relevant cost or loss. Amortized to profit or loss over the useful life of

the related asset according to a reasonable and systematic approach. (Amortized to other

income if refer to the principal activities of companies; Amortized to non-operating revenue

if refer to the other operating activitie of companies)

(3) Accounting treatment of the return of government subsidies

If the recognized government subsidies need to be returned, the company will conduct

accounting treatment according to the current situation:

a) If the book value of the relevant assets is offset at the time of initial recognition, the book

F-40

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 26

value of the assets shall be adjusted;

b) If there is related deferred income, the book balance of the related deferred income shall

be deduct, and the excess part shall be included in the current profit and loss;

c) In other cases, it shall be directly included in the current profit and loss.

25. Deferred Tax Assets and Deferred Tax Liabilities

Recognition of deferred income tax assets for deductible temporary differences is limited

to the amount of taxable income that is likely to be obtained in the future to deduct

deductible temporary differences. For the deductible losses and tax deductions that can be

carried forward in subsequent years, the corresponding deferred income tax assets are

confirmed to the extent that the future taxable income that is likely to be used to deduct the

deductible losses and tax deductions is limited .

For taxable temporary differences, except for special circumstances, deferred income tax

liabilities shall be recognized.

Special circumstances of not recognizing deferred income tax assets or deferred income tax

liabilities include: initial recognition of goodwill; other transactions or events that do not

affect accounting profit or taxable income (or deductible loss) at the time of occurrence

other than business combination.

When the company has the legal right to settle at a net amount and intends to settle at a net

amount or acquire assets and pay off liabilities at the same time, the company's current

income tax assets and current income tax liabilities are presented at the net amount after

offset.

When the company has the legal right to settle the current income tax assets and current

income tax liabilities on a net basis, and the deferred income tax assets and deferred income

tax liabilities are related to the income tax levied by the same tax collection and

management department on the same tax subject or different tax subjects, but in the future,

during each period when the significant deferred income tax assets and liabilities are

transferred back, the related When the tax payer intends to settle the current income tax

assets and liabilities with net amount or obtain assets and pay off liabilities at the same time,

the company's deferred income tax assets and liabilities are presented with net amount after

offset.

26. Lease

The leased assets of the company are mainly buildings, automobiles and others.

F-41

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 27

(1) The company as lessee

Initial measurement

On the beginning date of the lease term, the company recognizes the right to use the leased

asset within the lease term as the right to use asset, and recognizes the present value of the

unpaid lease payment as the lease liability, except for short-term lease and low value asset

lease. When calculating the present value of lease payments, the company adopts the

interest rate embedded in the lease as the discount rate; If the interest rate implicited in the

lease cannot be determined, the lessee's incremental loan interest rate shall be used as the

discount rate.

Subsequent measurement

The company depreciates the right of use assets with reference to the relevant depreciation

provisions of the accounting standards for Business Enterprises No. 4 - fixed assets (refer

to "IV. 20. Fixed assets"). If the company can reasonably determine the ownership of the

leased assets at the expiration of the lease term, then accrues depreciation within the

remaining service life of the leased assets. If it is impossible to reasonably determine that

the ownership of the leased asset can be obtained at the expiration of the lease term, the

company shall provision for depreciation within the shorter of the lease term and the

remaining service life of the leased asset.

For lease liabilities, the company calculates the interest expense of each period within the

lease term according to the fixed periodic interest rate, which is included in the current

profit and loss or the cost of relevant assets. The amount of variable lease payments not

included in the measurement of lease liabilities shall be included in the current profits and

losses or relevant asset costs when actually incurred.

After the beginning date of the lease term, when the actual fixed payment amount changes,

the expected payable amount of the guaranteed residual value changes, the index or ratio

used to determine the lease payment amount changes, the evaluation results or actual

exercise of the purchase option, renewal option or termination option change, The company

remeasures the lease liabilities according to the present value of the changed lease payments,

and adjusts the book value of the right to use assets accordingly. If the book value of the

right of use assets has been reduced to zero, but the lease liabilities still need to be further

reduced, the company shall record the remaining amount into the current profit and loss.

Short term leases and low value asset leases

For short-term leases (lease term of no more than 12 months) and low value asset leases,

F-42

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 28

the company adopts a simplified treatment method, does not recognize the right of use

assets and lease liabilities, and in each period of the lease term, the lease payment is

reckoned in the relevant asset cost or current profit and loss according to the straight-line

method or other systematic and reasonable methods.

(2) The company as lessor

Operating lease

The rental fee charged by the company for the lease of assets shall be apportioned on a

straight-line basis over the entire lease period without deducting the rent-free period, and

shall be recognized as lease income. The initial direct costs related to the lease transaction

paid by the company are included in the current expenses; if the amount is larger, they are

capitalized and included in the current income in installments on the same basis as the

recognition of the lease income throughout the entire lease period.

When the company bears the lease-related expenses that should be borne by the lessee, the

company deducts this part of the total rental income from the rent, and allocates the rental

expenses after deduction within the lease period.

Financial Lease

Finance leased out assets: The company recognizes the difference between the sum of the

financial lease receivables, unguaranteed residual value and its current value as unrealized

financing income on the starting date of the lease, and it is recognized as rental income in

each period in which the rental is received in the future. The initial direct costs incurred by

the company in relation to the leasing transaction are included in the initial measurement

of finance lease receivables and reduce the amount of revenue recognized during the lease

period.

V. Changes in Accounting Policies and Estimates, Correction of Accounting Error, Notes on

Other Adjustments

1. Changes in Accounting Policies

1) Implementation of "Accounting Standards for Business Enterprises No. 22 –

Recognition and Measurement of Financial Instruments", "Accounting Standards for

Business Enterprises No. 23 – Transfer of Financial Assets", "Accounting Standards for

Business Enterprises No. 24 – Hedging Accounting" and "Accounting Standards for

Business Enterprises No. No. 37 – Financial Instruments Presentation (revised in 2017)

(hereinafter collectively referred to as the "New Financial Instruments Standards").

F-43

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 29

In 2017, the Ministry of Finance revised the "Accounting Standards for Business

Enterprises No. 22 – Recognition and Measurement of Financial Instruments", "Accounting

Standards for Business Enterprises No. 23 – Transfer of Financial Assets", "Accounting

Standards for Business Enterprises No. 24 – Hedging Accounting" and "Accounting

Standards for Business Enterprises No. 37 – Presentation of Financial Instruments." The

revised standards stipulate that for financial instruments that have not been derecognized

on the first implementation date, if the previous recognition and measurement are

inconsistent with the requirements of the revised standard, it shall be adjusted

retrospectively. No adjustment is required if the financial statement data in the previous

period is inconsistent with the requirements of the revised standard.

The Company's subsidiaries, Guangzhou Metro Design and Research Institute Co., Ltd.,

Guangzhou Metro Design Institute Construction Drawing Consulting Co., Ltd., Guangzhou

Blueprint Office Service Co., Ltd., and Foshan Rail Transit Design and Research Institute

Co., Ltd. have implemented the New Financial Instruments Standards in 2019.

The Company and other subsidiaries starts to implement the New Financial Instruments

Standards on 1 January 2021. The accumulated impact of retrospective adjustments is

adjusted to retained earnings and other comprehensive income at the beginning of 2021.

The 2020 financial statements have not been adjusted.

2) Implementation of "Accounting Standards for Business Enterprises No. 14 – Revenue"

(revised in 2017) (hereinafter referred to as the "New Revenue Standards")

The Ministry of Finance revised the "Accounting Standards for Business Enterprises No.

14 – Revenue" in 2017. The revised standard stipulates that the cumulative effects on the

opening balance of retained earnings and other related items in the financial statements

should be adjusted on the first effective date of the standards, and information for the

comparable period(s) should remain unadjusted.

The Company's subsidiaries, Guangzhou Metro Design and Research Institute Co., Ltd.,

Guangzhou Metro Design Institute Construction Drawing Consulting Co., Ltd., Guangzhou

Blueprint Office Service Co., Ltd., and Foshan Rail Transit Design and Research Institute

Co., Ltd. have implemented the New Revenue Standards since 2020.

The Company and its subsidiaries have implemented the New Revenue Standards from 1

January 2021. According to the standards, the Company has adjusted the cumulative effects

on the 2021 opening balance of retained earnings and other related items in the financial

statements for contracts that have not been completed on the first effective date of the

F-44

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 30

standards, and the financial statements for 2020 remain unadjusted.

(3) Implementation of "Accounting Standards for Business Enterprises No. 21 – Leases"

(revised in 2018)

The Ministry of Finance revised the "Accounting Standards for Business Enterprises No.

21 – Leases" (referred to as the "New Lease Standards") in 2018. The Company has

implemented the New Lease Standards from 1 January 2021. According to the revised

standards, the Company chooses not to reassess whether it is a lease or contains a lease on

the first effective date of the standards for the contracts that already existed prior to the first

effective date. In accordance with the standards, the Company has adjusted the cumulative

effects on the 2021 opening balance of retained earnings and other related items in the

financial statements for contracts that have not been completed on the first effective date of

the standards, and the financial statements for 2020 remain unadjusted.

2. Changes in Accounting Estimates

There is no change in the company's main accounting estimates during the reporting period.

3. Correction of important prior period errors

During the reporting period, the company has no correction of important prior period errors.

4. Adjustment of other matters

The company has no other adjustment during the reporting period.

5. The impact of the above adjustments on the amount at the beginning of the year and

the amount at the end of the previous period is as follows

Item

Ending balance of

previous period

(amount of

previous period

before

adjustment)

Amount at the

beginning of the

current year

(amount of

previous period

after adjustment)

Adjustment impact

Total

Changes in

accounting

policies

Accounting

Error

Correction

Total assets 460,677,251,500.81 460,682,268,041.03 5,016,540.22 5,016,540.22

Total liabilities 210,655,574,474.69 210,658,248,314.88 2,673,840.19 2,673,840.19

F-45

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 31

Total owner's equity

attributable to the parent

company

249,565,866,340.21 249,568,209,040.24 2,342,700.03 2,342,700.03

Other comprehensive

income

1,279,027,458.36 1,565,868,773.03 286,841,314.67 286,841,314.67

Undistributed profit 1,046,830,606.99 762,331,992.35 -284,498,614.64 -284,498,614.64

VI. Taxes

1. The Main Taxes and Related Tax Rates

Categories Tax Base Rate

Value-added Tax VAT payable is the net difference between

output VAT and deductible input VAT. 6% 9% 13%

City Maintenance and Construction Tax Payable based of the turnover taxes to be

paid. 7%

Corporate Income Tax Payable based of the taxable profits. 15% 16.5% 25%

There are different corporate income tax rate of subsidiaries, to disclose details are as

follows:

Name of Taxpayer Tax Rate

Guangzhou Metro Design and Research Institute Co., Ltd. 15%

Foshan Rail Transit Design and Research Institute Co., Ltd. 15%

Guangzhou Rail Transit Construction Supervision Co., Ltd. 15%

Guangzhou Metro Investment and Financing (HK) Co., Ltd. profit tax 16.5%

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F-49

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 35

2. Companies no longer included in the merger in this period

No.

3. Subjects newly incorporated into the scope of merger in this period

No Name Formation of

control mode

Net assets at the

end of the period

Net profit for the

current period

1 Guangzhou Yunsheng Real

Estate Development Co., Ltd

Newly

established 9,759,090.05 -240,909.95

2 Guangzhou pinzhen Real Estate

Development Co., Ltd

Newly

established 10,023,973.18 23,973.18

VIII. Major Notes to Consolidated Financial Statements

1. Cash and Cash Equivalents

Item 30 June 2021 31 December 2020

Cash on hand 21,141.23 207,011.54

Cash at bank 32,352,769,462.32 20,412,614,300.29

Other monetary funds 52,743,777.14 78,474,813.97

Total 32,405,534,380.69 20,491,296,125.80

Restricted monetary funds are as follows:

Item 30 June 2021 31 December 2020

Performance bond 51,683,751.25 44,383,758.17

Escrow funds 21,194,234.93 21,194,234.93

Total 72,877,986.18 65,577,993.10

2. Financial assets held for trading

Item 30 June 2021 31 December 2020

1. Classified as financial assets measured at

fair value through profit or loss 1,552,665,543.43 554,795,958.42

2. Designated to be financial assets at fair

value through profit or loss

Total 1,552,665,543.43 554,795,958.42

F-50

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 36

3. Notes Receivable

(1) Classification of notes receivable

Category

30 June 2021 31 December 2020

Book balance Bad debt

provision Book value Book balance

Bad debt

provision Book value

Bank

acceptance

bill

26,749,970.30 26,749,970.30 57,025,899.14 57,025,899.14

Commercial

acceptance

bill

35,822,700.79 300,000.00 35,522,700.79 52,402,800.00 1,063,457.28 51,339,342.72

Total 62,572,671.09 300,000.00 62,272,671.09 109,428,699.14 1,063,457.28 108,365,241.86

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F-52

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 38

i. Accounts receivable with provision for bad debts according to the combination of

credit risk characteristics

Name

30 June 2021

Book balance Bad debt provision Expected credit loss

rate (%)

Combination of credit risk

characteristics 2,527,870,115.58 49,522,945.40 1.96

Total 2,527,870,115.58 49,522,945.40

ii. Accounts receivable with provision for bad debts made on a single item basis

Debtor Book balance Bad debt

provision

Proportion

(%) reason for accrual

Bailing Times Media Group

Co., Ltd 221,621,670.98 221,621,670.98 100.00

Estimated

unrecoverable

Guangzhou Metro TV Media

Co., Ltd 31,724,000.00 31,724,000.00 100.00

Estimated

unrecoverable

Baijun subway Advertising

Co., Ltd 21,857,001.31 21,857,001.31 100.00

Estimated

unrecoverable

Guangdong yuantianxiang

Biotechnology Co., Ltd 1,019,059.00 1,019,059.00 100.00

Estimated

unrecoverable

Guangzhou Changlong

Group Co., Ltd 3,557,936.11 1,604,857.46 45.11 Overdue

Zhuhai Changlong

Investment Development

Co., Ltd

96,980.00 29,094.00 30.00 Overdue

Guangzhou shidexian

Network Technology Co.,

Ltd

4,372,391.00 4,372,391.00 100.00 Estimated

unrecoverable

Nanjing Millennium Ankang

Culture Technology Co., Ltd 276,949.15 276,949.15 100.00

Estimated

unrecoverable

Others 223,353.57 223,353.57 100.00 Estimated

unrecoverable

Total 284,749,341.12 282,728,376.47

F-53

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 39

5. Prepayments

(1) Disclosure of prepayments by aging

Aging

30 June 2021 31 December 2020

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proportion

(%) Amount Proportion (%)

Within 1

year 2,372,498,099.10 90.62 2,113,426,385.21 90.69

1- 2 years 135,266,666.54 5.17 129,283,793.01 5.55

2- 3 years 40,725,759.39 1.56 43,083,743.51 1.85

over 3

years 69,660,906.52 2.65 5,209,873.61 44,647,142.84 1.91 5,209,873.61

Total 2,618,151,431.55 100.00 5,209,873.61 2,330,441,064.57 100.00 5,209,873.61

6. Other Receivables

Item 30 June 2021 31 December 2020

Interest receivable

Dividend receivable 161,507,851.18

Other receivables 12,409,427,641.39 14,748,910,373.24

Total 12,570,935,492.57 14,748,910,373.24

(1) Dividend receivable

Item 30 June 2021 31 December 2020

Yuexiu Real Estate Co. Ltd. 161,507,851.18

Total 161,507,851.18

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F-55

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 41

7. Inventories

(1) Classification of inventories

Item

30 June 2021 31 December 2020

Book balance Provision for

impairment Book value Book balance

Provision for

impairment Book value

Raw materials 1,018,337,111.58 1,370,943.31 1,016,966,168.27 939,383,075.76 1,370,943.31 938,012,132.45

Unfinished goods 14,332,554,899.55 14,332,554,899.55 4,886,392,539.64 4,886,392,539.64

Finished goods 611,839,495.42 89,349.17 611,750,146.25 757,102,922.77 89,349.17 757,013,573.60

Turnover materials

(packages, low value

consumables, etc.)

6,442,755.79 10,957.52 6,431,798.27 4,581,333.51 10,957.52 4,570,375.99

expendable biological

assets

Contract performance cost 512,316,067.74 512,316,067.74 398,508,112.63 398,508,112.63

Others 59,368,471.45 59,368,471.45 90,724,324.56 90,724,324.56

Total 16,540,858,801.53 1,471,250.00 16,539,387,551.53 7,076,692,308.87 1,471,250.00 7,075,221,058.87

8. Contract assets

(1) Contract assets

Item

30 June 2021 31 December 2020

Book balance Provision for

impairment Book value Book balance

Provision for

impairment Book value

Project service

fee 1,326,311,153.71 250,010,123.31 1,076,301,030.40 821,323,462.61 220,679,204.14 600,644,258.47

Total 1,326,311,153.71 250,010,123.31 1,076,301,030.40 821,323,462.61 220,679,204.14 600,644,258.47

(2) Provision for impairment of contract assets

Ttem 31 December 2020 Increase Decrease 30 June 2021

Project service fee 220,679,204.14 29,330,919.17 250,010,123.31

Total 220,679,204.14 29,330,919.17 250,010,123.31

F-56

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 42

9. Other Current Assets

Item 30 June 2021 31 December 2020

Tax retained 3,926,672,388.32 4,196,055,985.67

Input tax to be deducted 11,166,362.68 8,818,364.09

Input tax to be certified 82,670.73 239,252,430.86

Bank financial products

Reimbursed expenses 5,730,905,875.57 5,325,796,423.40

Others 66,714.72 382,388.00

Tax payed in advance 1,791,342.71

Total 9,668,894,012.02 9,772,096,934.73

10. Long -Term Equity Investments

(1) Classification of Long-term Equity Investment

Item 31 December 2020 Increase Decrease 30 June 2021

Investment in subsidiaries 4,213,317,215.07 4,213,317,215.07

Investment in joint ventures 24,506,601,845.03 2,313,225,444.13 191,639.75 26,819,635,649.41

Investment in associates

Subtotal 28,719,919,060.10 2,313,225,444.13 191,639.75 31,032,952,864.48

Less: Provision for

impairment

Total 28,719,919,060.10 2,313,225,444.13 191,639.75 31,032,952,864.48

11. Investment in other equity instruments

Item 30 June 2021 31 December 2020

Guangzhou Yuexiu Financial Holding

Group Co., Ltd 2,292,295,149.92 2,333,083,319.84

Chongqing Rail Line 4 construction and

Operation Co., Ltd 24,070,000.00 24,070,000.00

Guangzhou zhongzi Urban Rail Engineering

Consulting Co., Ltd 5,739,713.00 5,739,713.00

Guangzhou South Station to wanghong

station sectionbetween Foshan and

Dongguan (Guangzhou Section)

1,094,000,000.00 1,094,000,000.00

F-57

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 43

Item 30 June 2021 31 December 2020

New-built Foshan west station to

Guangzhou south station section of

Guangzhou Foshan Loop Line(Guangzhou

Section)

40,000,000.00 40,000,000.00

Pearl River Delta Intercity Rail Transit

Guangzhou South Station Baiyun Airport

section of Guangzhou Foshan ring line

4,668,000,000.00 4,168,000,000.00

New-built Guangzhou Qingyuan intercity

rail transit Guangzhou North Station to

Qingyuan station

4,237,990,000.00 4,237,990,000.00

New-built Xintang to Hongmei section of

Guangzhou Dongguan Shenzhen Intercity

Rail Transit

1,655,000,000.00 1,655,000,000.00

Intercity rail transit from Xintang in Pearl

River Delta to Guangzhou north railway

station via Baiyun Airport

10,135,000,000.00 10,135,000,000.00

Shilong container handling station project 2,000,000.00 2,000,000.00

Guangzhou Dongguan Shenzhen Pazhou

branch line of Pearl River Delta Intercity

Rail Transit

790,000,000.00 790,000,000.00

Guangfo Jiangzhu intercity 1,000,000.00 1,000,000.00

Guangzhou Zhuhai intercity 119,000,000.00 119,000,000.00

Total 25,064,094,862.92 24,604,883,032.84

F-58

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 44

12. Other non-current financial assets

Item Fair value at the end of

the period

Fair value at the

beginning of the year

Financial assets measured at fair value

through profit or loss 5,390,000.00 5,390,000.00

Total 5,390,000.00 5,390,000.00

13. Investment real estates

(1) Measured by the cost method

Item 31 December

2020

Increase

during the

period

Decrease

during the

period

30 June 2021

1. Original Cost 6,370,684,807.14 6,370,684,807.14

Including: Properties 6,370,684,807.14 6,370,684,807.14

Land use rights

2. Accumulated depreciation 775,148,850.22 78,339,168.48 853,488,018.70

Including: Properties 775,148,850.22 78,339,168.48 853,488,018.70

Land use rights

3. Net book value before

impairment 5,595,535,956.92 5,517,196,788.44

Including: Properties 5,595,535,956.92 5,517,196,788.44

Land use rights

4. Provision for impairment

5. Net book value 5,595,535,956.92 5,517,196,788.44

Including: Properties 5,595,535,956.92 5,517,196,788.44

Land use rights

14. Fixed Assets

Item Ending book value Beginning book value

Fixed assets 166,321,709,542.39 166,637,785,647.23

Disposal of fixed assets 88,840,647.12 32,158,527.09

Total 166,410,550,189.51 166,669,944,174.32

F-59

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 45

(1) Details of fixed assets

Item 31 December 2020 Increase Decrease 30 June 2021

1. Original Cost 183,218,837,817.16 145,106,313.46 239,742,152.78 183,124,201,977.84

Including: buildings and

structures 123,180,178,975.73 181,010,545.74 122,999,168,429.99

Machinery equipment 24,196,523,985.59 3,349,909.40 24,199,873,894.99

Transportation

instrument 23,391,606,054.92 131,522,944.81 346,084.20 23,522,782,915.53

Electronic equipment 11,750,512,871.88 106,800.56 56,360,520.55 11,694,259,151.89

Office equipment 297,118,092.22 5,425,700.16 1,921,390.54 300,622,401.84

Others 402,897,836.82 4,700,958.53 103,611.75 407,495,183.60

2. Accumulated

depreciation 14,313,376,125.41 283,714,387.88 1,219,789.51 14,595,870,723.78

Including: buildings and

structures 5,418,918,937.36 86,340,048.99 5,505,258,986.35

Machinery equipment 4,671,540,736.48 13,178,366.10 4,684,719,102.58

Transportation

instrument 2,482,624,031.76 118,389,241.76 316,457.35 2,600,696,816.17

Electronic equipment 1,437,869,490.25 55,022,729.50 1,492,892,219.75

Office equipment 211,547,380.37 7,671,403.42 804,901.00 218,413,882.79

Others 90,875,549.19 3,112,598.11 98,431.16 93,889,716.14

3. Net book value before

impairment 168,905,461,691.75 168,528,331,254.06

Including: buildings and

structures 117,761,260,038.37 117,493,909,443.64

Machinery equipment 19,524,983,249.11 19,515,154,792.41

Transportation

instrument 20,908,982,023.16 20,922,086,099.36

Electronic equipment 10,312,643,381.63 10,201,366,932.14

Office equipment 85,570,711.85 82,208,519.05

Others 312,022,287.63 313,605,467.46

4. Provision for

impairment 2,267,676,044.52 61,054,332.85 2,206,621,711.67

F-60

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 46

Item 31 December 2020 Increase Decrease 30 June 2021

Including: buildings and

structures 177,838,834.28 54,696,419.16 123,142,415.12

Machinery equipment 445,670,605.77 71,315.99 445,599,289.78

Transportation

instrument 726,565,790.39 96,183.25 726,469,607.14

Electronic equipment 912,051,091.70 6,190,414.45 905,860,677.25

Office equipment 303,732.64 303,732.64

Others 5,245,989.74 5,245,989.74

5. Net book value 166,637,785,647.23 166,321,709,542.39

Including: buildings and

structures 117,583,421,204.09 117,370,767,028.52

Machinery equipment 19,079,312,643.34 19,069,555,502.63

Transportation

instrument 20,182,416,232.77 20,195,616,492.22

Electronic equipment 9,400,592,289.93 9,295,506,254.89

Office equipment 85,266,979.21 81,904,786.41

Others 306,776,297.89 308,359,477.72

(2) Disposal of fixed assets

Item Ending book value Beginning book value Reasons for disposal

Disposal of fixed assets - be

declared worthless 87,858,053.75 31,136,082.08 be declared worthless

Disposal of fixed assets - be

sold out 982,593.37 1,022,445.01 be sold out

Total 88,840,647.12 32,158,527.09

F-61

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 47

15. Construction in Progress

Item

30 June 2021 31 December 2020

Book balance Provision for

impairment Book value Book balance

Provision

for

impairment

Book value

Construction in

progress 153,907,304,129.80 153,907,304,129.80 130,229,052,059.80 130,229,052,059.80

Construction

materials 202,400.86 202,400.86

Total 153,907,506,530.66 153,907,506,530.66 130,229,052,059.80 130,229,052,059.80

F-62

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 48

16. Intangible Assets

(1) Intangible assets

Item 31 December

2020 Increase Decrease 30 June 2021

1. Original Cost 1,014,151,858.17 5,608,668.33 1,019,760,526.50

Including: Software 230,475,782.35 5,608,668.33 236,084,450.68

Land use right 783,127,382.42 783,127,382.42

Patent right 55,489.52 55,489.52

Others 493,203.88 493,203.88

2. Accumulated

amortisation 234,381,344.37 17,221,461.46 1,945,101.37 249,657,704.46

Including: Software 199,334,723.87 10,542,704.14 1,945,101.37 207,932,326.64

Land use right 34,602,226.40 6,628,389.06 41,230,615.46

Patent right 8,730.77 1,047.90 9,778.67

Others 435,663.33 49,320.36 484,983.69

3. Provision for

impairment

Including: Software

Land use right

Patent right

Others

4. Net book value 779,770,513.80 770,102,822.04

Including: Software 31,141,058.48 28,152,124.04

Land use right 748,525,156.02 741,896,766.96

Patent right 46,758.75 45,710.85

Others 57,540.55 8,220.19

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F-64

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 50

18. Long-Term Deferred Expenses

Item 31 December

2020

Increase during

the period

Amortization in

the current period

Other

decrease 30 June 2021

Decoration fee 35,701,550.57 6,098,190.00 7,484,202.83 34,315,537.74

Staff training fee 24,832,243.35 3,420,187.20 21,412,056.15

Start up expenses 336,256.56 154,632.22 181,624.34

Sporadic works 12,849,136.19 2,116,237.98

Others 202,630.70 66,856.02 135,774.68

Total 73,921,817.37 6,098,190.00 13,242,116.25 66,777,891.12

19. Deferred tax assets and deferred tax liabilities

(1) Deferred income tax assets and deferred income tax liabilities are not presented

as net amount after offset

Item

30 June 2021 31 December 2020

Deferred tax

assets / liabilities

Deductible/taxable

temporary

difference

Deferred tax

assets / liabilities

Deductible/taxable

temporary difference

1. Deferred tax assets 149,983,384.67 604,172,300.16 135,122,053.25 727,914,425.97

Deductible loss 25,852,110.53 100,276,389.73 25,852,110.53 100,276,389.73

Provision for asset

impairment 47,607,881.49 81,513,921.34 41,503,746.05 263,637,353.74

Accrued expenses 44,413,524.67 292,356,994.01 37,231,685.99 240,985,606.14

Cost adjustment of real

estate enterprises 16,095,368.02 64,381,472.08 16,095,368.02 64,381,472.08

Accrued land value

added tax 6,746,986.66 26,987,946.64 6,746,986.66 26,987,946.64

Others 9,267,513.30 38,655,576.36 7,692,156.00 31,645,657.64

2. Deferred tax

liabilities 1,877,346.80 7,509,387.21 1,877,346.80 7,509,387.21

Temporary difference in

one-time depreciation of

fixed assets 1,877,346.80 7,509,387.21 1,877,346.80 7,509,387.21

20. Other Non-Current Assets

Item 30 June 2021 31 December 2020

Prepayments of non-current assets 116,702,709.87 315,442,893.83

VAT to be deducted 25,348,424.05 25,348,424.05

F-65

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 51

Item 30 June 2021 31 December 2020

Advance payment 42,906,201,821.90 41,767,834,764.16

Others 1,030,951.19 1,032,985.36

Prepayment for equity transfer 4,854,500,000.00 3,000,000,000.00

Total 47,903,783,907.01 45,109,659,067.40

21. Short-term Borrowings

Item 30 June 2021 31 December 2020

Credit loans 49,289,408,236.08 30,270,400,862.42

Total 49,289,408,236.08 30,270,400,862.42

22. Notes payable

Item 30 June 2021 31 December 2020

Bank acceptance bill 282,968,675.87 78,402,137.83

Commercial acceptance bill 206,160,143.27 249,954,760.61

Total 489,128,819.14 328,356,898.44

23. Accounts payable

Aging 30 June 2021 31 December 2020

Within 1 year 41,764,796,033.66 30,608,815,320.10

1- 2 years 3,613,747,297.85 3,871,510,462.87

2- 3 years 2,402,882,049.93 2,440,611,308.24

over 3 years 2,496,598,167.79 2,713,353,557.89

Total 50,278,023,549.23 39,634,290,649.10

F-66

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 52

24. Advances from Customers

Aging 30 June 2021 31 December 2020

Within 1 year 1,346,756,313.07 65,855,273.00

over 1 years 539,431,946.86 27,890,902.79

Total 1,886,188,259.93 93,746,175.79

25. Contract liabilities

Item 30 June 2021 31 December 2020

Project service fee 2,024,438,035.42 1,845,628,031.59

Total 2,024,438,035.42 1,845,628,031.59

26. Employee benefits payable

(1) Employee benefits payable

Item 31 December 2020 Increase Decrease 30 June 2021

1. Short-term employee

benefits 2,554,956,219.36 948,472,640.52 2,172,019,920.00 1,331,408,939.88

2. Post-employment benefits -

defined contribution plan 62,871.53 354,823,844.54 354,823,844.44 62,871.63

3. Termination benefits 138,690.00 138,690.00

4.Other benefits within one

year

5. Others 497,498.00 422,368.00 75,130.00

Total 2,555,019,090.89 1,303,932,673.06 2,527,404,822.44 1,331,546,941.51

(2) Short-term employee benefits

Item 31 December

2020 Increase Decrease 30 June 2021

1. Salaries, bonus, allowance

and subsidies 2,245,357,660.09 540,781,742.27 1,824,855,062.04 961,284,340.32

2. Employee welfare 15,800.00 28,214,178.85 28,228,178.85 1,800.00

3. Social insurance 116,456.44 156,639,624.71 156,640,378.57 115,702.58

including: Medical insurance 36,702.79 121,188,170.68 121,189,034.68 35,838.79

Work injury insurance 1,516.75 3,360,320.16 3,360,210.02 1,626.89

Maternity insurance 5,820.19 19,878,899.83 19,878,899.83 5,820.19

Others 72,416.71 12,212,234.04 12,212,234.04 72,416.71

F-67

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 53

Item 31 December

2020 Increase Decrease 30 June 2021

4. Housing fund 48,803.18 47,855,193.94 47,860,081.62 43,915.50

5. Labour union fee and

employee education fee 281,152,363.94 104,146,701.12 17,073,896.93 368,225,168.13

6. Short-term paid absence

7. Short-term profit sharing

plan

8. Other short-term employee

benefits 28,265,135.71 70,835,199.63 97,362,321.99 1,738,013.35

Total 2,554,956,219.36 948,472,640.52 2,172,019,920.00 1,331,408,939.88

(3) Defined contribution plans

Item 31 December

2020 Increase Decrease 30 June 2021

1. Basic retirement security 61,284.16 243,737,400.15 243,737,400.15 61,284.16

2. Unemployment insurance 1,587.37 6,160,263.41 6,160,263.41 1,587.37

3. Supplementary pension 104,926,180.98 104,926,180.88 0.10

Total 62,871.53 354,823,844.54 354,823,844.44 62,871.63

27. Taxes payable

Item 30 June 2021 31 December 2020

Value-added tax 4,351,207.82 27,618,686.09

Corporate income tax 27,220,099.43 85,796,573.12

City maintenance and construction tax 7,067,096.04 7,003,721.18

Real estate tax 24,103,700.75 5,515,256.82

Land use tax 2,075,391.97 1,036,009.50

Individual income tax 63,188,491.78 48,859,098.34

Education surcharge 4,402,092.65 5,015,944.45

Land-value increment tax 26,987,946.67

Other taxes 282,036,040.63 872,423,162.07

Total 441,432,067.74 1,053,268,451.57

F-68

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 54

28. Other Payables

Item 30 June 2021 31 December 2020

Interest payable 270,873,798.34 1,637,008,199.37

Dividends payable

Other payables 301,290,348.07 2,369,384,037.50

Total 572,164,146.41 4,006,392,236.87

29. Non-Current Liabilities due within One Year

Item 30 June 2021 31 December 2020

Long-term loans due within one year 4,759,574,700.00 1,452,948,882.31

Bonds payable due within one year 8,246,165,940.00 7,541,445,262.57

Long-term payables due within one year 20,000,000.00 20,000,000.00

Total 13,025,740,640.00 9,014,394,144.88

30. Other Current Liabilities

Item 30 June 2021 31 December 2020

Short-term bonds payable 8,850,000,000.00 10,000,000,000.00

Pending output tax 68,767,394.06 55,716,874.53

ABS priority bill 686,476,313.19 661,781,512.42

ABN priority bill 712,283,519.29 762,253,399.29

Others 487,910.36 487,910.36

Total 10,318,015,136.90 11,480,239,696.60

31. Long-term Borrowings

Item 30 June 2021 31 December 2020

Guaranteed loan 2,107,040,135.94 2,107,040,135.94

Credit loan 60,130,177,473.59 47,840,016,840.29

subtotal 62,237,217,609.53 49,947,056,976.23

Less: long term borrowings due

within one year 4,862,832,900.00 1,452,948,882.31

Total 57,374,384,709.53 48,494,108,093.92

F-69

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 55

32. Bonds Payable

(1) Bonds payable

Item 30 June 2021 31 December 2020

Bonds issued by an enterprise 18,449,999,999.98 24,500,000,000.00

Medium term note 45,405,157,174.98 31,995,981,738.22

subtotal 63,855,157,174.96 56,495,981,738.22

Less: bonds payable due within one

year 8,246,165,940.00 7,541,445,262.57

Total 55,608,991,234.96 48,954,536,475.65

(2) Details of bonds payable

Item 30 June 2021 31 December 2020

14 Guangzhou Metro bond 01 900,000,000.00 1,200,000,000.00

14 Guangzhou Metro bond 02 1,349,999,999.98 1,800,000,000.00

16 Guangzhou Metro MTN001 4,000,000,000.00

First phase of Guangzhou Metro special

bond in 2016 200,000,000.00 4,000,000,000.00

First phase of Guangzhou Metro special

bond in 2017 3,000,000,000.00 3,000,000,000.00

18 Guangzhou Metro MTN001 3,000,000,000.00 3,000,000,000.00

18 Guangzhou Metro MTN002 3,000,000,000.00 3,000,000,000.00

18 Guangzhou Metro MTN003 2,000,000,000.00 2,000,000,000.00

18 Guangzhou Metro MTN004 2,000,000,000.00 2,000,000,000.00

19 Guangzhou Metro bond 01 3,000,000,000.00 3,000,000,000.00

19 Guangzhou Metro bond 02 2,000,000,000.00 2,000,000,000.00

19 Guangzhou Metro bond 03 2,000,000,000.00 2,000,000,000.00

19 Guangzhou Metro bond 04 1,500,000,000.00 1,500,000,000.00

20 Guangzhou Metro bond 01 1,500,000,000.00 1,500,000,000.00

20 Guangzhou Metro bond 02 1,500,000,000.00 1,500,000,000.00

20 Guangzhou Metro MTN001 2,500,000,000.00 2,500,000,000.00

20 Guangzhou Metro MTN002 2,500,000,000.00 2,500,000,000.00

20 Guangzhou Metro bond 03 1,500,000,000.00 1,500,000,000.00

20 Guangzhou Metro bond 04 1,500,000,000.00 1,500,000,000.00

F-70

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 56

Item 30 June 2021 31 December 2020

20 Guangzhou Metro MTN003 2,500,000,000.00 2,500,000,000.00

20 Guangzhou Metro MTN004 2,500,000,000.00 2,500,000,000.00

21 Guangzhou Metro MTN003 600,000,000.00

21 Guangzhou Metro MTN004 2,500,000,000.00

21 Guangzhou Metro MTN005 1,900,000,000.00

21 Guangzhou Metro MTN006 2,500,000,000.00

21 Guangzhou Metro MTN007 2,500,000,000.00

21Guangtie 01 2,500,000,000.00

21 Guangtie 02 1,500,000,000.00

21 Guangtie 03 2,000,000,000.00

2018 $200 million medium-term notes 1,146,606,240.00 1,291,445,262.57

2019 $200 million medium-term notes 1,310,092,270.95 1,299,621,990.21

2020 $500 million medium-term notes 3,282,204,005.04 3,255,972,572.24

2020 $330 million medium-term notes 2,166,254,658.99 2,148,941,913.20

Total 63,855,157,174.96 56,495,981,738.22

33. Long-Term Payables

Item 31 December

2020 Increase Decrease 30 June 2021

Long-term

payables 3,005,000,000.00 10,474,245.96 3,015,474,245.96

Special payables 3,880,715,046.01 2,849,962,239.49 1,030,752,806.52

Total 6,885,715,046.01 10,474,245.96 2,849,962,239.49 4,046,227,052.48

34. Deferred income

Item 31 December 2020 Increase Decrease 30 June 2021

Government grants 55,881,439.36 205,066,849.93 81,738,153.55 179,210,135.74

Total 55,881,439.36 205,066,849.93 81,738,153.55 179,210,135.74

35. Other Non-Current Liabilities

Item 30 June 2021 31 December 2020

ABS priority bill 2,897,789,100.00 2,975,710,200.00

ABN priority bill 2,794,984,940.00 2,968,000,000.00

F-71

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 57

Item 30 June 2021 31 December 2020

Total 5,692,774,040.00 5,943,710,200.00

36. Share Capital

Investor Name

31 December 2020 Increase Decrease

30 June 2021

Investment amount Proportion

(%)

Investment

amount

Proportion

(%)

State-owned Assets

Supervision and

Administration

Committee of

Guangzhou Municipal

Government

58,425,396,737.51 100.00

58,425,396,737.51 100.00

Total 58,425,396,737.51 100.00 58,425,396,737.51 100.00

37. Other Equity Instruments

Financial instruments

issued

31 December 2020 Increase Decrease 30 June 2021

Quantity Book value Quantity Book

value Quantity

Book

value Quantity Book value

First phase of the 2016

renewable corporate bonds 2,400,000,000.00 2,400,000,000.00

Second phase of the 2016

renewable corporate bonds 2,000,000,000.00 2,000,000,000.00

Third phase of the 2016

renewable corporate bonds 2,600,000,000.00 2,600,000,000.00

Total 7,000,000,000.00 7,000,000,000.00

38. Capital Surplus

Item 31 December 2020 Increase Decrease 30 June 2021

1. Capital (or equity)

premium 181,584,520,792.92 6,416,037,969.65 188,000,558,762.57

2. Others 7,877,068.78 7,877,068.78

Total 181,592,397,861.70 6,416,037,969.65 188,008,435,831.35

Including: state-owned

capital reserve

F-72

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 58

39. Special reserve

Item 31 December 2020 Increase Decrease 30 June 2021

Safety production cost 26,901.28 27,461,175.40 4,126.27 27,483,950.41

Total 26,901.28 27,461,175.40 4,126.27 27,483,950.41

40. Surplus Reserve

Item 31 December 2020 Increase Decrease 30 June 2021

Statutory reserve 222,186,774.37 222,186,774.37

Total 222,186,774.37 222,186,774.37

41. Retained Earnings

Item Current period Prior period

Undistributed profit at the end of last year before

adjustment 1,046,830,606.99 1,317,222,922.21

Adjust the undistributed profit at the beginning of the

current period -284,498,614.64 -31,578,081.53

Retained earnings at the beginning of the current

period after adjustment 762,331,992.35 1,285,644,840.68

Increase in the current period 740,370,192.28 -97,854,053.80

Including: Transfer from current net profit 740,370,192.28 186,644,560.84

Other adjustments -284,498,614.64

Decrease in the current period 147,664,548.72 425,458,794.53

Including: appropriation of statutory surplus reserve

Appropriation of general risk provision

Cash dividends distributed in the current

period 58,744,548.72 181,378,794.53

Converted into capital

Others 88,920,000.00 244,080,000.00

Retained earnings at the end of current period 1,355,037,635.91 762,331,992.35

F-73

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 59

42. Operating Income and Operating Cost

Item Current period Prior period

Revenue Cost Revenue Cost

Transportation income 2,348,436,876.75 3,459,145,772.33 1,727,018,766.65 2,837,886,577.89

Property 561,660,127.72 210,663,886.10 1,709,690,000.00 982,225,000.00

Resource management 367,952,977.45 102,070,642.42 394,415,627.78 102,995,615.16

Industry external service 1,428,787,618.52 946,594,631.06 1,179,963,839.38 829,005,570.16

Others 305,442,331.19 56,960,641.35 275,646,711.20 53,461,822.56

Total 5,012,279,931.63 4,775,435,573.26 5,286,734,945.01 4,805,574,585.77

43. Selling Expenses, Gerneral and Administrative Expenses, R&D expenses, Financial

Expenses

(1) Selling expenses

Item Current period Prior period

Warehousing fees 1,703,247.32 2,145,460.23

Advertising fees 1,250,855.92 1,559,230.15

Sales service fee 123,797.86 3,253,724.89

Employee benefits 42,781,763.50 35,311,368.38

Operating expenses 448,447.37 681,026.64

depreciation fee 169,064.40 261,500.19

Others 5,944,130.53 4,853,264.93

Total 52,421,306.90 48,065,575.41

(2) Gerneral and administrative expenses

Item Current period Prior period

Employee benefits 260,368,712.13 250,093,871.37

Depreciation charges 8,257,275.86 5,796,674.96

Repair costs 1,390,457.03 469,429.88

Amortization of intangibles 977,616.62 4,491,433.22

Business reception expenses 1,453,907.37 -159,833.99

Travel expenses 1,233,649.75 876,527.91

Office expenses 7,535,604.10 4,526,923.34

Conference fees 418,861.41 -83,353.78

F-74

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 60

Item Current period Prior period

Intermediary service fees 5,236,792.69 19,166,197.48

consulting fees 3,660.38 268,867.94

Others 45,373,656.33 85,940,135.91

Total 332,250,193.67 371,386,874.24

(3) Research and development expenses

Item Current period Prior period

Labor costs 41,182,280.62 35,637,275.03

Direct expenses 626,589.21 656,847.12

Research fees for external development 2,205,233.62 3,997,511.47

Other expenses 8,607,977.77 6,877,923.41

Total 52,622,081.22 47,169,557.03

(4) Financial expenses

Item Current period Prior period

Interest expenses 786,128,470.60 1,238,124,028.57

Less: Interest income 184,976,905.65 92,033,210.56

Net exchange loss ( "-"for gain) 83,388.00 -33,010,885.84

Others 12,786,946.68 -21,271,921.86

Total 614,021,899.63 1,091,808,010.31

44. Other Income

Item Current period Prior period

Government subsidies 30,612,333.05 407,257,515.63

Input tax plus deduction 2,333,289.97 3,281,450.63

commission for individual

income tax 1,091,083.63 957,790.37

Others 41.43

Total 34,036,748.08 411,496,756.63

45. Investment Income

F-75

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 61

Sources of income from investment Current period Prior period

Investment income from long-term equity investments

under the equity method 468,973,546.68 393,401,498.91

Investment income from disposal of long-term equity

investments 2,450,000.00 331,345,489.58

Investment income of financial assets measured at fair

value through profit or loss during the holding period 13,449,633.84

Investment income from disposal of financial assets at

fair value through profit or loss 23,287,235.62

Investment income from held-to-maturity investment

during holding period 23.36

Investment income from available-for-sale financial

assets during holding period 54,911,167.99

After the loss of control right, the residual equity was

remeasured at fair value 254,170,716.94

Others 2,453,879.58

Total 510,614,295.72 1,033,828,896.78

46. Gains on Change in Fair Value

Sources of income from changes in fair value Current period Prior period

financial assets held for trading 641,854,862.88

Total 641,854,862.88

47. Credit impairment loss

Item Current period Prior period

Bad debt loss 12,419,063.24 4,625,973.18

Impairment loss of contract assets 29,330,919.17 9,689,486.82

Total 41,749,982.41 14,315,460.00

48. Income from asset disposal

Item Current period Prior period

Disposal of Guanhu plot 292,000,000.00

Disposal of Shuixi plot 460,000,000.00

Disposal of fixed assets 1,556,525.00

Total 753,556,525.00

F-76

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 62

49. Non-operating Profits

Item Current period Prior period

Amount transferred to

non-recurrent gains

and losses

Gains from diposal of non-

current assets 415,249.91 95,095.72 415,249.91

Accepting donation 2,473,405.50 3,061,980.86 2,473,405.50

Government grants 4,060,942.68 2,062,509.96 4,060,942.68

Penalty incomes 5,329,806.19

Others 1,912,467.13 7,341,232.40 1,912,467.13

Total 8,862,065.22 17,890,625.13 8,862,065.22

50. Non-operating Expenses

Item Current period Prior period

Amount transferred

to non-recurrent

gains and losses

Losses on disposal of non-

current assets 9,498,943.27 1,483,489.41 9,498,943.27

External donation 1,530,000.00

Others 1,937,573.45 228,479.91 1,937,573.45

Total 11,436,516.72 3,241,969.32 11,436,516.72

51. Income Tax Expenses

(1) Income tax expense form

Item Current period Prior period

Current income tax expenses 62,661,336.90 45,580,885.50

Adjustment of deferred income tax -14,861,331.42 -9,289,703.23

Total 47,800,005.48 36,291,182.27

IX. Contingencies

1. Contingent liabilities from pending litigation and arbitration

As of 30 June 2021, the Company is a defendant in certain legal proceedings and a plaintiff

in other lawsuits arising from daily business. Although it is currently impossible to

determine the results of these contingencies, legal proceedings or other litigations, the

Management believes that any liabilities arising therefrom will not have a significant

F-77

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 63

negative effect on the Company's financial position or operating results.

2. Contingent liabilities from providing debt guarantee for other companies

The Company’s real estate business provides phased guarantees for provident fund

mortgage loans for commercial housing purchasers in accordance with real estate business

practices. The guarantee period of the phased guarantee starts from the effective date of the

provident fund loan contract to that of the completion of the certificate of rights to other

houses under the provident fund loan contract and handover to the mortgagee. The

commercial houses purchsed are used as collateral. So far, the purchasers have not breached

the contract. The Management believe that the risks associated with the provision of such

guarantees are relatively low, and that any resulting liabilities will not have a significant

negative effect on the Company's financial position or operating results.

3. Other contingencies that need to be explained

Other major commitments

The Company provides balance payment and repayment commitment for the principal and

expected payoffs of the first phase of the 2019 Green Asset-Backed Notes of Guangzhou

Metro Group Co., Ltd. issued on 21 January 2019 (raised RMB 2.85 billion). The duration

of the plan starts from the establishment date of the special plan to 21 January 2024 (if the

date is a non-working day, the expected expiration date is the first working day after that

date), which can be terminated early according to the agreement.

The Company provides balance payment and repayment commitment for the principal and

expected payoffs of the second phase of 2019 Green Asset-Backed Notes of Guangzhou

Metro Group Co., Ltd. issued on 19 September 2019 (raised RMB 1.998 billion). The

duration of the plan is from the establishment date of the special plan to August 28, 2028

(if the date is a non-working day, the expected expiration date is the first working day after

that date), which can be terminated early according to the agreement.

The Company provides balance payment and repayment commitment for the principal and

expected payoffs of the first phase of the Priority Asset-Backed Securities for the Green

Asset-Backed Special Plan of GF Hengjin-Guangzhou Metro Group subway passenger

transport revenue right issued and established on 15 March 2019 (raised RMB 3 billion).

The duration of the plan starts from the establishment date of the special plan to 21

December 2023 (if the date is a non-working day, the expected expiration date is the first

working day after that date), which can be terminated early according to the agreement.

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Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 64

The Company provides balance payment and repayment commitment for the principal and

expected payoffs of the first phase of the Priority Asset-Backed Securities for the Green

Asset-Backed Special Plan of GF Hengjin-Guangzhou Metro Group subway passenger

transportation revenue right issued and established on 24 September 2019 (raised RMB

1.749 billion). The duration of the plan starts from the establishment date of the special plan

to 29 September 2029 (if the date is a non-working day, the expected expiration date is the

first working day after that date), which can be terminated early according to the agreement.

X. Events After the Balance Sheet Date

The Company has no non-adjusting matters after the balance sheet date that need to be

disclosed.

XI. Related Parties and Related Party Transations

1. Parent Company

Unit: RMB10,000yuan

Name of parent company Registered

place

Nature of

business

Register

ed

capital

Shareholding

ratio of parent

company in the

company (%)

Proportion of

voting rights of the

parent company to

the company (%)

State owned assets

supervision and

Administration

Commission of

Guangzhou Municipal

People's Government

Guangzhou —— —— 100.00 100.00

2. Subsidiaries

Detailed information of the subsidiaries can be found on Note VII of this note.

F-79

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 65

3. Joint Ventures and Associates

Unit: RMB10,000yuan

No. Company Name Business Nature Place of

Registry

The Company's

Shareholding

Ratio %

1 Guangzhou Metro Television Media

Co., Ltd.

Cable radio and

television transmission

services

Guangzhou 50.00

2 Guangzhou Yangcheng Metro Rongmei

Technology Co., Ltd. Newspaper publishing Guangzhou 40.00

3 Guangdong Guangfo Rail Transit

Co., Ltd. Urban Rail Transit Foshan 56.52

4 Guangzhou Siborui Hotel Co., Ltd. Tourist hotel Guangzhou 50.00

5 Guangzhou Zhongche Rail Transit

Equipment Co., Ltd.

Urban rail

transportation

equipment

manufacturing

Guangzhou 40.00

6 Guangzhou Urban Rail Transit Training

College Profession advice Guangzhou 36.00

7 Guangzhou Qingyun Computer

Technology Co., Ltd. Software development Guangzhou 35.00

8 Guangzhou Zhongche Transportation

Research Institute Company Limited

Scientific research and

technology services Guangzhou 40.00

9 Guangzhou Metro Microfinance

Co., Ltd.

Financial information

service Guangzhou 30.00

10 Guangzhou Zhongche Times Electric

Technology Co., Ltd.

Urban rail

transportation

equipment

manufacturing

Guangzhou 40.00

11 Nanchang Railway Transportation Design

Institute Co., Ltd.

Transportation,

warehousing and postal

service

Nanchang 45.00

12 Guangdong Shunguang Rail

Transportaion Co.,Ltd

Urban rail

transportation Foshan 10.64

F-80

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 66

No. Company Name Business Nature Place of

Registry

The Company's

Shareholding

Ratio %

equipment

manufacturing

13 Guangzhou Letu Media Co.,Ltd Journalism Guangzhou 30.00

14 Guangzhou Letu Network Technology

Co., Ltd.

Scientific research and

technology services Guangzhou 49.00

15

Guangzhou Huancheng Underground

Pipe Gallery Construction Investment

Co., Ltd.

Leasing and business

services Guangzhou 39.00

16 Urban rail Innovation Network Center

Co., Ltd.

Scientific research and

technology services Beijing 12.35

17 Guangzhou Green Infrastructure Industry

Investment Fund Management Co., Ltd. Financial business Guangzhou 15.00

18 Guangzhou Pinshi Real Estate

Development Co., Ltd Real estate Guangzhou 49.00

19 Guangzhou Pinhui Real Estate

Development Co., Ltd Real estate Guangzhou 49.00

20 Guangzhou Pinyue Real Estate

Development Co., Ltd Real estate Guangzhou 40.00

21 Guangzhou Pinxiu Real Estate

Development Co., Ltd. Real estate Guangzhou 14.00

22 Guangzhou Yaosheng Real Estate

Development Co., Ltd. Real estate Guangzhou 35.00

23 Guangzhou Yunda Intelligent Technology

Co., Ltd.

Wholesale and retail

business Guangzhou 25.00

24 Guangzhou Tieke Intelligent Control

Co., Ltd.

Scientific research and

technology services Guangzhou 25.13

25 Maitreya City Rail Transit Co., Ltd.

Transportation,

warehousing and postal

service

Maitreya,

Yunnan 2.74

F-81

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 67

No. Company Name Business Nature Place of

Registry

The Company's

Shareholding

Ratio %

26

Guangzhou Huangpu District Light

Railway Line 1 Investment Construction

Co., Ltd.

Leasing and business

services Guangzhou 2.40

27 Guangdong Tiandi Commercial

Operation Management Co., Ltd.

Leasing and business

services Guangzhou 15.00

28

Guangzhou State-owned Enterprise

Innovation Investment Fund Partnership

(LP)

Financial business Guangzhou 7.66

29

Guangzhou Urban Renewal Rail Transit

Industry Investment Development Fund

Partnership (LP)

Leasing and business

services Guangzhou 39.98

30

Guangzhou Rail Transit Industry

Investment Development Fund (Limited

Partnership)

Financial business Guangzhou 14.99

31 Guangzhou northeast freight car outer

winding Railway Co., Ltd Railway transportation Guangzhou 32.90

32 Guangzhou Railway Investment Industry

Investment Co., Ltd Business services Guangzhou 9.34

33 Guangzhou financial city station

integrated transportation hub Co., Ltd Business services Guangzhou 20.00

34 Guangdong Guangshan Railway Co., Ltd Business services Guangzhou 21.50

35 Guangzhou machine made sand industry

Co., Ltd manufacturing industry Guangzhou 40.00

36 Yuexiu Property Company Limited Real Estate Hongkong 19.99

37 Nanchang zhongtiehui rail transit

construction and Operation Co., Ltd Business services Nanchang 5.00

38

Guangzhou Huangpu District Light

Railway Line 2 Investment Construction

Co., Ltd.

Civil engineering

construction industry Guangzhou 3.40

F-82

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 68

No. Company Name Business Nature Place of

Registry

The Company's

Shareholding

Ratio %

39 Lijiang Xueshan Rail Transit Co., Ltd Road transportation

industry Yunnan 2.00

40 Guangzhou green infrastructure industry

investment fund partnership (LP)

Leasing and business

services Guangzhou 14.99

41 Changsha-Suicheng Rail Transit Co., Ltd Civil engineering

construction industry

Changsha 36.00

42 Guangzhou Pinguan Real Estate

Development Co., Ltd

Real estate Guangzhou 29.00

43 Guangzhou Pinhui Real Estate

Development Co., Ltd

Real estate Guangzhou 29.00

44 Guangzhou smart city investment and

Operation Co., Ltd

Leasing and business

services

Guangzhou 10.00

45 Guangzhou Yangchengtong Co., Ltd Business services Guangzhou 46.00

46 Guangzhou Pincheng Real Estate

Development Co., Ltd Real estate Guangzhou 10.00

47 Guangzhou Metro Environmental

Engineering Co., Ltd Services Guangzhou 33.00

48 Guangdong Guangzhan Railway Co., Ltd

Urban rail transit

engineering

construction

Guangzhou 10.16

49 Yuexiu Service Group Co., Ltd Services Hongkong 8.15

50 Foshan Yuntian Intelligent Power

Technology Co., Ltd

Technology promotion

and application services Foshan 6.00

51 Guangzhou Dawan District Rail Transit

Industry Investment Group Co., Ltd Capital market services Guangzhou 4.00

52 Beijing zhonggui Transit Research

Institute Co., Ltd

Research and

experimental

development

Beijing 5.00

F-83

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 69

4. Related-parties Transactions

(1) Procurement of goods/reception of labor

Related-parties Subjects Current period Prior period

Guangzhou Metro Environmental Engineering Co.,

Ltd.

Cleaning and

Greening Service 183,245.81 143,843.87

Guangzhou Qingyun Computer Technology Co., Ltd. Other Services 134,433.96

Nanchang Rail Transit Design and Research Institute

Co., Ltd.

Survey and design,

planning and

consulting services

85,341.07 41,347.75

Guangzhou Tieke Intelligent Control Co., Ltd. Consulting service 42,166.61

Guangzhou Zhongzi Urban Rail Engineering

Consulting Co., Ltd. Other Services 43,070.80

Guangzhou Metro Microfinance Co., Ltd. Other Services 12.18

Guangzhou Metro Environmental Engineering Co.,

Ltd. Other Services 41,972.84

Guangzhou Urban Rail Transit Training Institute Co.,

Ltd. Other Services 63,217.96

Guangzhou Rail Transit Industry Alliance Other Services 21,705.69

Guangzhou Huangpu District Light Rail Line 1

Investment and Construction Co., Ltd. Other Services 43,544.05

Guangzhou Zhongzi Urban Rail Engineering

Consulting Co., Ltd. Other Services 43,968.44

(2) Sales of goods/ rendering of service

Related-parties Subjects Current period Prior period

Guangdong Intercity Railway Operation Co., Ltd.

Survey and design,

planning and

consulting services

1,192,873.18

Guangdong Guangfo Rail Transit Co., Ltd.

Survey and design,

planning and

consulting services

1,847,604.15 3,051,624.03

F-84

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 70

Related-parties Subjects Current period Prior period

Guangzhou Metro Environmental Engineering Co.,

Ltd.

Survey and design,

planning and

consulting services

112,592.49

Guangzhou Metro Microfinance Co., Ltd.

Survey and design,

planning and

consulting services

68,726.42 301,132.08

Guangzhou Huancheng Underground Pipe Corridor

Construction Investment Co., Ltd.

Survey and design,

planning and

consulting services

594,218.73 7,611,453.56

Guangzhou Huangpu District Light Rail Line 2

Construction Investment Co., Ltd.

Survey and design,

planning and

consulting services

409,500.89

Guangzhou Huangpu District Light Rail Line 1

Investment and Construction Co., Ltd.

Survey and design,

planning and

consulting services

11,674.53 27,240.57

Guangzhou Pinhui Real Estate Development Co., Ltd.

Survey and design,

planning and

consulting services

467,390.25

Guangzhou Pinhui Real Estate Development Co., Ltd. Interest income 54,044,866.13 91,427,942.28

Guangzhou Pinshi Real Estate Development Co., Ltd.

Survey and design,

planning and

consulting services

1,578,583.96 223,698.11

Guangzhou Pinshi Real Estate Development Co., Ltd. Interest income 104,711,404.34 202,921,612.69

Guangzhou Pinxiu Real Estate Development Co., Ltd.

Survey and design,

planning and

consulting services

4,044,603.31 3,935,635.82

Guangzhou Pinxiu Real Estate Development Co., Ltd. Interest income 21,922,436.98 23,779,705.94

Guangzhou Yaosheng Real Estate Development Co.,

Ltd.

Survey and design,

planning and

consulting services

4,594,962.94 1,063,033.50

F-85

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 71

Related-parties Subjects Current period Prior period

Guangzhou Yaosheng Real Estate Development Co.,

Ltd. Interest income 41,312,080.69 67,620,111.25

Guangzhou pinhui Real Estate Development Co., Ltd.

Survey and design,

planning and

consulting services

2,837,490.57

Guangzhou pinhui Real Estate Development Co., Ltd. Interest income 19,425,266.86 71,131,710.38

Guangzhou Pinyue Real Estate Development Co.,

Ltd. Interest income 67,621,280.57 92,031,583.77

Guangzhou Pinyue Real Estate Development Co.,

Ltd.

Survey and design,

planning and

consulting services

1,041,233.82

Guangzhou Pinguan Real Estate Development Co.,

Ltd. Interest income 14,523,054.83 63,863,874.03

Guangzhou Pinguan Real Estate Development Co.,

Ltd.

Survey and design,

planning and

consulting services

3,386,869.82

Guangzhou Yangcheng Metro Financial Technology

Co., Ltd.

Broadcasting

management right,

service and lease

448,391.12

Guangzhou Lotto Network Technology Co., Ltd. Resource use fee

and electricity fee 333,620.75 4,348,990.52

Guangzhou Spring Hotel Co., Ltd. Interest income 1,307,231.70 1,809,283.02

Guangzhou Tieke Intelligent Control Co., Ltd. Logistics service

income 37,957.66

Guangzhou Lotto Media Co., Ltd. Other services 284,078.71 270,285.53

Urban Rail Innovation Network Center Co., Ltd. Other services 76,152.27

Guangzhou Urban Rail Transit Training Institute Co.,

Ltd. Other services 146,930.73

Guangzhou CRRC Rail Transit Equipment Co., Ltd.

Survey and design,

planning and

consulting services

1,200,943.40 48,390.09

F-86

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 72

Related-parties Subjects Current period Prior period

Guangzhou Zhongzi Urban Rail Engineering

Consulting Co., Ltd. Other services 258,584.20 8,435.48

Guangzhou Pincheng Real Estate Development Co.,

Ltd. Interest income 9,981,933.26

Guangdong Shunguang Rail Transit Co., Ltd. Other services 217,183.97

Nanchang China Railway Suicheng Rail Transit

Construction and Operation Co., Ltd. Other services 1,693,358.49

5. Amounts due to/from Related Parties

(1) Amounts due from related parties

Item Related Party Closing Balance Opening Balance

Accounts

receivable

Guangdong Guangfo Rail Transit Co., Ltd. 740,103,177.29 668,950,405.03

Guangzhou Zhongzi Rail Engineering

Consulting Co. Ltd 1,123,834.07 1,754,509.58

Guangzhou Yaosheng Real Estate

Development Co., Ltd. 649,800.00 7,550,113.42

Guangzhou Letuo Network Technology Co.,

Ltd. 910.54 11,050,455.23

Guangzhou Zhongche Rail Transit

Equipment Co., Ltd. 14,240.28

Urban rail Innovation Network Center Co.,

Ltd. 80,721.41 80,721.41

Guangzhou urban rail transit Training

Institute Co., Ltd 978,822.05 2,842,081.20

Guangzhou Metro Microfinance Co., Ltd. 14,595.92 2,034.93

Guangzhou Metro Environmental

Engineering Co., Ltd 1,796.03

F-87

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 73

Item Related Party Closing Balance Opening Balance

Guangzhou Huangpu District Light Railway

Line 1 Investment Construction Co., Ltd. 40,754.72

Guangzhou Urban Construction Investment

Group Co., Ltd 16,097.04 768,198.00

Baijun subway Advertising Co., Ltd 21,853,389.95

Guangdong Shunguang Rail Transportaion

Co.,Ltd 160,000.00

Guangzhou Metro TV Media Co., Ltd 31,723,999.98

Guangzhou Rail Transit Industry Alliance 25,802.77

Guangzhou pinguan Real Estate

Development Co., Ltd 275,600.00

Guangzhou pinhui1 Real Estate Development

Co., Ltd 1,580,990.00

Guangzhou pinhui2 Real Estate Development

Co., Ltd 172,600,000.00

Guangzhou Pinshi Real Estate Development

Co., Ltd 37,607,797.38

Guangzhou Pinxiu Real Estate Development

Co., Ltd 459,192.00

Guangzhou CRRC Urban Rail Equipment

Co., Ltd 95,920.51

Nanchang zhongtiehui rail transit

construction and Operation Co., Ltd 10,796,434.95

Other

receivables

Guangzhou Pinshi Real Estate Development

Co., Ltd 3,699,278,219.53 3,771,854,509.94

Guangdong Guangfo Rail Transit

Co., Ltd. 4,127,586,271.08 3,506,519,828.65

Guangzhou pinhui2 Real Estate Development

Co., Ltd 2,012,516,766.73 3,406,537,112.79

F-88

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 74

Item Related Party Closing Balance Opening Balance

Guangzhou pinyue Real Estate Development

Co., Ltd 1,734,906,734.92 3,427,974,038.90

Guangzhou Yaosheng Real Estate

Development Co., Ltd 1,905,253,758.65 2,685,272,959.13

Guangdong shunguang Rail Transit Co., Ltd 391,639,585.22 241,529,663.51

Guangzhou Pinxiu Real Estate Development

Co., Ltd 679,005,586.86 817,822,140.14

Guangzhou Siborui Hotel Co., Ltd. 415,059.40 72,415,059.40

Guangzhou CRRC Rail Transit Equipment

Co., Ltd 624,638.96 624,638.96

Guangzhou Letu Media Co.,Ltd 405,061.11 405,061.11

Guangzhou Yangcheng Metro newspaper

Co., Ltd 2,613,243.80 232,530.79

Guangzhou pinhui1 Real Estate Development

Co., Ltd 693,351,024.89 652,834,629.83

Guangzhou urban rail transit Training

Institute Co., Ltd 18,363.01 21,730.49

Guangzhou machine made sand industry Co.,

Ltd 276,228.36 108,312.60

Guangzhou Pinguan Real Estate

Development Co., Ltd 457,778,213.90 651,117,356.50

Guangdong Shenmao Railway Co., Ltd 50,000,000.00

Guangzhou Pincheng Real Estate

Development Co., Ltd 249,273,636.36

Contract asset

Guangdong Intercity Railway Operation Co.,

Ltd 1,685,927.42 421,481.86

Guangdong Guangfo Rail Transit Co., Ltd 7,274,010.23 6,843,919.64

Guangdong Shunguang Rail Transportaion

Co.,Ltd 1,195,729.60 1,195,729.60

Guangzhou Metro Microfinance

Co., Ltd. 62,450.00

F-89

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 75

Item Related Party Closing Balance Opening Balance

Guangzhou Huancheng Underground Pipe

Gallery Construction Investment Co., Ltd. 3,049,527.15 2,511,375.30

Guangzhou Urban Construction Investment

Group Co., Ltd 47,300.00

Guangzhou Pincheng Real Estate

Development Co., Ltd 5,075,440.71 5,075,440.71

Guangzhou pinhui1 Real Estate Development

Co., Ltd 200,000.00 200,000.00

Guangzhou Pinshi Real Estate Development

Co., Ltd 579,600.00 430,320.00

Guangzhou Yaosheng Real Estate

Development Co., Ltd 2,249,685.46 2,000,098.63

Guangzhou CRRC Rail Transit Equipment

Co., Ltd 1,222,000.00

Nanchang Rail Transit Design and Research

Institute Co., Ltd 387,752.73 387,752.73

(2) Amounts due to related parties

Item Related Party Closing Balance Opening Balance

Accounts payables

Guangzhou Qingyun

Computer Technology

Co., Ltd.

Guangzhou Qingyun Computer Technology

Co., Ltd. 134,433.96

Nanchang Rail Transit Design and Research

Institute Co., Ltd. 1,181,097.08 1,134,870.67

Other payables

Guangdong Guangfo Rail Transit Co., Ltd. 3,894,574,778.56 297,978,496.03

Guangzhou Qingyun Computer Technology

Co., Ltd. 175,000.00 175,000.00

Guangzhou Spring Hotel Co., Ltd. 1,052,669.17 1,052,669.17

F-90

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 76

Item Related Party Closing Balance Opening Balance

Guangzhou Huangpu District Light Rail Line 1

Investment and Construction Co., Ltd. 123,546.87

Guangzhou Metro Environmental Engineering

Co., Ltd. 51,417.77

Advances

Guangdong Shunguang Rail Transit Co., Ltd. 8,286,044.67

Guangzhou Tieke Intelligent Control Co., Ltd. 13,113.00

Contract liabilities

Guangdong Guangfo Rail Transit Co., Ltd. 26,669.40 26,669.40

Guangdong Tianyudi Commercial Operation

Management Co., Ltd. 224,056.60 224,056.60

Guangzhou Huancheng Underground Pipe

Corridor Construction Investment Co., Ltd. 27,540,106.57 27,626,634.87

Guangzhou Huangpu District Light Rail Line 2

Construction Investment Co., Ltd. 141,593.84 551,094.72

Guangzhou Huangpu District Light Rail Line 1

Investment and Construction Co., Ltd. 761,273.58 194,457.54

Guangzhou Urban Construction Investment

Group Co., Ltd. 338,143.00

Guangzhou Pincheng Real Estate Development

Co., Ltd. 1,966,914.24

Guangzhou Pinhui Real Estate Development

Co., Ltd. 14,647,000.61 5,542,865.30

Guangzhou Pinxiu Real Estate Development

Co., Ltd. 2,847,857.29 6,459,260.60

Guangzhou Pinyue Real Estate Development

Co., Ltd. 5,553,807.04 5,553,807.04

Guangzhou Yaosheng Real Estate Development

Co., Ltd. 277,484.51 1,847,217.38

F-91

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F-92

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 78

1 Provision for bad debts per item

Item

30 June 2021

Book Balance Provision for

Bad Debt

Expected Credit

Loss Rate %

Rationale for

Provision

Bailing Times

Media Group Co.,

Ltd.

221,621,670.98 221,621,670.98 100.00 Expected to be

unrecoverable

Guangzhou Metro

Television Media

Co., Ltd.

31,724,000.00 31,724,000.00 100.00 Expected to be

unrecoverable

Baijun Metro

Advertising Co.,

Ltd.

21,857,001.31 21,857,001.31 100.00 Expected to be

unrecoverable

Guangdong

Yuantianxiang

Biotechnology Co.,

Ltd.

1,019,059.00 1,019,059.00 100.00 Expected to be

unrecoverable

Total 276,221,731.29 276,221,731.29

2 Provision for bad debts by portfolio

Item

30 June 2021

Book Balance Provision for Bad

Debt

Expected Credit Loss Rate

%

Credit risk characteristics

portfolio 2,527,385,667.78 4,087,337.18 0.16

Total 2,527,385,667.78 4,087,337.18

F-93

Guangzhou Metro Group Co., Ltd. For the six months ended 30 June 2021 Notes to Financial Statements

Notes to Financial Statements Page 79

2. Other Receivables

Item 30 June 2021 31 December 2020

Interest receivable

Dividend receivable 154,678,326.03 154,678,326.03

Other receivables 23,820,776,580.78 19,381,631,625.17

Total 23,975,454,906.81 19,536,309,951.20

(1) Dividends receivable

Item 30 June 2021 31 December

2020

Guangzhou Metro Materials Co., Ltd. 68,385,741.81 68,385,741.81

Guangzhou Metro Foshan Nanhai Real Estate

Development Company 86,292,584.22 86,292,584.22

Total 154,678,326.03 154,678,326.03

F-94

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F-101

Prepared by: GUANGZHOU METRO GROUP CO., LTD. Expressed in RMB

Consolidated Company Consolidated Company

Current assets:

Cash at bank and on hand VIII.1 20,491,296,125.80 16,092,882,833.61 13,829,839,781.21 9,693,903,719.94

△Provision of settlement fund

△Fund lent

☆Held-for-trading financial assets

Financial assets at fair value through profit or loss VIII.2 - - 39,995,947.79 39,995,947.79

Derivative financial assets

Notes Receivable VIII.3 108,365,241.86 - 64,565,195.50 -

Accounts receivable VIII.4 3,113,372,191.72 3,224,890,719.19 1,886,941,613.60 1,396,572,229.69

☆Accounts receivable financing

Prepayments VIII.5 2,325,231,190.96 2,037,627,370.20 456,564,349.80 181,616,603.05

△Insurance premiums receivable

△Reinsurance Accounts Receivable

△Reinsurance contract reserves receivable

Other receivables VIII.6 14,756,227,753.53 19,554,138,163.86 16,592,209,686.72 24,376,780,344.43

Including: Dividend receivables - 154,678,326.03 - 154,678,326.03

△Buying back the sale of financial assets

Inventories VIII.7 7,075,221,058.87 5,784,323,446.34 14,227,688,069.66 4,224,272,145.77

Including: Raw materials 938,012,132.45 936,704,457.30 658,721,831.11 657,564,224.19

Finished goods 757,013,573.60 731,061,101.62 1,568,994,747.18 1,541,298,004.72

☆Contract assets VIII.8 555,956,267.74

Assets held for sale

Non-current assets due within one year

Other current assets VIII.9 9,772,096,934.73 9,639,241,427.11 9,080,052,770.44 8,909,580,772.48

Total current assets 58,197,766,765.21 56,333,103,960.31 56,177,857,414.72 48,822,721,763.15

Non-current assets:

△Loans and payments

☆Debt investments

Available-for-sale financial assets VIII.10 25,159,678,991.26 2,765,893,032.84 21,192,339,898.89 2,063,373,920.13

☆Other debt investments

Credit impairment gains ("-" for losses)

Asset impairment losses ("-" for losses)

Long -Term Equity Investments VIII.11 28,719,919,060.10 38,239,718,216.16 23,205,260,104.52 34,822,566,686.71

Other equity instrument investment

☆Other non-current financial assets VIII.12 5,390,000.00 - 2,000,000.00 -

Investment properties VIII.13 5,595,535,956.92 4,469,503,393.10 5,429,886,852.93 4,246,074,707.71

Fixed assets VIII.14 166,669,944,174.32 165,787,831,048.61 112,549,619,083.05 111,652,770,838.35

Including: Original value of fixed assets 183,218,837,817.16 182,057,193,662.59 128,830,465,964.94 127,694,102,685.95

Accumulated depreciation 14,313,376,125.41 14,033,845,096.55 13,780,500,487.15 13,540,985,452.86

Provision for impairment of fixed assets 2,267,676,044.52 2,267,676,044.52 2,517,936,799.32 2,517,936,799.32

Construction in progress VIII.15 130,229,052,059.80 125,499,810,082.71 131,888,020,804.03 129,817,081,977.02

Productive biological assets

Oil and gas assets

☆Right-of-use asset

Intangible assets VIII.16 779,770,513.80 108,197,717.13 359,922,334.63 335,032,204.77

Development costs VIII.17 1,491,041.38 - 937,827.24 -

Goodwill VIII.18 0.00 - 6,201,715.94 -

Long-term deferred expenses VIII.19 73,921,817.37 24,965,350.47 60,238,811.96 19,723,436.26

Deferred tax assets VIII.20 135,122,053.25 5,676,844.96 112,529,743.06 -

Other non-current assets VIII.21 45,109,659,067.40 33,746,703,241.77 38,261,886,594.16 31,672,734,052.86

Including: Physical assets reserve specificallyauthorized

Total non-current assets 402,479,484,735.60 370,648,298,927.75 333,068,843,770.41 314,629,357,823.81

Total assets 460,677,251,500.81 426,981,402,888.06 389,246,701,185.13 363,452,079,586.96

Consolidated and Company Balance SheetAs at December 31, 2020

Item NoteAs at 31/12/2020 As at 31/12/2019

1

F-102

Prepared by: GUANGZHOU METRO GROUP CO.,LTD.

Expressed in RMB

Consolidated Company Consolidated Company

Current liabilities: 　

Short-term loans VIII.22 30,270,400,862.42 30,270,400,862.42 12,015,653,177.39 7,194,565,217.39 △Borrowings from central bank △Deposit funds ☆Held-for-trading financial liabilities Financial liabilities at fair value through profit or loss VIII.23 40,683,475.00 40,683,475.00 - - Derivative financial liabilities Notes payable VIII.24 328,356,898.44 78,402,137.83 1,128,834,651.97 1,062,334,651.97 Accounts payable VIII.25 39,634,290,649.10 38,752,075,174.20 22,809,936,792.34 19,159,995,484.60 Advances from customers VIII.26 878,869,229.28 760,957,986.77 6,157,064,063.26 4,971,176,130.64 ☆Contract liabilities VIII.27 1,114,839,962.38 - - - △Funds from sales of financial assets with repurchaseagreement △Deposits from interbank △Funds received as agent of stock exchange

△Funds received as stock underwrite

Employee benefits payable VIII.28 2,555,019,090.89 1,983,922,881.45 2,297,044,516.77 1,813,188,230.16

Including: Payrolls payable 2,245,357,660.09 1,783,806,304.11 2,044,856,144.76 1,654,966,882.73

Benefits payable 15,800.00 - 226,785.36 -

Including:Staff and workers’ incentive and welfare fund

Taxes payable VIII.29 997,048,412.25 888,093,072.07 1,046,071,572.49 655,038,399.01

Including: Taxes payable 992,032,467.80 887,995,479.37 1,041,388,767.60 654,814,387.69

Other payables VIII.30 4,006,392,236.87 9,506,425,462.20 3,092,710,645.11 10,761,796,508.51

Including: Dividend payables - - 4,800,000.00 -

△Handling charges and commissions payable △Reinsurance Accounts Payable Liabilities held for sale

Non-current liabilities due within one year VIII.31 9,014,394,144.88 9,124,612,482.31 16,073,038,012.88 15,787,918,435.07

Other current liabilities VIII.32 11,479,450,911.44 10,000,487,910.36 11,231,398,731.34 10,000,000,000.00

Total current liabilities 100,319,745,872.95 101,406,061,444.61 75,851,752,163.55 71,406,013,057.35

Non-current liabilities:

△Provision for insurance contracts

Long-term loans VIII.33 48,494,108,093.92 46,919,828,550.55 38,039,070,942.72 36,444,070,942.72

Debentures payable VIII.34 48,954,536,475.65 48,596,710,200.00 35,269,836,094.12 40,418,373,800.00

Including: Preference share

Perpetual bond

☆Lease liabilities

Long-term payables VIII.35 6,885,715,046.01 4,285,568,025.52 14,702,735,152.96 3,949,875,152.96

Long-term employee benefits payable

Provisions

Deferred income VIII.36 55,881,439.36 52,600,564.89 76,211,482.43 53,613,001.12

Deferred tax liabilities VIII.20 1,877,346.80 - 740,271.80 -

Other non-current liabilities VIII.37 5,943,710,200.00 - 7,515,373,800.00 - Including: Authorized reserve fund

Total non-current liabilities 110,335,828,601.74 99,854,707,340.96 95,603,967,744.03 80,865,932,896.80

Total liabilities 210,655,574,474.69 201,260,768,785.57 171,455,719,907.58 152,271,945,954.15

Paid-in capital (or share capital) VIII.38 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51

National capital 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51

State-owned legal person's capital

Collective capital

Private capital

Foreign capital

#Less: Investment returned

Net paid-in capital (or share capital) 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51 58,425,396,737.51

Other equity instruments VIII.39 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00

Including: Preference share

Perpetual debt 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00 7,000,000,000.00

Capital reserve VIII.40 181,592,397,861.70 159,135,203,920.10 150,322,206,295.02 144,470,025,519.14

Less:treasury shares

Other comprehensive income VIII.58 1,279,027,458.36 1,384,378,857.77 304,373,807.54 630,696,808.70 Including: Exchange differences on translatingforeign currencystatement

182,252,122.34 762,207.08 -215,656,207.11 -

Specific reserve VIII.41 26,901.28 - - -

Surplus reserve VIII.42 222,186,774.37 222,186,774.37 222,186,774.37 222,186,774.37

Including: Statutory surplus reserves 222,186,774.37 222,186,774.37 222,186,774.37 222,186,774.37

Other surplus reserve

#Reserve fund

#Enterprise expansion fund

#Profits capitalized on return of investment

△Provision for general risk

Retained earnings VIII.43 1,046,830,606.99 -446,532,187.26 1,317,222,922.21 431,827,793.09 Total equity attributable to owners or shareholders ofthe Company

249,565,866,340.21 225,720,634,102.49 217,591,386,536.65 211,180,133,632.81

Non-controlling interests 455,810,685.91 - 199,594,740.90 -

Total owners' equity (or shareholder' s equity) 250,021,677,026.12 225,720,634,102.49 217,790,981,277.55 211,180,133,632.81

Total liabilities and owners equity (or shareholder' sequity)

460,677,251,500.81 426,981,402,888.06 389,246,701,185.13 363,452,079,586.96

Consolidated and Company Balance Sheet (continued)

Item NoteAs at 31/12/2020 As at 31/12/2019

As at December 31, 2020

Legal representative: Person in charge of accounting function:

Person in charge of accounting department:

2

F-103

Prepared by: GUANGZHOU METRO GROUP CO., LTD. Expressed in RMB

Consolidated Company Consolidated Company

I. Total operating income 12,891,240,822.69 11,518,818,368.70 12,233,873,908.85 9,838,444,741.11

Including: Operating income VIII.44 12,891,240,822.69 11,518,818,368.70 12,233,873,908.85 9,838,444,741.11

△Interest income

△Insurance premiums earned

△Handling charges and commissions income

II. Total operating cost 15,409,381,399.13 12,960,353,705.21 14,122,281,445.73 11,066,537,114.25

Including: Operating costs VIII.44 11,290,769,061.84 9,825,498,228.14 9,565,906,869.86 7,337,709,577.69

△Interest expenses

△Handling charges and commissions expenses

△Refund of insurance premiums

△Net payments for insurance claims

△Net provision for insurance contracts

△Expenditures dividend policy

△Amortized Reinsurance Expenditures

Taxes and surcharges 444,068,598.69 418,259,959.59 717,261,205.39 662,795,302.38

Selling and distribution expenses VIII.45 129,239,044.07 24,090,297.62 159,385,867.94 39,152,777.71

General and administrative expenses VIII.46 1,100,228,720.56 780,636,200.15 1,370,905,270.22 1,024,153,301.56

Research and development expenses VIII.47 271,405,947.35 152,339,490.82 129,546,822.34 32,712,537.53

Financial expenses VIII.48 2,173,670,026.62 1,759,529,528.89 2,179,275,409.98 1,970,013,617.38

Including: Interest expenses 2,582,525,656.52 2,130,055,710.19 2,243,996,543.65 1,803,368,570.31

Interest income 317,725,809.70 141,440,414.65 383,016,792.11 136,670,089.50

Exchange losses ("-" for gains) (119,754,569.57) (249,055,035.69) 237,816,567.74 244,569,256.80

Others

Add: Other income VIII.49 510,178,373.31 473,513,855.14 906,934,716.37 898,422,599.83

Investment income ("-" for losses) VIII.50 2,215,045,355.50 342,782,005.41 2,640,698,402.43 1,307,541,597.56

Including: Income from investment in associates and jointventures

714,351,690.62 -785,366,950.89 951,179,984.14 -291,130,712.69

☆Derecognition income of financial assetsmeasured at amortized cost Exchange gains of loss ("-" for losses)

☆Net exposure hedging gains ( "-" for losses)

Gains from changes in fair value ( "-" for losses) VIII.51 -141,525,419.77 -141,525,419.77 57,809,594.67 13,863,603.07

Credit impairment gains ("-" for losses) VIII.52 -38,205,217.46 - -51,760,651.61 -

Asset impairment losses ("-" for losses) VIII.53 -35,062,709.66 -29,893,478.83 -513,314,146.74 -509,984,779.02

Gains from assets disposal ("-" for losses) VIII.54 301,935,819.27 301,794,725.40 5,689,927.08 -

III. Operating profit ("-" for losses) 294,225,624.75 -494,863,649.16 1,157,650,305.32 481,750,648.30

Add: Non-operating income VIII.55 38,179,224.02 31,933,503.30 8,678,143.81 6,608,619.93

Including: Government grant 3,245,000.00 457,361.49

Less: Non-operating expenses VIII.56 10,244,815.19 7,823,304.19 18,073,872.88 11,991,524.53

IV. Profit before income tax ("-" for losses) 322,160,033.58 -470,753,450.05 1,148,254,576.25 476,367,743.70

Less: Income tax expenses VIII.57 92,206,120.16 -4,625,134.66 104,051,485.61 -

V. Net profit for the year ("-" for losses) 229,953,913.42 -466,128,315.39 1,044,203,090.64 476,367,743.70

(I) Classification according to attribute - - - -

Including: owners of the Company 186,644,560.84 -466,128,315.39 993,878,306.42 476,367,743.70

Non-controlling interests 43,309,352.58 - 50,324,784.22 -

(II) Classification according to operation continuity - - - -

Including: Net profit from continuing operations ("-" for net loss)

229,953,913.42 -466,128,315.39 1,044,203,090.64 476,367,743.70

- - - -

VI. Other comprehensive income, net of tax 974,653,650.82 753,682,049.07 64,505,057.61 287,408,352.87

Other comprehensive income (net of tax) attributable to owners of the Company

VIII.58 974,653,650.82 753,682,049.07 64,505,057.61 287,408,352.87

(I) Items that will not be reclassified to other comprehensiveincome Including: 1. Remeasurement of defined benefit plan liability orasset 2. Other comprehensive income that cannot betransferred to profit or loss under the equity method ☆3. Changes in the fair value of other equity instruments investment ☆4. Changes in fair value of the enterprise's own creditrisk

5. Others (II) Items that may be reclassified to other comprehensiveincome

974,653,650.82 753,682,049.07 64,505,057.61 287,408,352.87

Including: 1. Other comprehensive income that can betransferred to profit or loss under the equity method

364,617.97 364,617.97 921,530.95 921,530.95

☆2. Changes in the fair value of other debtinvestments 3.Gains or losses arising from changes in fair value of available-for-sale financial assets

576,380,703.40 752,555,224.02 259,166,234.15 286,486,821.92

☆4. Amount of financial assets reclassified andincluded in other comprehensive income 5. Gains or losses arising from reclassification of held-to-maturity investments to available-for-sale financial assets

- - - -

☆6. Other debt investment credit impairment reserves 7. Effective portion of gains or losses arising from cash flow hedging instruments

- - - -

8. Translation differences arising from translation of foreign currency financial statements

397,908,329.45 762,207.08 -195,582,707.49 -

9. Others - - - -

Other comprehensive income (net of tax) attributable to non-controlling interests

- -

VII. Total comprehensive income for the year 1,204,607,564.24 287,553,733.68 1,108,708,148.25 763,776,096.57

Attributable to: Owners of the Company 1,161,298,211.66 287,553,733.68 1,058,383,364.03 763,776,096.57

Non-controlling interests 43,309,352.58 - 50,324,784.22 -

As at December 31, 2020

Year ended 31/12/2019

Consolidated and Company Income Statement

Item NoteYear ended 31/12/2020

Legal representative: Person in charge of accounting function:

Person in charge of accounting department:

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Audit Report Page 2

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

III. Key Audit Matters Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have identified the following audit issues that need to be communicated as they are key audit matters.

Key audit matters Deal with the matter in audit

1. Recognition of investment income As stated in note VIII (45) to the financial

statements, Guangzhou Metro recognized the

investment income of RMB 1.443 billion from

the disposal of long-term equity investment in

the financial statements during the reporting

period. It is mainly the equity disposal income

formed by disposing part of the equity of

Guangzhou pinhui Real Estate Development

Co., Ltd., Guangzhou Pinshi Real Estate

Development Co., Ltd. and Guangzhou

pinyue Real Estate Development Co., Ltd. in

the report period. The income from equity

disposal has a significant impact on the total

profit of the consolidated financial statements,

so we recognize the recognition of the income

from equity disposal investment as a key audit

matter.

1 Understand the key internal controls related

to investment income, evaluate the design of

these controls, determine whether they are

implemented, and test the operation

effectiveness of relevant internal controls; 2 Check whether the accounting policies for

the confirmation of the investment income from

equity disposal are correctly and consistently

applied; 3 Obtain and check the equity disposal

agreement and relevant approval documents

signed by Guangzhou Metro and each

counterparty, pay attention to the rationality of

the commercial purpose of the transaction and

the fairness of the disposal price, and confirm

the time point when the control right of the

subsidiary is lost in combination with the receipt

of the disposal price, the asset transfer

procedures and the industrial and commercial

F-257

Audit Report Page 3

change date; 4 Check the book entry of transfer price and

investment income, obtain the calculation

process of investment income, and recheck the

calculation; 5 Check whether the information related to

the equity disposal investment income has been

properly presented and disclosed in the financial

statements.

IV. Other Information

Management of Guangzhou Metro (hereinafter referred to as “the Management”) is responsible for other information. Other information includes information that covered in Guangzhou Metro's annual report for 2019, but excludes financial statements and our audit report.

Our audit opinions on financial statements do not cover other information, nor do we have any form of forensic conclusions on other information.

Combined with our audit of financial statements, our responsibility is to read other information. In this process, we should consider whether other information is substantially inconsistent with the financial statements or whether what we know in the audit process seems to be significant misstatement.

Based on what we have done, if we confirm that there are major misstatements in other information, we should report the conditions. In this regard, we have nothing to report.

V. Responsibilities of Management and Governance Layer

The Management is responsible for the preparation and fair presentation of these financial statements in accordance with Accounting Standards for Business Enterprises and for the design, implementation and maintenance of such internal control necessary to enable that the

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Audit Report Page 4

financial statements are free from material misstatement, whether due to fraud or error.

In preparing these financial statements, the Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The governance layer is responsible for supervising the financial reporting process of Guangzhou Metro.

VI. Auditor's Responsibilities for the Audit of the FinancialStatements

Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is assurance of high level, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

1 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

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Audit Report Page 5

intentional omissions, misrepresentations, or the override of internal control.

2 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but the purpose is not to express opinions on the effectiveness of internal control.

3 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management.

4 Conclude on the appropriateness of the Management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor report to the related disclosures in these financial statements, if the disclosures are insufficient, we should issue non-unreserved opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6 Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Guangzhou Metro to express audit opinions on financial statements. We are responsible for guiding, supervising and executing the Group’s audit, and assume full responsibility for the opinion.

We communicate with the governance layer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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Financial Statements Page 1

Guangzhou Metro Group Co., Ltd. Consolidated Balance Sheet

As at December 31, 2019

(Amounts are expressed in RMB unless otherwise stated)

Item Note Ending Balance Beginning Balance Current assets: Cash and cash equivalents 1 13,829,839,781.21 25,913,354,235.98 △ Settlement provisions △Placements with banks and other financial institutions

Trading financial assets Financial assets at fair value through profit or loss 2 39,995,947.79 57,611,575.17 Derivative financial assets Notes Receivable 3 64,565,195.50 73,334,109.34 Accounts Receivable 4 1,886,941,613.60 1,977,977,168.46

Receivables financing Prepayments 5 456,564,349.80 393,024,936.70 △ Insurances fee receivables △ Sub contract of iusurance fee receivable △Reinsurance contract reserve receivable Other receivables 6 16,592,209,686.72 12,205,564,645.13 △ Financial assets purchased under resale agreements

Inventories 7 14,227,688,069.66 25,623,891,322.24 Including: Raw materials 658,721,831.11 624,805,380.94 Merchandised inventories(Finished goods) 1,568,986,707.18 492,392,035.99

Contractual assets Classified as held-to-sale assets Non-current assets maturing within one year Other current assets 8 9,080,052,770.44 8,232,533,539.77 TOTAL CURRENT ASSETS 56,177,857,414.72 74,477,291,532.79 Non-current assets: △Loans and advances

Debt investment Available-for-sale financial assets 9 21,192,339,898.89 18,464,293,642.50

Other investment on bonds Held-to-maturity investments 10 1,029,622,620.00 Long-term receivables Long-term equity investments 11 23,205,260,104.52 12,568,603,826.44

Other investment on equity Other non-current financial assets 12 2,000,000.00

Investment real estates 13 5,429,886,852.93 5,372,217,257.41 Fixed assets 14 112,549,619,083.05 92,279,306,530.16 Construction in progress 15 131,888,020,804.03 111,865,036,944.45 Productive biological assets Oil and natural gas assets

Assets of right of use Intangible assets 16 359,922,334.63 360,096,759.62 Research and development costs 17 937,827.24 9,423,719.39 Goodwill 18 6,201,715.94 6,201,715.94 Long-term deferred expenses (Deferred assets) 19 60,238,811.96 51,046,871.45 Deferred tax assets 20 112,529,743.06 87,707,585.90 Other non-current assets 21 38,261,886,594.16 35,485,417,363.12 Including: Special reserve materials TOTAL NON-CURRENT ASSETS 333,068,843,770.41 277,578,974,836.38 TOTAL ASSETS 389,246,701,185.13 352,056,266,369.17

The accompanying notes are an integral part of these financial statements. Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 2

Guangzhou Metro Group Co., Ltd. Consolidated Balance Sheet (continued)

As at December 31, 2019

(Amounts are expressed in RMB unless otherwise stated)

Current liabilities: Short-term borrowings 22 12,015,653,177.39 20,560,915,172.00 △Borrowing from Central bank△Placements from banks and other financial institutions

Financial liabilities held for trading Financial liabilities at fair value through profit or loss 23 48,068,686.00

Derivative financial liabilities Notes payable 24 1,128,834,651.97 66,000,000.00 Accounts payable 25 22,809,936,792.34 16,498,054,226.80 Advances form customers 26 6,157,064,063.26 9,838,682,891.78

Contractual liability △Repurchase of financial assets△Absorbed deposit and savings in other banks△Agent of buying and sale of securities△Agent of underwriting of securities Employee benefits payable 27 2,297,044,516.77 1,775,650,145.41 Including: Accrued payroll 2,044,854,995.19 1,572,300,120.36

Wealfare fund payable 226,785.36 79,568.98 #Including : Staff bonus and reserve fund Taxes and fees payable 28 1,046,071,572.49 378,876,159.76 Including:Taxes payable Other payables 29 3,092,710,645.11 2,673,975,564.01 △Charges and commission payable△Accounts payable reinsurance Classified as held-to-sale libilities

Non-current liabilities maturing within one year 30 16,073,038,012.88 3,653,726,974.18 Other current liabilities 31 11,231,398,731.34 10,001,935,866.20 TOTAL CURRENT LIABILITIES 75,851,752,163.55 65,495,885,686.14 Non-current liabilities: △Provision of insurance contracts Long-term borrowings 32 38,039,070,942.72 29,521,150,732.53 Bonds payable 33 35,269,836,094.12 37,543,081,163.98 Including:Preferred stocks

Perpetual bonds Lease liabilities

Long-term payables 34 14,702,735,152.96 12,286,351,041.87 Long-term employee benefits payable Estimated liabilities Deferred income 35 76,211,482.43 55,492,186.41 Deferred tax liabilities 20 740,271.80 473,194.51 Other non-current liabilities 36 7,515,373,800.00 32,475,421.77

Including: Special reserve fund TOTAL NON-CURRENT LIABILITIES 95,603,967,744.03 79,439,023,741.07 TOTAL LIABILITIES 171,455,719,907.58 144,934,909,427.21 Owners' equity(shareholders' equity):

Paid-in capital (or share capital) 37 58,425,396,737.51 58,425,396,737.51 Capital contributed by state 58,425,396,737.51 58,425,396,737.51

Capital contributed by stated owned legal entity Capital contributed by collective entity Capital contributed by private entity Capital contributed by foreign investors # Less: Investment return

Net paid-in capital(or share capital) 58,425,396,737.51 58,425,396,737.51 Other equity instruments 38 7,000,000,000.00 7,000,000,000.00 Including preferred stock

perpetual capital securities 7,000,000,000.00 7,000,000,000.00 Capital reserves 39 150,322,206,295.02 140,375,222,765.34 Less: Treasury stock Other comprehensivie income 304,373,807.54 239,868,749.93 Including Translation difference of foreign currency statement -21,462,095.91 Specific reserves Surplus reserves 40 222,186,774.37 174,550,000.00 Including: Statutory surplus reserve 222,186,774.37 174,550,000.00

Discretionary surplus reserve # Reserve fund # Enterprise expansion fund # Profits capitalised on return of investments △Provision for normal risks Undistributed profit 41 1,317,222,922.21 689,281,581.07

Total owner's equity belongs to parent company 217,591,386,536.65 206,904,319,833.85 Minority shareholders' equity 199,594,740.90 217,037,108.11 TOTAL OWNER'S EQUITY 217,790,981,277.55 207,121,356,941.96 TOTAL LIABILITIES AND OWNERS' EQUITY 389,246,701,185.13 352,056,266,369.17

The accompanying notes are an integral part of these financial statements.

Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 3

Guangzhou Metro Group Co., Ltd. Balance Sheet

As at December 31, 2019 (Amounts are expressed in RMB unless otherwise stated)

Item Note Ending Balance Beginning Balance Current assets: Cash and cash equivalents 9,693,903,719.94 18,105,620,571.83 △ Settlement provisions △Placements with banks and other financial institutions

Trading financial assets Financial assets at fair value through profit or loss 39,995,947.79 53,410,876.70 Derivative financial assets Notes Receivable Accounts Receivable 12 1 1,396,572,229.69 1,909,579,263.40

Receivables financing Prepayments 181,616,603.05 152,651,102.49 △ Insurances fee receivables △ Sub contract of iusurance fee receivable △Provision of sub receivable Other receivables 12 2 24,376,780,344.43 35,452,476,217.90 △ Financial assets purchased under resale agreements

Inventories 4,224,272,145.77 3,595,411,133.98 Including: Raw materials 657,564,224.19 622,214,304.12 Merchandised inventories(Finished goods) 1,541,298,004.72 306,841,445.55

Contractual assets Classified as held-to-sale assets Non-current assets maturing within one year Other current assets 8,909,580,772.48 8,209,988,117.63 TOTAL CURRENT ASSETS 48,822,721,763.15 67,479,137,283.93 Non-current assets: △Loans and advances

Debt investment Available-for-sale financial assets 2,063,373,920.13 1,374,679,103.21

Other investment on bonds Held-to-maturity investments Long-term receivables Long-term equity investments 12 3 34,822,566,686.71 8,123,526,914.79

Other investment on equity Other non-current financial assets

Investment real estates 4,246,074,707.71 4,364,649,976.46 Fixed assets 111,652,770,838.35 91,357,548,421.65 Construction in progress 129,817,081,977.02 111,643,433,308.06 Productive biological assets Oil and natural gas assets

Assets of right of use Intangible assets 335,032,204.77 345,476,540.41 Research and development costs Goodwill Long-term deferred expenses (Deferred assets) 19,723,436.26 20,389,233.08 Deferred tax assets Other non-current assets 31,672,734,052.86 30,375,429,621.75 Including: Special reserve materials TOTAL NON-CURRENT ASSETS 314,629,357,823.81 247,605,133,119.41 TOTAL ASSETS 363,452,079,586.96 315,084,270,403.34

The accompanying notes are an integral part of these financial statements.

Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 4

Guangzhou Metro Group Co., Ltd. Balance Sheet (continued) As at December 31, 2019

(Amounts are expressed in RMB unless otherwise stated) Item Note Ending Balance Beginning Balance

Current liabilities: Short-term borrowings 7,194,565,217.39 19,014,715,172.00 △Borrowing from Central bank△Placements from banks and other financial institutions

Financial liabilities held for trading Financial liabilities at fair value through profit or loss

Derivative financial liabilities Notes payable 1,062,334,651.97 Accounts payable 19,159,995,484.60 15,737,993,259.44 Advances form customers 4,971,176,130.64 9,137,190,820.82

Contractual liability △Repurchase of financial assets△Absorbed deposit and savings in other banks△Agent of buying and sale of securities△Agent of underwriting of securities Employee benefits payable 1,813,188,230.16 1,386,417,806.51 Including: Accrued payroll 1,654,966,882.73 1,254,929,817.15

Wealfare fund payable # Including : Staff bonus and reserve fund Taxes and fees payable 655,038,399.01 248,268,766.06 Including:Taxes payable Other payables 10,761,796,508.51 8,095,248,050.13 △Charges and commission payable △Accounts payable reinsurance Classified as held-to-sale libilities

Non-current liabilities maturing within one year 15,787,918,435.07 2,281,086,974.18 Other current liabilities 10,000,000,000.00 10,000,000,000.00 TOTAL CURRENT LIABILITIES 71,406,013,057.35 65,900,920,849.14 Non-current liabilities: △Provision of insurance contracts Long-term borrowings 36,444,070,942.72 27,919,150,732.53 Bonds payable 40,418,373,800.00 34,823,816,000.00 Including:Preferred stocks

Perpetual bonds Lease liabilities

Long-term payables 3,949,875,152.96 4,193,751,041.87 Long-term employee benefits payable Estimated liabilities Deferred income 53,613,001.12 46,367,113.69 Deferred tax liabilities Other non-current liabilities Including: Special reserve fund TOTAL NON-CURRENT LIABILITIES 80,865,932,896.80 66,983,084,888.09 TOTAL LIABILITIES 152,271,945,954.15 132,884,005,737.23 Owners' equity(shareholders' equity):

Paid-in capital (or share capital) 58,425,396,737.51 58,425,396,737.51 Capital contributed by state 58,425,396,737.51 58,425,396,737.51

Capital contributed by stated owned legal entity Capital contributed by collective entity Capital contributed by private entity Capital contributed by foreign investors # Less: Investment return

Net paid-in capital(or share capital) 58,425,396,737.51 58,425,396,737.51 Other equity instruments 7,000,000,000.00 7,000,000,000.00 Including preferred stock

perpetual capital securities 7,000,000,000.00 7,000,000,000.00 Capital reserves 144,470,025,519.14 115,935,632,458.10 Less: Treasury stock Other comprehensivie income 630,696,808.70 343,288,455.83 Including Translation difference of foreign currency statement

Specific reserves Surplus reserves 222,186,774.37 174,550,000.00 Including: Statutory surplus reserve 222,186,774.37 174,550,000.00

Discretionary surplus reserve # Reserve fund # Enterprise expansion fund # Profits capitalised on return of investments △Provision for normal risks Undistributed profit 431,827,793.09 321,397,014.67 TOTAL OWNER'S EQUITY 211,180,133,632.81 182,200,264,666.11 TOTAL LIABILITIES AND OWNERS' EQUITY 363,452,079,586.96 315,084,270,403.34

The accompanying notes are an integral part of these financial statements.

Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 5

Guangzhou Metro Group Co., Ltd. Consolidated Income Statement

For the year ended December 31, 2019

(Amounts are expressed in RMB unless otherwise stated) Item Note Current Period Prior Period

I. Overall turnover 12,233,873,908.85 9,083,482,390.95 Including: Revenue from operations 42 12,233,873,908.85 9,083,482,390.95 △ Interest revenue △Earned insurance fee △Revenues of charges and commissionII. Overall costs 14,122,281,445.73 11,431,877,735.35 Including: Cost of operations 42 9,565,906,869.86 8,308,953,542.26 △ Interest expenses△Charges and commission expenses△ Insurance fee return△Net of insurance claim payments△Accrual of insurance liabilities provisions△ Insurance dividend payment△Sunbinsurance contract expenses

Taxes and surcharges on operations 717,261,205.39 200,494,117.25 Selling and distribution expenses 43 159,385,867.94 100,200,772.43 General and administrative expenses 43 1,370,905,270.22 1,099,017,959.52 Research and development expenses 43 129,546,822.34 93,587,382.62 Financial expenses 43 2,179,275,409.98 1,629,623,961.27 Including: Interest expenses 2,243,996,543.65 1,502,005,476.08

Interest income 383,016,792.11 270,107,814.92 Loss on foreign exchange transactions("-" for gain) 237,816,567.74 346,192,511.22

Others Plus: Other income 44 906,934,716.37 1,729,886,592.73

Investment income ("-" for loss) 45 2,640,698,402.43 2,368,404,559.03 Including: Investment income from joint ventures and affiliates 951,179,984.14 26,589,357.79

Income from derecognition of financial assets measured at amortized cost △Exchange gain ("-" for loss) Net open hedging income ("-" for loss)

Gains on change in fair value ("-" for loss) 46 57,809,594.67 92,936,961.21 Credit impairment loss ("-" for loss) 47 -51,760,651.61

Assets impairment loss ("-" for loss) 48 -513,314,146.74 -1,607,770,226.20 Gains or losses from disposal of assets ("-" for loss) 49 5,689,927.08 48,939,750.77

III. Operating profit ("-" for loss) 1,157,650,305.32 284,002,293.14 Plus: Non-operating profit 50 8,678,143.81 10,195,284.35

Including: Government subsidies Less: Non-operating expense 51 18,073,872.88 21,820,187.81 IV. Profit before tax ("-" for loss) 1,148,254,576.25 272,377,389.68 Less: Income tax expenses 52 104,051,485.61 92,110,879.98 V. Net profit ("-" for loss) 1,044,203,090.64 180,266,509.70

I Classification by ownership

Net profit belongs to parent company 993,878,306.42 100,978,738.46 Gain or loss of minority shareholders 50,324,784.22 79,287,771.24

II Classification by business continuity

Net profit of continuous operation 1,044,203,090.64 180,266,509.70 Net profit of cease operation VI. Other comprehensive income after tax 64,505,057.61 -418,472,164.89

Other comprehensive income belong to parent company 64,505,057.61 -418,472,164.89 I Other comprehensive income that cannot be reclassified into income

1 Changes in net liabilities or net assets of the benefit plan 2 Under the equity method, the investment entity shall enjoy the share of other

comprehensive income which cannot be classified into the profit and loss 3 Changes in fair value of investment in other equity instruments 4 Changes in fair value of enterprise's credit risk 5 Others

II Other comprehensive income that can be reclassified into income 64,505,057.61 -418,472,164.89 1 Under the equity method, the investment entity shall enjoy the share of other

comprehensive income which cannot be classified into the profit and loss 921,530.95

2 Changes in fair value of investment in other creditor's rights 3 Changes in the fair value of available for sale financial assets 259,166,234.15 -386,809,903.61 4 Financial assets reclassified into other comprehensive income 5 Gain or loss of hold to maturity investments are classified as available for sale

financial assets 6 Provision for credit impairment of other debt investment 7 Effective part of cash flow hedging profit and loss 8 Translation difference of foreign currency statement -195,582,707.49 -31,662,261.28 9 Others

Other comprehensive income belong to minority shareholders VII. Total of comprehensive income 1,108,708,148.25 -238,205,655.19

Total comprehensive income belong to parent company 1,058,383,364.03 -317,493,426.43 Total comprehensive income belong to minority shareholders 50,324,784.22 79,287,771.24

VIII. Earnings per share Basic earnings per share Diluted earnings per share

The accompanying notes are an integral part of these financial statements.

Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 6

Guangzhou Metro Group Co., Ltd. Income Statement

For the year ended December 31, 2019

(Amounts are expressed in RMB unless otherwise stated) Item Note Current Period Prior Period

I. Overall turnover 9,838,444,741.11 6,877,925,920.06 Including: Revenue from operations 12 4 9,838,444,741.11 6,877,925,920.06 △Interest revenue△Earned insurance fee △Revenues of charges and commission

II. Overall costs 11,066,537,114.25 8,937,437,473.60 Including: Cost of operations 12 4 7,337,709,577.69 6,430,554,862.22 △Interest expenses△Charges and commission expenses△Insurance fee return△Net of insurance claim payments△Accrual of insurance liabilities provisions△ Insurance dividend payment△Sunbinsurance contract expenses

Taxes and surcharges on operations 662,795,302.38 176,167,716.88 Selling and distribution expenses 39,152,777.71 23,246,387.72 General and administrative expenses 1,024,153,301.56 741,561,139.75

Research and development expenses 32,712,537.53 16,642,026.17 Financial expenses 1,970,013,617.38 1,549,265,340.86 Including: Interest expenses 1,803,368,570.31 1,259,280,128.41

Interest income 136,670,089.50 132,349,454.34 Loss on foreign exchange transactions("-" for gain) 244,569,256.80 379,976,291.33

Others

Plus: Other income 898,422,599.83 1,726,767,313.26 Investment income ("-" for loss) 12 5 1,307,541,597.56 1,385,424,984.97 Including: Investment income from joint ventures and affiliates -280,963,916.52 20,536,874.84

Income from derecognition of financial assets measured at amortized cost △Exchange gain ("-" for loss)

Net open hedging income ("-" for loss)

Gains on change in fair value ("-" for loss) 13,863,603.07 98,591,509.03 Credit impairment loss ("-" for loss)

Assets impairment loss ("-" for loss) -509,984,779.02 -1,584,508,396.57 Gains or losses from disposal of assets ("-" for loss) 49,011,028.24

III. Operating profit ("-" for loss) 481,750,648.30 -384,225,114.61 Plus: Non-operating profit 6,608,619.93 6,351,320.44

Including: Government subsidies

Less: Non-operating expense 11,991,524.53 14,457,431.67 IV. Profit before tax ("-" for loss) 476,367,743.70 -392,331,225.84 Less: Income tax expenses

V. Net profit ("-" for loss) 476,367,743.70 -392,331,225.84 Net profit of continuous operation 476,367,743.70 -392,331,225.84 Net profit of cease operation VI. Other comprehensive income after tax 287,408,352.87 -306,711,540.92 I Other comprehensive income that cannot be reclassified into income

1 Changes in net liabilities or net assets of the benefit plan 2 Under the equity method, the investment entity shall enjoy the share of other

comprehensive income which cannot be classified into the profit and loss 3 Changes in fair value of investment in other equity instruments 4 Changes in fair value of enterprise's credit risk 5 Others

II Other comprehensive income that can be reclassified into income 287,408,352.87 -306,711,540.92 1 Under the equity method, the investment entity shall enjoy the share of other

comprehensive income which cannot be classified into the profit and loss 921,530.95

2 Changes in fair value of investment in other creditor's rights

3 Changes in the fair value of available for sale financial assets 286,486,821.92 -306,711,540.92 4 Financial assets reclassified into other comprehensive income

5 Gain or loss of hold to maturity investments are classified as available for sale

financial assets 6 Provision for credit impairment of other debt investment

7 Effective part of cash flow hedging profit and loss

8 Translation difference of foreign currency statement

9 Others

VII. Total of comprehensive income 763,776,096.57 -699,042,766.76 VIII. Earnings per share

Basic earnings per share

Diluted earnings per share

The accompanying notes are an integral part of these financial statements.

Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 7

Guangzhou Metro Group Co., Ltd. Consolidated Cash Flow Statement

For the year ended December 31, 2019

(Amounts are expressed in RMB unless otherwise stated) Item Note Current Period Prior Period

I. Cash flows from operating activities: Cash receipts from the sale of goods and the rendering of services 14,693,620,082.20 10,239,803,343.70 △Net increased of client deposit and bank deposit △Net increase of borrowings from Central Bank △Net increase of borrowings from other financial organization△Cash receipt from original insurance△Cash receipt from re-insurance business △Net increase of insurer deposit and investment△Net increase of financial assets held for trading disposal △Cash receipt from interest revenue\charges and commission △Net increase of Placements from banks and other financial institutions△Net increase of repurchase business Cash receipt from tax refund 678,948,478.60 312,002.84 Other cash receipts relating to operating activities 18,695,665,835.57 14,255,688,478.99

Sub-total of cash inflows from operating activities 34,068,234,396.37 24,495,803,825.53 Cash payments for goods purchased and services received 5,463,675,427.20 23,478,183,241.23 △Net payment of client loans and other holding funds△Net increase of fund deposited in central bank and other banks △Cash payments for original insurance claims payment△Cash payments for interest\charges and commission

Cash payments for dividend from insurance contract Cash payments to and on behalf of employees 5,165,247,596.94 4,583,356,271.85 Payments of all types of taxes 846,587,883.88 1,383,356,310.91 Other cash payments relating to operating activities 9,186,063,704.80 8,326,200,154.36

Sub-total of cash outflows from operating activities 20,661,574,612.82 37,771,095,978.35 Net cash flows from operating activities 13,406,659,783.55 -13,275,292,152.82 II. Cash flows from investing activities:

Cash receipts from disposals and withdraw on investment 5,056,098,978.43 17,971,557,978.25 Cash receipts from returns on investments 1,031,505,772.81 175,694,806.64

Cash receipt from disposal of fixed assets\intangible assets and other long term assets

6,386,746.78 9,000,472.34

Net cash receipts from disposals of subsidiaries and other business units 1,198,548,999.60 957,556,635.46 Other cash receipts relating to investing activities

Sub-total of cash inflows from investing activities 7,292,540,497.62 19,113,809,892.69 Cash payments to acquire and construct fixed assets, intangible assets

and other long-term assets 38,551,245,098.31 30,565,723,975.05

Cash payments to acquire investments 16,227,922,695.20 21,674,247,854.47 Net cash from subsidiaries and other business units payment Other cash payments relating to investing activities 994,009,467.73 10,100.83

Sub-total of cash outflows from investing activities 55,773,177,261.24 52,239,981,930.35 Net cash flows from investing activities -48,480,636,763.62 -33,126,172,037.66 III. Cash flows from financing activities:

Cash receipts from investors in making investment in the enterprise 11,418,496,500.00 25,775,416,497.03 Including: Cash received from minority shareholders' investment

absorbed by subsidiaries Cash receipts from borrowings 66,201,889,533.40 68,593,870,248.25 △Cash receipts from bond issuing

Other cash receipts relating to financing activities 4,362,600,000.00 Sub-total of cash inflows from financing activities 77,620,386,033.40 98,731,886,745.28

Cash repayments of amounts borrowed 49,373,488,299.52 32,610,427,989.25 Cash payments for distribution of dividends or profits, or cash payments

for interest expenses 4,919,386,146.68 3,722,816,187.88

Including:Subsidiary companies pay cash to minority shareholders for interest expenses and distribution of dividends or profit

43,886,826.06

Other cash payments relating to financing activities 10,896,674.67 36,529,801.16 Sub-total of cash outflows from financing activities 54,303,771,120.87 36,369,773,978.29 Net cash flows from financing activities 23,316,614,912.53 62,362,112,766.99 IV. Effect of foreign exchange rate changes on cash and cash equivalents -196,759,277.79 249,457,410.15 V. Net increase in cash and cash equivalents -11,954,121,345.33 16,210,105,986.66

Plus:Cash and cash equivalents at the beginning of the period 25,705,750,122.00 9,495,644,135.34 VI. Cash and cash equivalents at the end of the period 13,751,628,776.67 25,705,750,122.00

The accompanying notes are an integral part of these financial statements. Legal representative: Head of accountant: Head of accounting department:

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Financial Statements Page 8

Guangzhou Metro Group Co., Ltd. Cash Flow Statement

For the year ended December 31, 2019

(Amounts are expressed in RMB unless otherwise stated) Item Note Current Period Prior Period

I. Cash flows from operating activities: Cash receipts from the sale of goods and the rendering of services 10,194,687,068.94 6,384,167,630.61 △Net increased of client deposit and bank deposit △Net increase of borrowings from Central Bank △Net increase of borrowings from other financial organization△Cash receipt from original insurance△Cash receipt from re-insurance business △Net increase of insurer deposit and investment△Net increase of financial assets held for trading disposal△Cash receipt from interest revenue\charges and commission △Net increase of Placements from banks and other financial institutions△Net increase of repurchase business Cash receipt from tax refund 676,606,006.25 Other cash receipts relating to operating activities 20,391,193,023.46 11,045,288,624.03

Sub-total of cash inflows from operating activities 31,262,486,098.65 17,429,456,254.64 Cash payments for goods purchased and services received 3,744,422,230.02 3,382,396,668.41 △Net payment of client loans and other holding funds △Net increase of fund deposited in central bank and other banks △Cash payments for original insurance claims payment△Cash payments for interest\charges and commission △Cash payments for dividend from insurance contract Cash payments to and on behalf of employees 3,910,966,096.38 3,462,311,135.89 Payments of all types of taxes 564,602,862.07 472,962,738.65 Other cash payments relating to operating activities 8,975,432,305.03 31,008,096,357.95

Sub-total of cash outflows from operating activities 17,195,423,493.50 38,325,766,900.90 Net cash flows from operating activities 14,067,062,605.15 -20,896,310,646.26 II. Cash flows from investing activities:

Cash receipts from disposals and withdraw on investment 2,195,416,885.66 16,686,204,963.96 Cash receipts from returns on investments 848,819,801.74 423,682,799.52

Cash receipt from disposal of fixed assets\intangible assets and other long term assets

669,758.18 8,949,177.12

Net cash receipts from disposals of subsidiaries and other business units

1,228,463,900.07 973,787,370.00

Other cash receipts relating to investing activities Sub-total of cash inflows from investing activities 4,273,370,345.65 18,092,624,310.60

Cash payments to acquire and construct fixed assets, intangible assets and other long-term assets

34,474,153,948.11 26,116,339,928.47

Cash payments to acquire investments 3,778,421,884.00 14,877,764,643.70 Net increase of mortgage loans

Net cash from subsidiaries and other business units payment Other cash payments relating to investing activities 628,377,969.65

Sub-total of cash outflows from investing activities 38,880,953,801.76 40,994,104,572.17 Net cash flows from investing activities -34,607,583,456.11 -22,901,480,261.57 III. Cash flows from financing activities:

Cash receipts from investors in making investment in the enterprise 2,938,176,500.00 17,696,208,836.20 Cash receipts from borrowings 57,177,585,361.23 65,723,850,113.67 △Cash receipts from bond issuing

Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities 60,115,761,861.23 83,420,058,949.87

Cash repayments of amounts borrowed 43,416,891,248.25 25,011,751,031.20 Cash payments for distribution of dividends or profits, or cash

payments for interest expenses 4,443,561,146.87 3,373,521,598.82

Other cash payments relating to financing activities 7,679,700.05 3,373,434.23 Sub-total of cash outflows from financing activities 47,868,132,095.17 28,388,646,064.25 Net cash flows from financing activities 12,247,629,766.06 55,031,412,885.62 IV. Effect of foreign exchange rate changes on cash and cash equivalents

-145,313,401.72 218,939,148.28

V. Net increase in cash and cash equivalents -8,438,204,486.62 11,452,561,126.07 Plus:Cash and cash equivalents at the beginning of the period 18,068,958,417.11 6,616,397,291.04

VI. Cash and cash equivalents at the end of the period 9,630,753,930.49 18,068,958,417.11

The accompanying notes are an integral part of these financial statements.

Legal representative: Head of accountant: Head of accounting department:

F-269

Fina

ncia

l Sta

tem

ents

Pag

e 9

Gua

ngzh

ou M

etro

Gro

up C

o., L

td.

Con

solid

ated

Sta

tem

ent o

f Cha

nges

in E

quity

Fo

r th

e ye

ar e

nded

Dec

embe

r 31

, 201

9

(Am

ount

s are

exp

ress

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RM

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s oth

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stat

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rent

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l cap

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ther

s

I. Ba

lanc

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end

of l

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I. Ch

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Cap

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(III

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(IV

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tribu

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. Bal

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The

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se fi

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tate

men

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Lega

l rep

rese

ntat

ive:

H

ead

of a

ccou

ntan

t: H

ead

of a

ccou

ntin

g de

partm

ent:

F-270

Fina

ncia

l Sta

tem

ents

Pa g

e 10

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ngzh

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etro

Gro

up C

o., L

td.

Con

solid

ated

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tem

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tinue

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ecem

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31, 2

019

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ount

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ress

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III.

Chan

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F-271

Fina

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Gro

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Stat

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Equ

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the

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31, 2

019

(Am

ount

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exp

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B u

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Item

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I. Ch

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28

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Cap

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,068

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(III

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for s

peci

fic re

serv

e

1Ex

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spec

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se sp

ecifi

c re

serv

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tribu

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prof

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F-273

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 1

Guangzhou Metro Group Co., Ltd. Notes to Financial Statements

(Amounts are expressed in RMB unless otherwise stated)

I. General condition

1. The History, Registered Address, Institution Information and Headquarters

Address Institution Information

Guangzhou Metro Group Co., Ltd. (hereinafter referred to as “the Company”) was

established on November 21, 1992. On June 30, 2015, the company has restructured into

the Limited Liability Company (solely state-owned). Registered address: Tower A,

Wansheng Plaza, No. 1238 Xingang East Road, Haizhu District, Guangzhou. The

registered capital is RMB58,425,396,737.00 yuan. Unified social credit code:

91440101190478645G.Legal representative: Ding Jianlong.

2. Business Nature and Scope of Business

The Company’s principal businesses are in urban rail transit industry.

The Company has a wide range of business scope which includes construction,

maintenance and operation of the rail transport system. It also engages in a diversified

industry that focuses on the development of metro-related resources, including imports

and exports of the Metro related goods (special projects required the testimonial from

corresponding government departments), real estates (operating as acquired certifications),

rail transit technology consulting and training. Others include office rental, advertisement,

parking services, channel setting and instalment, train maintenance, waterproof

construction engineering, landscape engineering, wholesale and retail trade business

(exclusively controlled and sold merchandise are not covered), storage (excepted danger

goods), construction and metal materials manufacture, computer technology services,

cleaning services.

3. Name of Controlling Shareholder

The ultimate controller of the Company is the state owned assets supervision and

Administration Commission of Guangzhou Municipal People's government.

4. Business term

The business term of the company is from November 21, 1992 to long term.

F-274

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 2

II. Preparation Basis of the Consolidated Financial Statements

The financial statements of the Company are prepared on the basis of going concern.

According to the actual transactions and events, the financial statements of the Company

are preared in compliance with the Accounting Standards for Business Enterprises – Basic

Standards and the specific rules, application guildlines, explanations and relevant

regulations of the Standards issue by the Ministry of Financ of China.

III. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements of the Company are prepared in compliance with the

requirements of the Accounting Standards for Business Enterprises and the Financial

Accounting System. They have truthfully and completely reflected the financial position

of the Company on 31 December 2019, and the results of their operations and their cash

flows for ended 31 December 2019.

IV. Significant Accounting Policy and Accounting Estimates

In 2017, the Ministry of Finance issued the revised accounting standards for Business

Enterprises No. 22 - recognition and measurement of financial instruments, accounting

standards for Business Enterprises No. 23 - transfer of financial assets, accounting

standards for Business Enterprises No. 24 - hedge accounting and accounting standards

for Business Enterprises No. 37 - presentation of financial instruments (revised in 2017)

(hereinafter referred to as the "new financial instruments standards"). According to the

provisions of the new financial instruments standards, enterprises listed both at home and

abroad or enterprises listed abroad and adopting international financial reporting

standards or accounting standards for enterprises to prepare financial reports shall be

implemented as of January 1, 2018; other domestic listed enterprises shall be

implemented as of January 1, 2019; non-listed enterprises that implementing the

accounting standards for business enterprises shall go into effect as of January 1, 2021.

Meanwhile, encourage enterprises to implement in advance.

In 2017, the Ministry of Finance issued the revised accounting standards for Business

Enterprises No. 14 - income (hereinafter referred to as the "new income standard").

According to the new income standard, enterprises listed both at home and abroad or

enterprises listed abroad and adopting international financial reporting standards or

accounting standards for enterprises to prepare financial reports shall be implemented as

of January 1, 2018; other domestic listed enterprises shall be implemented as of January 1,

F-275

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 3

2020; non-listed enterprises that implementing the accounting standards for business

enterprises shall go into effect as of January 1, 2021. Meanwhile, enterprises are allowed

to execute in advance.

In 2018, the Ministry of Finance issued the revised accounting standards for Business

Enterprises No. 21 - leasing (hereinafter referred to as the "new leasing standards").

According to the provisions of the new leasing standards, enterprises listed both at home

and abroad or enterprises listed abroad and adopting international financial reporting

standards or accounting standards for enterprises to prepare financial reports shall be

implemented as of January 1, 2019; other enterprises implementing the accounting

standards for business enterprises shall be implemented as of January 1, 2021. Enterprises

whose parent company or subsidiary company is listed overseas and whose overseas

financial statements are prepared in accordance with international financial reporting

standards or accounting standards for business enterprises may implement these standards

in advance, but not earlier than the date when the parent company or subsidiary company

simultaneously implements the new financial instruments standards and new income

standards.

According to the notice of the Ministry of Finance on revising and printing the accounting

standards for Business Enterprises No. 14 - income and other relevant provisions, if the

parent company implements the new standards but the subsidiary company has not yet

implemented the new standards, the parent company shall adjust the financial statements

of the subsidiary company in accordance with the new standards when preparing the

consolidated financial statements. If the parent company has not yet implemented the new

standards but the subsidiary company has implemented the new standards, the parent

company can adjust the financial statements of the subsidiary company according to the

accounting policies of the parent company when preparing the consolidated financial

statements, or directly combine the financial statements of the subsidiary company

prepared according to the new standards. If the parent company directly consolidates the

financial statements of its subsidiaries prepared in accordance with the new standards, it

shall disclose the fact in the consolidated financial statements, and separately disclose the

accounting policies and other relevant information of the parent company and its

subsidiaries.

The implementation of the new standards by the company and its subsidiaries is as

follows:

F-276

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 4

Corporate name New financial

instrument standards

New revenue

standards

New lease

standards

Guangzhou Metro Group Co., Ltd.

(parent company) Not yet implemented Not yet implemented

Not yet

implemented

Guangzhou Metro Design and

Research Institute Co., Ltd

Implemented from

January 1, 2019 Not yet implemented

Not yet

implemented

Guangzhou Metro Design Institute

construction drawing Consulting

Co., Ltd

Implemented from

January 1, 2019 Not yet implemented

Not yet

implemented

Guangzhou blueprints Office

Service Co., Ltd

Implemented from

January 1, 2019 Not yet implemented

Not yet

implemented

Foshan Rail Transit Design and

Research Institute Co., Ltd

Implemented from

January 1, 2019 Not yet implemented

Not yet

implemented

Other companies Not yet implemented Not yet implemented Not yet

implemented

When preparing consolidated financial statements, the company directly consolidates the

financial statements of subsidiaries prepared in accordance with the new standards.

1. Accounting Period

The accounting period of the Company is divided into annual and interim periods. The

fiscal year adopts the calendar year, that is, from 1st January to 31st December, and the

interim periods refers to the reporting period shorter than one full fiscal year.

2. Reporting Currency

Renminbi, in which the financial statements are presented, is used as the Group’s

recording and functional currency.

3. Basis of Accounting and Pricing Principles

Accounting is based on the accrual basis, with historical cost as the valuation principle,

except for the specified valuation basis.

4. Business Combination

A business combination is a transaction or event that brings together two or more than

two separate entities into one reporting entity. Business combinations are classified into

F-277

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 5

“Business combination involving entities under common control” and “Business

combination involving entities not under common control”.

(1) Business combination involving entities under common control

A business combination under the same control is a business combination in which all of

the combining enterprises are ultimately controlled by the same party or parties both

before and after the combination, and that control is not transitory. On the date of merger,

the merger party is the one who gains control over the other enterprises involved in the

merger, and the other enterprises involved in the merger are the merged party.

For the merger of enterprises under the same control, if the consideration of the merging

enterprise is that it makes payment in cash, transfers non-cash assets or bears its debts, it

shall, on the date of merger, regard the share of the book value of the owner's equity of the

merged enterprise as the initial cost of the long-term equity investment. The difference

between the initial cost of the long-term equity investment and the payment in cash,

non-cash assets transferred as well as the book value of the debts borne by the merging

party shall offset against the capital reserve. If the capital reserve is insufficient to dilute,

the retained earnings shall be adjusted.

(2) Business combination involving entities not under common control

A business combination involving enterprises not under common control is a business

combination in which all of the combining enterprises are not ultimately controlled by the

same party or parties both before and after the business combination. For a business

combination not involving enterprises under common control, the party that, on the

acquisition date, obtains control of another enterprise participating in the combination is

the acquirer, while the other enterprise participating in the combination is the acquiree.

Acquisition date is the date on which the acquirer effectively obtains control of the

acquiree.

For a business combination not involving enterprise under common control, the

combination cost including the sum of fair value, at the acquisition date, of the assets

given, liabilities incurred or assumed, and equity securities issued by the acquirer. The

intermediary expense incurred by the acquirer in respect of auditing, legal services,

valuation and consultancy services etc. and other associated administrative expenses

attributable to the business combination are recognized in profit or loss when they are

incurred. The transaction cost arose from issuing of equity securities or liability securities

F-278

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 6

shall be initially recognized as equity securities or liability securities. The contingent

consideration related to the combination shall be booked as combination cost at the fair

value at the acquisition date. If, within the 12 months after acquisition, additional

information can prove the existence of related information at acquisition date and the

contingent consideration need to be adjusted, goodwill can be adjusted.

Combination cost of the acquirer’s interest and identifiable net assets of the acquirer

acquired through the business combination shall be measured by the fair value at the

acquisition date. When the cost of combination exceeds the acquirer’s interest in the fair

value of the acquiree’s identifiable net assets, the difference shall be recognized as

goodwill. When the merger cost is less than the fair value share of the purchased party's

identifiable net assets obtained in the merger, the fair value of the acquired party's

identifiable assets, liabilities and contingent liabilities and the measurement of the merger

cost shall be reviewed first. If the merger cost is still less than the fair value share of the

purchased party's identifiable net assets obtained in the merger, the acquirer shall

recognize the remaining difference immediately in profit or loss for the current period.

5. Method of preparing the Consolidated Financial Statements

The scope of consolidation includes the company and all of the subsidiaries.

The company's consolidated financial statements are prepared in accordance with the

requirements of Accounting Standards for Enterprises No. 33 - Consolidated Financial

Statements and related provisions. All major internal transactions and transactions within

the scope of consolidation at the time of consolidation have been offset. The

shareholders'rights and interests of a subsidiary company which are not owned by the

parent company are listed separately as minority shareholders' rights and interests in the

consolidated financial statements.

When the accounting period or accounting policies of a subsidiary are different from

those of the company, the company makes necessary adjustments to the financial

statements of the subsidiary based on the company’s own accounting period or accounting

policies.

Where a subsidiary was acquired during the reporting period through a business

combination not under common control, the financial statements was reconciliated on the

basis of the fair value of identifiable net assets at the date of acquisition. Where a

subsidiary and a party being absorbed in a merger by absorption was acquired during the

reporting period, through a business combination involving enterprises under common

F-279

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 7

control, the financial statements of the subsidiary are included in the consolidated

financial statements. The results of operations and cash flow are included in the

consolidated balance sheet and the consolidated income statement, respectively, based on

their carrying amounts, from the date that common control was established, and the

opening balances and the comparative figures of the consolidated financial statements are

restated.

6. Classification of Joint Arrangements and Accounting Procedures for Joint

Venture

A joint arrangement is an arrangement of which two or more parties have joint control. A

joint arrangement is either a joint operation or a joint venture, depending of the rights and

obligation of the company in the joint arrangement. A joint operation is a joint

arrangement whereby the company has rights to the assets, and obligations for the

liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the

company has rights to the net assets of the arrangement.

When the company is a joint venture, the following items related to the share of the

common operating interests shall be recognized:

(1) Its assets, including its share of any assets held jointly;

(2) Its liabilities, including its share of any liabilities incurred jointly;

(3) Its revenue from the sale of its share of the output arising from the joint operation;

(4) Its share of the revenue from the sale of the output by the joint operation;

(5) Its expenses, including its share of any expenses incurred jointly.

When the company is a joint venture, the investment of the joint venture shall be

recognized as long-term equity investment and shall be accounted for in accordance with

the method described in the notes to the financial statements.

7. Cash and Cash Equivalents

The cash equivalents determined by the company in preparing for the cash flow statement

refer to the investments that the company holds for a short period of time, have strong

liquidity, and are easy to convert into cash of known amount with little risk of value

change.

8. Foreign Currency Translation

F-280

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 8

Foreign currency transaction of the Company is translated into RMB for recording at spot

exchange rate at the transaction date.

Foreign currency monetary items are translated using the spot exchange rate at the

balance sheet date. Exchange differences arising thereby are recorded as exchange gains

or losses for the current year. Exchange differences arising from foreign currency

borrowings for the acquisition or construction of qualifying assets are dealt with

according to the standard of capitalization of borrowing costs.

9. Financial Instruments

Financial instruments include financial assets, financial liabilities and equity instruments.

Companies that have not yet implemented the new financial instruments

standards

(1) Classification of financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on

a trade date basis. On initial recognition, the company’s financial assets are classified into

one of the four categories, including financial assets and liabilities at fair value though

profit or loss, held-to-maturity investments, loans and receivables and available-for-sale

financial investments, other financial liabilities. Transaction costs relating to financial

assets of other categories are included in the amount initially recognized.

(2) Recognition and measurement of financial instruments

a) Financial assets (financial liabilities) measured at fair value through profit or loss

A financial asset is recognized initially at fair value, and relevant transaction costs are

immediately charged to the profit and loss of the current period. The interest rate or cash

dividend which was gained in the period when the financial assets held by the company

are measured at its fair value and of which the variation is recorded into the profit and loss

in the current period shall be recognized as investment income. Any gains or losses

arising from changes in the fair value are recognized as investment income and adjust the

fair value variation into profit and loss.

b) Held-to-maturity investments

The investments which will be held to their maturity will regard the sum between the

gained fair value and the transaction expense thereof as the initially recognized amount.

The interest on bonds in payment, of which the mature interest is not drawn, shall be

solely recognized as the receivables. The interest revenue which is measured and

F-281

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 9

recognized by the amortized cost and actual interest rate during the period of the

investments which will be held to their maturity shall be recorded into investment income.

The actual interest rate which is recognized in the period of gaining the investments

which will be held to their maturity, shall maintain unchanged within the predicted term

of existence or within a shorter applicable term of the said investment which will be held

to their maturity. The little difference between actual interest rate and coupon rate of

which interest revenue can be measured at the coupon rate shall be recorded into the

profits of losses in the current period. When the investments which will be held to their

maturity are on disposal, the difference between the obtained price and investment book

value shall be recorded into the profit and loss in the current period.

c) Receivables

Receivables are non-derivative financial assets with fixed determinable payment that are

not quoted in an active market. Financial assets classified receivables by the company

include note receivables, account receivables, other receivables and so on, taking the

contract or agreed price receivable from the Purchaser as the initial confirmation amount;

if it has the nature of financing, it shall be initially confirmed according to its present

value.

The difference between the obtained price and investment book value shall be recorded

into the profit and loss in the current period.

d) Available-for-sale financial assets

Financial assets available-for-sale include non-derivative financial assets that are

designated on initial recognition as available for sale, and financial assets that are not

classified as financial assets at fair value through profit or loss, loans and receivables or

investment held-to-maturity.

Financial assets available-for-sale are subsequently measured at fair value, and gains or

losses arising from changes in the fair value are recognized as other comprehensive

income and included in the capital reserve, except that impairment losses and exchange

differences related to amortized cost of monetary financial assets denominated in foreign

currencies are recognized in profit or loss, until the financial assets are derecognized, at

which time the gains or losses are released and recognized in profit or loss. Interests

obtained and dividends declared by the investee during the period in which the financial

assets available-for-sale are held, are recognized in investment gains.

e) Other financial liabilities

Other financial liabilities are regarded as the initial recognized amount in accordance with

F-282

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 10

the sum between the fair value and the transaction expense thereof. The company shall

make subsequent measurement on other financial liabilities on the basis of the

post-amortization costs.

(3) Recognition and measurement of financial assets transfer

The enterprise has transferred its rights to receive cash flows from the asset and either (a)

has transferred substantially all the risks and rewards of the asset, or (b) has neither

transferred nor retained substantially all the risks and rewards of the asset, but has

transferred control of the asset. If the enterprise has neither retained all the risks and

rewards from the financial asset nor control over the asset, the asset is recognized

according to the extent it exists as financial asset, and correspondent liability is

recognized. The extent of existence refers the level of risk by the financial asset changes

the enterprise is facing.

For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a)

The carrying amount of the financial asset transferred; and (b) the sum of the

consideration received from the transfer and any cumulative gains or losses that had been

recognized in other comprehensive income, is recognized in profit or loss.

If a part of the transferred financial asset qualifies for derecognition, the carrying amount

of the transferred financial asset is allocated between the part that continues to be

recognized and the part that is derecognized, based on the relative fair value of those parts.

The difference between (a) the carrying amount allocated to the part derecognized; and (b)

the sum of the consideration received for the part derecognized and any cumulative gains

or losses allocated to the part derecognized which has been previously recognized in other

comprehensive income, is recognized in profit or loss.

(4) Derecognition of financial liabilities

The Group derecognizes a financial liability (or part of it) when the underlying present

obligation (or part of it) is discharged or cancelled or has expired. An agreement between

the company (an existing borrower) and existing lender to replace original financial

liability with a new financial liability with substantially different terms is accounted for as

an extinguishment of the original financial liability and the recognition of a new liability.

When the company derecognizes a financial liability or a part of it, it recognizes the

difference between the carrying amount of the financial liability (or part of the financial

liability) derecognized the consideration paid (including any non-cash assets transferred

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or new financial liabilities assumed) in profit or loss.

(5) Determination of fair value of financial assets and financial liabilities

Fair value is the amount for which an asset could be exchanged, or a liability settled,

between knowledgeable, willing parties in an arm’s length transaction. For a financial

instrument which has an active market, the company uses quoted price in the active

market to establish its fair value. The quoted price in the active market refers to the price

that can be regularly obtained from exchange market, agencies, industry associations,

pricing authorities; it represents the fair market trading price in the actual transaction.

For a financial instrument which does not have an active market, the company establishes

fair value by using a valuation technique. Valuation techniques include using recent arm’s

length market transactions between knowledgeable, willing parties, reference to the

current fair value of another instrument that is substantially the same, discounted cash

flow analysis and option pricing models.

The company measures initially and subsequently the fair value of an interest rate swap at

the value of a competitor’s interest rate swap quoted by a recognized financial institution

as at t company’s balance sheet date in accordance with the principle of consistency.

(6) Impairment of financial assets (excluding accounts receivable)

The Company assesses at the balance sheet date the carrying amount of every financial

asset except for the financial assets that measured by the fair value. If there is objective

evidence indicating a financial asset may be impaired, a provision is provided for the

impairment.

a) Impairment on available-for-sale financial assets

Where the fair value of the equity instrument investment drops significantly or not

contemporarily according to the integrated relevant factors, an available-for-sale financial

asset is impaired.

When an available-for-sale financial asset is impaired, the cumulative loss arising from

declining in fair value that had been recognized in capital reserve shall be removed and

recognized in profit or loss. The amount of the cumulative loss that is removed shall be

difference between the acquisition cost with deduction of recoverable amount less

amortized cost, current fair value and any impairment loss on that financial asset

previously recognized in profit or loss.

If, after an impairment loss has been recognized, there is objective evidence that the value

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of the financial asset is recovered, and it is objectively related to an event occurring after

the impairment loss was recognized, the initial impairment loss can be reversed and the

reserved impairment loss on available-for-sale equity instrument is recorded in the profit

or loss, the reserved impairment loss on available-for-sale debt instrument is recorded in

the current profit or loss.

The equity instrument where there is no quoted price in an active market, and whose fair

value cannot be reliably measured, or impairment loss on a derivative asset that is linked

to and must be settled by delivery of such an unquoted equity instrument shall not be

reversed.

b) Impairment on held-to-maturity investment

The measurement of impairment loss on held to maturity investment shall be handled in

accordance with the measurement method of impairment loss of receivables.

Companies that have implemented new financial instrument standards

The subsidiaries of the company, Guangzhou Metro Design & Research Institute Co., Ltd.,

Guangzhou Metro Design Institute construction drawing Consulting Co., Ltd.,

Guangzhou blueprints Office Service Co., Ltd. and Foshan Rail Transit Design &

Research Institute Co., Ltd., have implemented the new financial instrument standards

since January 1, 2019 according to the resolution of the board of directors. The

accounting policies of the above companies are as follows:

(1) Classification of financial instruments

According to the company's business model for managing financial assets and the

contractual cash flow characteristics of financial assets, financial assets are initially

classified as: financial assets measured at amortized cost, financial assets measured at fair

value with changes included in other comprehensive income (debt instruments) and

financial assets measured at fair value through profit or loss.

The business model is to collect contractual cash flow as the goal and the contractual cash

flow is only the payment of principal and interest based on the outstanding principal

amount, which is classified as a financial asset measured at amortized cost; the business

model aims both to receive the contract cash flow and sell the financial assets, and the

contract cash flow is only the payment of the principal and the interest based on the

outstanding principal amount, it is classified as a financial asset measured at fair

valuewith changes included in other comprehensive income (debt instruments); Other

financial assets other than those are classified as financial assets measured at fair value

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through profit or loss.

For investment in non-trading equity instruments, the company determines whether to

designate it as a financial asset measured at fair value with changes included in other

comprehensive income (equity instruments) at initial recognition.

Financial liabilities are classified at initial recognition as financial liabilities measured at

fair value through profit or loss and financial liabilities measured at amortized cost.

(2) Confirmation basis and measurement method of financial instruments

a) Financial assets measured at amortized cost

Financial assets measured at amortized cost include bills receivable, accounts receivable,

other receivables, long-term receivables, debt investment, etc., are initially measured at

fair value, and related transaction costs are included in the initial confirmation amount;

not included the accounts receivable of major financing components and receivables that

the company decides not to consider financing components for no more than one year

shall be initially measured at the contract transaction price.

Interest calculated using the effective interest rate method during the holding period is

included in the current profit and loss.

When recovering or disposing, the difference between the acquired price and the book

value of the financial asset is included in the current profit and loss.

b) Financial assets (debt instruments) measured at fair value with changes included in

other comprehensive income

Financial assets (debt instruments) measured at fair value with changes included in other

comprehensive income include receivables financing, other debt investment, etc., are

initially measured at fair value, and related transaction costs are included in the initial

recognition amount. The financial assets are subsequently measured at fair value. Changes

in fair value are included in other comprehensive income except for interest, impairment

losses or gains calculated using the actual interest rate method, and exchange gains and

losses.

At the time of derecognition, the cumulative gains or losses previously included in other

comprehensive income are transferred out of other comprehensive income and included in

the current profit and loss.

c) Financial assets (equity instruments) measured at fair value with changes included in

other comprehensive income

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Financial assets (equity instruments) measured at fair value with changes included in

other comprehensive income include other equity instrument investment, etc., they are

initially measured at fair value, and related transaction costs are included in the initial

recognition amount. The financial assets are subsequently measured at fair value, and

changes in fair value are reckoned in other comprehensive income. The dividends

obtained are included in the current profit and loss.

At the time of derecognition, the previously cumulative gains or losses included in other

comprehensive income are transferred out of other comprehensive income and included in

retained earnings.

d) Financial assets measured at fair value through profit or loss

Financial assets measured at fair value through profit or loss include transactional

financial assets, derivative financial assets, and other non-current financial assets. The

initial measurement is based on fair value, and related transaction costs are included in the

current profit and loss. The financial assets are subsequently measured at fair value, and

changes in fair value are included in the current profit and loss.

e) Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value through profit or loss include transactional

financial liabilities, derivative financial liabilities, etc., are initially measured at fair value,

and related transaction costs are included in current profit or loss. The financial liabilities

are subsequently measured at fair value, and changes in fair value are included in the

current profit and loss.

When the confirmation is terminated, the difference between the book value and the

consideration paid is included in the current profit and loss.

f) Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include short-term borrowings, bills

payable, accounts payable, other payables, long-term borrowings, bonds payable, and

long-term payables. The initial measurement is based on fair value, and related

transaction costs are included in the initial recognition amount.

Interest calculated using the effective interest rate method during the holding period is

included in the current profit and loss.

At the time of derecognition, the difference between the consideration paid and the book

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value of the financial liability is included in the current profit and loss.

(3) Confirmation basis and measurement method of financial asset transfer

When the company transfers financial assets, if almost all the risks and rewards of the

ownership of the financial assets have been transferred to the transferee, the financial

asset will be derecognized; If almost all the risks and rewards in the ownership of the

financial asset are retained, the recognition of the financial asset will not be terminated.

When judging whether the transfer of financial assets meets the above conditions for

derecognition of financial assets, the principle of substance over form is adopted. The

company distinguishes the transfer of financial assets into overall transfer and partial

transfer of financial assets. If the overall transfer of financial assets meets the conditions

for termination of confirmation, the difference between the following two amounts shall

be included in the current profit and loss:

a) The book value of the transferred financial assets;

b) The sum of the consideration received due to the transfer and the accumulated amount

of the changes in the fair value originally included in the owner's equity (the financial

assets involved in the transfer are the financial assets (debt instruments) measured at the

fair value and the changes are included in other comprehensive income).

If the partial transfer of financial assets meets the conditions for termination of

confirmation, the entire book value of the transferred financial assets shall be apportioned

between the termination of confirmation and the portion of non-termination confirmation

according to their relative fair values, and the difference between the following two

amounts Into the current profit and loss:

(1) The book value of the termination confirmation part;

(2) The consideration for the termination confirmation part corresponds to the amount of

the termination confirmation part in the cumulative amount of the fair value change that

was originally directly included in the owners' equity (the financial assets involved in the

transfer are measured at fair value and their changes are included in other comprehensive

income The sum of financial assets (debt instruments).

If the transfer of financial assets does not satisfy the conditions for termination of

confirmation, continue to confirm the financial asset, and the received consideration is

recognized as a financial liability.

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(4) Conditions for termination of financial liabilities

If all or part of the current obligations of financial liabilities have been discharged, the

financial liabilities or part of them will be derecognized; if the company signs an

agreement with creditors to replace existing financial liabilities with new financial

liabilities, the new financial liabilities and existing financial liabilities If the contract

terms of the contract are substantially different, the existing financial liabilities shall be

derecognized and the new financial liabilities shall be recognized at the same time.

If substantial changes are made to all or part of the contract terms of the existing financial

liabilities, the existing financial liabilities or part of them will be derecognized, and the

financial liabilities with the revised terms will be recognized as a new financial liability.

When all or part of financial liabilities are derecognized, the difference between the book

value of derecognized financial liabilities and the consideration paid (including non-cash

assets transferred out or new financial liabilities assumed) is included in the current profit

and loss.

If the company repurchases part of its financial liabilities, it will allocate the entire book

value of the financial liabilities on the repurchase date according to the relative fair value

of the part that continues to be recognized and the part that is terminated. The difference

between the book value allocated to the derecognized portion and the consideration paid

(including non-cash assets transferred out or new financial liabilities assumed) is included

in the current profit and loss.

(5) The method for determining the fair value of financial assets and financial

liabilities

For financial instruments that have an active market, the fair value is determined based on

the quotation in the active market. For financial instruments that do not have an active

market, valuation techniques are used to determine their fair value. In the valuation, the

company adopts valuation techniques that are applicable in the current situation and have

sufficient available data and other information to support, and choose to be consistent

with the characteristics of assets or liabilities considered by market participants in

transactions of related assets or liabilities Input value, and give priority to the relevant

observable input value. The unobservable input value is used only when the relevant

observable input value cannot be obtained or is not feasible.

(6) Test methods and accounting treatment methods for impairment of financial

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assets

The company considers all reasonable and evidence-based information, including

forward-looking information, in a single or combined manner for financial assets

measured at amortized cost and financial assets measured at fair value with changes

included in other comprehensive income (debt instruments) to estimate the expected

credit loss. The measurement of expected credit losses depends on whether a significant

increase in credit risk has occurred in financial assets since initial recognition.

If the credit risk of the financial instrument has increased significantly since the initial

confirmation, the company measures its loss preparation in accordance with the expected

credit loss for the entire duration of the financial instrument; if the credit risk of the

financial instrument has not been increased significantly since the initial recognition, the

company measures its loss reserves in accordance with the expected credit loss of the

financial instrument in the next 12 months. The resulting increase or reversal of the loss

provision is included in the current profit and loss as an impairment loss or gain

Generally, the company believes that the credit risk of the financial instrument has

significantly increased over 30 days after the due date, unless there is solid evidence that

the credit risk of the financial instrument has not increased significantly since initial

recognition.

If the credit risk of a financial instrument is low on the balance sheet date, the company

considers that the credit risk of the financial instrument has not increased significantly

since its initial recognition.

If there is objective evidence that a financial asset has suffered credit impairment, the

company shall make provision for impairment of the financial asset on a single basis.

Regarding accounts receivable, whether or not it contains a significant financing

component, the company always measures its loss provisions in accordance with the

expected credit losses for the entire duration.

For lease receivables, long-term receivables formed by the company through the sale of

commodities or the provision of labor services, the company chooses to always measure

its loss reserves in accordance with the expected credit losses for the entire duration.

10. Receivables

Receivables include accounts receivable, other receivables, etc. Accounts receivable

formed by selling goods or providing services shall be initially recognized as the fair

value of the contract or agreement price receivable from the purchaser. Receivables are

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presented at amortized cost less provision for bad debts using the effective interest

method.

Companies that have not yet implemented the new financial instruments standards

(1) Receivables that are individually significant and of which bad debt provision is

assessed individually:

As to receivables with significant individual amounts, if there is objective evidence

showing that a receivable may be impairing, bad debt provision is made at the difference

between the present value of future cash flows and the book value of the receivable and

charged to profit or loss of the current period.

If there is no evidence of impairment in the individual test, the impairment test should be

included in the following portfolio with similar credit risk characteristics.

Receivables that are individually significant refer to those taking up 5% of the balance of

receivables.

(2) Receivables for which bad debt provision is made on a group basis with similar

credit risk characteristics:

Basis of Recognition for Groups

Receivables with no impairment

Related party receivables, internal staff funds, quality

retention money, performance bond and other solid

evidence indicate that there is no impairment of

receivables.

The combination of aging account

Receivables with minor and significant amounts but no

impairment in single test are grouped according to the

similarity of credit risk characteristics.

Basis of Bad Debt Provisions

Receivables with no impairment No provision for bad debts

The combination of aging account Age Analysis Method

Trade receivables with provision for bad debts made under the aging analysis

method:

Aging Accounts receivable

%

Other Receivables %

Deposit Others

Within 6 month 0% 0% 0%

6-12 month 5% 5% 5%

1 2 years 10% 10% 10%

2 3 years 30% 20% 30%

3 4 years 50% 20% 50%

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Aging Accounts receivable Other Receivables %

4 5 years 80% 20% 80%

More than 5 years 100% 20% 100%

(3) Receivables that are not individually significant but bad debts provision is made

individually:

Reasons for individual provision for bad debt There s evidence that the receivables are

uncollectible.

Method of provision bad debt The difference between the present value of future cash

flows and the book value of the receivable is recognized as impairment loss and shall be

included in the profits and losses of the current period.

Companies that have implemented the new financial instruments standards

For details, please refer to "IV. 9 financial instruments - companies that have implemented

the new financial instruments standard 6 . Test methods and accounting treatment

methods for impairment of financial assets".

11. Inventoires

(1) Classification of inventory

The company’s inventory includes raw materials, products in process, low value

consumables, etc.

(2) Valuation method of inventory acquisition and delivery, inventory system and

amortization

The company's inventory is valued at the actual cost when it is obtained. Raw materials,

products in process and goods in stock are priced by weighted average method when they

are issued; low value consumables are amortized by one-off write off method when they

are Consuming. The perpetual inventory system is adopted for the inventory system.

(3) Basis for determining net realizable value of inventories and provision methods

for decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business less

the estimated costs of completion, the estimated costs necessary to make the sale and

relevant taxes. Net realizable value is determined on the basis of clear evidence obtained,

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and takes into consideration the purpose of holding inventories and effect of post balance

sheet events.

At the balance sheet date, inventories are measured at the lower of the cost and net

realizable value. If the net realizable value is below the cost of inventories, a provision for

decline in value of inventories is made. The provisions for inventories decline in value is

determined normally by the difference of the costs of individual Items less its realizable

value. For large quantity and low value Itemss of inventories, provision for decline in

value is made based on categories of inventories. For Itemss of inventories relating to a

product line that are produced and marketed in the same geographical area, have the same

or similar end users or purposes, and cannot be practicably evaluated separately from

other Itemss in that product line provision for decline in value is determined on an

aggregate basis.

After the provisions for decline in value of inventories is made, if the circumstances that

previously caused inventories to be written down below cost no longer exist so that the

net realizable value of inventories is higher than their cost, the original provision for

decline in value is reversed and the reversal is included in profit or loss for the period.

12. Long-Term Equity Investments

(1) Classification of long-term equity investments

Long-term equity investments consist of equity investments in subsidiaries, joint ventures

and associates.

(2) Determination of Investment cost

a) For the merger of enterprises under the same control, if the consideration of the

merging enterprise is that it makes payment in cash, transfers non-cash assets, issuing

equity securities or bearing its debts, it shall, on the date of merger, regard the share of the

book value stated in the ultimate control parties’ consolidated financial statement of the

owner's equity of the merged enterprise as the initial cost of the long-term equity

investment. The difference between the initial undefined cost of the long-term equity

investment and the payment in cash, non-cash assets transferred as well as the book value

of the debts borne by the merging party shall offset against the capital reserve. If the

capital reserve is insufficient to dilute, the retained earnings shall be adjusted.

For the equity of the combined party under common control obtained step-by-step

through multiple transactions and the business combination under common control

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ultimately formed, the shares of the book value of the owners’ equity of the combined

party in the consolidated financial statements of the ultimate control party shall be as the

initial investment cost of the long-term equity investment. The capital reserves shall be

adjusted for the difference between the initial investment cost of long- term equity

investment and the sum of the book value of long-term equity investment before merging

and that of new consideration payment obtained on the merger date. The retained earnings

shall be adjusted if the capital reserves are insufficient to offset.

b) For the equity of the combined party not under common control, the fair value of the

consideration on the acquisition date shall be recognized as initial investment cost. For the

equity of the combined party not under common control obtained step-by-step through

multiple transactions, the relevant accounting treatment for separate and consolidated

financial statements are different.

(i) In the separate financial statement, the initial investment cost are the sum of the book

value of the acquirer’s share of the acquiree’s net equity before the acquisition date. The

equity investment which relevant to other comprehensive income held before the

acquisition date shall be transferred into the current profit and loss with the other

comprehensive income.

(ii) In the consolidated financial statement, the equity investment before the acquisition

date will be re-calculated according to the fair value of the equity on the acquisition date,

the difference between the fair value and its book value shall be transferred to the current

profits; The equity investment which relevant to other comprehensive income held before

the acquisition date shall be transferred into the current profit and loss with the other

comprehensive income.

c) Long-term equity investments acquired not through business combination are measured

at cost on initial recognition. Depending on the way of acquisition, the cost of acquisition

can be the total cash paid, the fair value of equity instrument issued, the contract price, the

fair value or book value of the assets given away in the case of non-monetary asset

exchange, or the fair value of the relevant long-term equity investments. The cost of

acquisition of a long-term equity investment acquired not through business combination

also includes all directly associated expenses, applicable taxes and fees, and other

necessary expenses.

(3) Subsequent measurement and profit and loss confirmation

Long-term equity investments that can be controlled by the investee are accounted for

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using the cost method; long-term equity investments with joint control and significant

influence are accounted for using the equity method.

(4) Recognition standard and accrual method of long-term equity investment

depreciation

At the end of each period, the company judges whether there is any sign of impairment of

long-term equity investment.

If there are signs of impairment in long-term equity investment, such as when the book

value of long-term equity investment is greater than the share of the book value of the

owner's equity of the invested entity, the company shall conduct impairment test on

long-term equity investment and estimate its recoverable amount.

Provision for impairment shall be made according to the difference between the

recoverable amount and the book value of long-term equity investment. Once the

impairment provision is confirmed, it will not be reversed in the future accounting period.

13. Investment Properties

Investment properties are interests in land and buildings (including the leasehold interest

under an operating lease for a property) held to earn rental income and/or for capital

appreciation.

Investment properties are measured initially at cost. As for the subsequent expenses

related to investment properties, if the economic benefits of the assets are likely to flow

into the Company and its cost can be measured reliably, then it will be included in the cost

of investment property. Otherwise, the subsequent cost will be calculated in the current

profits and losses when it occurs.

If there is any sign of impairment, the company estimates the recoverable amount. If the

recoverable amount is lower than the book value, the corresponding impairment loss shall

be recognized.

Once the impairment loss of investment real estate is recognized, it will not be reversed.

14. Fixed Assets

(1) Recognition of Fixed Assets

The fixed assets of the company refer to the tangible assets held for the purpose of

producing commodities, providing labor services, leasing or operating management, with

a service life of more than one accounting year.

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When the economic benefits related to the fixed assets are likely to flow into the

enterprise, and the cost of the fixed assets can be reliably measured, the fixed assets can

be recognized.

The fixed assets of the company are initially measured according to the actual cost at the

time of acquisition.

(2) Classification and depreciation policy of fixed assets

According to the opinions on depreciation policies of subway stations and tunnel

buildings (sczh [2019] No. 18) issued by Guangzhou Municipal Bureau of Finance, The

company continues to use depreciation methods approved by the office of the people's

Government of Guangzhou document [Project(2007) 281], considering characteristics of

the rail transit, the subway assets are divided into three kinds using different depreciation

methods: stations, tunnel buildings, operation equipments and management equipments:

(1) The station and tunnel buildings will not be depreciated.

(2) The depreciation of operating equipment assets is accrued by the workload

method, which is implemented from 2007. The depreciation that accrued in

previous years will no longer be retroactively adjusted by the workload method.

(3) For management equipments, the straight-line method is used to allocate

depreciation.

By using the straight-line method, the depreciation life and annual depreciation rate

of fixed assets are as follows:

Category Useful life Residuals rate (%) Annual depreciation rate (%)

Buildings and structures 10-100 5 0.95-9.50

Transportation instrument 10-30 5 3.17-9.50

Machinery equipment 3-30 5 3.17-31.67

Office equipment 5-10 5 9.50-19.00

Electronic equipment 5-20 5 4.75-19.00

Other equipment 5-10 5 9.50-19.00

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(3) Accounting treatment of subsequent expenditure of fixed assets

The follow-up expenditure of fixed assets refers to the expenditure for renovation and

repair of fixed assets in the process of use.

If the subsequent expenditure for the renewal and transformation of fixed assets meets the

recognition conditions of the company's fixed assets, it shall be included in the cost of

fixed assets after deducting the book value of the replaced part; if the fixed assets repair

expense fails to meet the recognition conditions of the company's fixed assets, it shall be

included in the current profit and loss at the time of occurrence.

(4) Recognition standard and accrual method of the impairment of fixed assets

The company would exam every fixed asset, if an asset’s recoverable amount is lower

than its carrying value, a provision for the asset impairment shall be made according to

the difference, and once any loss of asset impairment is recognized, it shall not be

switched back in the future accounting periods. The recoverable amount of an asset group

shall be determined on the basis of the higher one of the net amount of the fair value of

the asset minus the disposal expenses and the current value of the expected future cash

flow of the asset. The current value of the expected future cash flow of an asset shall be

determined by the discounted cash with an appropriate discount rate, on the basis of the

expected future cash flow generated during the continuous use or final disposal of an

asset.

The total amount of the fixed asset’s impairment of provision will be made if it has one of

the condition stated below:

a) It has not being used in a long-term, and it will not be used in the foreseeable future,

and there is no transfer value of the fixed asset.

b) The fixed asset cannot be used any more due to reasons such as technology

development

c) Even though the fixed asset can still be used, but it produced large amount of

disqualified products after usage.

d) The fixed asset has been destroyed and it no longer has any use value and transfer

value.

e) Other fixed asset that cannot substantially bring financial benefit to the company.

f) The total amount of the fixed asset s impairment of provision has already been made,

no provision need to be made anymore.

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15. Construction in Progress

(1) Types of construction in progress

Construction in progress shall be detailed accounting by project item, including:

construction engineering, installation engineering, installation equipment, pending

expenditure and so on.

(2) Measurement of construction in progress

The project under construction is valued at actual cost, and the project cost is determined

according to the actual expenditure. Net expenditure incurred before the project reaches

its intended operational status is included in the project cost. The costs incurred in the trial

operation of products that can be sold before the project reaches its intended usable state

shall be included in the cost of the construction in progress, and the cost of the

construction in progress shall be reduced according to the actual sales revenue or the

expected selling price when the project is sold or transferred into inventory goods. If the

borrowing expenses incurred in a construction project meet the conditions for

capitalization, they shall be included in the construction cost before the fixed assets reach

the intended usable state.

(3) Standards and time points for transferring construction in progress into fixed

assets

Construction in progress is transferred to fixed asset when it is ready for intended use. All

the expenditures that bring the construction in process to the expected condition for use

shall be the credit value of the fixed asset. If the construction in process has already

reached the expected condition for use, but hasn’t been made the final account; it shall be

carried forward to a fixed asset according to its estimated value based on the budget, cost

or actual cost of the construction starting from the date when it reaches the expected

condition for use, and the fixed asset shall be depreciated according to the company’s

depreciation policy for fixed asset. After the final account has been made, the original

provisional estimated value shall be adjusted according to the actual cost, but the

depreciation which has originally been counted and drawn shall not be adjusted.

(4) Confirmation standard and calculation method to impairment of construction in

progress

At the end of the year, the company conducts a comprehensive inspection of the

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construction in progress. If there is evidence that the value of the construction in progress

has been impaired, the company shall make provision for the value impairment. Once the

loss of impairment of construction in progress has been confirmed, it shall not be reversed

in the future accounting period. Provision for impairment of construction in progress shall

be made, if it has one or more conditions exist as follows:

a) Construction projects that have been suspended for a long time and are not expected to

be restarted in the next three years.

b) The project has lagged behind both in performance and technology, and the economic

benefits brought to enterprises are uncertain.

c) Other situations demonstrating that impairment has occurred in construction projects.

16. Borrowing Costs

The borrowing costs that are directly attributable to the acquisition, construction or

production of a qualifying asset are capitalized. The amounts of other borrowing costs

incurred are recognized as an expense in the period in which they are incurred. Qualifying

assets are asset (fixed asset, investment property and inventories, etc.) that necessarily

take a substantial period of time for acquisition, construction or production to get ready

for their intended use or sale. Meanwhile, the borrowing costs begin to capitalize when

the following conditions are met:

a) Asset expenditure has occurred, which includes expenditure in the form of cash

payments, transfer of non-cash assets or interest-bearing liabilities; b)Borrowing costs

have occurred; c) The acquisition, construction and production activities necessary to

make the assets available or marketable have begun.

When funds are borrowed for a specific-purpose, the amount of interest to be capitalized

is the actual interest expense incurred on that borrowing for the period less any bank

interest earned from depositing the borrowed funds before being used on the asset or any

investment income on the temporary investment of those funds.

When funds are borrowed for a general-purpose, the amount of interest to be capitalized

on such borrowings is determined by applying a weighted average interest rate to the

weighted average of the excess amounts of accumulated expenditure on the asset over and

above the amounts of specific- purpose borrowings.

Capitalization of borrowing costs is suspended during periods in which the acquisition,

construction or production of a qualifying asset is interrupted by activities other than

those necessary to prepare the asset for its intended use or sale, when the interruption is

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Notes to Financial Statements Page 27

for a continuous period of more than 3 months. Borrowing costs incurred during these

periods recognized as an expense for the current period until the acquisition, construction

or production is resumed. If the interruption is the necessary procedure for the acquisition,

construction or production of capitalized assets to reach the intended usable or saleable

state, the borrowing costs will continue to be capitalized.

The capitalization of borrowing costs shall be stopped when the assets that eligible for

capitalization are qualified for usable or saleable state.

17. Intangible Assets

(1) Recognition of intangible assets

Intangible assets refer to identifiable non-monetary assets owned or controlled by the

company without physical form. Intangible assets are recognized only when the following

conditions are met:

(1) The economic benefits related to the intangible assets are likely to flow into the

company;

(2) The cost of the intangible assets can be measured reliably.

(2) Valuation of intangible assets

The intangible assets are initially measured by their costs. The difference between the

actual payment and the current value of the purchase price shall be recorded into profit or

loss for the credit period.

a) The cost of purchasing intangible assets are the actual expenditure when the expected

purposes of the use are realized.

b) The expenditures for its internal research and development projects are recorded to

current profit and loss when it incur. The development expenditures for its internal

research and development projects may be confirmed as intangible assets if it meets

capitalization condition.

c) The cost invested into intangible assets by investors shall be determined according to

the conventional value in the investment contract or agreement, except for those of unfair

value in the contract or agreement.

d) The cost of intangible assets acquired from non-cash assets to cover debts or debts

receivables to exchange intangible assets are the fair value of the intangible assets.

e) The cost of intangible assets acquired from non-monetary assets transaction shall be the

fair value of the property, plant and equipment and the tax payables.

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f) For the intangible asset that is donated, donor need to provide relevant credentials, the

cost is the amount stated in the credential and the tax payables. If the donor fails to

provide relevant evidence, the estimated amount will base on the market price of the same

or similar intangible assets if there is an active market, together with the relevant tax

payables, shall be used as the actual cost. If there are no same or similar types of

intangible assets in the active market, the actual cost would be the current value of the

expected future cash flow; The self-developed intangible asset that acquired through

application of legal process, the actual cost would be the registered cost and the attorney’s

fee when legally acquire the asset.

(3) Judgment basis of intangible assets with uncertain service life

As of the balance sheet date, the company has no intangible assets with uncertain service

life.

(4) Impairment of intangible assets

The company would exam the estimated ability to bring the future economic interest of

every intangible asset at the end of the year, if estimated recoverable amount is lower than

its carrying value, a provision for the asset impairment shall be made according to the

difference, and once any loss of asset impairment is recognized, it shall not be switched

back in the future accounting periods.

(5) The expenditure of research and development

The expenditures for its internal research and development projects of the company shall

be classified into research expenditures and development expenditures.

The research expenditures shall be recorded into the profit and loss of the current period

when they are incurred.

Development expenditures in internal research and development projects shall be

recognized as intangible assets where they satisfy all of the following conditions:

a) Technical feasibility of completing the intangible asset so that it will be available for

use or sale;

b) Intention to complete the intangible asset and use or sell it;

c) How the intangible asset will generate economic benefits, including the ability to

demonstrate the existence of a market for the output of the intangible asset or the

intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;

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Notes to Financial Statements Page 29

d) Availability of adequate technical, financial and other resources to complete the

development and to use or sell the intangible asset;

e) Ability to measure reliably the expenditure that is attributable to the intangible asset

during its development.

18. Goodwill

The initial cost of goodwill formed by the merger of enterprises not under the same

control is the difference between the merger cost and the fair value share of the purchased

party's identifiable net assets.

Goodwill shall be transferred out at the disposal of its relevant asset groups or portfolios,

and shall be included in current profits and losses.

The company does not amortize goodwill. Goodwill should be conducted impairment

testing at least once a year at the end of each year.

The impairment provisions are not reversed during the duration of the assets once

provided.

19. Long-Term Deferred Expenses

The long-term deferred expenses refer to all the expenses that occurred and undertaken in

the current year or with the amortization limit of more than one year for the company. The

long-term deferred expenses shall be amortized within the benefit period according to the

direct method.

20. Employee benefits

The employee benefits of the company include short-term employee benefits,

post-employment benefits, termination benefits and other long-term employee benefits:

Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare,

health insurance, maternity insurance, work injury insurance, housing funds, labour union

funds, employee education funds, non-monetary benefits and etc. Short-term employee

benefits are recognised as liabilities and profit or loss account or the costs associated with

the asset during the accounting period when employees actually provide services. The non

-monetary benefits are measured at fair value.

Post-employment benefit include defined contribution plans and defined benefit plans.

Defined contribution plan which includes the basic pension, unemployment insurance and

annuities shall be recognized as cost of related assets or profit or loss. Projected unit

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Notes to Financial Statements Page 30

credit cost method (“PUC”) was used by independent actuaries engaged by the company

to determine the present value of the defined benefit obligations with unbiased and

consistent actuarial assumptions regarding population variables and financial variables.

Defined benefit obligation was presented with the present value and the related current

service cost was accounted into current profit or loss.

When the company terminates the labour relationship with employees prior to the

employment contracts, or encourages employees to accept voluntary redundancy

compensation proposals in this company, a provision shall be recognized for the

compensation arising from the termination of employment relationship with employees at

the time when the company cannot unilaterally withdraw layoff proposal termination

benefits provided due to termination of employment, or the company ensures the costs

related to the payment for termination benefits related to the restructuring, which one is

early to confirm employee benefits liabilities, and recorded as profit or loss.

However, if termination benefits cannot be fully paid after twelve months of the reporting

date, the liability shall be processed in accordance with other long-term employee

benefits.

Retirement plan adopts the same principles as the termination benefits. The salaries and

insurance to be paid from the date when employees stop providing services to the date of

normal retirement shall be recognized in profit or loss (termination benefits) when

satisfying the requirements of a provision.

Other long-term employee benefits provided by the company to employees that is in line

with defined contribution plans shall adopt the accounting treatment in accordance with

defined contribution plans, otherwise the accounting treatment of defined benefit plans.

21. Revenue

(1) The recognition of the income from selling goods

The income from selling goods shall be recognized by the following conditions:

a) Revenue from sales of goods is recognized when the Company has transferred to the

buyer the significant risks and rewards of ownership of the goods;

b) The Company retains neither continuing managerial involvement to the degree usually

associated with ownership nor effective control over the goods sold;

c) The amount of revenue can be measured reliably;

d) It is probable that the associated economic benefits will flow to the enterprise;

e) The associated costs incurred or to be incurred can be measured reliably.

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(2) Labor income

If the result of the transaction of providing labor service can be estimated reliably, the

company will recognize the income by the percentage of completion method at the end of

the period.

(3) Giving of asset using rights

When the economic benefits related to the transaction are likely to flow into the enterprise

and the amount of income can be reliably measured, the amount of revenue from

transferring the right to use assets shall be determined in the following circumstances:

a) The amount of interest is determined according to the length of time for which the

enterprise's monetary fund is used by others and the effective interest rate.

b) The amount of royalties is determined according to the period and method of charging

as stipulated in the relevant contract or agreement.

22. Government Grants

(1) Classification of Government grant

Government grants are transfer of monetary assets and non-monetary assets from the

government to the company at no consideration. Government grant can be classified as

grant related to the assets and grants related to the income.

Government grants obtained by the company which are relevant to construction or

acquisition of long-term assets are classified as asset-related government grants.

Government grant related to income refers to government grants except government grant

related to the asset.

(2) Measurement and derecognition of government subsidies

The company's government subsidies are recognized when they meet the conditions

attached to government subsidies and can be received.

Government subsidies for monetary assets shall be measured according to the amount

received or receivable. Government subsidies for non-monetary assets shall be measured

at fair value; if the fair value cannot be obtained reliably, it shall be measured at nominal

amount.

Government grant related to the assets are written down the book value of relevant assets

or recognised as deferred income. A government grant related to an asset is recognized as

deferred income, and evenly Government grant related to the assets are written down the

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Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 32

book value of relevant assets or recognised as deferred income. A government grant

related to an asset is recognized as deferred income, and evenly amortized to profit or loss

over the useful life of the related asset according to a reasonable and systematic approach.

(Amortized to other income if refer to the principal activities of companies; Amortized to

non-operating revenue if refer to the other operating activitie of companies)

For a government grant related to income, if the grant is a compensation for related

expenses or losses to be incurred in subsequent period, the grant is recognized as deferred

income, and recognized in profit or loss over the periods in which the related costs are

recognized (Amortized to other income if refer to the principal activities of companies;

Amortized to non-operating revenue if refer to the other operating activitie of companies)

or written down the relevant cost or loss. If the grant is a compensation for related

expenses or losses already incurred, the grant is recognized immediately in profit or loss

for the period. (Amortized to other income if refer to the principal activities of companies;

Amortized to non-operating revenue if refer to the other operating activitie of companies)

or written down the relevant cost or loss. Amortized to profit or loss over the useful life of

the related asset according to a reasonable and systematic approach. (Amortized to other

income if refer to the principal activities of companies; Amortized to non-operating

revenue if refer to the other operating activitie of companies)

(3) Accounting treatment of the return of government subsidies

If the recognized government subsidies need to be returned, the company will conduct

accounting treatment according to the current situation:

a) If the book value of the relevant assets is offset at the time of initial recognition, the

book value of the assets shall be adjusted;

b) If there is related deferred income, the book balance of the related deferred income

shall be deduct, and the excess part shall be included in the current profit and loss;

c) In other cases, it shall be directly included in the current profit and loss.

23. Deferred Tax Assets and Deferred Tax Liabilities

Recognition of deferred income tax assets for deductible temporary differences is limited

to the amount of taxable income that is likely to be obtained in the future to deduct

deductible temporary differences. For the deductible losses and tax deductions that can be

carried forward in subsequent years, the corresponding deferred income tax assets are

confirmed to the extent that the future taxable income that is likely to be used to deduct

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Notes to Financial Statements Page 33

the deductible losses and tax deductions is limited .

For taxable temporary differences, except for special circumstances, deferred income tax

liabilities shall be recognized.

Special circumstances of not recognizing deferred income tax assets or deferred income

tax liabilities include: initial recognition of goodwill; other transactions or events that do

not affect accounting profit or taxable income (or deductible loss) at the time of

occurrence other than business combination.

When the company has the legal right to settle at a net amount and intends to settle at a

net amount or acquire assets and pay off liabilities at the same time, the company's current

income tax assets and current income tax liabilities are presented at the net amount after

offset.

When the company has the legal right to settle the current income tax assets and current

income tax liabilities on a net basis, and the deferred income tax assets and deferred

income tax liabilities are related to the income tax levied by the same tax collection and

management department on the same tax subject or different tax subjects, but in the future,

during each period when the significant deferred income tax assets and liabilities are

transferred back, the related When the tax payer intends to settle the current income tax

assets and liabilities with net amount or obtain assets and pay off liabilities at the same

time, the company's deferred income tax assets and liabilities are presented with net

amount after offset.

24. Lease

The company recognizes leases that transfer virtually all risks and rewards related to asset

ownership (regardless of whether ownership is ultimately transferred) as financial leases,

and other leases other than financial leases are recognized as operating leases.

(1) Accounting treatment of operating lease

a) The lease fee paid by the company for renting assets shall be apportioned on the

straight-line method over the entire lease period without deducting the rent-free period

and included in the current expenses. The initial direct costs paid by the company related

to the lease transaction are included in the current expenses.

When the asset lessor bears the expenses related to the lease that should be borne by the

company, the company shall deduct such expenses from the total rent, apportion the

deducted rent expenses within the lease term and record them into the current expenses.

b) The rental fee charged by the company for the lease of assets shall be apportioned on a

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Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 34

straight-line basis over the entire lease period without deducting the rent-free period, and

shall be recognized as lease income. The initial direct costs related to the lease transaction

paid by the company are included in the current expenses; if the amount is larger, they are

capitalized and included in the current income in installments on the same basis as the

recognition of the lease income throughout the entire lease period.

When the company bears the lease-related expenses that should be borne by the lessee,

the company deducts this part of the total rental income from the rent, and allocates the

rental expenses after deduction within the lease period.

Assets leased out under operating leases are included in the relevant items in the balance

sheet according to the nature of the asset. For fixed assets leased out by operations,

depreciation is accrued in accordance with the company ’s depreciation policy for similar

assets; for other assets leased out by operation, systematic and reasonable methods are

used for amortization.

(2) Judgment standard and accounting treatment of financial leasing

a) A lease that meets one or more of the following criteria is recognized as a financial

lease

At the end of the lease term, the ownership of the leased asset is transferred to

the lessee;

The lessee has the option to purchase the leased asset, and the purchase price

concluded is expected to be much lower than the fair value of the leased asset

when the option is exercised, so it can be reasonably determined that the

lessee will exercise this option on the lease start date;

Even if the ownership of the asset is not transferred, the lease period accounts

for most of the service life of the leased asset;

The current value of the lessee ’s minimum lease payment on the lease start

date is almost equivalent to the fair value of the leased asset on the lease start

date; the lessor ’s minimum lease receipt value on the lease start date is almost

equivalent to the fair value of the leased asset on the lease start date value;

The leased assets are of a special nature, and only a lessee can use them

without major modification.

b) Financial lease in assets: on the lease start date, the company takes the lower of the fair

value of the leased assets and the present value of the minimum lease payments as the

entry value of the leased assets, takes the minimum lease payments as the entry value of

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Notes to Financial Statements Page 35

the long-term payables, and takes the difference as the unrecognized financing expenses.

The company adopts the effective interest method to amortize the unrecognized financing

expenses during the asset leasing period and include them in the financial expenses. The

initial direct expenses incurred by the company shall be included in the value of the leased

assets.

c) Finance leased out assets: The company recognizes the difference between the sum of

the financial lease receivables, unguaranteed residual value and its current value as

unrealized financing income on the starting date of the lease, and it is recognized as rental

income in each period in which the rental is received in the future. The initial direct costs

incurred by the company in relation to the leasing transaction are included in the initial

measurement of finance lease receivables and reduce the amount of revenue recognized

during the lease period.

V. Changes in Accounting Policies and Estimates, Correction of Accounting Error, Notes

on Other Adjustments

1. Changes in Accounting Policies

In 2019, the company implemented the following accounting standards for business

enterprises issued or revised by the Ministry of Finance:

- Notice on revising and printing the format of financial statements of general

enterprises in 2019 Finance and Accounting [2019] No.6 and Notice on revising

and issuing of consolidated financial statement format (2019 version) Finance and

Accounting[2019] No.16 .

The company's subsidiaries such as Guangzhou Metro Design & Research Institute Co.,

Ltd., Guangzhou Metro Design Institute construction drawing Consulting Co., Ltd.,

Guangzhou blueprints Office Service Co., Ltd. and Foshan Rail Transit Design &

Research Institute Co., Ltd. implemented the following accounting standards for

enterprises which was issued or revised by the Ministry of Finance in 2019:

- Accounting standard for Business Enterprises No. 22 - recognition and measurement

of financial instruments Accounting standards for Business Enterprises No. 23 -

transfer of financial assets Accounting standards for Business Enterprises No. 24 -

hedge accounting and Accounting standard for Business Enterprises No. 37 -

reporting of financial instruments referred to as "new financial instrument

standards" .

F-308

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 36

(1) Executive Finance and Accounting [2019] No.6 and Finance and

Accounting [2019] No.16

The Ministry of Finance issued the notice on revising and printing the format of

financial statements of general enterprises in 2019 Finance and Accounting [2019]

No.6 on April 30, 2019 and issued notice on revising and issuing of consolidated

financial statement format (2019 version) Finance and Accounting [2019] No.16

on September 19, 2019. The format of general enterprise financial statements and

consolidated financial statements has been revised according to the two notes. In

addition to the presentation changes due to the new financial instrument standards,

new income standards and new lease standards, the two notes revised the balance

sheet, income statement, cash flow statement and statement of changes in owners'

equity. The company reclassifies "notes receivable and accounts receivable" into

"notes receivable" and "accounts receivable","notes payable and accounts payable"

into "notes payable" and "accounts payable", newly increased "receivables

financing" and increased “income from derecognition of financial assets measured

at amortized cost” on item “investment income”, adjusted the presentation position

of some items in the income statement. According to relevant regulations, the

enterprise adopts retroactive adjustment method to adjust the comparative data of

comparable accounting periods.

The main impacts of the company's implementation of the above provisions are as

follows:

No Item 31 December 2018

Before adjustment Adjustment amount After adjustment

1 Notes receivable and

accounts receivable 2,051,311,277.80 -2,051,311,277.80

2 Notes receivable 73,334,109.34 73,334,109.34

3 Accounts receivable 1,977,977,168.46 1,977,977,168.46

4 Notes payable and

accounts payable 16,564,054,226.80 -16,564,054,226.80

5 Notes payable 66,000,000.00 66,000,000.00

6 Accounts payable 16,498,054,226.80 16,498,054,226.80

(2) Implementation of new financial instrument standards

The Ministry of Finance revised the accounting standards for Business Enterprises

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Notes to Financial Statements Page 37

No. 22 - recognition and measurement of financial instruments, accounting

standards for Business Enterprises No. 23 - transfer of financial assets, accounting

standards for Business Enterprises No. 24 - hedge accounting and accounting

standards for Business Enterprises No. 37 - presentation of financial instruments in

2017. The revised standards stipulate that for financial instruments that have not

been derecognized on the first implementation date, if the previous recognition and

measurement are inconsistent with the requirements of the revised standards,

retroactive adjustment shall be made. If there is any inconsistency between the data

of previous comparative statements and the requirements of the revised standards,

no adjustment is required.

In accordance with the new financial instrument standards, the cumulative impact

of retroactive adjustment will be reflected in the adjustment amount of retained

earnings and other comprehensive income on January 1, 2019.

Within the scope of the company's consolidation, the enterprises involved in the

first implementation of the new financial instrument standards on January 1, 2019

include:

No Corporate name Executive reason

1 Guangzhou Metro Design and Research Institute Co., Ltd Domestic companies to be listed

2 Guangzhou Metro Design Institute Construction Drawing

Consulting Co., Ltd.

Subsidiaries of domestic

companies to be listed

3 Guangzhou Blueprint Office Service Co., Ltd. Subsidiaries of domestic

companies to be listed

4 Foshan Rail Transit Design and Research Institute Co., Ltd. Subsidiaries of domestic

companies to be listed

The implementation of the new financial instrument standards by the above

enterprises has no impact on the consolidated financial statements based on the

balance on December 31, 2018 adjusted in accordance with the provisions of

Finance and accounting [2019] No. 6 and finance and accounting [2019] No. 16.

2. Changes in Accounting Estimates

There is no change in the company's main accounting estimates during the

reporting period.

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Notes to Financial Statements Page 38

3. Correction of significant previous errors

No significant prior accounting error corrections occurred during the reporting

period.

4. Adjustment of business combination under the same control

According to the notice on transferring 100% state owned property right of Guangzhou

railway investment and Construction Group Co., Ltd. to Guangzhou Metro Group Co.,

Ltd. for free issued by the state owned assets supervision and Administration Commission

of Guangzhou Municipal People's Government sgzcq [2019] No. 31 , it transfer 100%

state-owned equity of Guangzhou railway investment and Construction Group Co., Ltd.

(hereinafter referred to as "Guangzhou railway investment") to the company free of

charge. This transaction is a merger and reorganization between enterprises in the same

industry triggered by the industrial restructuring reform of Guangzhou Municipal People's

Government, therefore, based on the principle that substance is more important than form,

the business combination of the company and Guangzhou Railway Investment Co., Ltd. is

essentially a business combination under the same control of Guangzhou Municipal

People's government due to industrial restructuring, so the corresponding assets and

liabilities of Guangzhou Railway Investment Co., Ltd. are incorporated into the

company's consolidated financial statements according to their book value. For the

relevant information about the adjustment of the owner's equity at the beginning of the

consolidated financial statements due to the combination of Guangzhou Railway

Investment Co., Ltd. at the beginning of the period, please refer to " V(5) " the impact of

the above adjustment on the opening balance and the ending balance of the previous

period is as follows".

5. The impact of the above adjustments on the opening balance and the closing balance

of the previous period is as follows

Item

Ending balance of

previous period

(before adjustment)

Beginning balance of

current period (after

adjustment)

Amount of adjustment effects

Total

Adjustment of

business combination

under the same control

Total assets 319,813,946,737.40 352,056,266,369.17 32,242,319,631.77 32,242,319,631.77

Total liabilities 137,158,973,284.43 144,934,909,427.21 7,775,936,142.78 7,775,936,142.78

Total owner's equity 182,437,936,344.86 206,904,319,833.85 24,466,383,488.99 24,466,383,488.99

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Notes to Financial Statements Page 39

attributable to the parent

company

Capital surplus 115,863,396,762.19 140,375,222,765.34 24,511,826,003.15 24,511,826,003.15

Undistributed profit 734,724,095.23 689,281,581.07 -45,442,514.16 -45,442,514.16

Total amount of profits 268,129,373.78 272,377,389.68 4,248,015.90 4,248,015.90

Net profit attributable to

the owner of the parent

company

105,206,284.86 100,978,738.46 -4,227,546.40 -4,227,546.40

VI. Taxes

1. The Principal Kind of Taxes and Related Tax Rates

Categories Tax Base Rate

Value-added Tax VAT payable is the net difference between

output VAT and deductible input VAT.

6% 9% 10% 13%

16%

City Maintenance and Construction Tax Payable based of the turnover taxes to be

paid. 7%

Corporate Income Tax Payable based of the taxable profits. 15% 16.5% 25%

There are different corporate income tax rate of subsidiaries, to disclose details are as

follows:

Name of Taxpayer Tax Rate

Guangzhou Metro Design and Research Institute Co., Ltd. 15%

Foshan Rail Transit Design and Research Institute Co., Ltd. 15%

Guangzhou Rail Transit Construction Supervision Co., Ltd. 15%

Guangzhou Metro Investment and Financing (HK) Co., Ltd. profit tax 16.5%

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9.49

F-318

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 46

4. Relevant information of structured entities that included in the scope of

consolidated financial statements

This period, the company has 4 newly incorporated structured entities in the scope of

consolidation, which are respectively the "GF Hengjin Guangzhou Metro Group

passenger toll revenue right 2019 first phase green asset support special plan" (hereinafter

referred to as "19 Guangzhou Metro ABS001") and "GF Hengjin Guangzhou Metro

Group passenger toll revenue right 2019 second phase green asset support special plan"

(hereinafter referred to as "19 Guangzhou Metro ABS002") with GF Securities Asset

Management (Guangdong) Co., Ltd. (hereinafter referred to as "GF Securities") as the

manager; "Guangzhou Metro Group Co., Ltd.'s 2019 first phase green asset support note"

(hereinafter referred to as "19 Guangzhou Metro ABN001") and "Guangzhou Metro

Group Co., Ltd.'s 2019 second phase green asset support note" (hereinafter referred to as

"19 Guangzhou Metro ABN002") with Ping An Trust Co., Ltd. (hereinafter referred to as

"Ping An Trust") as the administrator.

As of December 31, 2019, the above-mentioned structured subject's equity attributable to

the company is RMB 403,000,000.00, and the equity of other equity holders is listed in

the consolidated statement as other current liabilities or other non-current liabilities, with

the amount of RMB 8,697,603,033.74, as follows:

Name of structured entities

Equity attributable to the

company as of December 31,

2019

Equity attributable to other

holders as of December 31,

2019

19 Guangzhou Metro ABS001 158,000,000.00 2,486,054,366.53

19 Guangzhou Metro ABS002 93,000,000.00 1,739,032,294.68

19 Guangzhou Metro ABN001 150,000,000.00 2,474,516,233.04

19 Guangzhou Metro ABN002 2,000,000.00 1,998,000,139.49

VIII. Major Notes to Consolidated Financial Statements

1. Cash and Cash Equivalents

Item Ending Balance Beginning balance

Cash on hand 1,520,230.03 2,536,377.89

Cash at bank 11,335,546,198.36 25,467,280,655.45

other monetary funds 2,492,773,352.82 443,537,202.64

Total 13,829,839,781.21 25,913,354,235.98

Including: cash kept overseas 220,644,518.97 1,442,750,217.17

F-319

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 47

Restricted monetary funds are as follows:

Item Ending Balance Beginning balance

Deposit for bank acceptance 6,864,750.25

Performance bond 45,980,226.46 40,383,772.29

Structured deposits 159,800,000.00

Special fund for Financial City Project 184,276.76 555,591.44

Escrow funds 32,046,501.32

Total 78,211,004.54 207,604,113.98

2. Financial Assets at Fair Value through Profit or Loss

Item Ending Balance Beginning balance

1.Financial assets held for trading 39,995,947.79 57,611,575.17

Including: Investment in debt instruments

Investment in equity instruments

Others 39,995,947.79 57,611,575.17

2.Financial assets at fair value through profit

or loss

Including: Investment in debt instruments

Investment in equity instruments

Others

Total 39,995,947.79 57,611,575.17

3. Notes Receivable

(1) Classification of notes receivable

Category

Ending Balance Beginning balance

Book balance Bad debt

provision Book value Book balance

Bad debt

provision Book value

Bank

acceptance bill 19,973,285.50 19,973,285.50 25,169,268.58 25,169,268.58

Commercial

acceptance bill 44,821,000.00 229,090.00 44,591,910.00 48,164,840.76 48,164,840.76

Total 64,794,285.50 229,090.00 64,565,195.50 73,334,109.34 73,334,109.34

F-320

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 48

(2) Notes receivable endorsed or discounted at the end of the period and not yet due

at the balance sheet date

Category Amount of derecognition at

the end of the period

Amount of derecognition at

the beginning of the period

Bank acceptance bill 7,800,000.00

Commercial acceptance bill

Total 7,800,000.00

F-321

Gua

ngzh

ou M

etro

Gro

up C

o., L

td.

For t

he Y

ear E

nded

Dec

31,

201

9 N

otes

to F

inan

cial

Sta

tem

ents

Note

s to

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ncia

l St a

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F-322

Gua

ngzh

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etro

Gro

up C

o., L

td.

For t

he Y

ear E

nded

Dec

31,

201

9 N

otes

to F

inan

cial

Sta

tem

ents

Note

s to

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46

F-323

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 51

i. Accounts receivable that are individually significant and for which bad debt

provision is made on a single item basis

Debtor Book balance Bad debt

provision Aging

Proportion

(%)

reason for

accrual

Bailin Times

Media Group

Co., Ltd.

221,621,670.98 221,621,670.98 More than

5 years 100.00

Estimated

unrecoverable

Baijun Metro

Advertising Co.,

Ltd

21,857,001.31 21,857,001.31 More than

5 years 100.00

Estimated

unrecoverable

Guangzhou

Metro TV Media

Co., Ltd

31,724,000.02 31,724,000.02 More than

5 years 100.00

Estimated

unrecoverable

Total 275,202,672.31 275,202,672.31

ii. Assessed bad debt provision in portfolios based on credit risk characteristics

a) Accounts receivable for bad debt provision by using age analysis method

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proporti

on (%) Amount

Proporti

on (%)

Within 6

months 212,675,489.73 88.66 233,684,694.42 30.20

6-12 months 8,000,547.60 3.34 375,183.62 12,899,180.32 1.67 644,959.01

Within 1 year 283,725,645.04 36.66 14,186,282.39

1-2 years 9,589,667.80 4.00 958,966.78 109,435,802.32 14.14 10,943,580.24

2-3 years 5,752,777.57 2.40 1,725,833.27 50,461,418.06 6.52 15,138,425.43

3-4 years 2,298,901.62 0.96 1,149,450.81 19,123,470.98 2.47 9,561,735.53

4-5 years 202,707.87 0.08 162,166.30 29,075,947.46 3.76 23,260,757.95

Over 5 years 1,341,896.42 0.56 1,341,896.42 35,473,815.19 4.58 35,473,815.19

Total 239,861,988.61 100.00 5,713,497.20 773,879,973.79 100.00 109,209,555.74

F-324

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 52

b) Accounts receivable for bad debt provision by using balance percentage

method or other combination method

Combination

name

Ending Balance Beginning balance

Book balance Proporti

on (%)

Bad debt

provision Book balance

Proporti

on (%)

Bad debt

provision

Accounts

receivable

portfolio without

impairment

677,490,135.92 1,304,011,339.66

Total 677,490,135.92 1,304,011,339.66

iii. Accounts receivable that are not individually significant but for which bad debt

provision is made on a single item basis

Debtor Book balance Bad debt

provision Aging

Proporti

on (%)

reason for

accrual

Guangdong yuantianxiang

Biotechnology Co., Ltd 1,019,059.00 1,019,059.00

3-4

years 100.00

Estimated

unrecoverable

Heilongjiang Yulin construction

company 658,800.00 658,800.00

Over 5

years 100.00

Estimated

unrecoverable

Guangzhou Langqi Industry Co.,

Ltd 1,563,822.01 469,146.60

Within 1

year 30.00

Estimated

unrecoverable

Kaidike advertising (Shanghai)

Co., Ltd 1,559,085.29 467,725.59

Within 1

year 30.00

Estimated

unrecoverable

Guangzhou shidexian Network

Technology Co., Ltd 1,375,091.00 1,375,091.00

1-2

years 100.00

Estimated

unrecoverable

Shenzhen Meiteng Culture

Communication Co., Ltd 752,219.90 75,221.99

Within 1

year 10.00

Estimated

unrecoverable

Nanjing Millennium Ankang

Culture Technology Co., Ltd 320,000.00 320,000.00

1-2

years 100.00

Estimated

unrecoverable

Kaijun advertising (Shanghai)

Co., Ltd 240,900.00 72,270.00

Within 1

year 30.00

Estimated

unrecoverable

Shenzhen Shengyuan

communication planning Co., Ltd 237,650.00 71,295.00

Within 1

year 30.00

Estimated

unrecoverable

Guangzhou Yiwang Advertising 175,800.00 52,740.00 Within 1 30.00 Estimated

F-325

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 53

Debtor Book balance Bad debt

provision Aging

Proporti

on (%)

reason for

accrual

Co., Ltd year unrecoverable

Guangzhou United Trading Park

operation and Investment Co.,

Ltd

126,560.00 37,968.00 Within 1

year 30.00

Estimated

unrecoverable

Holgos Media Co., Ltd 97,500.00 29,250.00 Within 1

year 30.00

Estimated

unrecoverable

Guangzhou shidexian Network

Technology Co., Ltd 2,997,300.00 2,997,300.00

1-2

years 100.00

Estimated

unrecoverable

Nanjing Millennium Ankang

Culture Technology Co., Ltd 83,362.50 83,362.50

1-2

years 100.00

Estimated

unrecoverable

Others 131,415.01 131,415.01 Over 5

years 100.00

Estimated

unrecoverable

Total 11,338,564.71 7,860,644.69

F-326

Gua

ngzh

ou M

etro

Gro

up C

o., L

td.

For t

he Y

ear E

nded

Dec

31,

201

9 N

otes

to F

inan

cial

Sta

tem

ents

Note

s to

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Pag

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F-327

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 55

1) Provision for bad debts by combination

Combination accrual items:

Name Ending Balance

Book balance Bad debt provision Proportion (%)

Combination of credit risk

characteristics 1,180,682,044.18 208,856,977.93 17.69

Total 1,180,682,044.18 208,856,977.93

(2) Top five debtors in amount at the end of the period

Debtor Book balance

Proportion to

total accounts

receivable (%)

Bad debt

provision

Guangdong Guangfo Rail Transit Co., Ltd. 917,912,410.26 38.49

Bailin Times Media Group Co., Ltd. 221,621,670.98 9.29 221,621,670.98

Nanning rail transit Group Co., Ltd 124,867,571.20 5.24

Shenzhen Metro Group Co., Ltd 71,850,233.00 3.01

Chengdu rail transit Group Co., Ltd 59,275,147.89 2.49

Total 1,395,527,033.33 58.52 221,621,670.98

5. Prepayments

(1) Disclosure of prepayments by aging

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proportion

(%) Amount

Proportion

(%)

Within 1

year 306,619,589.04 66.40 281,461,422.71 70.68

1- 2 years 77,111,120.20 16.70 29,098,323.23 7.31

2- 3 years 19,899,819.08 4.31 24,845,748.08 6.24

over 3

years 58,143,695.09 12.59 5,209,873.61 62,829,316.29 15.77 5,209,873.61

Total 461,774,223.41 100.00 5,209,873.61 398,234,810.31 100.00 5,209,873.61

F-328

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 56

(2) Top five prepayments in amount at the end of the period

Supplier Book balance Proportion to total

prepayments (%)

Bad debt

provision

Zhongtie Huanan Construction Co., Ltd. 65,484,086.45 14.18

Guangzhou Jiadu Data Service Co., Ltd 14,647,680.21 3.17

Guangdong huazhiyuan Information

Engineering Co., Ltd

13,630,790.23 2.95

Wukuang Construction Group Co., Ltd 12,540,184.15 2.72

Siemens international trade (Shanghai) Co., Ltd 12,223,430.99 2.65

Total 118,526,172.03 25.67

6. Other Receivables

Item Ending Balance Beginning balance

Interest receivable 2,201,939.73 10,760,305.48

Dividend receivable

Other receivables 16,590,007,746.99 12,194,804,339.65

Total 16,592,209,686.72 12,205,564,645.13

(1) Interest receivable

Classification of interest receivable

Item Ending Balance Beginning balance

Fixed deposit 2,697,100.00

Others 2,201,939.73 8,063,205.48

Total 2,201,939.73 10,760,305.48

F-329

Gua

ngzh

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etro

Gro

up C

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td.

For t

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nded

Dec

31,

201

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F-330

Gua

ngzh

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etro

Gro

up C

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td.

For t

he Y

ear E

nded

Dec

31,

201

9 N

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to F

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F-331

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 59

a Assessed bad debt provision in portfolios based on credit risk characteristics

Other receivables for bad debt provision by using age analysis method

Deposit:

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proporti

on (%) Amount

Proporti

on (%)

Within 6 months 5,983,775,502.95 99.87 1,402,358.21 10.57

6-12 months 1,127,670.88 0.02 15,659.30 553,984.75 4.18 27,699.23

Within 1 year 2,027,089.62 15.28 101,354.48

1-2 years 136,048.37 12,278.84 3,032,636.05 22.86 303,263.61

2-3 years 3,052,732.43 0.05 610,546.49 1,906,119.72 14.37 381,228.65

3-4 years 1,386,070.00 0.02 242,834.81 1,726,494.38 13.01 345,298.88

4-5 years 1,118,489.62 0.02 223,697.92 180,568.00 1.36 36,113.60

Over 5 years 1,074,592.80 0.02 214,918.56 2,437,740.01 18.37 487,548.00

Total 5,991,671,107.05 100.00 1,319,935.92 13,266,990.74 100.00 1,682,506.45

Others:

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proporti

on (%) Amount

Proporti

on (%)

Within 6 months 25,307,092.17 28.20 1,464.50 11,715,445.07 31.26

6-12 months 39,621,975.03 44.15 1,933,458.19 5,475,477.02 14.61 273,773.85

1-2 years 11,938,396.19 13.30 797,147.41 13,161,847.55 35.12 1,316,184.75

2-3 years 8,612,346.58 9.60 2,416,221.88 901,222.72 2.40 270,366.82

3-4 years 672,446.97 0.75 336,223.50 1,052,112.05 2.81 526,056.03

4-5 years 82,112.05 0.09 65,689.64 1,749.65 1,399.72

Over 5 years 3,514,784.92 3.92 3,514,784.92 5,165,235.22 13.78 5,165,235.22

Total 89,749,153.91 100.00 9,064,990.04 37,473,089.28 100.00 7,553,016.39

F-332

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 60

Other receivables for bad debt provision by using balance percentage method

or other combination method

Combinatio

n name

Ending Balance Beginning balance

Book balance Proportio

n (%)

Bad debt

provision Book balance

Proporti

on (%)

Bad debt

provision

Other

receivables

portfolio

without

impairment

10,465,187,890.16 12,148,435,106.99

A portfolio

of bad debts

charged at

0.5%

4,889,121.08 0.50 24,445.60

Total 10,465,187,890.16 12,153,324,228.07 24,445.60

b) Other receivables that are not individually significant but for which bad debt provision is

made on a single item basis

Debtor Book balance Bad debt

provision Aging

Proportion

(%)

Reasons for

accrual

Reimbursed

expenses 26,387.00 26,387.00

Over 5

years 100.00

Estimated

unrecoverable

Others 85,440.45 85,440.45 Over 5

years 100.00

Estimated

unrecoverable

Total 111,827.45 111,827.45

F-333

Gua

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F-334

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 62

a) Provision for bad debts by single item

Name

Ending Balance

Book balance Bad debt provision Proportion

(%)

Accrual

reasons

Provision for bad

debts by single item 261,656.00 261,656.00 100.00

Uncollectible

lease deposit

Total 261,656.00 261,656.00

b) Provision for bad debts by combination

Name

Ending Balance Beginning balance

Book balance Bad debt

provision

Proportion

(%)

Book

balance

Bad debt

provision

Proportion

(%)

Provision for

bad debts by

combination

56,365,527.01 2,581,005.18 4.58

Total 56,365,527.01 2,581,005.18

ii. Top five debtors of other receivables at the end of the period

Debtor Nature of

receivable Book balance Aging

Proportion to

total other

receivable (%)

Bad debt

provision

Guangzhou Pinshi Real Estate

Development Co., Ltd

reimbursed

expenses 3,807,276,538.68

0-2

years 22.93

Guangzhou pinyue Real Estate

Development Co., Ltd

reimbursed

expenses 3,324,181,674.83

0-2

years 20.02

Guangzhou Pinghui Real Estate

Development Co., Ltd

reimbursed

expenses 3,303,425,529.98

0-2

years 19.90

Guangzhou Yaosheng Real Estate

Development Co., Ltd

reimbursed

expenses 2,609,242,079.00

0-2

years 15.72

Guangdong Guangfo Rail Transit

Co., Ltd

reimbursed

expenses 802,326,694.07

0-3

years 4.83

Total 13,846,452,516.56 83.40

F-335

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 63

7. Inventories

(1) Classification of inventories

Item

Ending Balance Beginning balance

Book balance Provision for

impairment Book value Book balance

Provision for

impairment Book value

Raw materials 687,385,652.59 28,663,821.48 658,721,831.11 694,911,768.18 70,106,387.24 624,805,380.94

Unfinished goods 11,073,640,813.29 11,073,640,813.29 23,768,148,218.17 23,768,148,218.17

Including: completed but

unsettled projects

real estate

development products

under construction

9,048,265,802.21 9,048,265,802.21 23,571,951,251.87 23,571,951,251.87

Finished goods 1,569,084,096.35 97,389.17 1,568,986,707.18 492,481,385.16 89,349.17 492,392,035.99

Including: real estate

products 25,529,346.73 25,529,346.73 639,724,861.22 639,724,861.22

Turnover materials

(packages, low value

consumables, etc.)

2,305,883.82 2,305,883.82 132,451.89 132,451.89

Others 924,032,834.26 924,032,834.26 738,413,235.25 738,413,235.25

Total 14,256,449,280.31 28,761,210.65 14,227,688,069.66 25,694,087,058.65 70,195,736.41 25,623,891,322.24

8. Other Current Assets

Item Ending Balance Beginning balance

Tax retained 3,345,343,559.39 2,727,013,977.19

Input tax to be deducted 106,980,721.98 413,965,036.66

Input tax to be certified 20,486,914.96

Bank financial products 660,000,000.00 430,000,000.00

Reimbursed expenses 4,890,707,813.96 4,655,182,904.35

Others 56,533,760.15 6,371,621.57

Total 9,080,052,770.44 8,232,533,539.77

F-336

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 64

9. Available-for-Sale Financial Assets

(1) Condition of Available-for-sale financial assets

Item

Ending Balance Beginning balance

Book balance

Provision

for

impairment

Book value Book balance

Provision

for

impairment

Book value

Available-for-sale

debt instruments 339,973,440.45 339,973,440.45

Available-for-sale

equity instruments 21,185,410,964.51 21,185,410,964.51 18,107,639,232.09 18,107,639,232.09

Including:

Measured at fair

value

2,463,991,251.51 2,463,991,251.51 2,481,149,519.09 2,481,149,519.09

Measured at cost 18,721,419,713.00 18,721,419,713.00 15,626,489,713.00 15,626,489,713.00

Others 6,928,934.38 6,928,934.38 16,680,969.96 16,680,969.96

Total 21,192,339,898.89 21,192,339,898.89 18,464,293,642.50 18,464,293,642.50

Note: Guangzhou railway investment and Construction Group Co., Ltd., a subsidiary of the

company (hereinafter referred to as "Guangzhou railway investment") invested

RMB18,697,750,000.00 yuan on behalf of the government in Guangdong Pearl River Delta

Intercity Rail Transit Co., Ltd., a subsidiary of Guangdong Railway Construction and Investment

Group Co., Ltd., for the construction of relevant projects in Guangzhou section, which is actually

project investment. According to the spirit of relevant documents of Guangzhou Development and

Reform Commission and state owned assets supervision and Administration Commission of

Guangzhou Municipal People's government, Guangzhou Railway Investment Co., Ltd. and

Guangdong Railway Construction Investment Group Co., Ltd. signed the "provincial and

municipal investment and investment management agreement" to fulfill the investment

management obligations, and agreed to start related approval matters about implementation of real

name equity timely.

(2) Available-for-sale financial assets that measured at fair value

Item Available-for-sale

equity instruments

Available-for-sale

debt instruments Others Tatal

Cost of equity Instruments /

Amortized cost of debt

instruments 1,895,777,092.67 1,895,777,092.67

Fair value 2,463,991,251.51 2,463,991,251.51

F-337

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 65

Item Available-for-sale

equity instruments

Available-for-sale

debt instruments Others Tatal

Accumulated fair value changes

recorded in other comprehensive

income 568,214,158.84 568,214,158.84

Amount of impairment accrued

10. Held-to-Maturity Investments

(1) Held-to-maturity investments

Item

Ending Balance Beginning balance

Book

balance

Provision

for

impairment

Book

value Book balance

Provision

for

impairment

Book value

JPMorgan credit notes 1,029,622,620.00 1,029,622,620.00

Total 1,029,622,620.00 1,029,622,620.00

11. Long -Term Equity Investments

(1) Classification of Long-term Equity Investment

Item Beginning balance Increase Decrease Ending Balance

Investment in joint ventures 4,203,615,234.07 97,292,549.40 4,300,907,783.47

Investment in associates 8,364,988,592.37 11,300,993,350.53 761,629,621.85 18,904,352,321.05

Subtotal 12,568,603,826.44 11,398,285,899.93 761,629,621.85 23,205,260,104.52

Less: Provision for

impairment

Total 12,568,603,826.44 11,398,285,899.93 761,629,621.85 23,205,260,104.52

F-338

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F-344

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 72

(3) Major financial information of important joint ventures

Item

Current period Prior period

Guangdong Guangfo Rail

Transit Co., Ltd

Guangzhou Siborui

Hotel Co., Ltd.

Guangdong Guangfo

Rail Transit Co., Ltd

Guangzhou Siborui

Hotel Co., Ltd.

Current assets 5,060,932,309.76 27,491,539.36 3,339,746,715.65 35,150,507.49

Non-current assets 13,598,326,961.56 436,628,195.36 13,143,442,266.79 475,655,242.51

Total assets 18,659,259,271.32 464,119,734.72 16,483,188,982.44 510,805,750.00

Current liabilities 9,651,830,693.17 22,506,741.70 7,754,437,109.39 31,011,065.48

Non-current liabilities 93,340,029.57 72,000,000.00 16,111,899.93 72,000,000.00

Total liabilities 9,745,170,722.74 94,506,741.70 7,770,549,009.32 103,011,065.48

Net assets 8,914,088,548.58 369,612,993.02 8,712,639,973.12 407,794,684.52

Net asset share based on shareholding proportion 4,055,848,277.62 184,806,496.51 3,999,717,891.81 203,897,342.27

Adjustments

Book value of equity investment in joint

ventures 4,055,848,277.62 184,806,496.51 3,999,717,891.81 203,897,342.27

Revenue 344,546,355.35 54,541,788.44 314,361,783.03 66,159,875.66

Financial expenses -1,076,377.74 3,615,849.41 2,314,254.89 3,552,591.71

Income tax expenses

Net profit 196,260,090.25 -38,894,625.43 106,071,342.69 -32,636,217.56

Other comprehensive income

Total comprehensive income 196,260,090.25 -38,894,625.43 106,071,342.69 -32,636,217.56

Dividends received from joint ventures

(4) Major financial information of important associates

Item

Current period Prior period

Guangzhou Zhongche

Urban Rail

Equipment Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Yuexiu Property

Company Limited

Guangzhou Zhongche

Urban Rail

Equipment Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Current assets 175,293,973.04 45,867,096.20 185,052,675,604.33 252,600,485.57 142,384,289.79

Non-current assets 563,182,639.98 304,742,402.30 49,644,581,088.40 577,273,866.18 205,056,873.71

Total assets 738,476,613.02 350,609,498.50 234,697,256,692.73 829,874,351.75 347,441,163.50

Current liabilities 194,051,755.92 24,760,735.50 106,917,634,382.09 298,898,296.43 5,401,403.13

Non-current liabilities 26,699,323.50 72,587,806,032.27 26,608,103.14

F-345

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 73

Item

Current period Prior period

Guangzhou Zhongche

Urban Rail

Equipment Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Yuexiu Property

Company Limited

Guangzhou Zhongche

Urban Rail

Equipment Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Total liabilities 220,751,079.42 24,760,735.50 179,505,440,414.36 325,506,399.57 5,401,403.13

Net assets 517,725,533.60 325,848,763.00 55,191,816,278.37 504,367,952.18 342,039,760.37

Including: net assets belonging to the

associated enterprise in the consolidated

financial statements of the associated

enterprise

40,723,508,237.53

Net assets attributable to minority

shareholders in consolidated financial

statements of the associated enterprises

14,468,308,040.84

Net asset share based on shareholding

proportion 207,090,213.44 97,754,628.91 5,485,274,100.43 201,747,180.87 102,611,928.11

Adjustments

Book value of equity investment in

associated enterprises 207,090,213.44 97,754,628.91 5,485,274,100.43 201,747,180.87 102,611,928.11

Revenue 764,234,297.21 43,512,657.08 38,476,598,653.58 1,653,549,966.23 33,851,544.77

Net profit 3,039,186.84 19,658,247.19 4,730,507,943.55 32,752,426.82 15,359,372.87

Including: net profit belonging to the

associated enterprise in the consolidated

financial statements of the associated

enterprise

3,483,351,198.11

Net profit attributable to minority

shareholders in consolidated financial

statements of the associated enterprises

1,247,156,745.44

Other comprehensive income -108,898,426.75

Total comprehensive income 3,039,186.84 19,658,247.19 4,621,609,516.80 32,752,426.82 15,359,372.87

Including: total comprehensive income

belonging to the associated enterprise in

the consolidated financial statements of

the associated enterprise

3,372,029,183.86

Total comprehensive income 1,249,580,332.94

F-346

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 74

Item

Current period Prior period

Guangzhou Zhongche

Urban Rail

Equipment Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Yuexiu Property

Company Limited

Guangzhou Zhongche

Urban Rail

Equipment Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

attributable to minority shareholders in

consolidated financial statements of the

associated enterprises

Dividends received from associates 4,147,030.67 293,611,641.18 3,408,838.55

(5) Summary information of unimportant joint ventures and associates.

Item Current period Prior period

Joint ventures:

Total book value of investments 60,253,009.34

The following items are total amount based on

shareholding proportion

Net profit -4,622,284.39 -467,205.00

Other comprehensive income

Total comprehensive income -4,622,284.39 -467,205.00

Associates:

Total book value of investments 18,599,507,478.70 8,060,629,483.39

The following items are total amount based on

shareholding proportion

Net profit -184,490,608.02 -3,460,608.39

Other comprehensive income 461,054.26 698,898.87

Total comprehensive income -184,029,553.76 -2,761,709.52

12. Other non-current financial assets

Item Fair value at the end of the

period

Fair value at the beginning

of the year

Financial assets measured at fair value

through profit or loss 2,000,000.00

Including: equity instrument investment 2,000,000.00

Total 2,000,000.00

F-347

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 75

13. Investment real estates

(1) Measured by the cost method

Item Beginning

balance

Increase during

the period

Decrease

during the

period

Ending balance

1. Original Cost 5,823,683,762.29 218,792,971.58 7,096,755.97 6,035,379,977.90

Including: Properties 5,823,683,762.29 218,792,971.58 7,096,755.97 6,035,379,977.90

Land use rights

2. Accumulated depreciation 451,466,504.88 155,079,421.06 1,052,800.97 605,493,124.97

Including: Properties 451,466,504.88 155,079,421.06 1,052,800.97 605,493,124.97

Land use rights

3. Net book value before impairment 5,372,217,257.41 5,429,886,852.93

Including: Properties 5,372,217,257.41 5,429,886,852.93

Land use rights

4. Provision for impairment

Including: Properties

Land use rights

5. Net book value 5,372,217,257.41 5,429,886,852.93

Including: Properties 5,372,217,257.41 5,429,886,852.93

Land use rights

14. Fixed Assets

Item Ending book value Beginning book value

Fixed assets 112,532,028,678.47 92,267,381,385.10

Disposal of fixed assets 17,590,404.58 11,925,145.06

Total 112,549,619,083.05 92,279,306,530.16

(1) Fixed assets

Item Beginning balance Increase Decrease Ending balance

1. Original Cost 107,400,707,979.86 21,545,368,745.52 115,610,760.44 128,830,465,964.94

Including: buildings and

structures 68,308,573,963.38 14,538,324,311.42 27,316,350.26 82,819,581,924.54

Machinery equipment 16,074,892,168.60 2,230,865,954.22 16,101,233.82 18,289,656,889.00

Transportation instrument 15,462,792,040.58 3,189,964,649.37 5,589,779.72 18,647,166,910.23

F-348

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 76

Item Beginning balance Increase Decrease Ending balance

Electronic equipment 6,882,965,236.76 1,448,313,168.62 244,800.00 8,331,033,605.38

Office equipment 259,611,322.81 30,958,587.61 10,061,777.64 280,508,132.78

Others 411,873,247.73 106,942,074.28 56,296,819.00 462,518,503.01

2. Accumulated depreciation 13,118,346,747.94 747,172,045.17 85,018,305.96 13,780,500,487.15

Including: buildings and

structures 4,979,592,702.63 248,295,136.96 11,610,166.35 5,216,277,673.24

Machinery equipment 4,304,470,602.39 134,222,177.13 12,819,851.82 4,425,872,927.70

Transportation instrument 2,024,102,054.72 276,205,731.11 4,577,249.71 2,295,730,536.12

Electronic equipment 1,333,732,466.99 57,353,173.36 202,589.47 1,390,883,050.88

Office equipment 202,544,387.85 14,618,670.40 9,500,369.81 207,662,688.44

Others 273,904,533.36 16,477,156.21 46,308,078.80 244,073,610.77

3. Net book value before

impairment 94,282,361,231.92 115,049,965,477.79

Including: buildings and

structures 63,328,981,260.75 77,603,304,251.30

Machinery equipment 11,770,421,566.21 13,863,783,961.30

Transportation instrument 13,438,689,985.86 16,351,436,374.11

Electronic equipment 5,549,232,769.77 6,940,150,554.50

Office equipment 57,066,934.96 72,845,444.34

Others 137,968,714.37 218,444,892.24

4. Provision for impairment 2,014,979,846.82 507,060,120.18 4,103,167.68 2,517,936,799.32

Including: buildings and

structures 455,626,058.88 1,438,588.30 3,281,794.52 453,782,852.66

Machinery equipment 351,416,833.57 90,987,804.72 792,491.21 441,612,147.08

Transportation instrument 721,541,848.91 4,597,609.05 28,881.95 726,110,576.01

Electronic equipment 480,850,471.79 410,028,877.40 890,879,349.19

Office equipment 305,790.01 94.63 305,884.64

Others 5,238,843.66 7,146.08 5,245,989.74

5. Net book value 92,267,381,385.10 112,532,028,678.47

Including: buildings and

structures 62,873,355,201.87 77,149,521,398.64

Machinery equipment 11,419,004,732.64 13,422,171,814.22

Transportation instrument 12,717,148,136.95 15,625,325,798.10

Electronic equipment 5,068,382,297.98 6,049,271,205.31

F-349

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 77

Item Beginning balance Increase Decrease Ending balance

Office equipment 56,761,144.95 72,539,559.70

Others 132,729,870.71 213,198,902.50

(2) Disposal of fixed assets

Item Ending book value Beginning book value Reasons for disposal

Office equipments 256,341.86 210,117.31 Need to be scrapped

Vehicles 87,595.62 31,524.81 Need to be scrapped

Machinery equipments 85,052.63 212,424.62 Need to be scrapped

Operation equipments 17,161414.47 10,842,881.85 Need to be scrapped

Others 628,196.47 Need to be scrapped

Total 17,590,404.58 11,925,145.06

15. Construction in Progress

Item

Ending balance Beginning balance

Book balance

Provision

for

impairment

Book value Book balance

Provision

for

impairment

Book value

Construction in

progress 131,888,020,804.03 131,888,020,804.03 111,865,036,944.45 111,865,036,944.45

Construction

materials

Total 131,888,020,804.03 131,888,020,804.03 111,865,036,944.45 111,865,036,944.45

F-350

Gua

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F-355

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 83

16. Intangible Assets

(1) Intangible assets

Item Beginning

balance Increase Decrease Ending balance

1. Original Cost 581,405,388.18 22,261,516.03 54,152.37 603,612,751.84

Including: Software 194,327,297.98 22,266,758.75 54,152.37 216,539,904.36

Land use right 386,488,389.98 386,488,389.98

Patent right 5,816.72 5,816.72

Trademark right 85,436.90 85,436.90

Chartered right 498,446.60 -5,242.72 493,203.88

2. Accumulated

amortisation 221,308,628.56 22,403,219.47 21,430.82 243,690,417.21

Including: Software 177,645,502.55 12,384,340.83 21,430.82 190,008,412.56

Land use right 43,380,794.74 9,905,684.48 53,286,479.22

Patent right 5,816.72 5,816.72

Trademark right 35,598.75 17,087.40 52,686.15

Chartered right 240,915.80 96,106.76 337,022.56

3. Provision for

impairment

Including: Software

Land use right

Patent right

Trademark right

Chartered right

4. Net book value 360,096,759.62 359,922,334.63

Including: Software 16,681,795.43 26,531,491.80

Land use right 343,107,595.24 333,201,910.76

Patent right

Trademark right 49,838.15 32,750.75

Chartered right 257,530.80 156,181.32

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F-358

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 86

18. Goodwill

Name of investee Beginning balance Increase Decrease Ending balance

Guangzhou Metro Environmental

Engineering Co., Ltd. 6,201,715.94 6,201,715.94

Total 6,201,715.94 6,201,715.94

19. Long-Term Deferred Expenses

Item Beginning

balance

Increase during

the period

Amortization in

the current period

Other

decrease Ending balance

Start-up costs 946,458.24 305,100.84 641,357.40

Sporadic engineering 3,347,243.80 7,640,658.01 1,858,282.33 9,129,619.48

Renovation costs 20,574,226.72 8,072,048.16 8,600,870.20 43,587.40 20,001,817.28

Employees training fees for Line

6 17,546,450.48 8,773,225.20 8,773,225.28

Employees training fees for APM 1,670,255.20 1,670,255.20

Employees training fees for Line

6 phase II 7,710,948.82 1,542,189.72 6,168,759.10

Employees training fees for Line

7 phase I 4,935,323.36 987,064.68 3,948,258.68

Employees training fees for

Tramcar 271,440.00 135,720.00 135,720.00

Advertising space renovation

project 3,841,839.41 2,586,395.74 1,398,023.60 5,030,211.55

Others 2,848,957.60 5,309,950.10 1,749,064.51 6,409,843.19

Total 51,046,871.45 36,255,324.19 27,019,796.28 43,587.40 60,238,811.96

F-359

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 87

20. Deferred tax assets and deferred tax liabilities

(1) Deferred income tax assets and deferred income tax liabilities are not presented

as net amount after offset

Item

Ending balance Beginning balance

Deferred tax

assets / liabilities

Deductible/taxable

temporary

difference

Deferred tax

assets / liabilities

Deductible/taxable

temporary difference

1. Deferred tax assets 112,529,743.06 608,734,840.57 87,707,585.90 444,907,688.23

Deductible temporary

differences 92,151,262.73 527,220,919.23 58,082,413.01 326,406,996.68

Deductible loss 20,378,480.33 81,513,921.34 29,625,172.89 118,500,691.55

2. Deferred tax

liabilities 740,271.80 2,961,087.20 473,194.51 1,892,778.04

Temporary difference in

one-time depreciation of

fixed assets 740,271.80 2,961,087.20 473,194.51 1,892,778.04

21. Other Non-Current Assets

Item Ending balance Beginning balance

Prepayments of non-current assets 21,924,828.48 13,404,018.07

Media management software development project 985,839.62

VAT to be deducted 28,931,563.57 29,361,846.34

Advance payment 38,205,282,591.20 35,438,424,336.16

Others 5,747,610.91 3,241,322.93

Total 38,261,886,594.16 35,485,417,363.12

22. Short-term Borrowings

Item Ending balance Beginning balance

Credit loans 12,015,653,177.39 20,560,915,172.00

Total 12,015,653,177.39 20,560,915,172.00

23. Financial Liabilities at Fair Value through Profit or Loss

Item Ending balance Beginning balance

Financial liabilities held for trading

Financial liabilities at fair value through

profit or loss 48,068,686.00

F-360

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 88

Item Ending balance Beginning balance

Others

Total 48,068,686.00

24. Notes payable

Item Ending balance Beginning balance

Bank acceptance bill 66,500,000.00 66,000,000.00

Commercial acceptance bill 1,062,334,651.97

Total 1,128,834,651.97 66,000,000.00

25. Accounts payable

Aging Ending balance Beginning balance

Within 1 year 12,775,655,984.42 8,187,515,115.15

1- 2 years 3,528,864,774.79 2,472,743,144.02

2- 3 years 2,014,559,215.99 2,096,345,235.02

over 3 years 4,490,856,817.14 3,741,450,732.61

Total 22,809,936,792.34 16,498,054,226.80

Important accounts payable over one year old:

Creditor Ending balance Reasons for non-repayment

Zhongche Zhuzhou Electric Locomotive Co., Ltd. 888,578,682.42 Project is not settled

China Railway Huanan Construction Co., Ltd 496,551,892.91 Project is not settled

China Railway Erju Group Corporation 363,755,202.14 Project is not settled

China Railway Sanju Group Corporation 409,235,730.83 Project is not settled

China RailwayYiju Group Corporation 318,891,167.22 Project is not settled

Total 2,477,012,675.52

26. Advances from Customers

Aging Ending balance Beginning balance

Within 1 year 5,304,038,504.22 9,312,100,079.06

over 1 years 853,025,559.04 526,582,812.72

Total 6,157,064,063.26 9,838,682,891.78

F-361

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 89

Advance from customers with large amount and aging over 1 year:

Creditor Ending balance Reason for pending

Foshan Railway Investment and

Construction Group Co., Ltd. 127,831,015.50

Failure to reach the revenue

confirmation node

Total 127,831,015.50

27. Employee benefits payable

(1) Employee benefits payable

Item Beginning balance Increase Decrease Ending balance

1. Short-term employee

benefits 1,774,899,503.97 6,380,959,405.04 5,859,017,190.44 2,296,841,718.57

2. Post-employment benefits

- defined contribution plan 750,641.44 669,925,704.65 670,473,547.89 202,798.20

3. Termination benefits 4,420,321.90 4,420,321.90

4.Other benefits within one

year

5. Others

Total 1,775,650,145.41 7,055,305,431.59 6,533,911,060.23 2,297,044,516.77

(2) Short-term employee benefits

Item Beginning

balance Increase Decrease Ending balance

1. Salaries, bonus, allowance

and subsidies 1,572,300,120.36 5,142,102,500.14 4,669,547,625.31 2,044,854,995.19

2. Employee welfare 79,568.98 160,019,730.99 159,872,514.61 226,785.36

3. Social insurance 30,236.17 271,026,443.24 271,003,018.27 53,661.14

including: Medical insurance 25,059.59 225,490,087.19 225,470,841.81 44,304.97

Work injury insurance 1,333.25 6,677,965.39 6,677,510.44 1,788.20

Maternity insurance 4,234.23 31,246,847.45 31,243,804.47 7,277.21

Others -390.90 7,611,543.21 7,610,861.55 290.76

4. Housing fund 261,177.35 443,235,189.91 443,314,107.81 182,259.45

5. Labour union fee and

employee education fee 173,031,527.35 159,696,162.21 116,129,662.37 216,598,027.19

6. Short-term paid absence

7. Short-term profit sharing plan

8. Other short-term employee 29,196,873.76 204,879,378.55 199,150,262.07 34,925,990.24

F-362

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 90

Item Beginning

balance Increase Decrease Ending balance

benefits

Total 1,774,899,503.97 6,380,959,405.04 5,859,017,190.44 2,296,841,718.57

(3) Defined contribution plans

Item Beginning

balance Increase Decrease Ending balance

1. Basic retirement security 36,659.76 484,164,642.38 484,125,843.82 75,458.32

2. Unemployment insurance 971.57 16,116,442.61 16,114,989.05 2,425.13

3. Supplementary pension 482,100.74 169,644,619.66 170,001,805.65 124,914.75

4. Mandatory provident fund 230,909.37 230,909.37

Total 750,641.44 669,925,704.65 670,473,547.89 202,798.20

28. Taxes payable

Item Beginning

balance Current increase Current decrease Ending balance

Value-added tax 26,156,105.47 211,887,928.45 212,442,127.09 25,601,906.83

Corporate income tax 39,569,366.32 133,977,964.12 120,621,371.74 52,925,958.70

City maintenance and

construction tax 4,424,888.39 19,667,829.82 17,490,229.32 6,602,488.89

Real estate tax 11,330,463.55 267,887,224.95 257,263,024.00 21,954,664.50

Land use tax 2,839,987.19 3,495,401.54 3,156,613.67 3,178,775.06

Individual income tax 26,033,278.44 150,374,379.36 150,909,327.25 25,498,330.55

Education surcharge 3,144,954.21 14,037,278.06 12,499,427.38 4,682,804.89

Land-value increment

tax 232,263,059.88 479,664,267.75 72,830,226.05 639,097,101.58

Other taxes 33,114,056.31 410,141,813.80 176,726,328.62 266,529,541.49

Total 378,876,159.76 1,691,134,087.85 1,023,938,675.12 1,046,071,572.49

29. Other Payables

Item Ending balance Beginning balance

Interest payable 1,569,336,472.35 588,496,021.44

Dividends payable 4,800,000.00

Other payables 1,518,574,172.76 2,085,479,542.57

F-363

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 91

Item Ending balance Beginning balance

Total 3,092,710,645.11 2,673,975,564.01

(1) Interest payable

Item Ending balance Beginning balance

Interest payables for long-term loans 4,003,185.38 3,522,538.85

Interest payable on corporate bonds 852,871,657.75 472,264,973.32

Interest payables for short-term loans 518,449,104.58 112,708,509.27

Other interests 18,427,896.17

Total 1,569,336,472.35 588,496,021.44

(2) Dividends payable

Item Ending balance Beginning balance

Ordinary stock dividend 4,800,000.00

Total 4,800,000.00

F-364

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 92

(3) Other payables

Item Ending balance Beginning balance

Intercourse payables 1,518,574,172.76 2,085,479,542.57

Total 1,518,574,172.76 2,085,479,542.57

30. Non-Current Liabilities due within One Year

Item Ending balance Beginning balance

Long-term loans due within one year 3,375,255,535.07 1,681,032,874.18

Bonds payable due within one year 12,277,782,477.81 1,872,640,000.00

Long-term payables due within one year 420,000,000.00 100,054,100.00

Total 16,073,038,012.88 3,653,726,974.18

31. Other Current Liabilities

Item Ending balance Beginning balance

Short-term bonds payable 10,000,000,000.00 10,000,000,000.00

Pending output tax 49,169,497.60 1,904,082.70

ABS priority bill 587,657,039.49

ABN priority bill 594,572,194.25

Others 31,783.50

Total 11,231,398,731.34 10,001,935,866.20

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F-366

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 94

32. Long-term Borrowings

Item Ending balance Beginning balance

Guaranteed loan 2,752,361,049.31 843,915,240.00

Credit loan 35,286,709,893.41 28,677,235,492.53

Total 38,039,070,942.72 29,521,150,732.53

33. Bonds Payable

(1) Bonds payable

Item Ending balance Beginning balance

14 Guangzhou Metro bond 01 1,200,000,000.00 1,400,000,000.00

14 Guangzhou Metro bond 02 1,800,000,000.00 2,100,000,000.00

15 Guangzhou Metro MTN001 6,000,000,000.00

16 Guangzhou Metro MTN001 4,000,000,000.00 4,000,000,000.00

First phase of Guangzhou Metro special

bond in 2016 4,000,000,000.00 4,000,000,000.00

First phase of Guangzhou Metro special

bond in 2017 3,000,000,000.00 3,000,000,000.00

18 Guangzhou Metro MTN001 3,000,000,000.00 3,000,000,000.00

18 Guangzhou Metro MTN002 3,000,000,000.00 3,000,000,000.00

18 Guangzhou Metro MTN003 2,000,000,000.00 2,000,000,000.00

18 Guangzhou Metro MTN004 2,000,000,000.00 2,000,000,000.00

US dollar medium-term notes 2,769,836,094.12 7,043,081,163.98

19 Guangzhou Metro bond 01 3,000,000,000.00

19 Guangzhou Metro bond 02 2,000,000,000.00

19 Guangzhou Metro bond 03 2,000,000,000.00

19 Guangzhou Metro bond 04 1,500,000,000.00

Total 35,269,836,094.12 37,543,081,163.98

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.00

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9512

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2

Not

e: th

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paym

ent a

mou

nt o

f the

cur

rent

per

iod

incl

udes

RM

B 1

2,27

7,78

2,47

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yua

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at a

re re

clas

sifie

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non

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liab

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with

in o

ne y

ear.

F-369

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 97

34. Long-Term Payables

Item Beginning balance Increase Decrease Ending balance

Long-term payables 3,412,158,788.56 13,168,403.12 430,690,637.63 2,994,636,554.05

Special payables 8,874,192,253.31 4,814,692,396.26 1,980,786,050.66 11,708,098,598.91

Total 12,286,351,041.87 4,827,860,799.38 2,411,476,688.29 14,702,735,152.96

(1) Long-term payables

Item Ending balance Beginning balance

Financial leasing payable 394,636,554.05 812,158,788.56

CDB Development Fund Co., Ltd. 2,600,000,000.00 2,600,000,000.00

Total 2,994,636,554.05 3,412,158,788.56

(2) Special payables

Item Beginning balance Increase Decrease Ending balance

Financial special fund

allocation 8,593,788,344.54 4,814,692,396.26 1,700,786,050.66 11,707,694,690.14

Line 1 retained

earning 403,908.77 403,908.77

Capital allocated by

the Finance Bureau 280,000,000.00 280,000,000.00

Total 8,874,192,253.31 4,814,692,396.26 1,980,786,050.66 11,708,098,598.91

35. Deferred income

Item Beginning balance Increase Decrease Ending balance

Government grants 55,492,186.41 1,383,476,105.16 1,362,756,809.14 76,211,482.43

Total 55,492,186.41 1,383,476,105.16 1,362,756,809.14 76,211,482.43

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F-378

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 106

36. Other Non-Current Liabilities

Item Ending balance Beginning balance

Pending output tax 32,475,421.77

ABS priority bill 3,637,373,800.00

ABN priority bill 3,878,000,000.00

Total 7,515,373,800.00 32,475,421.77

37. Share Capital

Investor Name

Beginning balance Increa

se

Decre

ase

Ending balance

Investment amount Proporti

on (%) Investment amount

Proportio

n (%)

State-owned Assets

Supervision and

Administration Committee

of Guangzhou Municipal

Government

58,425,396,737.51 100.00 58,425,396,737.51 100.00

Total 58,425,396,737.51 100.00 58,425,396,737.51 100.00

38. Other Equity Instruments

Financial

instruments issued

Beginning balance Increase Decrease Ending balance

Quantity Book value Quantity Book

value Quantity

Book

value Quantity Book value

First phase of the

2016 renewable

corporate bonds

2,400,000,000.00 2,400,000,000.00

Second phase of

the 2016

renewable

corporate bonds

2,000,000,000.00 2,000,000,000.00

Third phase of the

2016 renewable

corporate bonds

2,600,000,000.00 2,600,000,000.00

Total 7,000,000,000.00 7,000,000,000.00

F-379

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 107

39. Capital Surplus

Item Beginning balance Increase Decrease Ending balance

1. Capital (or equity)

premium140,367,228,840.43 9,954,051,749.06 150,321,280,589.49

2. Others 7,993,924.91 7,068,219.38 925,705.53

Total 140,375,222,765.34 9,954,051,749.06 7,068,219.38 150,322,206,295.02

Including: state-owned

capital reserve

40. Surplus Reserve

Item Beginning balance Increase Decrease Ending balance

Statutory reserve 174,550,000.00 47,636,774.37 222,186,774.37

Total 174,550,000.00 47,636,774.37 222,186,774.37

41. Retained Earnings

Item Current period Prior period

Retained earnings at the beginning of the current

period 689,281,581.07 664,049,649.26

Increase in the current period 993,878,306.42 106,504,781.15

Including: Transfer from current net profit 993,878,306.42 106,504,781.15

Other adjustments

Decrease in the current period 365,936,965.28 81,272,849.34

Including: appropriation of statutory surplus reserve 47,636,774.37

Appropriation of general risk provision

Cash dividends distributed in the current period 28,405,696.91 81,272,849.34

Converted into capital

Others 289,894,494.00

Retained earnings at the end of current period 1,317,222,922.21 689,281,581.07

F-380

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 108

42. Operating Income and Operating Cost

Item Current period Prior period

Revenue Cost Revenue Cost

Transportation income 5,515,497,200.73 6,465,708,714.99 4,994,312,545.33 6,054,076,352.91

Property 2,797,212,308.62 1,208,589,327.95 643,564,542.48 468,918,851.65

Resource management 1,136,607,478.26 318,664,363.33 1,175,485,653.41 345,984,493.88

Industry external service 2,049,088,441.96 1,317,868,421.31 1,887,685,549.67 1,300,067,985.69

Others 735,468,479.28 255,076,042.28 382,434,100.06 139,905,858.13

Including: interest income

from capital occupation 454,638,486.36 244,853,655.38

Total 12,233,873,908.85 9,565,906,869.86 9,083,482,390.95 8,308,953,542.26

43. Selling Expenses, Gerneral and Administrative Expenses, R&D expenses, Financial

Expenses

(1) Selling expenses

Item Current period Prior period

Traffic expenses 1,363.64 87,652.76

Warehousing fees 5,005,451.85 436,072.14

Exhibition fees 820,868.22

Advertising fees 30,106,654.66 28,426,263.01

Sales service fee 7,248,413.84 3,483,350.68

Employee benefits 87,773,254.13 49,512,012.48

Operating expenses 8,536,324.97 15,776,900.58

Commission fee 4,286,574.52

Depreciation charges 509,149.92 37,734.69

Others 15,918,680.41 1,619,917.87

Total 159,385,867.94 100,200,772.43

F-381

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 109

(2) Gerneral and administrative expenses

Item Current period Prior period

Employee benefits 849,065,474.92 773,963,207.87

Insurance expenses 7,150,235.02 4,337,116.68

Depreciation charges 24,400,784.33 12,357,030.44

Repair costs 1,357,874.44 934,116.42

Amortization of intangibles 11,876,279.27 50,201,059.54

Business reception expenses 5,752,727.79 9,860,852.94

Travel expenses 9,033,198.59 7,769,861.35

Office expenses 13,940,837.90 12,518,186.08

Conference fees 13,876,259.68 13,104,274.66

Litigation costs 142,051.26 672,395.30

Intermediary service fees 30,129,019.69 42,041,494.10

consulting fees 22,336,194.93 536,320.76

Others 381,844,332.40 170,722,043.38

Total 1,370,905,270.22 1,099,017,959.52

(3) Research and development expenses

Item Current period Prior period

Labor costs 95,981,315.19 72,166,098.80

Material consumable expenses 1,387,281.07 2,785,707.03

Fuel and power expenses 5,887,466.00 1,310,622.59

Conference fees 127,363.55 125,556.49

Travel expenses 576,507.44 608,231.68

Management expenses 467,000.00 1,071,378.00

Testing processing fee 3,070,409.94 811,127.57

Depreciation charges 9,053.50 121,065.46

Intellectual property fees 13,492.60 74,721.33

Consulting fees 268,576.06 39,510.50

Research fees for external development 14,760,694.10 11,904,276.76

Equipment fees 1,305,639.15 672,365.63

Other expenses 5,692,023.74 1,896,720.78

Total 129,546,822.34 93,587,382.62

F-382

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 110

(4) Financial expenses

Item Current period Prior period

Interest expenses 2,243,996,543.65 1,502,005,476.08

Less: Interest income 383,016,792.11 270,107,814.92

Net exchange loss ( "-"for gain) 237,816,567.74 346,192,511.22

Including: exchange gain -9,388,329.83 -33,785,204.56

Exchange loss 247,204,897.57 379,977,715.78

Others 80,479,090.70 51,533,788.89

Total 2,179,275,409.98 1,629,623,961.27

44. Other Income

Item Current period Prior period

Fare subsidy 408,195,801.94 1,273,839,134.74

Interest subsidy 17,978,966.72 107,625,779.74

Exchange Profit and Loss

Subsidies 5,378,265.37 9,193,870.90

Research funds 10,187,218.55 10,059,206.17

Security subsidy 454,520,771.24 323,577,376.76

Input tax plus deduction 3,319,096.49

Others 7,354,596.06 5,591,224.42

Total 906,934,716.37 1,729,886,592.73

45. Investment Income

Sources of income from investment Current period Prior period

Investment income from long-term equity investments

under the equity method 951,179,984.14 26,589,357.79

Investment income from disposal of long-term equity

investments 1,443,922,735.90 2,100,225,015.66

Investment income of financial assets measured at fair

value through profit or loss during the holding period 15,168,539.25

Investment income from disposal of financial assets at fair

value through profit or loss 181,478,027.08 67,921,070.65

Investment income from held-to-maturity investment

during holding period 116,217,736.73

Investment income from disposal of held-to-maturity

investment -19,377,322.01

F-383

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 111

Sources of income from investment Current period Prior period

Investment income from available-for-sale financial assets

during holding period 35,789,232.11 42,505,732.79

Investment income from disposal of available-for-sale

financial assets 8,104,381.04 -872,815.86

Others 24,432,824.92 15,818,461.27

Total 2,640,698,402.43 2,368,404,559.03

46. Gains on Change in Fair Value

Sources of income from changes in fair value Current period Prior period

Financial assets at fair value through profit or loss 57,809,594.67 141,005,647.21

Financial liabilities at fair value through profit or loss -48,068,686.00

Total 57,809,594.67 92,936,961.21

47. Credit impairment loss

Item Current period Prior period

Bad debt loss of notes receivable 229,090.00

Bad debt loss of accounts receivable 50,732,276.73

Bad debt loss of other receivables 799,284.88

Total 51,760,651.61

48. Impairment of Assets

Item Current period Prior period

Bad debt loss 6,245,986.56 26,971,970.23

Inventory falling price loss 8,040.00 70,195,736.41

Loss of impairment of fixed assets 507,060,120.18 1,510,602,519.56

Total 513,314,146.74 1,607,770,226.20

49. Gains or Losses from Disposal of Assets

Item Current period Prior period Amount transferred to

non-recurrent gains and losses

Income from disposal of fixed

assets 5,689,927.08 -60,249.23 5,689,927.08

Income from disposal of

intangible assets 49,000,000.00

Total 5,689,927.08 48,939,750.77 5,689,927.08

F-384

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 112

50. Non-operating Profits

Item Current period Prior period

Amount transferred to

non-recurrent gains

and losses

Gains from diposal of

non-current assets 7,569.05 14,935.00 7,569.05

Government grants 457,361.49 1,455,324.02 457,361.49

Penalty incomes 5,349,962.62 3,237,630.85 5,349,962.62

Others 2,863,250.65 5,487,394.48 2,863,250.65

Total 8,678,143.81 10,195,284.35 8,678,143.81

51. Non-operating Expenses

Item Current period Prior period

Amount transferred

to non-recurrent

gains and losses

Losses on disposal of

non-current assets 8,862,053.16 6,198,915.50 8,862,053.16

External donation 2,560,358.16 1,369,361.82 2,560,358.16

Compensation 4,942,372.00 9,761,119.60 4,942,372.00

Penalty expenditure 996,371.93 3,764,247.15 996,371.93

Others 712,717.63 726,543.74 712,717.63

Total 18,073,872.88 21,820,187.81 18,073,872.88

52. Income Tax Expenses

(1) Income tax expense form

Item Current period Prior period

Current income tax expenses 122,239,816.42 127,000,752.64

Adjustment of deferred income tax -18,188,330.81 -34,889,872.66

Total 104,051,485.61 92,110,879.98

(2) Adjustment process of accounting profit and income tax expense

Item Current period

Total amount of profits 1,148,254,576.25

Income tax expense calculated according to applicable tax rate 287,063,644.06

Influence of different tax rates applied to subsidiaries -38,160,610.60

F-385

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 113

Item Current period

Effect of adjusting income tax in the previous period -3,919,320.65

Impact of non-taxable income

Impact of non-deductible costs, expenses and losses 33,250,054.25

Impact of deductible loss of unrecognized deferred income tax assets in the

prior period -167,648,165.11

Impact of deductible temporary difference or deductible loss of unrecognized

deferred income tax assets in the current period -96,749.47

Others -6,437,366.87

Income tax expense 104,051,485.61

53. Consolidated Cash Flow Statement

(1) Supplementary information of Statement of Cash Flow

Supplementary information Current year Prior year

1.Adjustments to reconcile net income to net cash

provided by operating activities:

Net profit 1,044,203,090.64 180,266,509.70

Plus: Provision for impairment of assets 513,313,015.23 1,607,770,226.20

Loss of impairment of credit assets 51,761,783.12

Depreciation of fixed assets 902,251,466.23 820,922,836.40

Amortization of intangible assets 22,403,219.47 117,497,473.29

Amortization of long-term deferred assets 27,019,796.28 51,926,254.79

Losses on disposal of fixed assets, intangible assets

and other long-term assets ("-" for gains) -5,689,927.08 -42,740,835.27

Losses on scrapping of fixed assets ("-" for gains) 8,854,484.11

Loss on fair value fluctuation ("-" for gains) -57,809,594.67 -92,936,961.21

Financial expenses ("-" for gains) 2,243,996,543.65 1,848,196,562.85

Investments loss ("-" for gains) -2,640,698,402.43 -2,368,404,559.03

Decrease in deferred tax assets ("-" for increase) -24,822,157.16 -35,363,067.17

Increase in deferred tax liabilities ("-" for decrease) 267,077.29 473,194.51

Decrease in inventories ("-" for increase) 11,437,637,778.34 2,968,234,306.67

Decrease in operating receivables ("-" for increase) -5,416,451,643.65 -13,903,727,088.64

Increase in operating payables ("-" for decrease) 5,300,423,254.18 -4,427,407,005.91

Others

F-386

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 114

Supplementary information Current year Prior year

Net cash flows from operating activities 13,406,659,783.55 -13,275,292,152.82

2. Significant investing and financing activities that do

not involve cash receipts or payments:

Conversion of debt into capital

Convertible bonds to be expired within 1 year

Fixed assets under finance lease

3. Net increase in cash and cash equivalents:

Cash at the end of the period 13,751,628,776.67 25,705,750,122.00

Less: Cash at the beginning of the period 25,705,750,122.00 9,495,644,135.34

Plus: Cash equivalents at the end of the period

Less: Cash equivalents at the beginning of the period

Net increase in cash and cash equivalents -11,954,121,345.33 16,210,105,986.66

(2) Net cash received from acquisition or disposal of subsidiaries

Item Current year

1. Cash or cash equivalents paid by enterprises merged in the current period

Less: cash and cash equivalents held by subsidiaries on the date of

purchase

Plus: Cash or cash equivalents paid in the current period by enterprises

merged in previous periods

Obtain net cash payments from subsidiaries

2. Cash or cash equivalents received from disposal of subsidiaries in the

current period1,228,463,900.07

Less: Cash and cash equivalents held by subsidiaries on the day of loss of

control 29,914,900.47

Plus: Cash or cash equivalents received this period which was from

disposal of subsidiaries during the previous period

Net cash receipts from disposals of subsidiaries 1,198,548,999.60

(3) Cash and cash equivalents

Item Current year Prior year

1. Cash 13,751,628,776.67 25,705,750,122.00

Including: Cash on hand 1,520,230.03 2,536,377.89

Bank deposit available for use 11,355,132,375.15 25,467,280,655.45

Other monetary funds avaivalbe for use 2,394,976,171.49 235,933,088.66

F-387

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 115

Item Current year Prior year

Cash in central bank available for payment

Call loan from banks

Call loan to banks

2. Cash equivalents

Including: Debt investments due within 3 months

3. Cash and cash equivalents at the end of the period 13,751,628,776.67 25,705,750,122.00

Including: parent company or subsidiaries within the

group use restricted cash and cash equivalents 78,211,004.54 207,604,113.98

IX. Contingencies

1. Contingent liabilities formed by pending litigation and arbitration and their

financial impact

As of December 31, 2019, the company was the defendant in certain legal proceedings

and the plaintiff in other proceedings that occurred in daily business. Although the

outcome of these contingencies, legal proceedings or other lawsuits cannot be determined

at this time, management believes that any resulting liabilities will not have a significant

negative impact on the company's financial position or operating results.

2. Contingent liabilities formed by providing debt guarantees to other company and

financial impact

Providing guarantees for other companies

The Company's real estate business provides phased guarantees for provident fund

mortgage loans to commercial house buyers in accordance with real estate operating

practices. The guarantee period of the phased guarantee is from the effective date of the

provident fund loan contract to the completion of the other rights certificate of the house

under the provident fund loan contract and the mortgagee is provided with the periodical

joint liability guarantee. The purchase of commercial housing was used as collateral. So

far, the buyer has not breached the contract. Management believes that the risks

associated with the provision of such guarantees are relatively small, and it is believed

that any resulting liabilities will not have a significant negative impact on the company's

financial position or operating results.

F-388

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 116

3. Other contingencies that need to be explained

Other major commitments

The company provides differential payment and repurchase commitment for the principal

and expected return of the 2019 first phase of the green asset-backed notes (The amount

raised is 2.85 billion yuan) issued by Guangzhou Metro Group Co., Ltd., which was

issued and established on January 21, 2019. The duration of the plan is from the

establishment of the special plan to January 21, 2024 (if the date is a non-working day, the

expected termination date is the first working day after that date), which can be

terminated in advance as agreed.

The company provides differential payment and repurchase commitment for the principal

and expected return of the 2019 second phase of the green asset-backed notes priority

asset-backed notes (raised amount of 1.998 billion yuan) issued by Guangzhou Metro

Group Co., Ltd, which was issued and established on September 19, 2019. The duration

of the plan is from the establishment of the special plan to August 28, 2028 (if the date is

a non-working day, the expected expiration date is the first working day after that date),

which can be terminated in advance as agreed..

The company provides differential payment and repurchase commitment for the principal

and expected return of the priority asset-backed securities (raised amount of 3 billion yuan)

of the first phase of 2019 green asset support special plan of Guangzhou Metro Group

metro passenger toll revenue right of Guang Fa Heng Jin issued and established on March

15, 2019.The duration of the plan is from the establishment date of the special plan to

December 21, 2023 (if the date is a non-working day, the expected expiration date is the

first working day after that date), which can be terminated in advance as agreed.

The company provides differential payment and repurchase commitment for the principal

and expected return of the priority asset-backed securities (raised amount of 1.749 billion

yuan) of the second phase of 2019 green asset support special plan of Guangzhou Metro

Group metro passenger toll revenue right of Guang Fa Heng Jin issued and established on

September 24, 2019. The duration of the plan is from the establishment date of the special

plan to September 29, 2029 (if the date is a non-working day, the expected expiration date

is the first working day after that date), which can be terminated in advance as agreed.

X. Events after the Balance Sheet Date

Evaluation of the impact of new coronavirus pneumonia

Since the outbreak of pneumonia caused by new coronaviruses broke out across the

F-389

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 117

country in January 2020, the prevention and control of the pneumonia outbreak is

continuing nationwide. The company will effectively implement the requirements of the

Office of the Headquarters of Guangzhou Municipality for the Prevention and Control of

New Coronavirus Infection Pneumonia, and strengthen the support of subway operation

lines for epidemic prevention and control.

The pneumonia epidemic will have a certain impact on people's daily travel and overall

economic operation, which may affect the company's passenger operation revenue to a

certain extent. The degree of impact will depend on the situation of the epidemic

prevention and control, the duration and the implementation of various regulatory

policies.

The company will continue to pay close attention to the development of the pneumonia

epidemic, and evaluate and actively respond to its impact on the company's financial

situation and operating results.

As of the reporting date of this report, the assessment is still in progress.

XI. Related Parties and Related Party Transations

1. Parent Company

Unit: RMB10,000yuan

Name of parent company Registered

place

Nature of

business

Register

ed

capital

Shareholding ratio

of parent

company in the

company (%)

Proportion of voting

rights of the parent

company to the

company (%)

State owned assets

supervision and

Administration Commission

of Guangzhou Municipal

People's Government

Guangzhou —— —— 100.00 100.00

2. Subsidiaries

Detailed information of the subsidiaries can be found on Note VII of this note.

F-390

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 118

3. Joint Ventures and Associates

Unit: RMB10,000yuan

Name Business nature Registered

Address

Registered

capital

Shareholding

ratio (%)

Guangzhou Metro Television Media Co.,

Ltd.

Cable radio and

television transmission

services

Guangzhou 1,000.00 50.00

Guangzhou Yangcheng Metro Rongmei

Technology Co., Ltd. Newspaper publishing Guangzhou 3,000.00 40.00

Guangdong Guangfo Rail Transit Co., Ltd. Urban Rail Transit Foshan 5,000.00 56.52

Guangzhou Siborui Hotel Co., Ltd. Tourist hotel Guangzhou 55,600.00 50.00

Guangzhou Zhongche Rail Transit

Equipment Co., Ltd.

Urban rail

transportation

equipment

manufacturing

Guangzhou 49,800.00 40.00

Guangzhou Urban Rail Transit Training

College Profession advice Guangzhou 1,400.00 36.00

Guangzhou Qingyun Computer Technology

Co., Ltd. Software development Guangzhou 1,000.00 35.00

Guangzhou Zhongche Transportation

Research Institute Company Limited

Scientific research and

technology services Guangzhou 1,000.00 40.00

Guangzhou Metro Microfinance Co., Ltd. Financial information

service Guangzhou 30,000.00 30.00

Guangzhou Zhongche Times Electric

Technology Co., Ltd.

Urban rail

transportation

equipment

manufacturing

Guangzhou 3,000.00 40.00

Nanchang Railway Transportation Design

Institute Co., Ltd.

Transportation,

warehousing and postal

service

Nanchang 1,000.00 45.00

Guangdong Shunguang Rail Transportaion

Co.,Ltd

Urban rail

transportation

equipment

manufacturing

Foshan 10,000.00 10.64

Guangzhou Letu Media Co.,Ltd Journalism Guangzhou 1,000.00 30.00

F-391

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 119

Name Business nature Registered

Address

Registered

capital

Shareholding

ratio (%)

Guangzhou Letu Network Technology Co.,

Ltd.

Scientific research and

technology services Guangzhou 500.00 49.00

Guangzhou Huancheng Underground Pipe

Gallery Construction Investment Co., Ltd.

Leasing and business

services Guangzhou 121,868.00 39.00

Urban rail Innovation Network Center Co.,

Ltd.

Scientific research and

technology services Beijing 8,100.00 12.35

Guangzhou Green Infrastructure Industry

Investment Fund Management Co., Ltd. Financial business Guangzhou 10,000.00 15.00

Guangzhou Pinshi Real Estate

Development Co., Ltd Real estate Guangzhou 40,075.00 49.00

Guangzhou Pinhui Real Estate

Development Co., Ltd Real estate Guangzhou 73,786.00 49.00

Guangzhou Pinyue Real Estate

Development Co., Ltd Real estate Guangzhou 62,260.00 40.00

Guangzhou Pinxiu Real Estate

Development Co., Ltd. Real estate Guangzhou 634,378.00 14.00

Guangzhou Yaosheng Real Estate

Development Co., Ltd. Real estate Guangzhou 17,000.00 35.00

Guangzhou Yunda Intelligent Technology

Co., Ltd.

Wholesale and retail

business Guangzhou 6,000.00 25.00

Guangzhou Tieke Intelligent Control Co.,

Ltd.

Scientific research and

technology services Guangzhou 19,900.00 25.13

Maitreya City Rail Transit Co., Ltd.

Transportation,

warehousing and postal

service

Maitreya,

Yunnan 5,000.00 2.74

Guangzhou Huangpu District Light

Railway Line 1 Investment Construction

Co., Ltd.

Leasing and business

services Guangzhou 58,951.00 2.40

Beijing Medium Rail Transport Research

Institute Co., Ltd.

Scientific research and

technology services Beijing 500.00 5.00

Guangdong Tiandi Commercial Operation

Management Co., Ltd.

Leasing and business

services Guangzhou 5,000.00 15.00

Guangzhou State-owned Enterprise

Innovation Investment Fund Partnership Financial business Guangzhou 261,000.00 7.66

F-392

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 120

Name Business nature Registered

Address

Registered

capital

Shareholding

ratio (%)

(LP)

Guangzhou Urban Renewal Rail Transit

Industry Investment Development Fund

Partnership (LP)

Leasing and business

services Guangzhou 250,100.00 39.98

Guangzhou Rail Transit Industry

Investment Development Fund (Limited

Partnership)

Financial business Guangzhou 200,100.00 14.99

Guangzhou northeast freight car outer

winding Railway Co., Ltd Railway transportation Guangzhou 100,000.00 32.90

Guangzhou Railway Investment Industry

Investment Co., Ltd Business services Guangzhou 535,450.00 9.34

Guangzhou financial city station integrated

transportation hub Co., Ltd Business services Guangzhou 10,000.00 20.00

Guangdong Guangshan Railway Co., Ltd Business services Guangzhou 10,000.00 21.50

Guangzhou Nansha Port Railway Co., Ltd Civil engineering

construction industry Guangzhou 760,000.00 6.21

Guangzhou machine made sand industry

Co., Ltd manufacturing industry Guangzhou 200,100.00 40.00

Yuexiu Property Company Limited Real Estate Hongkong 1,803,501.50 19.99

Nanchang zhongtiehui rail transit

construction and Operation Co., Ltd Business services Nanchang 95,983.45 5.00

Guangzhou Huangpu District Light

Railway Line 2 Investment Construction

Co., Ltd.

Civil engineering

construction industry Guangzhou 53,901.00 3.40

Lijiang Xueshan Rail Transit Co., Ltd Road transportation

industry Yunnan 20,000.00 2.00

Guangzhou green infrastructure industry

investment fund partnership (LP)

Leasing and business

services Guangzhou 400,200.00 14.99

Guangzhou Huangpu railway investment

Hub Development Co., Ltd

Water conservancy,

environment and public

facilities management

Guangzhou 6,000.00 50.00

Note: According to Notice (2018) 1 issued by Guangzhou Development and Reform

F-393

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 121

Commission and the leading group office of Foshan rail transit construction project,

Guangzhou Metro Corporation and Foshan Rail Transportation Development Co., Ltd.

will decide the percentage of share each controls on the basis of the actual investment of

Guangzhou section and Foshan section by the settlement of Guangzhou-Foshan Line

project, refunding for any over payment or charging a supplemental paymeng for any

deficiency and taking responsibility for profit or loss for the operation.

Guangdo GuangFo Railway Traffic Co., Ltd. has the first section of Guangzhou-Foshan

Line (Xiliang-Kuiqilu) in operation, and the Guangzhou section is recently in construction,

the settlement of the project is not made, therefore the percentage of share each controls

cannot be recognized. As the reason states, the financial report of Guangzhou Metro

Corporation by equity method. The investment percentage and the portion of loss

consolidated would be confirmed according to the loss Guangzhou Metro which take

from the period of the first section to the full opening of the trail run. Until 31 December

2018, Guangzhou section (Longxi-xiliang 5.93km) takes up 28.60% of first section

(Xiliang-kuiqilu 20.73km) in overall length.

4. Related-parties Transactions

(1) Sales of goods/ rendering of service

Related-parties Subjects Current period Prior period

Guangdong Guangfo Rail Transit Co., Ltd. Operation, design and

supervision services 552,542,729.34 561,407,539.70

Guangzhou Pinshi Real Estate Development Co., Ltd Interest income 289,686,948.79

Guangzhou pinyue Real Estate Development Co., Ltd Interest income 267,695,700.14

Guangzhou Pinhui Real Estate Development Co., Ltd Interest income 231,539,792.68

Guangzhou Pinxiu Real Estate Development Co.,

Ltd. Interest income 181,775,268.20 261,383,315.90

Guangzhou Yaosheng Real Estate Development Co.,

Ltd. Interest income 138,751,064.85 9,097,871.64

Guangzhou Huancheng Underground Pipe Gallery

Construction Investment Co., Ltd.

Project agent

construction, survey

and design,

preliminary research

services, etc.

34,620,596.13 6,555,003.50

F-394

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 122

Related-parties Subjects Current period Prior period

Guangzhou Yangcheng Metro Rongmei Technology

Co., Ltd.

Operating rights

service, leasing 15,747,049.30 3,718,889.30

Guangzhou Letuo Network Technology Co., Ltd. Utilization fee,

electricity fee 7,110,120.16 5,938,681.75

Guangzhou Siborui Hotel Co., Ltd. Interest income 3,608,679.25 3,429,339.62

Guangzhou Urban Rail Transit Training College Logistics service 242,172.36 83,574.36

Guangzhou Zhongzi Rail Engineering Consulting Co.

Ltd Logistics service, etc 168,556.45 2,199,010.59

Guangdong Shunguang Rail Transportaion Co.,Ltd

Survey and design,

preliminary research

service

76,010.78 40,297,007.27

Guangzhou Tieke Intelligent Control Co., Ltd Logistics service 9,472.45

Guangzhou Metro Microfinance Co., Ltd. Logistics service, etc 6,576.96 918,114.55

Guangzhou Zhongche Rail Transit Equipment Co.,

Ltd.

Material sales,

preliminary research, 217,795.32

F-395

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 123

(2) Purchase of goods/acceptance of services

Related-parties Subjects Current period Prior period

Guangzhou Urban Rail Transit Training College Management

consulting fee 288,649.83 17,830.19

Guangzhou Tieke Intelligent Control Co., Ltd Consulting service 97,747.25

Guangzhou Zhongzi Rail Engineering Consulting Co. Ltd Other service 87,083.33

Guangzhou Zhongche Rail Transit Equipment Co., Ltd. Maintenance

expenditure 995,707.88

Guangzhou Zhongche Rail Transit Equipment Co., Ltd. Equipment purchasing 880,341.88

Guangzhou Letu Media Co.,Ltd Publicity expenses 188,679.24

Guangzhou Qingyun Computer Technology Co., Ltd. Equipment purchasing 8,280,560.85

Nanchang Railway Transportation Design Institute Co.,

Ltd. Other services 4,361,128.30

5. Amounts due to/from Related Parties

(1) Amounts due from related parties

Item Related-parties

Ending balance Beginning balance

Book balance Bad debt

provision Book balance

Bad debt

provision

Accounts

receivable

Guangdong Guangfo Rail Transit Co., Ltd. 917,912,410.26 916,507,609.73

Guangzhou Huancheng Underground Pipe Gallery

Construction Investment Co., Ltd. 36,697,831.89 358,767.91

Guangzhou Zhongzi Rail Engineering Consulting

Co. Ltd 7,886,135.20

Guangzhou Yaosheng Real Estate Development

Co., Ltd. 4,358,915.88

Guangzhou Letuo Network Technology Co., Ltd. 6,800,000.04

Guangzhou Tieke Intelligent Control Co., Ltd 7,866.58

Guangdong Shunguang Rail Transportaion

Co.,Ltd 17,356,360.95

Guangzhou Metro Television Media Co., Ltd. 31,724,000.02

F-396

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 124

Item Related-parties

Ending balance Beginning balance

Book balance Bad debt

provision Book balance

Bad debt

provision

Guangzhou Letuo Network Technology Co., Ltd. 5,100,000.01

Guangzhou Qingyun Computer Technology Co.,

Ltd. 445,000.00

Guangzhou Siborui Hotel Co., Ltd. 1,639,805.70

Guangzhou Zhongche Rail Transit Equipment

Co., Ltd. 246,227.49

Prepayments

Guangzhou Zhongche Rail Transit Equipment

Co., Ltd. 8,083,379.65

Other

receivables

Guangzhou Pinshi Real Estate Development Co.,

Ltd 3,807,276,538.68

Guangdong Guangfo Rail Transit Co., Ltd. 802,326,694.07 454,924,717.49

Guangzhou Pinhui Real Estate Development Co.,

Ltd 3,303,425,529.98

Guangzhou Pinyue Real Estate Development Co.,

Ltd 3,324,181,674.83

Guangzhou Yaosheng Real Estate Development

Co., Ltd. 2,609,242,079.00 2,462,165,950.22

Guangdong Shunguang Rail Transportaion

Co.,Ltd 217,166,647.51 95,250,097.51

Guangzhou Pinxiu Real Estate Development Co.,

Ltd. 80,841,071.45 6,780,044,299.00

Guangzhou Siborui Hotel Co., Ltd. 72,415,059.40 72,415,059.40

Guangzhou Zhongche Rail Transit Equipment

Co., Ltd. 624,638.96 624,638.96

Guangzhou Letu Media Co.,Ltd 405,061.11 405,061.11

Guangzhou machine made sand industry Co., Ltd 374,419.48

Guangzhou Yangcheng Metro Newspaper Co.,

Ltd. 232,530.79 232,530.79

F-397

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 125

Item Related-parties

Ending balance Beginning balance

Book balance Bad debt

provision Book balance

Bad debt

provision

Guangzhou Zhongche Rail Transit Equipment

Co., Ltd. 3,000.00

Guangzhou Urban Rail Transit Training College 304.63

(2) Amounts due to related parties

Item Related-parties Ending balance Beginning balance

Accounts payable

Guangzhou Zhongche Rail Transit Equipment Co., Ltd. 318,707.35

Guangzhou Letu Media Co.,Ltd 200,000.00

Guangzhou Qingyun Computer Technology Co., Ltd. 1,119,582.65

Guangzhou Zhongche Transportation Research Institute

Company Limited 37,700.00

Nanchang Railway Transportation Design Institute Co., Ltd. 795,377.35

Other payables

Guangdong Guangfo Rail Transit Co., Ltd. 281,303,385.03 196,923,153.94

Guangzhou Qingyun Computer Technology Co., Ltd. 175,000.00 175,000.00

Guangzhou Siborui Hotel Co., Ltd. 1,052,669.17 1,052,669.17

Advances from

customers

Guangdong Shunguang Rail Transportaion Co.,Ltd 8,286,044.67 68,877,513.37

Guangzhou Huancheng Underground Pipe Gallery

Construction Investment Co., Ltd. 25,517,027.53 24,489,163.57

Guangzhou Yaosheng Real Estate Development Co., Ltd. 2,531,989.37

Guangdong Guangfo Rail Transit Co., Ltd. 29,686.03

Guangzhou Tieke Intelligent Control Co., Ltd 13,113.00

F-398

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F-399

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 127

(1) Accounts receivable that are individually significant and for which bad debt

provision is made on a single item basis

Debtor Book balance Bad debt

provision Aging

Proporti

on (%)

Reason for

provision

Bailing Times Media

Group Co., Ltd. 221,621,670.98 221,621,670.98 over 5 years 100.00

Estimated

unrecoverable

Baijun Metro Advertising

Co., Ltd 21,857,001.31 21,857,001.31 over 5 years 100.00

Estimated

unrecoverable

Guangzhou Metro TV

Media Co., Ltd 31,724,000.02 31,724,000.02 over 5 years 100.00

Estimated

unrecoverable

Total 275,202,672.31 275,202,672.31

(2) Assessed bad debt provision in portfolios based on credit risk characteristics

a) Accounts receivable for bad debt provision by using age analysis method

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proporti

on (%) Amount

Proporti

on (%)

Within 6 months 55,395,423.15 94.40 43,013,378.93 88.72

6-12 months 755,535.01 1.29 12,932.98 2,794,593.33 5.76 139,729.66

1-2 years 1,353,019.06 2.79 135,301.91

2-3 years 1,353,019.06 2.30 405,905.72 15,725.00 0.03 4,717.50

3-4 years 15,725.00 0.03 7,862.50

4-5 years 750,000.00 1.55 600,000.00

Over 5 years 1,164,595.91 1.98 1,164,595.91 556,546.63 1.15 556,546.63

Total 58,684,298.13 100.00 1,591,297.11 48,483,262.95 100.00 1,436,295.70

b) Accounts receivable for bad debt provision by using balance percentage

method or other combination method

Combination name

Ending Balance Beginning balance

Book balance Proportion

(%)

Bad debt

provision Book balance

Proportion

(%)

Bad debt

provision

Accounts receivable

portfolio without

impairment

1,339,479,228.67 1,862,532,296.15

F-400

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 128

Combination name

Ending Balance Beginning balance

Book balance Proportion

(%)

Bad debt

provision Book balance

Proportion

(%)

Bad debt

provision

Total 1,339,479,228.67 1,862,532,296.15

(3) Accounts receivable that are not individually significant but for which bad debt

provision is made on a single item basis

Debtor Book balance Bad debt

provision Aging Proportion

Reason for

provision

Guangdong Yuantianxiang

Biotechnology Co., Ltd. 1,019,059.00 1,019,059.00

3-4

years 100.00

Estimated

unrecoverable

Total 1,019,059.00 1,019,059.00

2. Other Receivables

Item Ending Balance Beginning balance

Interest receivable 7,585,671.23

dividend receivable 154,678,326.03 184,666,259.81

Other receivables 24,222,102,018.40 35,260,224,286.86

Total 24,376,780,344.43 35,452,476,217.90

(1) Interest receivable

Item Ending Balance Beginning balance

Others 7,585,671.23

Total 7,585,671.23

(2) Dividend receivable

Item Ending Balance Beginning

balance

Reasons for

non-recovery

Whether there's

impairment or

not and its

judgment basis

Dividends receivable

within one year 4,368,170.11

Including: Guangzhou

Metro Environmental

Engineering Co., Ltd.

4,368,170.11

F-401

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 129

Item Ending Balance Beginning

balance

Reasons for

non-recovery

Whether there's

impairment or

not and its

judgment basis

Dividends receivable over

one years 154,678,326.03 180,298,089.70

Including: Guangzhou

Metro Environmental

Engineering Co., Ltd.

25,619,763.67

Guangzhou Metro

Material Co., Ltd. 68,385,741.81 68,385,741.81

Cash

application

delayed

No

Guangzhou Metro

(foshan nanhai) Real Estate

Development Co., Ltd.

86,292,584.22 86,292,584.22

Cash

application

delayed

No

Total 154,678,326.03 184,666,259.81

F-402

Gua

ngzh

ou M

etro

Gro

up C

o., L

td.

For t

he Y

ear E

nded

Dec

31,

201

9 N

otes

to F

inan

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Sta

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ents

Note

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s ba

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teris

tics

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0.00

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71

0.04

35

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00

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3,71

3.41

0.

02

Oth

er r

ecei

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hat

are

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indi

vidu

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nific

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but

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prov

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00

6,93

3,71

3.41

F-403

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 131

i. Assessed bad debt provision in portfolios based on credit risk characteristics

Other receivables for bad debt provision by using age analysis method

Deposits:

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proportion

(%) Amount

Proportion

(%)

Within 6

months 5,977,420,000.00 99.93

6-12 months

1-2 years 27,893.78 2,789.38

2-3 years 2,171,000.00 0.04 434,200.00 542,551.48 21.10 108,510.30

3-4 years 542,551.48 0.01 108,510.30

4-5 years

Over 5 years 1,074,592.80 0.02 214,918.56 2,028,750.15 78.90 405,750.03

Total 5,981,236,038.06 100.00 760,418.24 2,571,301.63 100.00 514,260.33

Others:

Aging

Ending Balance Beginning balance

Book balance Bad debt

provision

Book balance Bad debt

provision Amount Proporti

on (%) Amount

Proporti

on (%)

Within 6 months 22,409,184.60 29.28 5,528,336.89 21.83

6-12 months 34,667,889.79 45.30 1,733,394.49 2,464,135.95 9.73 123,206.80

1-2 years 7,755,926.42 10.13 775,592.64 11,735,762.53 46.35 1,173,576.25

2-3 years 7,525,645.38 9.83 2,257,693.61 670,843.20 2.65 201,252.96

3-4 years 670,843.20 0.88 335,421.61

4-5 years

Over 5 years 3,502,824.12 4.58 3,502,824.12 4,921,417.07 19.44 4,921,417.07

Total 76,532,313.51 100.00 8,604,926.47 25,320,495.64 100.00 6,419,453.08

F-404

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 132

Other receivables for bad debt provision by using balance percentage method

or other combination method

Combination name

Ending Balance Beginning balance

Book balance Proportio

n (%)

Bad debt

provision Book balance

Proport

ion (%)

Bad debt

provision

Other receivables

portfolio without

impairment

18,173,699,011.54 35,239,266,203.00

Total 18,173,699,011.54 35,239,266,203.00

3. Long-Term Equity Investments

(1) Classification of long -term equity investments

Item Beginning balance Increase Decrease Ending Balance

Investment in Subsidiaries 3,017,494,158.97 25,028,804,809.78 44,145,432.19 28,002,153,536.56

Investment in joint ventures 4,203,615,234.07 37,039,540.06 4,240,654,774.13

Investment in associates 902,417,521.75 1,684,168,438.99 6,827,584.72 2,579,758,376.02

Subtotal 8,123,526,914.79 26,750,012,788.83 50,973,016.91 34,822,566,686.71

Less: Provision for impairment

Total 8,123,526,914.79 26,750,012,788.83 50,973,016.91 34,822,566,686.71

F-405

Gua

ngzh

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etro

Gro

up C

o., L

td.

For t

he Y

ear E

nded

Dec

31,

201

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Note

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F-406

Gua

ngzh

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etro

Gro

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o., L

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F-408

Gua

ngzh

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For t

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24

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36

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19

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12

2,30

6,20

0.58

F-409

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 137

(3) Major financial information of important joint ventures

Item

Current period Prior period

Guangdong Guangfo Rail

Transit Co., Ltd.

Guangzhou Siborui

Hotel Co., Ltd.

Guangdong Guangfo

Rail Transit Co., Ltd.

Guangzhou Siborui

Hotel Co., Ltd.

Current assets 5,060,932,309.76 27,491,539.36 3,339,746,715.65 35,150,507.49

Non-current assets 13,598,326,961.56 436,628,195.36 13,143,442,266.79 475,655,242.51

Total assets 18,659,259,271.32 464,119,734.72 16,483,188,982.44 510,805,750.00

Current liabilities 9,651,830,693.17 22,506,741.70 7,754,437,109.39 31,011,065.48

Non-current liabilities 93,340,029.57 72,000,000.00 16,111,899.93 72,000,000.00

Total liabilities 9,745,170,722.74 94,506,741.70 7,770,549,009.32 103,011,065.48

Net assets 8,914,088,548.58 369,612,993.02 8,712,639,973.12 407,794,684.52

Net asset share based on

shareholding proportion 4,055,848,277.62 184,806,496.51 3,999,717,891.81 203,897,342.27

Adjustments

Book value of equity

investment in joint ventures 4,055,848,277.62 184,806,496.51 3,999,717,891.81 203,897,342.27

Revenue 344,546,355.35 54,541,788.44 314,361,783.03 66,159,875.66

Financial expenses -1,076,377.74 3,615,849.41 2,314,254.89 3,552,591.71

Income tax expenses

Net profit 196,260,090.25 -38,894,625.43 106,071,342.69 -32,636,217.56

Other comprehensive income

Total comprehensive income 196,260,090.25 -38,894,625.43 106,071,342.69 -32,636,217.56

Dividends received from joint

ventures

(4) Major financial information of important associates

Item

Current period Prior period

Guangzhou Zhongche

Rail Transit Equipment

Co., Ltd.

Guangzhou Metro

Microfinance Co., Ltd.

Guangzhou Zhongche

Rail Transit Equipment

Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Current assets 175,293,973.04 45,867,096.20 252,600,485.57 142,384,289.79

Non-current assets 563,182,639.98 304,742,402.30 577,273,866.18 205,056,873.71

Total assets 738,476,613.02 350,609,498.50 829,874,351.75 347,441,163.50

Current liabilities 194,051,755.92 24,760,735.50 298,898,296.43 5,401,403.13

Non-current liabilities 26,699,323.50 26,608,103.14

F-410

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 138

Item

Current period Prior period

Guangzhou Zhongche

Rail Transit Equipment

Co., Ltd.

Guangzhou Metro

Microfinance Co., Ltd.

Guangzhou Zhongche

Rail Transit Equipment

Co., Ltd.

Guangzhou Metro

Microfinance Co.,

Ltd.

Total liabilities 220,751,079.42 24,760,735.50 325,506,399.57 5,401,403.13

Net assets 517,725,533.60 325,848,763.00 504,367,952.18 342,039,760.37

Net asset share based on

shareholding proportion 207,090,213.44 97,754,628.91 201,747,180.87 102,611,928.11

Adjustments

Book value of equity investment

in associates 207,090,213.44 97,754,628.91 201,747,180.87 102,611,928.11

Revenue 764,234,297.21 43,512,657.08 1,653,549,966.23 33,851,544.77

Net profit 3,039,186.84 19,658,247.19 32,752,426.82 15,359,372.87

Other comprehensive

income

Total comprehensive

income 3,039,186.84 19,658,247.19 32,752,426.82 15,359,372.87

Dividends received from

associates 4,147,030.67 3,408,838.55

(5) Summary information of unimportant joint ventures and associates

Item Current period Prior period

Joint ventures:

Total book value of investments

The following items are total amount

based on shareholding proportion

Net profit -5,254,807.74 -7,041,303.31

Other comprehensive income

Total comprehensive income -5,254,807.74 -7,041,303.31

Associates:

Total book value of investments 2,274,913,533.67 598,058,412.76

The following items are total amount

based on shareholding proportion

Net profit -189,745,415.76 2,828,092.24

Other comprehensive income 461,054.26 460,476.69

F-411

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 139

Item Current period Prior period

Total comprehensive income -189,284,361.50 3,288,568.93

4. Operating Income and Operating Cost

Item Current period Prior period

Revenue Cost Revenue Cost

Transportation income 5,507,681,203.10 6,353,490,067.18 4,987,917,530.99 5,988,491,740.32

Property 2,333,239,570.85 850,145,470.05 489,721,292.85 326,956,622.38

Resource management 697,147,388.73 46,593,989.49 620,710,680.62 71,921,761.36

Industry external

service 32,689,349.78 2,103,008.11 19,513,958.08 977,171.52

Others 1,267,687,228.65 85,377,042.86 760,062,457.52 42,207,566.64

Total 9,838,444,741.11 7,337,709,577.69 6,877,925,920.06 6,430,554,862.22

5. Investment Income

Sources of income from investment Current year Previous year

Investment income from long-term equity investments

under the cost method 179,302,325.41 214,769,677.48

Investment income from long-term equity investments

under the equity method -280,963,916.52 20,536,874.84

Investment income from disposal of long-term equity

investments 1,198,675,881.24 968,794,647.02

Investment income from financial assets at fair value

through profit or loss during holding period 15,168,539.25

Investment income from disposal of financial assets at

fair value through profit or loss 181,478,027.08 93,798,998.83

Investment income from held-to-maturity investment

during holding period 72,176,334.30

Investment income from available-for-sale financial

assets during holding period 15,168,539.25

Others 13,880,741.10 179,913.25

Total 1,307,541,597.56 1,385,424,984.97

6. Cash flow statement

(1) Supplementary information of Statement of Cash Flow

F-412

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 140

Item Current year Prior year

1.Adjustments to reconcile net income to net cash

provided by operating activities:

Net profit 476,367,743.70 -392,331,225.84

Plus: Provision for impairment of assets 509,984,779.02 1,584,508,396.57

Loss of impairment of credit assets

Depreciation of fixed assets 812,598,503.26 766,335,591.16

Amortization of intangible assets 10,694,613.98 112,346,992.85

Amortization of long-term deferred assets 13,312,069.00 38,525,810.53

Losses on disposal of fixed assets, intangible assets

and other long-term assets ("-" for gains) 8,809,892.33 -43,116,353.29

Losses on scrapping of fixed assets ("-" for gains)

Loss on fair value fluctuation ("-" for gains) -13,863,603.07 -98,591,509.03

Financial expenses ("-" for gains) 1,803,368,570.31 1,639,256,419.74

Investments loss ("-" for gains) -1,307,541,597.56 -1,385,424,984.97

Decrease in deferred tax assets ("-" for increase)

Increase in deferred tax liabilities ("-" for decrease)

Decrease in inventories ("-" for increase) -628,861,011.79 5,029,652,239.48

Decrease in operating receivables ("-" for increase) 9,492,620,865.85 -16,691,151,504.73

Increase in operating payables ("-" for decrease) 2,889,571,780.12 -11,456,320,518.73

Others

Net cash flows from operating activities 14,067,062,605.15 -20,896,310,646.26

2. Significant investing and financing activities that do

not involve cash receipts or payments:

Conversion of debt into capital

Convertible bonds to be expired within 1 year

Fixed assets under finance lease

3. Net increase in cash and cash equivalents:

Cash at the end of the period 9,630,753,930.49 18,068,958,417.11

Less: Cash at the beginning of the period 18,068,958,417.11 6,616,397,291.04

Plus: Cash equivalents at the end of the period

Less: Cash equivalents at the beginning of the period

Net increase in cash and cash equivalents -8,438,204,486.62 11,452,561,126.07

F-413

Guangzhou Metro Group Co., Ltd. For the Year Ended Dec 31, 2019 Notes to Financial Statements

Notes to Financial Statements Page 141

(2) Net cash received from acquisition or disposal of subsidiaries

Item Current year

1. Cash or cash equivalents paid by enterprises merged in the current

period

Plus: Cash or cash equivalents paid in the current period by

enterprises merged in previous periods

Obtain net cash payments from subsidiaries

2. Cash or cash equivalents received from disposal of subsidiaries in

the current period1,228,463,900.07

Plus: Cash or cash equivalents received this period which was

from disposal of subsidiaries during the previous period 29,914,900.47

Net cash receipts from disposals of subsidiaries 1,258,378,800.54

(3) Cash and cash equivalents

Item Ending balance Beginning balance

1. Cash 9,630,753,930.49 18,068,958,417.11

Including: Cash on hand 1,001,172.50 2,402,941.90

Bank deposit available for use 7,165,733,049.83 17,832,423,201.84

Other monetary funds avaivalbe for use 2,464,019,708.16 234,132,273.37

Cash in central bank available for

payment

Call loan from banks

Call loan to banks

2. Cash equivalents

Including: Debt investments due within 3

months

3. Cash and cash equivalents at the end of the

period 9,630,753,930.49 18,068,958,417.11

Restricted use of cash and cash equivalents by

the parent company or subsidiaries within the

group

63,149,789.45 36,662,154.72

Guangzhou Metro Group Co., Ltd.

25 March 2020

F-414

F-415

F-416

3

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Notes

Six month ended 30 June

2021 2020

HK$ HK$

Investment income and gains, net 5 17,535,398 30,084,776

Other gain and loss, net 6 (13,425,315) 42,235,819

Share of result of an associate 11 563,834,132 437,635,379

Administrative expenses (339,799) (2,319,267)

Finance costs 7 (112,494,294) (173,704,318)

Profit/(loss) before income expense 8 455,110,122 333,932,389

Income tax expense 9 - -

Profit/(loss) for the year 455,110,122 333,932,389

Other comprehensive income

Items that will not be reclassified to profit or loss:

Change in fair value of equity investments at fair value

through other comprehensive income

Items that may be reclassified subsequently to profit

or loss:

771,386,000

(265,076,280)

Change in fair value of debt investments at fair value

through other comprehensive income

Share of other comprehensive income of an associate

11

-

(5,951,054)

-

(45,210,831)

Reclassification adjustment to profit or loss on

disposal of debt investments at fair value through

other comprehensive income

-

-

Other comprehensive income for the year, net of tax 765,434,946 (310,287,111)

Total comprehensive income for the year 1,220,545,068 23,645,278

F-417

4

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2021

Notes 30 June

2021

31 December

2020

HK$ HK$

Assets

Non-current assets

Interest in Associates 11 10,960,209,908 10,199,669,180

Financial assets at fair value through other

comprehensive income 12 1,430,570,400

659,184,400

Total non-current assets 12,390,780,308 10,858,853,580

Current assets

Other receivables 194,101,350 -

Derivative financial instruments - -

Loan to immediate holding company 13 1,552,759,529 1,550,600,178

Cash and cash equivalents 14 795,775,079 1,289,198,517

Total current assets 2,542,635,958 2,839,798,695

Total assets 14,933,416,266 13,698,652,275

Liabilities

Current liabilities

Accruals 44,472,241 43,832,200

Amount due to immediate holding company 15 42,287,601 41,938,988

Bank borrowings - -

Notes payable 16 1,536,575,871 1,534,439,027

Total current liabilities 1,623,335,713 1,620,210,215

F-418

F-419

6

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Share capital (note 17)

Financial assets at fair value through

other comprehensive income reserve

(note 18)

Other reserve (note 18)

Accumulated losses/retained

profit (note 18)

Total HK$ HK$ HK$ HK$ HK$ At 1 January 2020 777,077,505 (68,723,480) (25,172,316) 2,917,721,557 3,600,903,266 Profit/(Loss) for the year 742,356,740 742,356,740 Other comprehensive income Change in fair value of equity

investments at fair value through other comprehensive income

-

(272,088,880)

-

-

(272,088,880)

Change in fair value of debt investments at fair value through other comprehensive income

-

-

-

-

-

Share of other comprehensive income of an associate - - 41,232,633 - 41,232,633

Total comprehensive income for

the year - (272,088,880) 41,232,633 742,356,740 511,500,493

At 31 December 2020 777,077,505 (340,812,360) 16,060,317 3,660,078,297 4,112,403,759 Profit/(Loss) for the six months - - 455,110,122 455,110,122

Other comprehensive income Change in fair value of equity

investments at fair value through other comprehensive income

-

771,386,000

-

-

771,386,000

Change in fair value of debt investments at fair value through other comprehensive income

-

-

-

-

-

Share of other comprehensive income of an associate - - (5,951,054) - (5,951,054)

Total comprehensive income for

the six months - 771,386,000 (5,951,054) 455,110,122 1,220,545,068

At 30 June 2021 777,077,505 430,573,640 10,109,263 4,115,188,419 5,332,948,827

F-420

7

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2021

Six month ended 30 June 2021 2020 HK$ HK$ Cash flows from operating activities Profit/(Loss) before income tax expense 455,110,122 333,932,389 Adjustments for: Interest income from bank deposits (1,406,418) (1,335,616)

Share of result of an associate (563,834,132) (437,635,379) Interest income from Loan to immediate holding company - -

Interest expense 112,494,294 173,704,318 Dividend income (16,128,980) (28,749,160)

Net unrealised (gain)/loss on derivative financial instruments - (32,978,545)

Net realised (gain)/loss on disposal of financial assets at fair value through other comprehensive income - -

Exchange difference 12,059,572 19,552,237 Operating profit before working capital changes (1,705,542) 26,490,244 Decrease/(increase) in other receivable - -

Dividend received from FVOCI 16,128,980 - (Decrease)/Increase in accruals - (1,502,761) Net cash from operating activities 14,423,438 24,987,483 Cash flows from investing activities Investment in an associate (396,759,000) -

Dividend received from an associate - - Proceeds from disposal of financial assets at fair value through other comprehensive income - -

Proceeds from disposal of financial assets at fair value through profit or loss - -

Loan to immediate holding company - - Repayment of loan to immediate holding company - - Interests received 1,406,418 1,335,616

Decrease in fixed deposits with original maturity over three months - -

Net cash used in investing activities (395,352,582) 1,335,616

F-421

8

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Six months ended 30 June 2021 2020 HK$ HK$ Net cash from financing activities

Proceeds from issue of shares - - Increase in amount due to immediate holding company - -

Proceeds from issue of notes - - Repayment of notes - -

Proceeds from bank borrowings - 3,581,886,000 Repayment of bank borrowings - (3,662,000,000) Interest paid for bank borrowings - (93,972,466) Interest paid for Notes payable (112,494,294) (79,731,852) Net cash from/(used in) financing activities (112,494,294) (253,818,318) Net increase/(decrease) in cash and cash equivalents (493,423,438) (227,495,219) Cash and cash equivalents at beginning of the period 1,289,198,517 246,544,005 Cash and cash equivalents at end of the period 795,775,079 19,048,786

F-422

9

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

1. GENERAL

Guangzhou Metro Investment Finance (HK) Limited (the "Company") is a limited liability company incorporated in Hong Kong. Its registered office is at 16th Floor, Wing On Centre,111 Connaught Road Central, Hong Kong and its principal place of business is at Tower A, Wansheng Square, No.1238 Xingang East Road, Haizhu District, Guangzhou, the People’s Republic of China (the "PRC"). The Company and its subsidiary (collectively the “Group”) are principally engaged in investments in listed financial instruments. The Company’s immediate holding is Guangzhou Metro Group Co., Ltd., a company incorporated in the PRC. The directors of the Company consider that the Company is ultimately controlled by the Guangzhou Municipal Government in the PRC.

2. ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS ("HKFRSs")

(a) Adoption of new/revised HKFRSs - effective 1 January 2020

In the current year, the Group has applied for the first time the following new or revised HKFRSs issued by Hong Kong Institute of Certified Public Accountants (“HKICPA"), which are relevant to and effective for the Group’s consolidated financial statements for the annual period beginning on 1 January 2020:

Amendments to HKFRS 3 Definition of a Business Amendments to HKAS 1 and

HKAS 8 Definition of Material

Amendments to HKAS 39, HKFRS 7 and HKFRS 9

Interest Rate Benchmark Reform

Conceptual Framework for Financial Reporting

Revised Conceptual Framework for Financial Reporting

The adoption of the new or revised HKFRSs has no material impact on the Group’s consolidated financial statements.

F-423

10

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

2. ADOPTION OF HKFRSs - Continued (b) New or revised HKFRSs that have been issued but are not yet

effective

The following new/revised HKFRSs, potentially relevant to the Group’s consolidated financial statements, have been issued, but are not yet effective and have not been early adopted by the Group. The Group’s current intention is to apply these changes on the date they become effective.

Amendments to HKAS 39, HKFRS 4, HKFRS 7, HKFRS 9 and HKFRS 16

Interest Rate Benchmark Reform - Phase 2

Amendments to HKFRS 16 Covid-19 - Related Rent Concessions beyond 30 June 2021

Amendments to HKAS 16 Amendments to HKAS 37 Amendments to HKFRS 1, HKFRS 9 and HKFRS 16 Amendments to HKFRS 3

Proceeds before Intended Use Onerous Contracts - Cost of Fulfilling a Contract Annual improvements HKFRS 2018-2020 Reference to the Conceptual Framework

Amendments to HKAS 1 HK Interpretation 5 (2020) HKFRS 17 Amendments to HKAS 1 Amendments to HKAS 8 Amendments to HKFRS 10

and HKAS 28

Classification of Liabilities as Current or Non-current Presentation of Financial Statements - Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause Insurance Contracts Disclosure of Accounting Policies Definition of Accounting Estimates Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The directors of the Company are in the process of making an assessment of the potential impact of these new or revised HKFRSs and the directors so far concluded that the application of these new or revised HKFRSs will have no material impact on the Group’s consolidated financial statements.

F-424

11

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 3. BASIS OF PREPARATION

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with all applicable HKFRSs, Hong Kong Accounting Standards "HKASs" and Interpretations (hereinafter collectively referred to as the “HKFRSs") by the Hong Kong Institute of Certified Public Accountants, and the provisions of the Hong Kong Companies Ordinance which concern the preparation of financial statements.

(b) Basis of measurement

The consolidated financial statements have been prepared under the historical cost basis except for certain financial instruments, which are measured at fair values as explained in the accounting policies set out below.

(c) Use of estimates and judgements The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involvi ng a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements are disclosed in note 25. (d) Functional and presentation currency The financial statements are presented in Hong Kong dollars (“HK$”), which is same as the functional currency of the Company.

F-425

12

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 4. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiary. Inter-company transactions and balances between group companies together with unrealised profits are eliminated in full in preparing the consolidated financial statements. Unrealised losses are also eliminated unless the transaction provides evidence of impairment on the asset transferred, in which case the loss is recognised in profit or loss.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the dates of acquisition or up to the dates of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

Acquisition of subsidiaries or businesses is accounted for using the acquisition method. The cost of an acquisition is measured at the aggregate of the acquisition-date fair value of assets transferred, liabilities incurred and equity interests issued by t he Group, as the acquirer. The identifiable assets acquired and liabilities assumed are principally measured at acquisition-date fair value. The Group’s previously held equity interest in the acquiree is re-measured at acquisition-date fair value and the resulting gains or losses are recognised in profit or loss. The Group may elect, on a transaction-by-transaction basis, to measure the non-controlling interests that represent present ownership interests in the subsidiary either at fair value or at the proportionate share of the acquiree’s identifiable net assets. All other non-controlling interests are measured at fair value unless another measurement basis is required by HKFRSs. Acquisition-related costs incurred are expensed unless they are incurred in issuing equity instruments in which case the costs are deducted from equity. Any contingent consideration to be transferred by the acquirer is recognised at acquisition-date fair value. Subsequent adjustments to consideration are recognised against goodwill only to the extent that they arise from new information obtained within the measurement period (a maximum of 12 months from the acquisition date) about the fair value at the acquisition date. All other subsequent adjustments to contingent consideration classified as an asset or a liability are recognised in profit or loss.

F-426

13

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(b) Subsidiaries

A subsidiary is an investee over which the Company is able to exercise control. The Company controls an investee if all three of the following elements are present: (1) power over the investee, (2) exposure, or rights, to variable returns from the investee, and (3) the ability to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. In the Company’s statement of financial position, investment in a subsidiary is stated at cost less impairment loss, if any. The result of subsidiary is accounted for by the Group on the basis of dividend received and receivable. (c) Associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor a joint arrangement. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies. Associates are accounted for using the equity method whereby they are initially recognised at cost and thereafter, their carrying amount are adjusted for the Group's share of the post-acquisition change in the associates’ net assets except that losses in excess of the Group's interest in the associate are not recognised unless there is an obligation to make good those losses. Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests In the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate. Where unrealised losses provide evidence of impairment of the asset transferred they are recognised immediately in profit or loss. Any premium paid for an associate above the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. Where there is objective evidence that the investment in an associate has been impaired, the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.

F-427

14

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued (c) Associates - Continued If the initial accounting for acquisition of an associate is incomplete by the end of the reporting period in which the acquisition occurs, the acquisition of an associate is initially accounted for on a provisional basis. The Group retrospectively adjusts the provisional amounts recognised during the measurement period, based on new information obtained about facts and circumstances that existed as of the acquisition date. The measure ment period is the period from the date the Group obtains complete information about the facts and circumstances that existed as of the acquisition date, and ends on 12 months from the date of acquisition. In the Company's statement of financial position, investment in an associate is accounted for using equity method as mentioned above. (d) Financial instruments

(i) Financial assets A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the market place. Financial assets with embedded derivatives are considered in their entirely when determining whether their cash flows are solely payment of principal and interest. Debt instruments Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

F-428

15

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(d) Financial instruments - Continued (i) Financial assets - Continued

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets at amortised cost are subsequently measured using the effective interest rate method. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain on derecognition is recognised in profit or loss. FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest rate method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss. FVTPL: Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial recognition at FVTPL, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at FVTPL, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at FVOCI, as described above, debt instruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

F-429

16

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(d) Financial instruments - Continued (i) Financial assets - Continued

Equity instruments On initial recognition of an equity investment that is not held for trading, the Group could irrevocably elect to present subsequent changes in the investment ’s fair value in other comprehensive income. This election is made on an investment-by-investment basis. Equity investments at FVOCI are measured at fair value. Dividend income are recognised in profit or loss unless the dividend income clearly represents a recovery of part of the cost of the investments. Other net gains and losses are recognised in other comprehensive income and are not reclassified to profit or loss. All other equity instruments are classified as FVTPL, whereby changes in fair value, dividends and interest income are recognised in profit or loss. (ii) Impairment loss on financial assets The Group recognises loss allowances for ECLs on financial assets measured at amortised cost and debt investments measured at FVOCI. The ECLs are measured on either of the following bases: (1) 12-month ECLs: these are the ECLs that result from possible default events within the 12 months after the reporting date; and (2) lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument. The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the assets’ original effective interest rate. For debt financial assets, the ECLs are based on the 12-month ECLs. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information.

F-430

17

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(d) Financial instruments - Continued (ii) Impairment loss on financial assets - Continued

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. Despite the foregoing, the Group assumes that the credit risk on a debt instrument has not increased significantly since initial recognition if the debt instrument is determined to have low credit risk at the reporting date. A debt instrument is determined to have low credit risk if (1) it has a low risk of default; (2) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term; and (3) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a financial asset to be in default when: (1) the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or (2) the financial asset is more than 90 days past due. A financial asset is credit-impaired when one or more events of default that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events: ▪ significant financial difficulty of the issuer or the borrower; ▪ a breach of contract, such as a default or past due event; ▪ the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

the disappearance of an active market for that financial asset because of financial difficulty of the issuer or the borrower. Interest income on credit-impaired financial assets is calculated based on the amortised cost (i.e. the gross carrying amount less loss allowance) of the financial asset. For non credit-impaired financial assets interest income is calculated based on the gross carrying amount.

F-431

18

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(d) Financial instruments - Continued (ii) Impairment loss on financial assets - Continued The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amount subject to the write-off. Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs. (iii) Financial liabilities The Group classifies its financial liabilities, depending on the purpose for which the liabilities were incurred. Financial liabilities at FVTPL are initially measured at fair value and financial liabilities at amortised costs are initially measured at fair value, net of directly attributable costs incurred. Financial liabilities at amortised cost Financial liabilities at amortised cost including accruals, amount due to immediate holding company, bank borrowings and notes payable are subsequently measured at amortised cost, using the effective interest method. The related interest expense is recognised in profit or loss. Gains or losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

(iv) Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability, or where appropriate, a shorter period. (v) Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

F-432

19

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(d) Financial instruments - Continued (vi) Derecognition The Group derecognises a financial asset when the contractual rights to the future cash flows in relation to the financial asset expire or when the financial asset has been transferred and the transfer meets the criteria for derecognition in accordance with HKFRS 9. Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires.

(e) Foreign currency

Transactions entered into by the group entities in currencies other than the currency of the primary economic environment in which it operates (the “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the end of reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income, in which case, the exchange differences are also recognised in other comprehensive income. On consolidation, income and expense items of foreign operations are translated into the presentation currency of the Group (i.e. HK$) at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the rates approximating to those ruling when the transactions took place are used. All assets and liabilities of foreign operations are translated at the rate ruling at the end of reporting period. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity as foreign exchange reserve (attributed to non-controlling interests as appropriate). Exchange differences recognised in profit or loss of group entities’ separate financial statements on the translation of long-term monetary items forming part of the Group’s net investment in the foreign operation concerned are reclassified to other comprehensive income and accumulated in equity as foreign exchange reserve.

F-433

20

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(e) Foreign currency - Continued On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are reclassified to profit or loss as part of the profit or loss on disposal.

(f) Revenue recognition

Interest income is accrued on a time basis on the principal outstanding at the applicable interest rate.

Dividend income is recognised when the right to receive the dividend is established.

(g) Income taxes

Income taxes for the year comprise current tax and deferred tax. Current tax is based on profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purposes and is calculated using tax rates that have been enacted or substantively enacted at the end of reporting period. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for tax purposes. Except for recognised assets and liabilities that affect neither accounting nor taxable profits, deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible tempora ry differences can be utilised. Deferred tax is measured at the tax rates appropriate to the expected manner in which the carrying amount of the asset or liability is realised or settled and that have been enacted or substantively enacted at the end of reporting period. Income taxes are recognised in profit or loss except when they relate to items recognised in other comprehensive income in which case the taxes are also recognised in other comprehensive income.

(h) Impairment of assets (other than financial assets)

At the end of each reporting period, the Company reviews the carrying amount of investment in a subsidiary to determine whether there is any indication that the asset has suffered an impairment loss or an impairment loss previously recognised no longer exists or may have decreased.

F-434

21

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(h) Impairment of assets (other than financial assets) - Continued

If the recoverable amount (i.e. the greater of the fair value less costs to sell and value in use) of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognise d as expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

Value in use is based on the estimated future cash flows expected to be derived from the asset or cash generating unit, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit.

(i) Capitalisation of borrowing costs

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalised as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalised. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(j) Provisions and contingent liabilities Provisions are recognised for liabilities of uncertain timing or amount when the Company has a legal or constructive obligation arising as a result of a past event, which will probably result in an outflow of economic benefits that can be reasonably estimated. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, the existence of which will only be confirmed by the occurrence or non- occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

F-435

22

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

4. SIGNIFICANT ACCOUNTING POLICIES - Continued

(k) Related parties

(a) A person or a close member of that person’s family is related to the Group if that person:

(i) has control or joint control over the Group; (ii) has significant influence over the Group; or (iii) is a member of key management personnel of the Group or the Group’s

parent

(b) An entity is related to the Group if any of the following conditions apply:

(i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

(iii) Both entities are joint ventures of the same third party; (iv) One entity is a joint venture of a third entity and the other entity is an

associate of the third entity; (v) The entity is a post-employment benefit plan for the benefit of the

employees of the Group or an entity related to the Group; (vi) The entity is controlled or jointly controlled by a person identified in (a); (vii) A person identified in (a)(i) has significant influence over the entity or is a

member of key management personnel of the entity (or of a parent of the entity); or

(viii) The entity, on any member of a group of which it is a part, provides key management personnel services to the Group or to the Group’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include: (i) that person’s children and spouse or domestic partner; (ii) children of that person’s spouse or domestic partner; and (iii) dependents of that person or that person’s spouse or domestic partner.

F-436

23

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 5. INVESTMENT INCOME AND GAINS, NET Six months ended 30 June

2021 2020

HK$ HK$ Interest income - Financial assets at FVTPL - - Financial assets at FVOCI - -Bank deposits 1,406,418 1,335,616 1,406,418 1,335,616 Dividend income - Financial assets at FVOCI 16,128,980 28,749,160 Net realized gain on disposal of financial assets at FVTPL - - Net realized gain on disposal of financial assets at FVOCI - - 17,535,398 30,084,776

6. OTHER GAIN AND LOSS, NET Six months ended 30 June

2021 2020

HK$ HK$ Net unrealised gain/(loss) on derivative financial

instruments - 32,978,545

Exchange gain/(loss), net (13,425,315) 9,257,274 (13,425,315) 42,235,819

7. FINANCE COSTS Six months ended 30 June

2021 2020

HK$ HK$ Interest expense on notes payable 112,494,294 79,731,852 Interest expense on bank borrowings - 93,972,466 112,494,294 173,704,318

F-437

24

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 8. LOSS BEFORE INCOME TAX EXPENSE Loss before income tax expense is arrived at after charging Six months ended 30 June

2021 2020

HK$ HK$ Exchange loss, net - - Auditor’s remuneration 152,488 114,944 152,488 114,944

9. INCOME TAX EXPENSE Hong Kong profits tax has not been provided for as the Group has no estimated assessable profits for the year. 10. DIRECTORS’ REMUNERATION The directors did not receive or entitle to any fee or emolument in respect of their services to the Group during the year. 11. INTEREST IN ASSOCIATES 30 June

2021 31 December

2020 HK$ HK$ At 1 January 10,199,669,180 9,494,595,550 Acquisition of an associate 396,759,000 - Gain on bargain purchase - - Dividend received - (326,538,139) Dividend receivable (194,101,350) - Share of result of an associate 563,834,132 990,379,136 Share of other comprehensive income of an associate (5,951,054) 41,232,633 10,960,209,908 10,199,669,180

F-438

25

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 11. INTEREST IN ASSOCIATES - Continued Note: (a) On 27 February 2019, the Company entered into a conditional subscription

agreement (the “Subscription Agreement") with Yuexiu Property Company Limited (“Yuexiu Property"), a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), relating to the proposed subscription by the Company of 3,080,973,807 subscription shares at the subscription price of HK$2.00 per subscription share for a total consideration of HK$6,161,947,614. The transaction was completed on 10 April 2019.

On February 2021, the Company entered into an investment agreement (the “Investment Agreement") with Yuexiu Services Group Limited (“Yuexiu Services "), a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), relating to the proposed subscription by the Company of 90,359,677 subscription shares for a total consideration of RMB330,000,000. The transaction was completed on 8 February 2021.

(b) Particulars of the Group’s associates as at 30 June 2021 are as follows:

Name of associate

Place of incorporation/

registration and business

Description of shares held

Percentage of equity attributable to the

Company Principal activities

Direct Indirect Yuexiu Property Company Limited

Hong Kong

3,080,973,807 ordinary

share of HK$2 each

19.9% Real estate development

Yuexiu 90,359,677 Services Hong Kong ordinary 8.148148% Property Group Limited share management

The above associates are accounted for using equity method in the consolidated financial statements. The accounting policies of financial statements of the above associate are conterminous with those of the Group. The shares of Yuexiu Property and Yuexiu services are listed on the Main Board of the Stock Exchange. As at 30 June 2021, the quoted market prices were HK $8.18 and HK $5.55 per share respectively.

F-439

26

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 12. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

30 June 2021

31 December 2020

HK$ HK$ Listed debt securities in Hong Kong, at fair value - - Unlisted debt securities, at fair value - - Listed equity securities in Hong Kong, at fair value 1,430,570,400 659,184,400 1,430,570,400 659,184,400 Details of disclosure for fair value measurement are set out in note 22. 13. LOAN TO IMMEDIATE HOLDING COMPANY As at 30 June 2021, the balance of loan to immediate holding company of HK$ 1,552,759,529 (2020: HK$ 1,550,600,178) was unsecured, interest-free and repayable within one year. 14. FIXED DEPOSITS WITH ORIGINAL MATURITY OVER THREE MONTHS/CASH AND CASH EQUIVALENTS

30 June 2021

31 December 2020

HK$ 795,775,079

HK$ 1,289,198,517 Cash and cash equivalents

Cash at banks earns interest at floating rates based on daily bank deposit rates. 15. AMOUNT DUE TO IMMEDIATE HOLDING COMPANY The amount due to immediate holding company was unsecured, interest free and repayable on demand.

F-440

27

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 16. NOTES PAYABLE 30 June

2021 31 December

2020 HK$ HK$

US$200,000,000 4.300% guaranteed notes, listed in Hong Kong

1,536,575,871 1,534,439,027

US$200,000,000 2.609% guaranteed notes, listed in Hong Kong 1,546,304,632 1,544,154,259

US$330,000,000 2.310% guaranteed notes, listed in Hong Kong 2,556,834,880 2,553,279,209

US$500,000,000 1.507% guaranteed notes, listed in Hong Kong 3,873,992,214 3,868,604,833

9,513,707,597 9,500,477,328

Classified as: Non-current liabilities 7,977,131,726 7,966,038,301 Current liabilities 1,536,575,871 1,534,439,027 9,513,707,597 9,500,477,328

Guangzhou Metro Investment Finance (BVI) Limited (“GMBVI”), a subsidiary of the Company, issued guaranteed notes. The guaranteed notes were guaranteed by the Company with credit enhancement measures, such as the keepwell deed and deed of equity interest purchase undertaking from the immediate holding company of the Company. 17. SHARE CAPITAL (a) Issued share capital

30 June 2021

31 December 2020

HK$ HK$ Issued and fully paid: Ordinary shares 777,077,505 777,077,505 777,077,505 777,077,505

F-441

28

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 17. SHARE CAPITAL - Continued Note: On 12 October 2018, the issued share capital of the Company was increased from US$10,000 (equivalent to approximately HK$77,505) to US$10,010,000 (equivalent to approximately HK$777,077,505) by the issue of 100,000,000 ordinary shares for total cash proceeds of US$100,000,000 (equivalent to approximately HK$777,000,000). (b) Capital management policy The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for the members and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the Group consists of equity attributable to owners of the Group only, comprising share capital and reserves. In order to maintain or adjust the capital structure, the Group will consider the macro economic conditions, prevailing borrowing rate in the market and adequacy of cash flows generating from operations and may raise funding through bank borrowings and notes as necessary. 18. RESERVES Nature and purpose of reserves The following table describes the nature and purpose of each reserve within owners’ equity.

Reserves Description and purposes

Financial assets at fair value through other comprehensive income reserve Other reserve

Balance represents fair value reserve comprises the cumulative net change in the fair value of equity investment designated at FVOCI under HKFRS 9 that are held at the end of the reporting period. Cumulative net gains and losses recognised from share of other comprehensive income of an associate.

Accumulated losses/ ( retained profit)

Cumulative net gains and losses recognised in profit or loss.

F-442

29

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 19. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

30 June 2021

31 December 2020

HK$ HK$ Assets Non-current assets Investment in a subsidiary 173,469,591 173,469,591 Interest in Associates 10,960,209,908 10,199,669,180

Financial assets at fair value through OCI 1,430,570,400 659,184,400 Financial assets at fair value through profit or loss - - Total non-current assets 12,564,249,899 11,032,323,171 Current assets Other receivables 194,101,350 -

Financial assets at fair value through OCI - - Amount due from a subsidiary - -

Derivative financial instruments - - Loan to a subsidiary - - Cash and cash equivalents 795,772,587 1,289,196,183 Total current assets 989,873,937 1,289,196,183 Total assets 13,554,123,836 12,321,519,354 Liabilities Current liabilities Accruals 798,613 518,610 Amount due to immediate holding company 42,287,601 41,938,988

Amount due to a subsidiary 5,794,978,979 5,896,223,105 Derivative financial instruments - -

Loan from a subsidiary 2,270,434,891 2,270,434,891 Bank borrowings - - Total current liabilities 8,108,500,084 8,209,115,594 Non-current liabilities Loan from a subsidiary - - Total non-current liabilities - - Total liabilities 8,108,500,084 8,209,115,594 NET ASSETS 5,445,623,752 4,112,403,760 Capital and reserves Share capital 777,077,505 777,077,505 Reserves 4,668,546,247 3,335,326,255 TOTAL EQUITY/(DEFICITS) 5,445,623,752 4,112,403,760

F-443

30

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 20. INTEREST IN A SUBSIDIARY Particulars of the Company’s subsidiary as at 30 June 2021 are as follows:

Name

Place of incorporation/

registration and business

Description of shares

held

Percentage of equity attributable to the Company Principal

activities Direct Indirect

Guangzhou Metro Investment Finance (BVI) Limited

The British Virgin Islands

100,000,000 ordinary share of

US$1 each

100% Issue of notes

21. FINANCIAL INSTRUMENTS - RISK MANAGEMENT The Group is exposed through its operations to the following risks from its use of financial instruments:

Market risks; Liquidity risk; and Credit risk

Policy for managing these risks is set by the directors following recommendations from management. The policy for each of the above risks is summarised below.

(a) Market risks

(i) Interest rate risk

The Group’s interest rate risk mainly arises from cash and cash equivalents (note 14), bank borrowings and notes payable (note 16). Borrowings are effectively on fixed rate basis through the use of interest rate swaps and investments in debt securities and borrowings at fixed rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. Management monitors the Group’s exposure on ongoing basis.

To manage the floating Interest rates, the Group enters into Interest rate swap, In which the Group agrees to exchange, at specified intervals, the floating interest rate to fixed contract rate amounts calculated by reference to the agreed notional amount. It is the Group’s policy to obtain quotes from the financial institutions to ensure that the most favourable rates are made available to the Group.

F-444

31

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

21. FINANCIAL INSTRUMENTS -RISK MANAGEMENT - Continued

(a) Market risks - Continued

(i) Interest rate risk - Continued As at 30 June 2021 and 31 December 2020, the Group has not entered into any interest rate swap. The following table details interest rate profile of the Group’s financial assets and liabilities at the end of the reporting period.

30 June 2021 31 December 2020 Effective

interest rate

Effective interest rate

(%) HK$ (%) HK$ Financial assets Cash and cash equivalents 0.01%-0.62% 795,775,079 0.01%-0.62% 1,289,198,517 795,775,079 1,289,198,517 Financial liabilities Variable rate bank borrowings - -

- -

fixed rate bank borrowings - - - - Fixed rate notes payable 1.51%-4.30% 9,513,707,597 1.51%-4.30% 9,500,477,328

9,513,707,597

9,500,477,328 (ii) Foreign exchange risk Foreign exchange risk arises when the Group enters into transactions denominated in a currency other than its functional currency. The Group is exposed to foreign exchange risk arising primarily from US$ and RMB. Foreign exchange risk arises from future commercial transactions and financial instruments. Management monitors exchange rate movements closely to ascertain if any material exposure may arise. Regarding transactions denominated in US$, as HK$ is pegged to US$, the Group does not expect any significant movements in the HK$/US$ exchange rate. In this regard, the Group does not consider itself exposed to significant currency risk arising from US$. No sensitivity analysis is therefore presented.

F-445

32

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 21. FINANCIAL INSTRUMENTS - RISK MANAGEMENT - Continued

(a) Market risks – Continued

(ii) Foreign exchange risk - Continued

The carrying amounts of the Group’s foreign currency denominated financial assets and liabilities at the reporting date are as follows:

(iii) Price risk

The Group is exposed to price risk arising from investments in equity securities classified as financial assets at FVOCI (note 12). Management closely monitors the price changes and takes appropriate action when necessary.

(b) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents. As part of the internal funding arrangement, advances were obtained for working capital and/or capital expenditures as and when necessary. The Group’s policy is to regularly monitor the current and expected liquidity requirements, to ensure that it meets its liquidity requirements in both the short and long terms. The following tables show the remaining contractual maturities at the end of the reporting period of the Group’s financial liabilities, based on undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the reporting date) and the earliest date the Group can be required to pay.

Liabilities Assets Liabilities Assets 30 June

2021 30 June

2021 31 December

2020 31 December

2020 HK$ HK$ HK$ HK$

US$ 9,513,707,598 2,168,304,140 9,543,790,917 2,641,382,914

RMB 85,961,229 2,056,662 42,457,600 2,321,071

F-446

33

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 21. FINANCIAL INSTRUMENTS - RISK MANAGEMENT - Continued

(b) Liquidity risk - Continued

Carrying amount

Total contractual

undiscounted cash flow

Within one year or on demand

More than one year but less than five

years HK$ HK$ HK$ HK$

At 30 June 2021 Non-derivatives

- Accruals 44,472,241 44,472,241 44,472,241 - - Amount due to immediate holding company

42,287,601

42,287,601

42,287,601

-

- Bank borrowings - - - - - Bonds payable 9,513,707,597 9,926,290,615 1,603,212,890 8,323,077,725 9,600,467,439 10,013,050,457 1,689,972,732 8,323,077,725

At 31 December 2020 Non-derivatives

- Accruals 43,832,200 43,832,200 43,832,200 - - Amount due to immediate holding company

41,938,988

41,938,988

41,938,988

-

- Bank borrowings - - - - - Bonds payable 9,500,477,328 9,912,486,586 1,706,080,544 8,206,406,042 9,586,248,516 9,998,257,774 1,791,851,732 8,206,406,042

F-447

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GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

21. FINANCIAL INSTRUMENTS - RISK MANAGEMENT - Continued

(c) Credit risk

The Group’s maximum exposure to credit risk which could cause a financial loss to the Group due to failure to discharge an obligation by the counterparties arises from the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position. The Group’s financial assets are financial assets at FVOCI, derivative financial instruments, financial assets at FVTPL, other receivables, loan to immediate holding company and cash and cash equivalents. Investments are normally only in liquid securities quoted on a recognised stock exchange, except where entered into for long term strategic purposes. Given their high credit standing, management does not expect any investment counterparty to fail to meet its obligations. The Group’s management considers that all the above financial assets that are not impaired for each of the reporting dates under review are of good credit quality. The Group assessed the credit quality of the counterparties by taking into account their financial position, credit history and other factors. The directors also regularly reviews the recoverability of these financial assets and follow up the disputes or amounts overdue, if any. The directors are of the opinion that the risk of default by counterparties is low. The Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. The Group’s exposure to credit risk arising from default of immediate holding company is limited as the immediate holding company has good credit standing and the Group does not expect any significant loss for uncollected advances from these entities.

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GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

21. FINANCIAL INSTRUMENTS - RISK MANAGEMENT - Continued

(c) Credit risk - Continued

The credit risk of the Group’s remaining financial assets, which are derivative financial instruments and cash and cash equivalents, is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

Management believes that there was no material credit risk inherent in the Company’s outstanding balance of financial assets at amortised cost.

None of the Group’s financial assets are secured by collateral or other credit enhancements.

22. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

30 June 2021

31 December 2020

HK$ HK$ Financial assets Financial assets at FVOCI 1,430,570,400 659,184,400 Financial assets at FVTPL - - Financial assets at amortised cost 2,542,635,958 2,839,798,695 3,973,206,358 3,498,983,095 Financial liabilities Financial liabilities at amortised cost 9,600,467,439 9,586,248,516

Financial liabilities at FVTPL - -

9,600,467,439 9,586,248,516

F-449

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GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 22. FINANCIAL INSTRUMENTS BY CATEGORY- Continued

(a) Financial instruments not measured at fair value

Financial instruments not measured at fair value include other receivables, loan to immediate holding company, cash and cash equivalents, accruals, amount due to immediate holding company, bank borrowings and notes payable. Due to their short term nature, the carrying value of other receivables, cash and cash equivalents, accruals and amount due to immediate holding company approximates fair value. The fair value of loan to immediate holding company, bank borrowings and notes payable for disclosure purposes has been determined using discounted cash flow models and is classified as level 3 in the fair value hierarchy. Significant inputs include the discount rate used to reflect the credit risks of the borrowers or the Group.

(b) Financial instruments measured at fair value The following table provides an analysis of financial instruments carried at fair value by level of fair value hierarchy: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

22. FINANCIAL INSTRUMENTS BY CATEGORY- Continued

(b) Financial instruments measured at fair value - Continued

30 June 2021 Level 1 Level 2 Level 3 Total HK$ HK$ HK$ HK$ Financial assets at FVOCI - Listed equity securities (note (a)) 1,430,570,400 - - 1,430,570,400 Derivative financial instruments - Interest rate swap (note (b)) - - - - 1,430,570,400 - - 1,430,570,400

31 December 2020 Level 1 Level 2 Level 3 Total HK$ HK$ HK$ HK$ Financial assets at FVOCI -Listed equity securities (note (a)) 659,184,400 - - 659,184,400 Derivative financial instruments - Interest rate swap (note (b)) - - - - 659,184,400 - - 659,184,400

There were no transfers between levels during the year. Notes: (a) The fair value was determined by quoted bid prices in an active market. (b) The fair value was determined based on the estimated amount that the Group would receive or pay to terminate the swaps at the end of the reporting period, taking into account observable interest rates and the current creditworthiness of the swap counter parties. 23. RELATED PARTY TRANSACTIONS

(a) Significant related party transactions Save as disclosed elsewhere in the consolidated financial statements, the Group did not enter into any significant transactions with related party during the years ended 30 June 2021 and 31 December 2020.

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GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021 23. RELATED PARTY TRANSACTIONS - Continued

(b) Compensation of key management personnel The directors and other members of key management did not receive any remuneration during the year.

24. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

Reconciliation of liabilities arising from financing activities

Amount due to immediate

holding company

Bank borrowings Notes payable

HK$ HK$ HK$ At 1 January 2021 41,938,988 - 9,500,477,328 Changes from financing cash flows:

Increase in amount due to immediate holding company -

-

-

Proceeds from bank borrowings

- - -

Repayment of bank borrowings - - -

Proceeds from Bonds payable - - -

Repayment of notes payable - - - Interest paid - - (112,494,294) Total changes from financing cash flows - - (112,494,294)

Other changes: Interest expense - - 112,494,294 Exchange difference 348,613 - 13,230,269 Total other changes 348,613 - 125,724,563 At 30 June 2021 42,287,601 - 9,513,707,597

F-452

39

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

24. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS - Continued

Reconciliation of liabilities arising from financing activities

Amount due to immediate

holding company

Bank borrowings Notes payable

HK$ HK$ HK$ At 1 January 2020 39,321,100 5,382,000,000 4,635,750,488 Changes from financing cash flows:

Increase in amount due to immediate holding company - - -

Proceeds from bank borrowings - 4,302,543,000 -

Repayment of bank borrowings -

(9,684,543,000)

-

Proceeds from notes payable - - 6,434,160,000

Repayment of notes payable - - (1,550,380,000)Interest paid - - ( 193,018,275) Total changes from financing cash flows - (5,382,000,000) 4,690,761,725

Other changes: Interest expense - - 193,018,275 Exchange difference 2,617,888 - (19,053,160) Total other changes 2,617,888 - 173,965,115 At 31 December 2020 41,938,988 - 9,500,477,328

F-453

40

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED ( )

NOTES TO THE FINANCIAL STATEMENTS

30 JUNE 2021

25. KEY SOURCES OF ESTIMATION UNCERTAINTY

Impairment of financial assets The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

26. EVENT AFTER THE REPORTING DATE

The Group had no significant subsequent events that need to be disclosed after the reporting date.

27. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the directors on 23 August 2021.

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GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED

911 liA49:PWAINt IT•c'e

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020

Notes 2020 HK$

2019 HK$

Investment income and gains 5 43,538,749 60,591,570

Other gain and loss, net 6 41,605,927 (35,582,207)

Share of result of an associate 11 990,379,136 690,265,311

Gain on bargain purchase 11 2,987,765,305

Administrative expenses (4,129,057) (7,466,423)

Finance costs 7 (329,038,015) (314,299,088)

Profit before income tax expense 8 742,356,740 3,381,274,468

Income tax expense 9

Profit for the year 742,356,740 3,381,274,468

Other comprehensive income Item that will not be reclassified to profit or loss: Change in fair value of equity investments at fair value

through other comprehensive income (272,088,880) 4,207,560

Items that may be reclassified subsequently to profit or loss:

Change in fair value of debt investments at fair value through other comprehensive income 6,431,703

Share of other comprehensive income of an associate 11 41,232,633 (25,172,316)

Other comprehensive income for the year, net of tax (230,856,247) (14,533,053)

Total comprehensive income for the year 511,500,493 3,366,741,415

6

F-460

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED

(* 911 1 &TAi 0:- (4s *)t FVe )

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

Assets Non-current assets

Notes 2020 HK$

2019 HK$

Interest in an associate 11 10,199,669,180 9,494,595,550 Financial assets at fair value through other

comprehensive income 12 659,184,400 931,273,280

Total non-current assets 10,858,853,580 10,425 868 830

Current assets Derivative financial instruments 15 690,631 Loan to immediate holding company 13 1,550,600,178 3,114,800,000 Cash and cash equivalents 1,289,198,517 246,544,005

Total current assets 2,839,798,695 3,362,034,636

Total assets 13,698,652,275 13,787,903,466

Liabilities Current liabilities

Accruals 43,832,200 74,177,678 Amount due to immediate holding company 14 41,938,988 39,321,100 Derivative financial instruments 15 55,750,934 Bank borrowings 16 5,382,000,000 Notes payable 17 1,534,439,027 1,543,656,342

Total current liabilities 1,620,210,215 7,094,906,054

Net current assets/(liabilities) 1,219,588,480 (3,732,871,418)

7 F-461

GUANGZHOU METRO INVESTMENT FINANCE (HK) LIMITED

(4 1#34Ra it (4s 4)* Rik J )

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) AS AT 31 DECEMBER 2020

Non-current liability

Notes 2020 HK$

2019 HK$

Notes payable 17 7,966,038,301 3,092,094,146

Total non-current liability 7,966,038,301 3,092,094,146

Total liabilities 9,586,248,516 10,187,000,200

NET ASSETS 4,112,403,759 3,600,903,266

Capital and reserves Share capital 18 777,077,505 777,077,505 Reserves 19 3,335,326,254 2,823,825,761

TOTAL EQUITY 4,112,403,759 3,600,903,266

On behalf of the directors

Wang Xiaobin Qian Wei

8

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ISSUER GUARANTOR COMPANYGuangzhou Metro Investment Finance

(BVI) Limited(廣州地鐵投融資(維京)有限公司)

Palm Grove HouseP.O. Box 438

Road Town, TortolaBritish Virgin Islands

Guangzhou Metro Investment Finance(HK) Limited

(廣州地鐵投融資(香港)有限公司)16/F, Wing On Centre

111 Connaught Road CentralHong Kong

Guangzhou Metro Group Co., Ltd.(廣州地鐵集團有限公司)

Tower A, Wansheng SquareNo. 1238 Xingang East Road

Haizhu DistrictGuangzhou, PRC

ISSUING AND PAYING AGENT AND(IN RELATION TO NOTES NOT

CLEARED THROUGH THE CMU) TRANSFER AGENTCitibank, N.A., London Branch

1 North Wall QuayDublin 1 Ireland

TRUSTEECiticorp International Limited

20/F, Citi TowerOne Bay East, 83 Hon Bun Road

Kwun TongKowloon

Hong Kong

REGISTRAR (IN RELATION TO NOTESNOT CLEARED THROUGH THE CMU)

Citigroup Global Markets Europe AGReuterweg 16

60323 FrankfurtGermany

CMU LODGING AND PAYING AGENT, REGISTRARAND TRANSFER AGENT (IN RELATION TO NOTES

CLEARED THROUGH THE CMU)Citicorp International Limited

20/F, Citi TowerOne Bay East, 83 Hon Bun Road

Kwun TongKowloon

Hong KongDEALERS

Guotai Junan Securities (Hong Kong) Limited27/F, Low Block, Grand Millennium Plaza

181 Queen’s Road CentralHong Kong

Standard Chartered BankOne Basinghall Avenue

London EC2V 5DDUnited Kingdom

LEGAL ADVISERS TO THE ISSUER, THE GUARANTOR AND THE COMPANY

As to Hong Kong law As to PRC law As to British Virgin Islands lawDeacons5th Floor

Alexandra House18 Chater Road, Central

Hong Kong

Genius Law FirmPoly Clover Zhongjing Mansion

No. 406, Huasui RoadZhujiang New Town

Guangzhou, PRC

Ogier11th Floor, Central Tower28 Queen’s Road Central

CentralHong Kong

LEGAL ADVISERS TO THE ARRANGERS AND DEALER

As to English law As to PRC lawLinklaters11th Floor

Alexandra HouseChater RoadHong Kong

United & Way Law FirmFloor 26, West Tower

Fuxing Commercial BuildingNo. 159 Huangpu Avenue, Tianhe District

Guangzhou, PRCLEGAL ADVISERS TO THE TRUSTEE

As to English lawLinklaters11th Floor

Alexandra HouseChater RoadHong Kong

INDEPENDENT AUDITOR OF THECOMPANY FOR THE YEARS ENDED31 DECEMBER 2018 AND 2019 ANDTHE SIX MONTHS ENDED 30 JUNE

2021 AND INDEPENDENTACCOUNTANTS TO THE

GUARANTOR

INDEPENDENT AUDITOR OF THECOMPANY FOR THE YEAR ENDED

31 DECEMBER 2020

INDEPENDENT AUDITOR OFTHE GUARANTOR

BDO China Shu Lun PanCertified Public Accountant LLP

6th FloorNo. 61 East Nanjing Road

Huangpu DistrictShanghai, PRC

Grant Thornton5/F, Scitech Place

22 Jianguomen Wai AvenueChaoyang District

Beijing, China

BDO Limited25th Floor

Wing On Centre111 Connaught Road Central

CentralHong Kong

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