Download - not for distribution into the united states

IMPORTANT NOTICE

NOT FOR DISTRIBUTION INTO THE UNITED STATES

IMPORTANT: You must read the following before continuing. The following applies to the offering circular (the‘‘Offering Circular’’) following this page, and you are therefore advised to read this carefully before reading, accessingor making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by thefollowing terms and conditions, including any modifications to them any time you receive any information from theIssuer (as defined in the Offering Circular) as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE INTHE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THESECURITIES DESCRIBED HEREIN HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANYSTATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFEREDOR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT ANDAPPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY IN OFFSHORETRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT.

THE FOLLOWING OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHERPERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAYNOT BE FORWARDED TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OFTHIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THISDIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OFOTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OFTHE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASEANY OF THE SECURITIES DESCRIBED THEREIN.

Confirmation of your Representation:

In order to be eligible to view this Offering Circular or make an investment decision with respect to the securities,investors must be purchasing the securities outside the United States in an offshore transaction in reliance on RegulationS under the Securities Act. By accepting the e-mail and accessing the attached Offering Circular, you shall be deemed tohave represented to the Joint Lead Managers (as defined in the Offering Circular) and the Issuer (as defined in theOffering Circular) (1) that you and any customers you represent are not, and that the electronic mail address that yougave the Issuer and to which this e-mail has been delivered is not, located in the United States and (2) that you consentto delivery of the attached Offering Circular and any amendments or supplements thereto by electronic transmission.

You are reminded that the Offering Circular has been delivered to you on the basis that you are a person into whosepossession the Offering Circular may be lawfully delivered in accordance with the laws of jurisdiction in which you arelocated and you may not, nor are you authorised to, deliver the Offering Circular to any other person. You should notreply by e-mail to this notice, and you may not purchase any securities by doing so. Any e-mail communications,including those you generate by using the ‘‘Reply’’ function on your e-mail software, will be ignored or rejected.

The materials relating to any offering of securities described in the Offering Circular do not constitute, and may not beused in connection with, an offer or solicitation by or on behalf of any of the Issuer or the Joint Lead Managers in anyplace where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by alicenced broker or dealer and the Joint Lead Managers or any affiliate of the Joint Lead Managers are licenced brokersor dealers in that jurisdiction, the offering shall be deemed to be made by the Joint Lead Managers or such affiliate onbehalf of the Issuer in such jurisdiction.

The Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via thismedium may be altered or changed during the process of electronic transmission and consequently neither the Joint LeadManagers or any person who controls the Joint Lead Managers nor any director, officer, employee nor agent of the JointLead Managers or affiliate of any such person accepts any liability or responsibility whatsoever in respect of anydifference between the Offering Circular distributed to you in electronic format and the hard copy version available toyou on request from the Joint Lead Managers.

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

The Offering Circular is being furnished in connection with an offering in offshore transactions outside the UnitedStates in compliance with Regulation S under the Securities Act solely for the purpose of enabling a prospectiveinvestor to consider the purchase of the securities described in the Offering Circular.

Actions that you may not take: If you receive this document by e-mail, you should not reply by e-mail to thisdocument, and you may not purchase any securities by doing so. Any reply e-mail communications, including those yougenerate by using the ‘‘Reply’’ function on your e-mail software, will be ignored or rejected.

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

U.S.$300,000,000 2.875 per cent. Bonds due 2019 (the “2019 Bonds”)U.S.$500,000,000 3.625 per cent. Bonds due 2021 (the “2021 Bonds”)

Issue Price for the 2019 Bonds: 99.063 per cent.Issue Price for the 2021 Bonds: 99.264 per cent.

The 2019 Bonds and the 2021 Bonds (together, the ‘‘Bonds’’) will be issued by Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd.（重慶市南岸區城市建設發展（集團）有限公司）(the ‘‘Issuer’’), a company incorporated in the People’s Republic of China (the ‘‘PRC’’) with limited liability.

In this Offering Circular, references to the ‘‘Bonds’’ are to the 2019 Bonds and the 2021 Bonds and references to a ‘‘series of the Bonds’’ or a ‘‘series’’ are to the 2019 Bondsor the 2021 Bonds separately. References in this Offering Circular to the ‘‘Terms and Conditions of the Bonds’’ are to the section ‘‘Terms and Conditions of the 2019 Bonds’’and/or ‘‘Terms and Conditions of the 2021 Bonds’’, as the case may be.

The 2019 Bonds will bear interest on their outstanding principal amount from and including 19 July 2016 at the rate of 2.875 per cent. per annum. The 2021 Bonds will bearinterest on their outstanding principal amount from and including 19 July 2016 at the rate of 3.625 per cent. per annum. Interest on the Bonds is payable semi-annually inarrear in equal instalments on 19 January and 19 July in each year, commencing on 19 January 2017. Payments on the Bonds will be made without deduction for or onaccount of taxes of the PRC or any political subdivision or authority therein or thereof having power to tax to the extent described under ‘‘Terms and Conditions of the Bonds– Taxation’’.

The Bonds will constitute direct, unconditional, unsubordinated and (subject to Condition 4(a) (Negative Pledge) of the terms and conditions of the 2019 Bonds (the ‘‘Termsand Conditions of the 2019 Bonds’’), in the case of the 2019 Bonds, and the terms and conditions of the 2021 Bonds (the ‘‘Terms and Conditions of the 2021 Bonds’’, andtogether with the Terms and Conditions of the 2019 Bonds, the ‘‘Terms and Conditions’’), in the case of the 2021 Bonds) unsecured obligations of the Issuer and shall at alltimes rank pari passu and without any preference among themselves. The payment obligations of the Issuer under the Bonds shall, save for such exceptions as may beprovided by applicable legislation and subject to Condition 4(a) (Negative Pledge) of the Terms and Conditions of the relevant series, at all times rank at least equally with allits other present and future unsecured and unsubordinated obligations.

The Issuer undertakes that it will (i) within 15 Registration Business Days (as defined in the Terms and Conditions) after the Issue Date (as defined below), register or causeto be registered with the State Administration of Foreign Exchange (‘‘SAFE’’) or its local branch the Bonds pursuant to the Administrative Measures for Foreign DebtRegistration（外債登記管理辦法）and its operating guidelines, effective as at 13 May 2013 (‘‘Foreign Debt Registration’’), (ii) use its best endeavours to complete theForeign Debt Registration and obtain a registration record from SAFE within 120 Registration Business Days after the Issue Date and (iii) comply with all applicable PRClaws and regulations in relation to the Bonds. For consequences of non-registration, see ‘‘Risk Factors – Risks Relating to the Bonds – Any failure to complete the relevantfilings under the NDRC Notice and the relevant registration under SAFE within the prescribed time frame following the completion of the issue of the Bonds may haveadverse consequences for the Issuer and/or the investors of the Bonds’’.

In accordance with the Circular on Promoting the Reform of the Administrative System on the Issuance by Enterprises of Foreign Debt Filings and Registrations（國家發展改革委關於推進企業發行外債備案登記制管理改革的通知（發改外資[2015]2044號）) (the ‘‘NDRC Circular’’) issued by the National Development and Reform Commission ofthe PRC (the ‘‘NDRC’’) on 14 September 2015 which came into effect on the same day, the Issuer has registered the issuance of the Bonds with NDRC and obtained acertificate from the Chongqing Development and Reform Commission as authorised by the NDRC on 17 May 2016 evidencing such registration. The Issuer has undertaken tofile the requisite information and documents on the issuance of the Bonds with the NDRC within 10 Registration Business Days after the Issue Date.

Unless previously redeemed, or purchased and cancelled, the Issuer will redeem each 2019 Bond at its principal amount on 19 July 2019 and each 2021 Bond at its principalamount on 19 July 2021. At any time, on giving not less than 30 nor more than 60 days’ notice to the Bondholders (as defined below) of a series (which notice shall beirrevocable), the Issuer may redeem the Bonds of such series in whole, but not in part, at their principal amount, together with unpaid interest accrued to (but not including)the date fixed for redemption, if, immediately before giving such notice, the Issuer satisfies the Trustee that the Issuer has or will become obliged to pay Additional TaxAmounts (as defined in the Terms and Conditions) as a result of any change in, or amendment to, the laws or regulations of the PRC or any political subdivision or anyauthority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including but not limited to anydecision by a court of competent jurisdiction), which change or amendment becomes effective on or after 12 July 2016, and such obligation cannot be avoided by the Issuertaking reasonable measures available to it. At any time following the occurrence of a Change of Control (as defined in the Terms and Conditions), each holder of Bonds (eacha ‘‘Bondholder’’) will have the right, at such Bondholder’s option, to require the Issuer to redeem all but not some only of that Bondholder’s Bonds on the Put SettlementDate (as defined in the Terms and Conditions) at 101 per cent. of their principal amount, together with accrued interest to (but excluding) such Put Settlement Date. See‘‘Terms and Conditions of the Bonds – Redemption and Purchase’’.

For a more detailed description of the Bonds, see ‘‘Terms and Conditions of the 2019 Bonds’’ and ‘‘Terms and Conditions of the 2021 Bonds’’ beginning on page 46 and page63, respectively.

The Bonds will be issued in denominations of U.S.$200,000 each and integral multiples of U.S.$1,000 in excess thereof.

Investing in the Bonds involves risks. See ‘‘Risk Factors’’ beginning on page 13 for a discussion of certain factors to be considered in connection with an investmentin the Bonds.The Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) and may not be offered or soldwithin the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. For adescription of these and certain further restrictions on offers and sales of the Bonds and the distribution of this Offering Circular, see ‘‘Subscription and Sale’’.Application will be made for the listing of and quotation for each series of Bonds on the Singapore Exchange Securities Trading Limited (the ‘‘SGX-ST’’). The SGX-STassumes no responsibility for the correctness of any statements made or opinions expressed or reports contained in this Offering Circular. Approval in-principle granted for thelisting and quotation of the Bonds on the SGX-ST is not to be taken as an indication of the merits of the Issuer or the Bonds. The Issuer accepts full responsibility for theaccuracy of the information contained in this Offering Circular and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are noother facts the omission of which would make any statement herein misleading.

Standard & Poor Ratings Services (‘‘S&P’’), a division of McGraw-Hill Companies, Inc. has assigned a corporate rating of BBB+ with a stable outlook, and Fitch Ratings Inc.(‘‘Fitch’’) has assigned a corporate rating of BBB+ with a stable outlook, to the Issuer. The Bonds are expected to be rated BBB+ by S&P and BBB+ by Fitch. A rating is nota recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.

Each series of Bonds will be represented initially by interests in a global certificate (each, a ‘‘Global Certificate’’) in registered form which will be registered in thename of a nominee of, and shall be deposited on or about 19 July 2016 (the ‘‘Issue Date’’) with, a common depositary for Euroclear Bank S.A./N.V. (‘‘Euroclear’’)and Clearstream Banking S.A. (‘‘Clearstream’’). Beneficial interests in a Global Certificate will be shown on, and transfers thereof will be effected only through,records maintained by Euroclear and Clearstream. Except as described herein, definitive certificates for Bonds will not be issued in exchange for interests in aGlobal Certificate.

Sole Global Coordinator

CICC HK Securities

Joint Lead Managers and Joint Bookrunners

CICC HKSecurities

Bank ofChina

ICBC (Asia) OCBC Bank ShanghaiPudong

DevelopmentBank Co.,Ltd., Hong

KongBranch

StandardChartered

Bank

Wing LungBank

Limited

Offering Circular dated 12 July 2016

NOTICE TO INVESTORS

THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR ASOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION TO ANYPERSON TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER OR SOLICITATION IN SUCHJURISDICTION. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY SALEMADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEENNO CHANGE IN THE AFFAIRS OF THE ISSUER OR ANY OF ITS SUBSIDIARIES OR THAT THEINFORMATION SET FORTH IN THIS OFFERING CIRCULAR IS CORRECT AS AT ANY DATESUBSEQUENT TO THE DATE HEREOF.

The Issuer accepts full responsibility for the accuracy of the information contained in this document andconfirm, having made all reasonable enquiries, that to the best of its knowledge and belief there are noother facts the omission of which would make any statement herein misleading.

The Issuer, having made all reasonable enquiries, confirms that (i) this Offering Circular contains allinformation with respect to the Issuer and its subsidiaries and affiliates (together with the Issuer, the‘‘Group’’) and the Bonds which is material in the context of the issue, offering, sale or distribution ofthe Bonds (including the information which is required by applicable laws and according to theparticular nature of the Issuer, the Group and the Bonds and is necessary to enable investors and theirinvestment advisers to make an informed assessment of the assets and liabilities, financial position,profits and losses, and prospects of the Issuer and the Group and the rights attaching to the Bonds); (ii)the statements contained in this Offering Circular, are in every material particular true and accurate andnot misleading; (iii) the opinions and intentions expressed in this Offering Circular with regard to theIssuer and the Group are honestly held, have been reached after considering all relevant circumstancesand are based on reasonable assumptions; (iv) there are no other facts in relation to the Issuer, theGroup, the transaction documents in relation to the Bonds or the Bonds, the omission of which would,in the context of the issue and offering of the Bonds make any statement in this Offering Circularmisleading; (v) all reasonable enquiries have been made by the Issuer to ascertain such facts and toverify the accuracy of all such information and statements; and (vi) the statistical, industry and market-related data and forward looking statements included in this Offering Circular (if any) are based on orderived or extracted from sources which the Issuer believes to be accurate and reliable in all materialrespects.

The Issuer has prepared this Offering Circular solely for use in connection with the proposed offering ofthe Bonds described in this Offering Circular. This Offering Circular does not constitute an offer of, oran invitation by or on behalf of China International Capital Corporation Hong Kong Securities Limited,Bank of China Limited, Industrial and Commercial Bank of China (Asia) Limited, Oversea-ChineseBanking Corporation Limited, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch,Standard Chartered Bank and Wing Lung Bank Limited (together, the ‘‘Joint Lead Managers’’) or theIssuer to subscribe for or purchase any of the Bonds. The distribution of this Offering Circular and theoffering of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possessionthis Offering Circular comes are required by the Issuer and the Joint Lead Managers to informthemselves about and to observe any such restrictions. No action is being taken to permit a publicoffering of the Bonds or the distribution of this Offering Circular in any jurisdiction where action wouldbe required for such purposes. There are restrictions on the offer and sale of the Bonds, and thecirculation of documents relating thereto, in certain jurisdictions including the United States, the UnitedKingdom, Hong Kong, the PRC, Singapore and Japan and to persons connected therewith. For adescription of certain further restrictions on offers and sales of the Bonds, and distribution of thisOffering Circular, see ‘‘Subscription and Sale’’. By purchasing the Bonds, investors represent and agreeto all of those provisions contained in that section of this Offering Circular. This Offering Circular ispersonal to each offeree and does not constitute an offer to any other person or to the public generally tosubscribe for, or otherwise acquire, Bonds. Distribution of this Offering Circular to any other personother than the prospective investor and any person retained to advise such prospective investor with

i

respect to its purchase is unauthorised. Each prospective investor, by accepting delivery of this OfferingCircular, agrees to the foregoing and to make no photocopies of this Offering Circular or any documentsreferred to in this Offering Circular.

No person has been or is authorised to give any information or to make any representation concerningthe Issuer, the Group or the Bonds other than as contained herein and, if given or made, any such otherinformation or representation should not be relied upon as having been authorised by the Issuer, theJoint Lead Managers, the Trustee or the Agents (as defined in the Terms and Conditions) or theirrespective affiliates, directors, officers or advisers. Neither the delivery of this Offering Circular nor anyoffering, sale or delivery made in connection with the issue of the Bonds shall, under any circumstances,constitute a representation that there has been no change or development reasonably likely to involve achange in the affairs of the Issuer or the Group since the date hereof or create any implication that theinformation contained herein is correct as at any date subsequent to the date hereof. This OfferingCircular does not constitute an offer of, or an invitation by or on behalf of the Issuer, the Joint LeadManagers, the Trustee or the Agents or any of their respective affiliates, directors, officers or advisers tosubscribe for or purchase the Bonds and may not be used for the purpose of an offer to, or a solicitationby, anyone in any jurisdiction or in any circumstances in which such offer or solicitation is notauthorised or is unlawful.

None of the Joint Lead Managers, the Trustee or the Agents or any of their respective affiliates,directors, officers or advisers has independently verified the information contained in this OfferingCircular. Accordingly, no representation, warranty or undertaking, express or implied, is made or givenand no responsibility or liability is accepted, by the Joint Lead Managers, the Trustee or the Agents orany of their respective affiliates, directors, officers or advisers, as to the accuracy, completeness orsufficiency of the information contained in this Offering Circular or any other information supplied inconnection with the Bonds. Nothing contained in this Offering Circular is, or shall be relied upon as, apromise, representation or warranty by the Joint Lead Managers, the Trustee or the Agents or any oftheir respective affiliates, directors, officers or advisers. This Offering Circular is not intended toprovide the basis of any credit or other evaluation nor should it be considered as a recommendation byany of the Issuer, the Joint Lead Managers, the Trustee or the Agents or any of their respectiveaffiliates, directors, officers or advisers that any recipient of this Offering Circular should purchase theBonds. Each person receiving this Offering Circular acknowledges that such person has not relied on theJoint Lead Managers, the Trustee, the Agents or any of their respective affiliates, directors, officers oradvisers in connection with its investigation of the accuracy of such information or its investmentdecision, and each such person must rely on its own examination of the Issuer and the merits and risksinvolved in investing in the Bonds. See ‘‘Risk Factors’’ for a discussion of certain factors to beconsidered in connection with an investment in the Bonds.

To the fullest extent permitted by law, none of the Joint Lead Managers, the Trustee or the Agents orany of their respective affiliates, directors, officers or advisers accepts any responsibility for the contentsof this Offering Circular and assume no responsibility for the contents, accuracy, completeness orsufficiency of any such information or for any other statement, made or purported to be made by theJoint Lead Managers, the Trustee or the Agents or any of their respective affiliates, directors, officers oradvisers or on their behalf in connection with the Issuer or the issue and offering of the Bonds. Each ofthe Joint Lead Managers, the Trustee and the Agents and their respective affiliates, directors, officers oradvisers accordingly disclaims all and any liability, whether arising in tort or contract or otherwise,which it might otherwise have in respect of this Offering Circular or any such statement. None of theJoint Lead Managers, the Trustee or the Agents or any of their respective affiliates, directors, officers oradvisers undertakes to review the results of operations, financial condition or affairs of the Issuer duringthe life of the arrangements contemplated by this Offering Circular nor to advise any investor orpotential investor in the Bonds of any information coming to the attention of the Joint Lead Managers,the Trustee or the Agents or their respective affiliates, directors, officers or advisers.

ii

IN CONNECTION WITH THIS OFFERING, ANY OF THE JOINT LEAD MANAGERSAPPOINTED AND ACTING IN ITS CAPACITY AS STABILISING MANAGER (THE‘‘STABILISING MANAGER’’) OR ANY PERSON(S) ACTING ON BEHALF OF THESTABILISING MANAGER MAY, SUBJECT TO ALL APPLICABLE LAWS, OVER-ALLOTBONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKETPRICE(S) OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISEPREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER(OR PERSON(S) ACTING ON BEHALF OF THE STABILISING MANAGER) WILLUNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ONOR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OFTHE OFFER OF THE BONDS IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIMEAND MUST BE BROUGHT TO AN END AFTER A LIMITED PERIOD.

Any of the Joint Lead Managers and their respective affiliates may purchase the Bonds for its or theirown account and enter into transactions, including credit derivatives, such as asset swaps, repackagingand credit default swaps relating to the Bonds and/or other securities of the Issuer or its subsidiaries orassociates at the same time as the offer and sale of the Bonds or in secondary market transactions. Suchtransactions may be carried out as bilateral trades with selected counterparties and separately from anyexisting sale or resale of the Bonds to which this Offering Circular relates (notwithstanding that suchselected counterparties may also be purchasers of the Bonds). Furthermore, investors in the Bonds mayinclude entities affiliated with the Group.

Prospective investors should not construe anything in this Offering Circular as legal, business or taxadvice. Each prospective investor should determine for itself the relevance of the information containedin this Offering Circular and consult its own legal, business and tax advisers as needed to make itsinvestment decision and determine whether it is legally able to purchase the Bonds under applicablelaws or regulations.

Industry and Market Data

Market data and certain industry forecasts used throughout this Offering Circular have been obtainedbased on internal surveys, market research, public information and industry publications. Industrypublications generally state that the information that they contain has been obtained from sourcesbelieved by the Issuer to be reliable and accurate but that the accuracy and completeness of thatinformation is not guaranteed. Similarly, internal surveys, industry forecasts and market research, whilebelieved to be reliable, have not been independently verified, and none of the Issuer, the Joint LeadManagers or their respective affiliates, directors, officers and advisers makes any representation as to thecorrectness, accuracy or completeness of that information. In addition, third-party information providersmay have obtained information from market participants and such information may not have beenindependently verified.

Presentation of Financial Information

This Offering Circular contains consolidated financial information of the Issuer as at and for the yearsended 31 December 2014 and 2015, which has been extracted from the audited consolidated financialstatements of the Issuer as at and for the year ended 31 December 2015 (the ‘‘2015 Audited FinancialStatements’’) included elsewhere in this Offering Circular, and consolidated financial information of theIssuer as at and for the year ended 31 December 2013, which has been extracted from the auditedconsolidated financial statements of the Issuer as at and for the year ended 31 December 2014 (the‘‘2014 Audited Financial Statements’’) included elsewhere in this Offering Circular. The consolidatedfinancial statements as at and for the years ended 31 December 2014 and 2015 were prepared andpresented in accordance with the Accounting Standards for Business Enterprises in the PRC (the ‘‘PRCGAAP’’) and have been audited by Baker Tilly China Certified Public Accountants (‘‘Baker TillyChina’’), the independent auditor of the Issuer in accordance with Auditing Standards for Chinese

iii

Certified Public Accountants. PRC GAAP differs in certain material respects from InternationalFinancial Reporting Standards (‘‘IFRS’’). See ‘‘Summary of Certain Material Differences Between PRCGAAP and IFRS’’.

The Issuer’s consolidated financial information as at and for the year ended 31 December 2014 includedin the 2015 Audited Financial Statements has been adjusted to reflect (i) certain changes to PRC GAAPwhich became effective in 2015 to make it comparable to its audited consolidated financial informationas at and for the year ended 31 December 2015 and (ii) certain other adjustments in the Issuer’sconsolidated financial statements as at and for the year ended 31 December 2014 (the ‘‘RelevantAdjustments’’). See note V (Adjustment on Prior Year Audited Financial Statements) to the 2015Audited Financial Statements on page F-34. The Issuer’s consolidated financial information as at and forthe years ended 31 December 2013 and 2014 contained in the 2014 Audited Financial Statements hasnot been revised to reflect the Relevant Adjustments. Therefore, the Issuer’s consolidated financialinformation as at and for the years ended 31 December 2013 and 2014 contained in the 2014 AuditedFinancial Statements is not directly comparable to the Issuer’s adjusted consolidated financialinformation as at and for the year ended 31 December 2014 or its consolidated financial information asat and for the year ended 31 December 2015, both of which are contained in the 2015 Audited FinancialStatements. Potential investors must exercise caution when using the Issuer’s historical financialinformation to evaluate the financial condition and results of operations of the Issuer. See ‘‘Risk Factors– Risks Relating to the Group’s Business – The Group’s historical financial information is not directlycomparable with its financial information in 2014 and beyond’’.

iv

CERTAIN DEFINITIONS, CONVENTIONS AND CURRENCY PRESENTATION

In this Offering Circular, unless otherwise specified or the context otherwise requires, all references tothe ‘‘PRC’’, ‘‘China’’ and ‘‘mainland China’’ are to the People’s Republic of China (excluding HongKong, the Macao Special Administrative Region of the People’s Republic of China and Taiwan), and allreferences to the ‘‘United States’’ and ‘‘U.S.’’ are to the United States of America, all references to‘‘PRC Government’’ are to the people’s government of the PRC; all references to ‘‘Hong Kong’’ are tothe Hong Kong Special Administrative Region of the People’s Republic of China; all references to‘‘Renminbi’’ and ‘‘RMB’’ are to the lawful currency of the PRC; and all references to ‘‘USD’’, ‘‘U.S.$’’and ‘‘U.S. dollars’’ are to the lawful currency of the United States of America. Historical amountstranslated into Renminbi have been translated at historical rates of exchange. Such translations shouldnot be construed as representations that the amounts referred to herein could have been or could beconverted into Renminbi at those rates or any other rate at all.

This Offering Circular contains translation of certain Renminbi amounts into U.S. dollars at specifiedrates solely for the convenience of the reader. Unless otherwise specified, where financial information inrelation to the Issuer has been translated into U.S. dollars, it has been so translated, for convenienceonly, at the rate of RMB6.4778 to U.S.$1.00 (the noon buying rate in New York City on 31 December2015 as set forth in the weekly H.10 statistical release of the Federal Reserve Board of the FederalReserve Bank of New York). Further information regarding exchange rate is set forth in ‘‘ExchangeRates’’ in this Offering Circular. No representation is made that the Renminbi amounts referred to in thisOffering Circular could have been or could be converted into U.S. dollars at any particular rate or at all.

In this Offering Circular, where information has been presented in thousands or millions of units,amounts may have been rounded up or down. Accordingly, totals of columns or rows of numbers intables may not be equal to the apparent total of the individual items and actual numbers may differ fromthose contained herein due to rounding. References to information in billions of units are to theequivalent of a thousand million units.

v

FORWARD-LOOKING STATEMENTS

The Issuer has made certain forward-looking statements in this Offering Circular. All statements otherthan statements of historical facts contained in this Offering Circular constitute ‘‘forward-lookingstatements’’. Some of these statements can be identified by forward-looking terms, such as ‘‘anticipate’’,‘‘target’’, ‘‘believe’’, ‘‘can’’, ‘‘would’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘aim’’, ‘‘intend’’, ‘‘may’’,‘‘plan’’, ‘‘will’’, ‘‘would’’ or similar words. However, these words are not the exclusive means ofidentifying forward-looking statements. All statements regarding expected financial condition and resultsof operations, business plans and prospects are forward-looking statements. These forward-lookingstatements include but are not limited to statements as to the business strategy, operating income andprofitability, planned projects and other matters as they relate to the Issuer and/or the Group discussedin this Offering Circular regarding matters that are not historical fact. These forward-looking statementsand any other projections contained in this Offering Circular (whether made by the Issuer or by anythird party) involve known and unknown risks, including those disclosed under the caption ‘‘RiskFactors’’, uncertainties and other factors that may cause the actual results, performance or achievementsof the Issuer or the Group to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements or other projections.

These forward-looking statements speak only as of the date of this Offering Circular. The Issuerexpressly disclaims any obligation or undertaking to release publicly any updates or revisions to anyforward-looking statement contained herein to reflect any change in the Group’s expectations withregard thereto or any change of events, conditions or circumstances, on which any such statement wasbased.

The factors that could cause the actual results, performances and achievements of the Issuer, the Groupor any member of the Group to be materially different include, among others:

• the Issuer’s ability to successfully implement its business plans and strategies;

• various business opportunities that the Issuer may pursue;

• financial condition, performance and business prospects of the Issuer;

• the Issuer’s capital expenditure plans and its ability to carry out those plans;

• access and cost of capital and financing;

• changes in the competition landscape in the industries where the Group operates;

• any changes in the laws, rules and regulations of the PRC Government and the Chongqing Nan’anDistrict Government and the rules, regulations and policies of the relevant governmental authoritiesrelating to the Issuer’s business;

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

• changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or prices,including those pertaining to the PRC and the industry and markets in which the Issuer operates;

• macroeconomic measures taken by the PRC Government to manage economic growth;

• changes in the global economic conditions and material changes in the global life insuranceindustry; and

• other factors, including those discussed in ‘‘Risk Factors’’.

The Issuer does not undertake any obligation to update or revise publicly any of the opinions orforward-looking statements expressed in this Offering Circular as a result of any new information, futureevents or otherwise.

vi

TABLE OF CONTENTS

Page

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

THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

SUMMARY CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

TERMS AND CONDITIONS OF THE 2019 BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

TERMS AND CONDITIONS OF THE 2021 BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM . . . . . . . . 64

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

OVERVIEW OF CHONGQING AND CHONGQING NAN’AN DISTRICT . . . . . . . . . . . . . . . . 68

DESCRIPTION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE ISSUER . . . . . . . . . 94

PRC REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

SUMMARY OF CERTAIN DIFFERENCES BETWEEN PRC GAAP AND IFRS . . . . . . . . . . 114

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

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

vii

SUMMARY

The summary below is only intended to provide a limited overview of information described in moredetail elsewhere in this Offering Circular. As it is a summary, it does not contain all of the informationthat may 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 this OfferingCircular in its entirety, including the section entitled ‘‘Risk Factors’’, before making an investmentdecision.

OVERVIEW

The Group is the largest investment and financing platform of the Chongqing Nan’an DistrictGovernment, in terms of total assets as at 31 December 2015, which engages in city construction andmunicipal development. It has historically focused on primary land development and infrastructureconstruction in Chongqing Nan’an District to implement the Chongqing Nan’an District Government’splans to develop Chongqing Nan’an District. By taking advantage of the administrative status andlocation of Chongqing and strong supports of the Chongqing Nan’an District Government, the Grouphas undertaken and completed a large number of civil projects of strategic importance to ChongqingNan’an District since its establishment in 2003. In recent years, the Group has diversified its businessand provides loan financing and supply-chain finance services for enterprises operating in ChongqingNan’an District, especially those operating in the electronics and information technology industries. TheIssuer believes that its business expansion is an active response to the Chongqing Nan’an DistrictGovernment’s strategy to promote the development of the electronics and information technologyindustries and gives the Group opportunities to diversify into the industries that have greater growthpotential in the future.

The Group’s business now consists of six segments, namely (i) primary land development; (ii)infrastructure construction; (iii) property leasing and management; (iv) loan financing; (v) supply-chainfinance and (vi) miscellaneous. Set forth below is a summary of each of the Group’s business segments:

• Primary land development: The Group is one of the designated entities to conduct primary landdevelopment in Chongqing Nan’an District. As at 31 December 2015, the Group held the land userights of approximately 6.5 million square metres of land under development, which were allocatedto the Issuer by the Chongqing Nan’an District Government before 2013. The Group’s operatingincome from primary land development derives from the land development fee paid by ChongqingNan’an District Government, which is in turn generated from the grant of land use rights to realestate developers.

• Infrastructure construction: Infrastructure construction has been the Group’s core business since itsestablishment, which involves construction of municipal roads, tunnels, transportation hubs,bridges, stadiums, parks, etc. The Group is commissioned by the Chongqing Nan’an DistrictGovernment to undertake all the infrastructure projects in Chongqing Nan’an District. As at 31December 2015, the Group had completed infrastructure projects with an estimated buybackamount of RMB19,015.6 million.

• Property leasing and management: The Group leases its properties in Chongqing Nan’an District,including commercial properties, office buildings and warehouses. The Group normally enters intoleases for a period of two to three years for commercial property leasing, three to five years foroffice building leasing and one to five years for warehouse leasing. As at 31 December 2015, theGroup had leasable properties with a total gross floor area (‘‘GFA’’) of 223,104 square metres, ofwhich approximately 85 per cent. had been leased. The Group also sells its properties selectivelyaccording to the instructions of the Chongqing Nan’an District Government if the sale provides asatisfactory return.

1

• Loan financing: The Group provides financing in the forms of short-term direct loans andentrusted loans to companies operating in Chongqing Nan’an District, which mainly includeenterprises owned or controlled by the Chongqing Nan’an District Government and electronics andinformation technology companies. The Group’s lending normally bears interest at a rate equal to apremium above the prevailing lending interest rate charged by major PRC commercial banks forthe same period and the Chongqing Nan’an District Government reviews each lending of theGroup before the lending is provided to customers. As at 31 December 2015, the principal amountof the Group’s outstanding loans was RMB2,790 million.

• Supply-chain finance: The Group began to offer supply-chain finance services in 2015, primarilyincluding raw material sourcing and export agency services. The Group’s operating income fromprovision of supply chain finance services is derived from the consulting fee and handling feepayable by its customers.

• Miscellaneous: The Group is also engaged in certain tourism-related business. The Group owns theoperation rights to the Nanshan Tourism Highway, which allows the Group to receive an annualfixed income of RMB13.7 million in each of 2013, 2014 and 2015.

The following table sets forth a breakdown of the Group’s total operating income from each businesssegment in absolute amount and as a percentage of its total operating income for the periods indicated:

Year ended 31 December

2013 2014 2015

Amount(RMB’000)

Per cent. oftotal

Amount(RMB’000)

Per cent. oftotal

Amount(RMB’000)

Per cent. oftotal

Primary land development(1) . . . . . . . . . . . . . . . . 802,509 43.9 – – – –

Infrastructure construction(2) . . . . . . . . . . . . . . . . 746,085 40.8 398,723 64.3 – –

Property leasing and management . . . . . . . . . . . . . 63,491 3.5 72,604 11.7 79,124 12.5Loan financing . . . . . . . . . . . . . . . . . . . . . . . . 184,051 10.1 132,848 21.4 155,713 24.7Supply-chain finance(3) . . . . . . . . . . . . . . . . . . . – – – – 380,424 60.3Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 32,380 1.7 15,544 2.5 15,714 2.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,828,517 100.0 619,719 100.0 630,975 100.0

Notes:

(1) The Group had no operating income from primary land development in 2014 and 2015 because there was no grant of landuse rights for the land developed by the Group in 2014 and the procedures relating to land grants conducted in 2015 had notbeen fully completed by the end of 2015.

(2) The Group had no operating income from infrastructure construction in 2015 because no projects were bought back in 2015.

(3) The Group began to provide supply-chain finance services in 2015.

The Group’s infrastructure projects are conducted under the ‘‘build and transfer’’ (‘‘BT’’) model. Detailsof a project or a group of projects (such as scope of work, estimated investment amount and estimatedbuyback amount) are normally set out in a project development master agreement between the Groupand the Chongqing Nan’an District Government or an administrative notice issued by the ChongqingNan’an District Government relating to the project. Depending on the scale of the project, theChongqing Nan’an District Government sometimes provides start-up capital equal to certain percentageof the total estimated investment amount and the Group is responsible for obtaining the remainingportion of financing for project development. The Group may apply for project buyback after theconstruction is completed (or a later time depending on the Group’s financial condition and cashdemand) by submitting the actual cost of development to the Chongqing Nan’an District Government foraudit, and the buyback amount determined by the government normally includes a 15 per cent. grossprofit based on the audited cost of development. The buyback amount is paid by instalments during aperiod ranging from five to ten years. It generally takes less than six months for the Group to receivethe payment of the first instalment of the buyback amount.

2

The Group engages third-party contractors to carry out the construction of its infrastructure and landdevelopment projects. It generally select third-party contractors through its standardised public tenderprocess. During the construction period, third-party contractors are responsible for the procurement ofconstruction materials and construction in accordance with the specific requirements of the contract.Currently, the Group has established a stable business relationship with a number of state-ownedconstruction companies.

The Group relies on its internal cash, funds allocated by the Chongqing Nan’an District Government andproceeds from external financing to fund its business operations. The Group maintains long-termrelationships with approximately 40 commercial banks and other financial institutions in the PRC, whichhave provided low-cost capital to support its business. As at 30 April 2016, the Group had creditfacilities in a total amount of approximately RMB14.3 billion, of which approximately RMB4.4 billionhad not been utilised.

For the three years ended 31 December 2013, 2014 and 2015, the Group’s net profit was RMB187.8million, RMB261.7 million and RMB318.0 million, respectively, and its net profit margin was 10.3 percent., 42.2 per cent., and 50.4 per cent., respectively. As at 31 December 2013, 2014 and 2015, theGroup’s total assets were RMB38,863.5 million, RMB41,493.3 million and RMB45,925.5 million,respectively.

In the future, the Group will continue to consolidate its leading position as a key entity in theconstruction of infrastructure and primary land development in Chongqing Nan’an District and to furtherdevelop its business in the industries with long-term growth potential. The Group also aims to continueto grow its asset base, optimise its capital structure and enhance operational efficiency.

COMPETITIVE STRENGTHS

The Group believes that its competitive strengths outlined below are important to its success and futuredevelopment:

• Well-positioned to leverage the strategic location of Chongqing and Chongqing Nan’an District toachieve stable business growth

• Strong support of the Chongqing Nan’an District Government

• A key entity of city construction and municipal development in Chongqing Nan’an District

• A strong project pipeline with abundant land reserves warranting sustainable revenue and operatingcash inflow from primary land development in the future

• An important investment vehicle of the Chongqing Nan’an District Government with significanceto the development of the enterprises operating in Chongqing Nan’an District

• Access to diversified financing channels

• Dedicated management team with extensive experience in the management of state-ownedenterprises

BUSINESS STRATEGIES

The Group aims to maintain its leading position in implementing the Chongqing Nan’an Government’sblueprint of urban planning, municipal construction and industrial upgrade. Its goal is to continue togrow its asset base, optimise its capital structure and enhance operational efficiency. The Group intendsto focus on the following strategies:

• Actively continue to focus on primary land and municipal infrastructure development in Chongqing

3

• Further diversify the business portfolio, creating new sources of income

• Invest in high-quality companies

• Explore new financing channels

• Adhere to prudent financial management with stringent risk control

CHONGQING

Chongqing is the most populous and the largest (in terms of size) municipality to hold provincial-levelstatus in the PRC, covering an area of approximately 82,400 square kilometres with a residentialpopulation of over 30 million. Chongqing, together with Beijing, Shanghai and Tianjin, is one of thefour municipalities that are under direct administration by the PRC Government, and is the onlymunicipality in Western China. It is designated as one of the five national central cities（國家中心城市）together with Beijing, Shanghai, Tianjin and Guangzhou. During 2009 to 2015, Chongqing’s nominalGDP increased at a CAGR of 13.37 per cent. compared to the CAGR of China’s nominal GDP of 10.07per cent. during the same periods. According to the National Statistics Bureau of the PRC, Chongqing isnow the sixth largest city in China in terms of GDP, as of 31 December 2015, with a nominal GDP ofRMB1,572.0 billion. See ‘‘Overview of Chongqing and Chongqing Nan’an District – Chongqing’’.

CHONGQING NAN’AN DISTRICT

Chongqing Nan’an District is located in the south-western area of Chongqing, to the south bank of theYangtze River. It is in the centre of Chongqing in terms of concentration of business and commercialactivities. With existing highways of 640 kilometres, seven major bridges connected to other centralareas of the city and four subways travelling across the district, Chongqing Nan’an District plays a keyrole in building the ‘‘One-hour Economic Circle’’ of Chongqing, within which nine core districts ofChongqing are within one-hour’s reach. It is also the transportation hub in Southern Chongqingaccessible by both river and land transportation. According to the Analysis on the EconomicPerformance of Chongqing Nan’an District in 2015 issued by the Chongqing Nan’an DistrictGovernment, Chongqing Nan’an District’s GDP in 2015 amounted to RMB67.9 billion, representing anincrease of 11.3 per cent. as compared to that of 2014 and accounting for 4.3 per cent. of the total GDPin Chongqing. See ‘‘Overview of Chongqing and Chongqing Nan’an District – Chongqing Nan’anDistrict’’.

RECENT DEVELOPMENTS

The Group’s total operating income substantially increased in the four months ended 30 April 2016compared to the same period in 2015. This increase in the Group’s operating income was largely due toan increase in the operating income from provision of supply-chain finance services. For the fourmonths ended 30 April 2016, the Group recorded an increase in operating loss as compared to thecorresponding period in 2015. The increased operating loss was principally due to an increase in theGroup’s operating costs and an increase in financial expenses on its long-term bank loans in the fourmonths ended 30 April 2016 as compared to the corresponding period in 2015. For the four monthsended 30 April 2016, the Group recorded a decrease in net loss as compared to the corresponding periodin 2015. This decrease was mainly due to a substantial increase in non-operating income in the fourmonths ended 30 April 2016 as compared to the corresponding period in 2015, which was in turn causedby an increase in government subsidies in the four months ended 30 April 2016 as compared to thecorresponding period in 2015.

4

The Group’s total indebtedness (comprising short-term and long-term borrowings and bonds payable)increased by approximately 23 per cent. as at 30 April 2016 compared to the balance as at 31 December2015. The substantial increase in the Group’s indebtedness was largely due to a substantial increase inits long-term borrowings as at 30 April 2016, which were mainly used to fund its project development.As at 30 April 2016, the Group’s payables substantially increased as compared to the balance as at 31December 2015, mainly due to an increase in the purchase amount payable to the suppliers relating to itsraw materials sourcing business and an increase in the contracting fees payable to the contractors itengaged for primary land development, which was in turn due to growth of its supply-chain finance andprimary land development business, respectively.

In June 2016, the Group and the Chongqing Nan’an District Government entered into a supplementalbuyback agreement pursuant to which the Chongqing Nan’an District Government undertook to buybacksubstantially all of the Group’s infrastructure projects that were constructed pursuant to administrativenotices without prior commitment of buyback. See ‘‘Description of the Group – Descriptions of theGroup’s Business – Infrastructure Construction’’.

5

THE OFFERING

The following is a brief summary of the offering and is qualified in its entirety by the remainder of thisOffering Circular. Some of the terms described below are subject to important limitations andexceptions. Words and expressions defined in ‘‘Terms and Conditions of the 2019 Bonds’’, ‘‘Terms andConditions of the 2021 Bonds’’ and ‘‘Summary of Provisions Relating to the Bonds in Global Form’’shall have the same meanings in this summary. For a more complete description of the terms andconditions of the Bonds, see ‘‘Terms and Conditions of the 2019 Bonds’’ and ‘‘Terms and Conditions ofthe 2021 Bonds’’ in this Offering Circular.

Issuer . . . . . . . . . . . . . . Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd.

The 2019 Bonds . . . . . . . U.S.$300,000,000 2.875 per cent. Bonds due 2019.

The 2021 Bonds . . . . . . . U.S.$500,000,000 3.625 per cent. Bonds due 2021.

Issue Price . . . . . . . . . . . The 2019 Bonds will be issued at 99.063 per cent. of their principalamount.

The 2021 Bonds will be issued at 99.264 per cent. of their principalamount.

Form andDenomination . . . . . . . The Bonds will be issued in registered form in denominations of

U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.

Issue Date . . . . . . . . . . . 19 July 2016.

Interest . . . . . . . . . . . . . The 2019 Bonds will bear interest on their outstanding principal amountfrom and including 19 July 2016, at the rate of 2.875 per cent. per annum,payable semi-annually in arrear in equal instalments on 19 January and 19July in each year, commencing on 19 January 2017.

The 2021 Bonds will bear interest on their outstanding principal amountfrom and including 19 July 2016, at the rate of 3.625 per cent. per annum,payable semi-annually in arrear in equal instalments on 19 January and 19July in each year, commencing on 19 January 2017.

Maturity Date . . . . . . . . 19 July 2019 for the 2019 Bonds.

19 July 2021 for the 2021 Bonds.

Status of the Bonds . . . . The Bonds will constitute direct, general, unconditional, unsubordinatedand (subject to Condition 4(a) (Negative Pledge) of the Terms andConditions of the relevant series) unsecured obligations of the Issuerwhich will at all times rank pari passu among themselves and at leastequally with all other present and future unsecured and unsubordinatedobligations of the Issuer, save for such exceptions as may be provided byapplicable legislation and subject to Condition 4(a) (Negative Pledge) ofthe Terms and Conditions of the relevant series.

Negative Pledge . . . . . . . The Bonds will contain a negative pledge provision as further describedin Condition 4(a) (Negative Pledge) of the Terms and Conditions of therelevant series.

6

Use of Proceeds . . . . . . . The net proceeds of the issue of the Bonds will be used for generalcorporate purposes. See ‘‘Use of Proceeds’’.

Events of Default . . . . . . The Bonds will contain certain events of default as further described inCondition 9 (Events of Default) of the Terms and Conditions of therelevant series.

Cross-Acceleration . . . . . The Bonds are subject to a cross-acceleration provision in respect ofpresent or future indebtedness for or in respect of monies borrowed or anyguarantee and/or indemnity thereof of the Issuer or of any of itsSubsidiaries in aggregate equals or exceeds U.S.$40 million or itsequivalent. See Condition 9(c) (Cross-Acceleration) of the Terms andConditions of the relevant series.

Taxation . . . . . . . . . . . . All payments of principal, premium and interest by or on behalf of theIssuer in respect of the Bonds shall be made free and clear of, and withoutwithholding or deduction for, any taxes, duties, assessments orgovernmental charges of whatever nature imposed, levied, collected,withheld or assessed by the PRC or any political subdivision or anyauthority therein or thereof having power to tax, unless such withholdingor deduction is required by law.

Where such withholding or deduction is required to be made by the Issuerby or within the PRC up to and including the aggregate rate applicable on12 July 2016 (the ‘‘Applicable Rate’’), the Issuer will increase theamounts paid by it to the extent required, so that the net amount receivedby Bondholders equals the amounts which would otherwise have beenreceivable by them had no such withholding or deduction been required.

In the event that the Issuer is required to make a deduction or withholdingby or within the PRC in excess of the Applicable Rate, the Issuer shallpay such additional amounts (the ‘‘Additional Tax Amounts’’) as willresult in receipt by the Bondholders of such amounts as would have beenreceived by them had no such withholding or deduction been required,except that no such Additional Tax Amounts shall be payable in thecircumstances set out in Condition 8 (Taxation) of the Terms andConditions of the relevant series.

Final Redemption. . . . . . Unless previously redeemed, or purchased and cancelled, the Bonds willbe redeemed at their principal amount on the Maturity Date of therelevant series.

Redemption forChange of Control . . . Following the occurrence of a Change of Control, the holder of any Bond

will have the right, at such holder’s option, to require the Issuer to redeemall, but not some only, of such holder’s Bonds at 101 per cent. of theirprincipal amount, together with accrued interest, as further described inCondition 6(c) (Redemption for Change of Control) of the Terms andConditions of the relevant series.

7

A ‘‘Change of Control’’ occurs when:

(i) (x) the Chongqing Nan’an District Bureau of Finance, and (y) anyother person directly or indirectly Controlled by the ChongqingMunicipal Government, together directly or indirectly hold or ownless than 80 per cent. of the issued share capital of the Issuer; or

(ii) the Issuer consolidates with or merges into or sells or transfers all orsubstantially all of the Issuer’s assets to any other person or persons,acting together, that is/are directly or indirectly less than 80 percent. held or owned by the Chongqing Municipal Government.

Redemption forTaxation Reasons . . . . The Bonds of a series may be redeemed at the option of the Issuer in

whole, but not in part, at any time, on giving not less than 30 nor morethan 60 days’ notice to the Bondholders of such series (which notice shallbe irrevocable) at their principal amount, together with unpaid interestaccrued to the date fixed for redemption, if, immediately before givingsuch notice, the Issuer satisfies the Trustee that:

(A) the Issuer has or will become obliged to pay Additional TaxAmounts as a result of any change in, or amendment to, the laws orregulations of the PRC or any political subdivision or any authoritythereof or therein having power to tax, or any change in theapplication or official interpretation of such laws or regulations(including without limitation a decision of a court of competentjurisdiction), which change or amendment becomes effective on orafter 12 July 2016; and

(B) such obligation cannot be avoided by the Issuer taking reasonablemeasures available to it,

provided, however, that no such notice of redemption shall be givenearlier than 90 days prior to the earliest date on which the Issuer would beobliged to pay such Additional Tax Amounts if a payment in respect ofthe Bonds were then due, as further described in Condition 6(b)(Redemption for Taxation Reasons) of the Terms and Conditions of therelevant series.

Further Issues . . . . . . . . The Issuer may from time to time, without the consent of the Bondholdersand in accordance with the Trust Deed, create and issue further bondshaving the same terms and conditions as the Bonds in all material respects(or in all material respects except for the first payment of interest and thetiming for registering and completing the Foreign Debt Registration andthe NDRC Post-issue Filing) so as to form a single series with the Bonds,as the case may be, as further described in Condition 15 (Further Issues)of the Terms and Conditions of the relevant series.

Trustee . . . . . . . . . . . . . The Bank of New York Mellon, London Branch.

Principal PayingAgent . . . . . . . . . . . . . The Bank of New York Mellon, London Branch.

8

Registrar andTransfer Agent . . . . . . The Bank of New York Mellon (Luxembourg) S.A..

Clearing Systems . . . . . . Each series of Bonds will be represented initially by beneficial interests ina Global Certificate, which will be registered in the name of a nomineeof, and deposited on the Issue Date with, a common depositary forEuroclear and Clearstream. Beneficial interests in a Global Certificate willbe shown on, and transfers thereof will be effected only through, recordsmaintained by Euroclear and Clearstream. Except as described in thisOffering Circular, definitive certificates for the Bonds will not be issuedin exchange for beneficial interests in a Global Certificate.

Clearance and Settlement The 2019 Bonds have been accepted for clearance through Euroclear andClearstream under Common Code 143842789 and the ISIN for the 2019Bonds is XS1438427897.

The 2021 Bonds have been accepted for clearance through Euroclear andClearstream under Common Code 144217756 and the ISIN for the 2021Bonds is XS1442177561.

Notices and Payment . . . So long as a Global Certificate is held on behalf of Euroclear andClearstream, any notice to the holders of the relevant series of Bondsshall be validly given by the delivery of the relevant notice to Euroclearand Clearstream, for communication by the relevant clearing system toentitled accountholders in substitution for notification as required by theTerms and Conditions of the relevant series and shall be deemed to havebeen given on the date of delivery to such clearing system.

Governing Law . . . . . . . English law.

Listing . . . . . . . . . . . . . Application will be made for the listing of and quotation for each seriesof Bonds on the SGX-ST. The Bonds will be traded on the SGX-ST in aminimum trading board lot size of U.S.$200,000 for so long as such aseries of Bonds is listed on the SGX-ST and the rules of the SGX-ST sorequire.

Selling Restrictions . . . . The Bonds will not be registered under the Securities Act or under anystate securities laws of the United States, are being offered only outsidethe United States in reliance on Regulation S of the Securities Act,Category 1 and will be subject to customary restrictions on transfer andresale. See ‘‘Subscription and Sale’’.

Ratings . . . . . . . . . . . . . S&P has assigned a corporate rating of BBB+ with a stable outlook, andFitch has assigned a corporate rating of BBB+ with a stable outlook, tothe Issuer. Each series of Bonds is expected to be rated BBB+ by S&Pand BBB+ by Fitch. A rating is not a recommendation to buy, sell or holdsecurities and may be subject to suspension, reduction or withdrawal atany time by the assigning rating agency.

9

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary consolidated financial information of the Issuer as at and for the years ended 31 December2014 and 2015 set forth below is derived from and should be read in conjunction with the consolidatedfinancial statements of the Issuer as at and for the year ended 31 December 2015, including the notesthereto and the auditor’s report in respect of the year ended 31 December 2015 included elsewhere inthis Offering Circular. The summary consolidated financial information of the Issuer as at and for theyear ended 31 December 2013 set forth below is derived from and should be read in conjunction withthe consolidated financial statements of the Issuer as at and for the year ended 31 December 2014,including the notes thereto and the auditor’s report in respect of the year ended 31 December 2014included elsewhere in this Offering Circular. The consolidated financial statements of the Issuer as atand for the years ended 31 December 2014 and 2015 have been audited by Baker Tilly China inaccordance with Auditing Standards for Chinese Certified Public Accountants.

The Issuer’s consolidated financial information as at and for the period was prepared and presented inaccordance with PRC GAAP. PRC GAAP is substantially in line with IFRS, except for certainmodifications which reflect the PRC’s unique circumstances and environment. For a summary of thematerial differences, see ‘‘Summary of Certain Material Differences between PRC GAAP and IFRS’’.

SUMMARY CONSOLIDATED INCOME STATEMENT DATA


2013(1) 2014(1) 2015

(audited) (audited) (audited)(RMB’000)

Total operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,828,517 619,719 630,975

Total operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,786,484) (694,792) (801,509)

Including: Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,536,877) (484,017) (461,969)Business taxes and levies . . . . . . . . . . . . . . . . . . . . . . . . . . (36,109) (24,740) (27,164)Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (140) (31) (215)Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,423) (63,119) (74,961)Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (176,170) (106,600) (242,227)Reversal/(Impairment) losses of assets . . . . . . . . . . . . . . . . . 10,236 (16,285) 5,026

Gains/(loss) from changes in fair values . . . . . . . . . . . . . . . . . . . . . . . 21,460 (19,126) (12,441)Investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568 4,077 5,411Operating profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,061 (90,122) (177,565)

Non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,789 356,365 501,571Non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) (487) (46)Total profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,815 265,757 323,959

Income tax expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63,046) (4,015) (6,006)Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,769 261,741 317,953

Net profit attributed to parent company . . . . . . . . . . . . . . . . . . . . . 180,587 262,686 318,484Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,183 (944) (530)

Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,769 261,741 317,953

Total comprehensive income attributed to parent company . . . . . . . . 180,587 262,686 318,484Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,183 (944) (530)

10

SUMMARY CONSOLIDATED BALANCE SHEET DATA

As at 31 December

2013(1) 2014(1) 2015


AssetsCurrent assetsCash and bank balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,803,036 2,333,056 3,524,782Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 – –

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,156,392 7,668,406 6,198,727Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,740,294 4,172,045 4,222,822Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,824,621 3,795,279 4,717,078Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,403,502 18,537,422 19,491,219Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 384

Sub-total of current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,928,445 36,506,208 38,155,013

Non-current assets:Available-for-sale financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 850,135 809,835 1,159,337Long-term equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 47,453Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,646,882 1,627,755 1,843,732Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,236,253 1,205,874 1,227,780Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610,533 766,857 891,307Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578,802 571,117 563,371Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,838 5,620 5,498Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,617 – 2,032,000Sub-total of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,935,059 4,987,058 7,770,477

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,863,504 41,493,266 45,925,490

Liabilities and Owners’ EquityCurrent liabilitiesShort-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 48,500 1,200,000Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000 – 195,073Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,396 294,905 252,679Receipts in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385,674 492,842 363,770Employee benefits payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 52 138Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452,026 404,563 175,276Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,748 81,748 88,104Other payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,936,967 6,894,787 5,982,913

Sub-total of current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,245,846 8,217,396 8,257,952

Non-current liabilitiesLong-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,245,960 6,632,130 7,817,350Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,265,029 2,069,346 3,293,678Long-term payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,053 110,953 1,060,536

Special payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,155,334 4,516,591 4,874,698Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,120 – –

Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,996 192,873 196,934Sub-total of non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 12,984,493 13,521,892 17,243,196

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,230,338 21,739,289 25,501,148

Owners’ equityPaid-in capital (share capital) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,412,241 3,412,241 3,641,241Capital reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,474,380 14,470,901 14,768,734Other comprehensive income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 7,497 9,944Surplus reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,304 82,996 131,617Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,215,307 1,287,255 1,303,642

Total owners’ equity attributable to the company . . . . . . . . . . . . . . . 19,139,233 19,260,890 19,855,178Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493,933 493,087 569,164

Total owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,633,166 19,753,977 20,424,343

Total Liabilities and Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . 38,863,504 41,493,266 45,925,490

Note:

(1) The Issuer’s consolidated financial information as at and for the year ended 31 December 2014 included in its 2015 AuditedFinancial Statements has been adjusted to reflect the Relevant Adjustments. See note V (Adjustment on Prior Year AuditedFinancial Statements) to the 2015 Audited Financial Statements on page F-34. The Issuer’s consolidated financialinformation as at and for the year ended 31 December 2013 contained in its 2014 Audited Financial Statements has not beenrevised to reflect the Relevant Adjustments. Therefore, the Issuer’s consolidated financial information as at and for the yearended 31 December 2013 contained in the 2014 Audited Financial Statements is not directly comparable to the Issuer’sadjusted consolidated financial information as at and for the year ended 31 December 2014 or its consolidated financialinformation as at and for the year ended 2015, both of which are contained in the 2015 Audited Financial Statements.Potential investors must exercise caution when using the Issuer’s historical financial information to evaluate the financialcondition and results of operations of the Issuer. See ‘‘Risk Factors – Risks Relating to the Group’s Business – The Group’shistorical financial information is not directly comparable with its financial information in 2014 and beyond’’.

11

SUMMARY CONSOLIDATED CASH FLOW STATEMENT DATA


2013 2014 2015


Net cash flows from/(used in) operating activities . . . . . . . . . . . . . . . . (810,193) (147,458) 382,366Net cash flows (used in) investing activities . . . . . . . . . . . . . . . . . . . . (855,672) (94,375) (2,571,906)Net cash flows from/(used in) financing activities . . . . . . . . . . . . . . . . 1,248,905 (278,147) 1,800,531Effect of foreign exchange rate changes on cash and cash equivalents . . . – – 146

Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . (416,959) (519,980) (388,863)Opening balance of cash and cash equivalents . . . . . . . . . . . . . . . . . . . 3,219,995 2,803,036 2,283,056Closing balance of cash and cash equivalents . . . . . . . . . . . . . . . . . . . 2,803,036 2,283,056 1,894,192

CERTAIN FINANCIAL INDICATORS AND OTHER FINANCIAL DATA


2013 2014 2015

(unaudited) (unaudited) (unaudited)EBIT(1) (RMB’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,668 719,199 727,137EBITDA(2) (RMB’000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 929,864 761,906 772,295Interest expense (RMB’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208,243 107,768 249,557Total debt(3) (RMB’000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,530,989 8,749,976 12,311,028Net debt(4) (RMB’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,727,954 6,416,920 8,786,245EBITDA/Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5x 7.1x 3.1xEBIT/Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3x 6.7x 2.9xLeverage ratio(5) (per cent.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.5 47.6 44.5

Notes:

(1) EBIT equals the sum of total operating income, non-operating income, capitalized interest and expensed interest, less grossoperating costs, taxes and surcharges on operations, selling expenses, administrative expenses.

(2) EBITDA equals EBIT plus depreciation of fixed assets, amortisation of intangible assets and amortisation of long-termdeferred expenses. EBITDA is not a standard measure under PRC GAAP or IFRS. EBITDA is a widely used financialindicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolation or construed as analternative to cash flows, net income or any other measure of performance or as an indicator of the Issuer’s operatingperformance, liquidity, profitability or cash flows generated by operating, investing or financing activities. In evaluatingEBITDA, investors should consider, among other things, the components of EBITDA such as total operating income andoperating expenses and the amount by which EBITDA exceeds capital expenditures and other charges. The Issuer presentsits EBITDA because the Issuer believes that it is a useful supplement to cash flow data as a measure of the its performanceand its ability to generate cash flow from operations to cover debt service and taxes. EBITDA presented herein may not becomparable to similarly titled measures presented by other companies. Investors should not compare the Issuer’s EBITDA toEBITDA presented by other companies because not all companies use the same definition. Interest expense excludescapitalised amounts.

(3) Total debt equals short-term and long-term borrowings and bonds payable.

(4) Net debt equals total debt less cash and bank balances.

(5) Leverage ratio equals owners’ equity divided by total assets.

12

RISK FACTORS

An investment in the Bonds is subject to a number of risks. Investors should carefully consider all of theinformation in this Offering Circular and, in particular, the risks described below, before deciding toinvest in the Bonds. The following describes some of the significant risks relating to the Group, itsbusiness, the market in which the Group operates and the value of Bonds. Some risks may be unknownto the Issuer and other risks, currently believed to be immaterial, could in fact be material. Any of thesecould materially and adversely affect the business, financial condition, results of operations orprospects of the Issuer and the Group or the value of the Bonds. The Issuer believes that the risk factorsdescribed below represent the principal risks inherent in investing in the Bonds, but the ability of theIssuer to pay interest, principal or other amounts on or in connection with any Bonds may be affectedby some factors that may not be considered as significant risks by the Issuer on information currentlyavailable to them or which they are currently unable to anticipate. All of these factors are contingencieswhich may or may not occur and the Issuer is not in a position to express a view on the likelihood ofany such contingency occurring. This Offering Circular also contains forward-looking statements thatinvolve risks and uncertainties. The actual results of the Group could differ materially from thoseanticipated in these forward-looking statements as a result of certain factors, including the risksdescribed below and elsewhere in this Offering Circular.

The Issuer does not represent that the statements below regarding the risk factors of holding any Bondsare exhaustive. Prospective investors should also read the detailed information set out elsewhere in thisOffering Circular and reach their own views prior to making any investment decision.

RISKS RELATING TO THE GROUP’S BUSINESS

The Group’s business is heavily dependent on the level of economic development in ChongqingNan’an District, Chongqing and the PRC.

The Group operates its business exclusively in Chongqing in the PRC, particularly in Chongqing Nan’anDistrict, and its assets and customers are highly concentrated in Chongqing Nan’an District. Therefore,the Group’s business, financial condition, results of operations and prospects have been and willcontinue to be heavily dependent on the level of economic development in Chongqing Nan’an District,Chongqing and the PRC.

The economy of the PRC experienced rapid growth in the past 30 years. There has been a slowdown inthe growth of the PRC’s gross domestic product (‘‘GDP’’) since the second half of 2013 and this hasraised market concerns that the historic rapid growth of the economy of the PRC may not be sustainable.According to the National Statistics Bureau of the PRC, the annual growth rate of China’s GDP in 2015slowed down to 6.9 per cent. on a year-on-year basis compared to 7.3 per cent. in 2014, and it furtherdecreased to 6.7 per cent. in the first quarter of 2016 on a year-on-year basis. The national economiccondition of the PRC has a material effect on the regional economic performance in the PRC.Chongqing has experienced a prolonged period of rapid economic growth in recent years. According tothe Statistics Bureau of Chongqing Municipality, Chongqing’s GDP increased from RMB653.0 billion in2009 to RMB1,572.0 billion in 2015 and Chongqing Nan’an District’s GDP increased from RMB30.0billion in 2009 to RMB67.9 billion in 2015. However, the annual growth rate of Chongqing’s GDPdecreased from 14.9 per cent. in 2009 to 11.0 per cent. in 2015 and the annual growth rate ofChongqing Nan’an District’s GDP decreased from 15.3 per cent. in 2009 to 11.3 per cent. in 2015.These changes were generally in line with the change in the PRC’s GDP growth rate during the sameperiod. The growth in fixed asset investments in Chongqing and Chongqing Nan’an District alsodisplayed a slowdown as a result of the deterioration of China’s macroeconomic conditions. See‘‘Overview of Chongqing and Chongqing Nan’an District’’.

The future prospects of the PRC’s, Chongqing’s and Chongqing Nan’an District’s economy depend onmany different factors, most of which are beyond the Group’s control. It is uncertain how the economiccondition and future development in Chongqing and Chongqing Nan’an District will be affected by the

13

slowdown in the growth of the PRC’s economy. There is no assurance that the economy of Chongqingor Chongqing Nan’an District will continue to be maintained at historical growth rates, if at all.Continued slowdown in the economic growth in Chongqing or Chongqing Nan’an District may affectthe fiscal income and financial condition of the Chongqing Nan’an District Government and theChongqing Municipal Government as well as their plans and budgets for city construction anddevelopment. This may in turn decrease the demand for the Group’s business and adversely affect theGroup’s business, financial condition, results of operations and prospects.

The Group’s business and prospects to a large extent depend upon the budget and spending of theChongqing Nan’an District Government on infrastructure development and fixed asset investments.

The Group is tasked to implement the Chongqing Nan’an District Government’s plans to constructChongqing Nan’an District and its business and prospects are heavily affected by the budget andspending of the Chongqing Nan’an District Government on infrastructure development and fixed assetinvestments. For example, the Group’s primary land development and infrastructure construction projectsare conducted according to the project development agreements the Group enters into with theChongqing Nan’an District Government or the Chongqing Nan’an District Government’s administrativenotices, and the Group’s operating income from these projects is derived from the land development feesand project buyback amounts paid by the Chongqing Nan’an District Government. In addition, theChongqing Nan’an District Government usually provides start-up capital for the Group at thepreliminary stage of the development of its infrastructure projects.

There are many factors affecting the amount, time and priority of the Chongqing Nan’an DistrictGovernment’s budget and spending on infrastructure development and fixed asset investments, such asnational and regional policies affecting the development of different industries and fiscal and monetarypolicies. Government budget and spending are also affected by government income and the generaleconomic conditions in the PRC and Chongqing. Any slowdown in the economic growth in the PRC andChongqing may adversely affect financial condition and fiscal income of the Chongqing Nan’an DistrictGovernment, which may in turn cause the Chongqing Nan’an District Government to reduce its spendingand budget on infrastructure development and fixed asset investments. See ‘‘– The Group’s business,financial condition, results of operations and prospects could be adversely affected by slowdowns in theChinese economy’’.

According to the Statistics Bureau of Chongqing Municipality, the total investments in fixed assets inChongqing Nan’an District was RMB45.7 billion, RMB48.8 billion and RMB50.1 billion for the yearsended 31 December 2013, 2014 and 2015, respectively, representing 4.1 per cent., 3.7 per cent. and 3.2per cent., respectively, of the total investments in fixed assets in Chongqing. There is no assurance thatthe fixed asset investments in Chongqing Nan’an District will continue to increase. If the publicspending and budget of the Chongqing Nan’an District Government on infrastructure development andfixed asset investments decrease, the Group’s business, financial condition, results of operations andprospects may be materially and adversely affected.

The Group faces risks associated with contracting with public bodies, such as the Chongqing Nan’anDistrict Government.

The Issuer is 89.32 per cent. beneficially owned by the Chongqing Nan’an District Bureau of Finance,which is directly supervised by the Chongqing Nan’an District Government as of the date of thisOffering Circular. A majority of the Group’s business activities are conducted with the ChongqingNan’an District Government and its controlled entities. A significant portion of the Group’s operatingincome is generated from the land development fee and project buyback amount payable by theChongqing Nan’an District Government relating to its primary land development and infrastructureconstruction, as well as the interest and consulting fee payable by the enterprises owned or controlled bythe Chongqing Nan’an District Government relating to its provision of loan financing and supply-chainfinance services. As such, the Group is exposed to certain inherent risks relating to dealing with publicbodies, such as the Chongqing Nan’an District Government.

14

The development of certain infrastructure projects of the Group were historically based on theadministrative notices in which the Chongqing Nan’an District Government did not make any specificbuyback commitment. The uncertainty relating to the Chongqing Nan’an District Government’s buybackcommitment existed even after the relevant projects were completed. For this reason, the Issuer couldnot recognise the operating income from the development of those projects according to its accountingprinciples resulting in a high level of inventories on the Issuer’s consolidated balance sheet. As of thedate of this Offering Circular, the Group has entered into a series of supplemental contracts with theChongqing Nan’an District Government to confirm the buyback arrangements relating to the projectsinvolved and the Chongqing Nan’an District Government has expressly committed to buybacksubstantially all of the Group’s infrastructure projects that are completed. However, there is noassurance that the Chongqing Nan’an District Government will or will be able to fulfil its obligationaccording to the arrangements agreed with the Group.

Any failure by the Chongqing Nan’an District Government to fulfil its contractual obligations or anyadverse change to its policies may require the Group to change its business plans and materially affectits business and operating results. If there is any material disagreement between the Group and theChongqing Nan’an District Government or any of its controlled entities, there is no assurance that theGroup will successfully resolve them in a timely manner, or at all. Any dispute or legal proceeding withor against the Chongqing Nan’an District Government may last for a long period of time and costconsiderable financial and managerial resources. Any of these may severely damage the businessrelationships between the Group and the Chongqing Nan’an District Government and its controlledentities affected, and in turn materially and adversely affect the Group’s business, financial condition,results of operations and prospects.

PRC regulations on the administration of the financing platforms of local governments may have amaterial impact on the Group’s business and sources of financing.

To strengthen the administration of the financing platforms of local governments in China and to controlthe risks relating to local government debt, the State Council of the PRC issued the Notice onStrengthening the Administration of Local Government Financing Vehicles（國務院關於加強地方政府

融資平臺公司管理有關問題的通知）(‘‘Circular 19’’) in June 2010. According to Circular 19, localgovernments at different levels are required to classify the debts incurred by their financing vehicles intothree categories based on the standards and principles set by the State Council and to control anddecrease the amount of their outstanding debts. The first category of debts are those incurred relating tothe development of projects for public welfare that will be repaid with government funds. The secondcategory of debts are those incurred relating to the development of projects for public welfare that willbe repaid with cash flow generated by the projects themselves. The third category of debts are thoseincurred relating to the development of projects not for public welfare. According to Circular 19, theGroup is required to maintain sufficient working capital and to improve corporate governance and tocarry on its operations and financing in accordance with market-oriented principles as privatecompanies.

In November 2010, the General Office of the NDRC issued the Notice on Further Regulating Issuanceof Bonds by Local Government Financing Vehicles（國家發展改革委辦公廳關於進一步規範地方政府

投融資平臺公司發行債券行為有關問題的通知）(‘‘Circular 2881’’). According to Circular 2881, thefinancing vehicles of a local government shall rely on its internal operating cash flow to finance thepayment of more than 70 per cent. of the cash requirement for repaying its corporate bonds issued in thePRC. If revenue from the construction of public interest projects represents more than 30 per cent. of itstotal revenue, the financing vehicles should provide the authorities that review the application ofcorporate bonds issuance with information relating to the balance of local government’s debts and otherdetailed information to demonstrate its repayment ability. In addition, it reinforces the requirementsunder Circular 19 which prohibit local governments from mortgaging state-owned assets or otherwisecreating security interest over public funds to secure the debts of its financing vehicles, directly orindirectly. As of the date of this Offering Circular, the Group has not received any notice from anygovernmental authority that the Group is not in compliance with Circular 2881.

15

In December 2012, the Ministry of Finance (‘‘MOF’’), the NDRC, the People’s Bank of China (the‘‘PBOC’’) and the China Banking Regulatory Commission (‘‘CBRC’’) jointly issued the NoticeRegarding the Prohibition of Illegal Financing by Local Governments（關於制止地方政府違法違規融資

行為的通知）(‘‘Circular 463’’). According to Circular 463, local governments at different levels andtheir government departments and offices generally are not permitted to (i) develop infrastructureprojects under the BT model except those that satisfy the criteria pursuant to applicable PRC laws andregulations, (ii) inject certain public assets into local financing vehicles, such as public schools, hospitaland garden, (iii) authorise local government financing vehicles with land reserve powers or allow localgovernment financing vehicles to mortgage their land use rights to secure its for borrowing, or (iv)provide guarantees in favour of local government financing vehicles relating to their bank borrowings orperformance under their respective BT construction arrangements. Circular 463 requires that localgovernments carefully determine the construction scale and the buyback schedule based on theconstruction plan of projects and their financial capability if the relevant projects are constructed underthe BT model.

As of the date of this Offering Circular, the Group conducts infrastructure construction under the BTmodel and it has not received any notice from any governmental authority that any of the Group’sactivities are not in compliance with Circular 463. As the PRC Government may issue more stringentpolicies that could affect the business of local government financing arms in the PRC in the future, thereis no assurance that the Group will be able to continue to carry on its business activities under the BTmodel in the future, which in turn may have a material impact on the Group’s business, financialcondition, results of operations and prospects.

PRC regulations on the administration of local government debts will have a material impact on theGroup’s financing model and business model.

In September 2014, the State Council of the PRC released the Opinion on Enhancing the Administrationof Fiscal Debts of Local Governments（關於加強地方政府性債務管理的意見）(‘‘Circular 43’’).According to Circular 43, financing vehicles companies, such as the Group, are no longer permitted tofunction as the financing arm of the local government or incur new government debts and should carryon its operations and financing in accordance with market-oriented principles. Local governments shouldfinance the development of public interest projects by issuance of government bonds. Public interestprojects that are profit earning, such as construction of non-toll free highways, may be developed eitherby private investors independently or by a special purpose company jointly set up by the localgovernment and private investors. Private investors and the special purpose companies jointly set up bythe local government and the private investors shall invest in accordance with market-oriented principlesand development of projects may be financed by bank loans, corporate bonds and asset-backedsecuritisation. Furthermore, private investors and the special purpose companies shall bear the obligationto repay their debts and the relevant local government shall not be liable for any of the privateinvestors’ or the special purpose companies’ debts.

As part of the implementation of Circular 43, the local branches of MOF began an audit on the existingdebts of financing vehicles of local governments. Debts reported by the local governments wereclassified into four categories, namely (i) the debts that shall be repaid with funds of the localgovernments (the ‘‘First Type of Borrowing’’), (ii) the debts that are guaranteed by the localgovernments (the ‘‘Second Type of Borrowing’’), (iii) the debts that may be repaid by the localgovernments with public funds at its option when the borrowing financing vehicles are not able to repay(the ‘‘Third Type of Borrowing’’), and (iv) the debts that will not be repaid or financed with the fundsof the local governments (the ‘‘Fourth Type of Borrowing’’).

The MOF subsequently rolled out a programme with an aim to control the significant increase in localgovernment debts and related risks in the PRC’s banking system in 2015 (the ‘‘Debt SwapProgramme’’). Under the Debt Swap Programme, local governments were allowed, at their discretion,to swap the outstanding debts of their financing vehicles that were classified as the First Type of

16

Borrowing with long-term and low-interest government bonds to be issued by local governments withinthe quota allocated by MOF. In March 2015 and June 2015, MOF allocated quota for government bondissuance in a total amount of RMB2,000 billion to local governments at different levels. The Issuersubmitted to the Chongqing Nan’an District Bureau of Finance a list of the Group’s then existing debtswhich amounted to approximately RMB5.79 billion in total. The Chongqing Nan’an District Bureau ofFinance has confirmed that, as at 31 December 2015, RMB4.39 billion of the Group’s existing debtswere classified as the First Type of Borrowing, RMB0.6 billion of its existing debts were classified asthe Second Type of Borrowing, and the remaining RMB0.8 billion were classified as the Third Type ofBorrowing.

The Group believes that the PRC Government will continue to implement Circular 43 to controlincreasing local government debts. There is no assurance that the Group’s future indebtedness incurredto finance its project development will all be classified as the First Type of Borrowing to enjoy thebenefit of the Debt Swap Programme, because the standards of classification are subject to the discretionof the Chongqing Nan’an District Bureau of Finance which are beyond the Group’s control. The Group’sfinancing model and business model may be required to change significantly and going forward,investors in relation to the Group’s indebtedness that are not classified as the First Type of Borrowingwill only have recourse to the Group’s assets and not those of the local government.

The Group’s business operations are capital intensive and any failure of the Group to obtainsufficient capital resources on acceptable terms or in a timely manner may adversely affect itsbusiness and prospects.

The Group’s business operations require substantial capital resources. For the years ended 31 December2013, 2014 and 2015, the Group incurred capital expenditures of RMB1,584.6 million, RMB2,737.3million and RMB3,105.0 million, respectively. The Group has historically met its cash requirementsthrough (i) the cash flow generated from its operating activities, (ii) subsidies from the ChongqingNan’an District Government, (iii) proceeds of bank and other borrowings, and (iv) issuance of bondsand commercial paper in the PRC capital markets. The Group believes that it will continue to requiresubstantial capital resources to support its business operations and expansion.

The ability of the Group to generate sufficient operating cash flow is affected by a number of factors,such as the Group’s ability to carry on its business activities in an efficient manner, the ChongqingNan’an District Government’s plans of project buyback and its performance, due performance of theGroup’s contractors, changes in the general market conditions and regulatory environment and thecompetition in certain sectors in which the Group operates. Any adverse change in any of these factors,which may be out of the Group’s control, may create capital shortfall. There is no assurance that theGroup’s operating activities are able to generate sufficient cash to satisfy its cash needs at all times. Forthe years ended 31 December 2013 and 2014, the Group had net operating cash outflows of RMB810.2million and RMB147.5 million, respectively. See ‘‘– The Group has historically experienced netoperating cash outflows’’ below.

A significant portion of the cash demand of the Group is satisfied through subsidies provided by theChongqing Nan’an District Government. For the years ended 31 December 2013, 2014 and 2015,government grants received by the Group amounted to RMB186.7 million, RMB356.3 million andRMB501.5 million, respectively. The ability of the Chongqing Nan’an District Government to providecontinued financial support to the Group to a large extent depends on the future fiscal income andpolicies of the Chongqing Nan’an District Government. There is no assurance that the Group willcontinue to receive the same government subsidies and grants or enjoy the same preferential treatmentsfrom the Chongqing Nan’an District Government in the future.

17

Insufficient cash flow generated from the Group’s operating activities will increase the Group’s relianceon external financing. As at 31 December 2015, the Group’s total indebtedness (comprising short-termand long-term borrowings and bonds payables) was RMB12.3 billion. As at 30 April 2016, the Grouphad credit facilities in a total amount of approximately RMB14.3 billion, of which approximatelyRMB4.4 billion had not been used. The Group’s ability to arrange for external financing and the cost ofsuch financing are dependent on numerous factors, including:

• general economic and capital market conditions;

• changes in monetary policies with respect to bank interest rates and lending policy;

• interest rates and credit availability from banks or other lenders;

• investor confidence in the Group, success of the Group’s business;

• the Group’s ability to obtain the PRC Government approvals required to access domestic orinternational financing;

• provisions of tax and securities laws that may be applicable to the Group’s efforts to raise capital;and

• political and economic conditions in the rest of the PRC generally.

There is no assurance that additional financing, either on a short-term or a long-term basis, will beavailable, or that such financing will be obtained on terms favourable to the Group. If the Group isunable to obtain financing on a timely basis and at a reasonable cost, it may not be able to undertakenew projects or implement them as planned. This would restrict the Group’s ability to grow and, overtime, may reduce the quality and reliability of the service the Group provides and adversely affects theGroup’s business, financial condition, results of operations and prospects. In addition, substantialindebtedness may in turn increase the pressure on the Group’s liquidity and cause additional operationalrisks. See ‘‘– Substantial indebtedness may restrict the Group’s business activities and increase theGroup’s exposure to various operational risks’’ below.

The Group has historically experienced net operating cash outflows.

For the years ended 31 December 2013 and 2014, the Group had net operating cash outflows ofRMB810.2 million and RMB147.5 million, respectively. The Group’s net operating cash outflows werelargely attributable to a mismatch between the development timetable of infrastructure construction andprimary land development projects which determines its expenditures and the buyback timetable orschedule of payment which determines its operating income from the relevant projects. Although theGroup has been engaged to undertake a large number of infrastructure projects in Chongqing Nan’anDistrict, the Group has to incur a significant amount of expenditures for project development before itreceives the buyback amount from the Chongqing Nan’an District Government after the relevant projectsare completed or the land development fee after the underlying land use rights are granted to real estatedevelopers. Payment of the buyback amount and the land development fee is usually made byinstalments during a period ranging from two to five years and it may be delayed due to various reasons,such as changes in the budget of the Chongqing Nan’an District Government which is beyond theGroup’s control. If the Group’s operating activities fail to generate sufficient cash to satisfy its cashrequirements, the Group has to increase its reliance on external financing to satisfy its working capitaland capital expenditure, thus increasing its financial vulnerability and adversely affecting its financialcondition and results of operations.

18

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

The Group relies on bank loans and proceeds from bond issuances to satisfy a portion of its capitalrequirements and the Group has had a significant amount of outstanding indebtedness. As at 31December 2015, the Group’s total indebtedness (comprising short-term and long-term borrowings andbonds payables) was RMB12.3 billion, of which RMB4.4 billion would become due within 12 months.In addition, the Group had outstanding guarantee in a total amount of RMB618.9 million as at 31December 2015, which was mainly relating to borrowings of members of the Group and certainindependent third parties.

Substantial indebtedness could impact on the Group’s business in a number of ways, including:

• requiring the Group to divert its operating cash flow to service its indebtedness;

• increasing the Group’s finance costs, thus affecting the overall profits of the Group;

• decreasing the Group’s financial flexibility in carrying on its business or responding to unexpectedmarket changes;

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

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

Certain financing contracts entered into by members of the Group contain operational and financialrestrictions that prohibit the borrower from incurring additional indebtedness unless it is able to satisfycertain financial ratios, restrict the borrower from creating security or granting guarantees or prohibit theborrower from changing its business and corporate structure, without the lender’s prior consent. Suchrestrictions may negatively affect the relevant companies’ ability to respond to changes in marketconditions, pursue the business opportunities the Group believes to be desirable, to obtain futurefinancing, fund capital expenditures, or withstand a continuing or future downturn in its business. Anyof these factors could materially and adversely affect the Group’s ability to satisfy its obligations underoutstanding financial obligations, such as the Bonds after issuance.

If the Issuer or any of its relevant subsidiaries is unable to comply with the restrictions (includingrestrictions on future investments) and covenants in its current or future debt obligations and otherfinancing agreements, a default under the terms of such agreements may occur. In the event of a defaultunder such agreements, the creditors may be entitled to terminate their commitments granted to theIssuer or its subsidiaries, accelerate the debt and declare all amounts borrowed due and payable orterminate the agreements, depending on the provisions of the relevant agreements. Some financingagreements of the Group contain cross-acceleration or cross-default provisions, which give creditorsunder these financing agreements to require the Group to immediately repay their loans or declare adefault of borrower as a result of the acceleration or default of other financing agreements by any othermember of the Group. If any of these events occur, there can be no assurance that the Group will beable to obtain the lenders’ waiver in a timely manner or that the assets and cash flow of the Issuer or itssubsidiaries would be sufficient to repay in full all of their respective debts as they become due, or thatthe Issuer or its subsidiaries would be able to find alternative financing. Even if the Issuer and itssubsidiaries could obtain alternative financing, there can be no assurance that it would be on terms thatare favourable or acceptable to the Issuer or, as the case may be, its subsidiaries.

19

In addition, the Group mortgages some of its assets, primarily land use rights, to secure its bankborrowings for project development. As at 31 December 2015, the Group’s assets with a total bookvalue of RMB7.5 billion were provided as security to secure the loan facilities of the Group. Third-partysecurity rights may limit the Group’s use of the underlying collateral assets and adversely affect itsoperation efficiency. If the Issuer and its subsidiaries are unable to service and repay their debts undersuch loan facilities on a timely basis, the assets mortgaged or charged to secure the Group’s bank loansmay be foreclosed, which may adversely affect the Group’s business, financial condition, results ofoperations and prospects.

The Group is exposed to risks relating to its high level of inventories.

The Group’s inventory level is affected by a number of factors, such as the Chongqing Nan’an DistrictGovernment’s commitment and ability to buyback the projects completed, the timetable and priority ofthe grant of land use rights for the Group’s primary land development projects and the Group’s plan toapply for project buyback. These factors may in turn be affected by the controlling measures of the PRCGovernment on real property investment and development and the government’s macroeconomic andmonetary policies.

As at 31 December 2013, 2014 and 2015, the balance of the Group’s inventories was RMB17,403.5million, RMB18,537.4 million and RMB19,491.2 million, respectively, representing 44.8 per cent., 44.7per cent. and 42.4 per cent. of the Group’s total assets as at the corresponding dates. The Group’sinventories are mainly the land use rights of land allocated to the Group by the Chongqing Nan’anDistrict Government for its primary land development before 2013 and the completed infrastructureprojects that have not been purchased by the Chongqing Nan’an District Government. The Group has ahigh level of inventories largely due to lack of clarity on the Chongqing Nan’an District Government’scommitment to buyback the relevant projects, which is the condition to recognise the operating incomeaccording to the Issuer’s accounting policies. Those land developed and infrastructure projects booked asinventories on the Issuer’s consolidated balance sheet are illiquid assets and may not be sold for cash inan efficient manner. This may limit the Group’s ability to respond to changing economic, financial andinvestment conditions. There is no assurance that it will be able to sell any of these real properties orinfrastructure projects to other third parties for price or on the terms satisfactory to them.

High level of inventories not only increases the pressure on the Group’s cash flows, it also causes theGroup to make provisions for impairment of fair value of inventories. Any failure to effectively managethe Group’s inventory level will have a material impact on the Group’s cash flow and adversely affect itsability to carry on ordinary business activities and to serve its outstanding indebtedness, such as theBonds, which in turn could materially and adversely affect the Group’s business, financial condition,results of operations or prospects. See ‘‘– The Group does not have any control over the price, scheduleand priority of the grant of land use rights for its primary land development projects and the Group’soperating income from primary land development may fluctuate significantly from period to period’’below.

Significant amount of account and other receivables may affect the Group’s liquidity and restrict theGroup’s business activities

As at 31 December 2013, 2014 and 2015, the Group’s account receivables were RMB8,156.4 million,RMB7,668.4 million and RMB6,198.7 million, respectively, representing 21.0 per cent., 18.5 per cent.and 13.5 per cent. of the Group’s total assets as at the corresponding dates. The Group’s accountreceivables are mainly the outstanding buyback amounts owed by the Chongqing Nan’an DistrictGovernment, and the outstanding primary land development fees owed by Chongqing Nanfa UrbanConstruction and Development Co., Ltd.（重慶市南發城建發展有限公司）, a state-owned companyengaging in development and construction of rural resettlement housing and affordable housing inChongqing Nan’an District. As at 31 December 2013, 2014 and 2015, the Group’s other receivablesamounts to RMB2,824.6 million, RMB3,795.2 million and RMB4,717.1 million, respectively,representing 7.3 per cent., 9.1 per cent. and 10.3 per cent. of the Group’s total assets as at the

20

corresponding dates. The Group’s other receivables primarily represent the amounts due from itscontractors under the Group’s loans and advances provided to those contractors to finance the projectconstruction. There are inherent risks associated with the ability of the Chongqing Nan’an DistrictGovernment and the Group’s contractors to make timely payments and any failure to make timelypayments by these entities could materially and adversely affect the Group’s liquidity and in turn affectits business, financial condition or results of operations. See ‘‘– The Group faces risks associated withcontracting with public bodies, such as the Chongqing Nan’an District Government’’ above.

The Group’s business operations are heavily regulated and any failure of the Group to comply withapplicable laws, rules and regulations, including obtaining or maintaining necessary qualifications,permits and approvals for its operations may adversely affect its business, financial condition andresults of operations.

The Group needs to obtain a number of approvals, certificates, licenses and permits from differentgovernmental authorities and to comply with extensive procedural requirements in order to carry on itsbusiness activities under PRC law and regulations. For example, the Group is required to obtain aproject approval and the environmental assessment approval at the outset of the project before it ispermitted to commence construction of the relevant project. As the projects progress, it also needs toreceive the construction land planning permit（建設用地規劃許可證）, the construction project planningpermit（建設工程規劃許可證）and the construction permit（建築工程施工許可證）. It normally takes sixto 12 months to obtain all of these approvals and certificates. Governmental authorities in the PRC havebroad discretion in implementing and enforcing applicable laws and regulations and in determining thegrant of approvals, licences, permits and certificates necessary for conducting the business. For thisreason, there are significant uncertainties in the interpretation and implementation of PRC laws, rules,regulations, policies and measures and verbal clarifications given by the governmental authorities maybe inconsistent with the regulations concerned, increasing the Group’s compliance risk.

PRC governmental authorities from time to time amend existing laws and regulations and release newpolicies which may affect the Group’s business operations. The Group may be unable to comply withnew laws, regulations or policies or fails to respond to any changes in the regulatory environment in atimely manner. In addition, to ensure the restrictions and conditions of relevant business permits,licenses and certificates are fulfilled, governmental authorities normally conduct regular or specialinspections, investigations and inquiries. If there is any material non-compliance of the Group or itsbusiness, the Group’s permits, licenses and certificates may be suspended or revoked, and it may receivefines or other penalties, which could have a material adverse effect on the Group’s business, financialcondition, results of operations and prospects.

As of the date of this Offering Circular, the Group has three projects which have not received orproperly maintained all requisite permits or approvals: (1) the Group has not received a projectestablishment permit, land use permit, environmental impact assessment report and feasibility studyreport for Begonia River Road Project（海棠溪河道工程）; (2) the Group has not received a projectestablishment permit, construction land planning permit, environmental impact assessment report andfeasibility study report for Sihai Road Project（四海路工程）; and (3) the Group has not received aproject establishment permit, construction permit, construction land planning permit, land use permit andenvironmental impact assessment report for Yanyu Road Project（煙雨路工程）. According to PRC lawsand regulations, the failure to obtain a project establishment permit could result in suspension ofconstruction projects; the failure to obtain a land use permit could result in revocation of land use rightsand compensation to third parties if any damage is caused; and the failure to obtain an environmentalimpact assessment report could result in suspension of construction projects, fines and administrativepenalties. As of the date of this Offering Circular, the Group has not received any notice from anygovernmental authorities regarding the above-mentioned non-compliance.

21

Regulations on the source of funds relating to provision of entrusted loans could have an adverseeffect on the development of the Group’s loan financing business.

On 16 January 2015, CBRC published the Administrative Measures for the Entrusted Loans ofCommercial Banks in draft form to solicit opinions and reviews from the public（商業銀行委託貸款管

理辦法（徵求意見稿））. According to the draft measures, CBRC proposed that commercial banks shouldbe prohibited from accepting funds from the following sources to grant entrusted loans, namely (i)special funds with special purposes stipulated by the government, (ii) funds coming from bank creditfacilities, (iii) proceeds from issue of bonds, (iv) funds raised from third parties, and (v) funds with noproof of sources. If the draft measures are adopted and take effect in the future, they will exertsubstantial restrictions on the sources of funds for conducting loan financing business and will have anadverse effect on the Group’s loan financing that is provided in the form of entrusted loans.

The Group does not have any control over the price, schedule and priority of the grant of land userights for its primary land development projects and the Group’s operating income from primary landdevelopment may fluctuate significantly from period to period.

The Group’s operating income from primary land development mainly derives from the landdevelopment fee payable by the Chongqing Nan’an District Government, which is in turn generatedfrom the land grant premium payable by real property developers in the granting of land use rights ofthe land developed by the Group. The Chongqing Nan’an District Government determines the price,schedule and priority of the grant of land use right by taking into consideration of many factors such asgovernment income and budget, city development plans, cost of primary development, location of theland, policies and regulations affecting real property investment and development and macroeconomicconditions in Chongqing. The Group has no control over the price, schedule and priority of the grant ofland use rights. According to the Issuer’s accounting policies, the Issuer recognises the operating incomefrom primary land development upon receipt of the payment of land development fee. As a result, theGroup’s operating income from primary land development may fluctuate significantly from time to timedepending on the timing and price of the land grant and the time of payment of the land developmentfee by the Chongqing Nan’an District Government. The Group’s results of operations relating to itsprimary land development for any period may not be directly comparable with other periods andtherefore may not be a useful indicator of its performance in the future. For the year ended 31 December2013, operating income generated from the Group’s primary land development business was RMB802.5million, representing 43.9 per cent. of the Group’s total operating income, while there was no operatingincome for primary land development business recognised for the years ended 31 December 2014 and2015 because there was no grant of land use rights for the projects developed by the Group in 2014 andthe procedures relating to land grants in 2015 had not been fully completed by the end of 2015.Suspensions or delays in granting of land use rights, as a result of government policies or decisions,macroeconomic conditions or otherwise, will also have a material adverse impact on the Group’sbusiness, financial condition and results of operations.

The Group’s financial condition and results of operations may be affected by material fluctuations ofinterest rates.

Most of the Group’s bank loans bear interests that accrue at rates linked to the benchmark lending ratespublished by the PBOC. A material fluctuation in the benchmark lending rates may have a materialimpact on the Group’s interest expenses and payables under its bank loans and in turn negatively affectits financing costs and results of operations. The PBOC from time to time adjusts interest rates asimplementation of its economic and monetary policies. Since the outbreak of the global financial crisisin 2008, the PBOC started to lower the benchmark lending rates with an aim to encourage lending,increase liquidity in the market and promote the recovery of China’s economy. Since 2008, the PBOCdecreased the benchmark one-year lending rate five times, from 7.47 per cent. to 5.31 per cent. inDecember 2008, which remained unchanged until September 2010. Since then, the one-year lending ratewas gradually increased to 6.56 per cent. on 7 July 2011 and onwards. In recent years, a perceivable

22

slowdown in the growth of the economy of the PRC again caused the PRC Government to adopt moreliberal monetary policies with the aim to stimulate the PRC’s economic development. Since 2012, thePBOC for a number of times reduced the benchmark one-year lending rate to 4.35 per cent. as at 24October 2015 and onwards. Although the Group’s financial condition and results of operations maybenefit from a low-interest environment, there is no assurance that this environment will continue. Anyincrease in the benchmark lending rate by the PBOC in the future will increase the Group’s financingcosts and adversely affect its profitability, financial condition and results of operations.

The Group relies on third-party contractors for certain services in its primary land development andinfrastructure development.

The Group engages third-party contractors to provide various services, including construction,landscaping, gardening, mechanical and electrical installation and gas, water and other utilitiesinstallation. It generally select third-party contractors through its standardised open tender process. TheGroup endeavours to employ those companies with good reputations, strong track records, performancereliability and adequate financial resources, and the Group also implements quality control proceduresand closely monitors the construction progress. However, there is no assurance that its third-partycontractors will always provide satisfactory services of the quality required by the Group. If theperformance of any third-party contractor fails to meet the requirements of the Group, the Group mayneed to replace such contractor or take other remedial actions, which could adversely affect the cost anddevelopment schedule of its projects. In addition, the Group may be asked to undertake one or moreprojects by the Chongqing Nan’an District Government on short notice, there is no assurance that theGroup is able to engage third-party contractors that meet its quality requirements in this situation.Moreover, the Group’s contractors may undertake projects from other enterprises operating similarbusiness, engage in risky undertakings or otherwise encounter financial or other difficulties, which mayadversely affect their ability to complete the Group’s projects on time, within budget or at all. All ofthese third-party related factors may have material adverse impact on the quality of services provided bythe Group’s contractors and the Group’s reputation, credibility, financial position and businessoperations.

The Group’s primary land development activities are exposed to certain risks associated withresettlement of local residents.

Many of the Group’s primary land development projects involves resettlement of local residents andbusinesses. According to the land development arrangement between the Group and the ChongqingNan’an District Government, the Group is responsible for relocating the residents affected and payingthe compensation in accordance with applicable PRC urban housing relocation regulations, although thecompensation will be reimbursed by the Chongqing Nan’an District Government as part of the paymentof land development fee. There is no assurance that the relocation of indigenous residents or businesseswill proceed smoothly. It is possible that the local residents or businesses may dissent the amount of thecompensation and refuse to be relocate, and in this case the Chongqing Nan’an District Government maybe asked to resolve the dispute by reviewing the arrangement and amount of compensation. Anunfavourable final ruling by the Chongqing Nan’an District Government may cause the Group to paymore compensation. Such resistance or refusal to relocate may delay the timetable of, or increase thedevelopment costs of, the Group’s development projects. In addition, the compensation we pay iscalculated in accordance with formulas published by relevant governmental authorities. These formulastake into account the location, type of building subject to demolition, local income levels and manyother factors. There is no assurance that the governmental authorities will not change or adjust theirformulas from time to time without sufficient advance notice. If they do so, the land costs may besubject to substantial increases, which can adversely affect the Group’s cash flow, financial conditionand results of operations.

23

The Group may not successfully implement its growth strategy.

The Group has historically been focused on primary land development and infrastructure construction inChongqing Nan’an District. In 2015, it has diversified its business into supply-chain finance and plansto further develop and expand this business. As one of its strategies, the Group continues to developother new business while maintaining sustainable growth of its existing business. Whether the Groupcould successfully implement this strategy, to some extent, depends on the Group’s ability to identifyattractive projects, obtain required approvals from relevant regulatory authorities in the PRC, obtainsufficient capital on acceptable terms in a timely manner and maintain close working relationships withvarious governmental authorities and agencies. The success of negotiations with respect to any particularproject cannot be assured. There can be no assurance that the Group will be able to successfullyimplement this strategy, manage or integrate newly-acquired operations with its existing operations.Failure to implement the Group’s growth strategy could have a material adverse impact on its business,financial condition and results of operations.

The Group has limited operating history of and experience in supply-chain finance business.

In 2015, the Group began to provide supply-chain finance services to enterprises operating inChongqing Nan’an District, particularly those in the electronics and information technology industries.For the year ended 31 December 2015, the Group’s operating income generated from provision ofsupply-chain finance services was RMB380.4 million, representing 60.3 per cent. of its total operatingincome for the same period. Future growth of this business requires the Group to devote additionalfinancial and managerial resources and to acquire related industry expertise. In addition, the Group willhave to compete with other companies operating the same business which it would not compete withbefore expansion. The Group has a limited operating history and experience in supply-chain financing.Operating this new business increases the Group’s exposure to risks and uncertainties which the Groupmay not be able to foresee, prevent or control based on its past experience. Any failure by the Group toaddress or control any new risk arising from the provision of supply-chain finance services or anyfailure to procure sufficient resources and expertise may hinder its implementation of expansionstrategies, and may have a material adverse effect on the Group’s business, financial condition andresults of operations.

The Group’s risk management systems and internal control policies may not be effective in mitigatingthe risk exposure.

The Group’s loan financing business, including the granting of entrusted loans and direct short-termloans, involves credit risk, as the loans the Group grants may not be repaid on time, if at all. TheGroup’s diversification in the supply-chain finance business may increase its exposure to credit risks.The Group’s loan financing business and supply-chain finance business currently focus on small andmedium sized electronics and information technology companies (‘‘Electronic Information SMEs’’) inChongqing Nan’an District. Many of its customers have limited financial resources or relatively weakercredit profile, making it difficult for them to obtain capitals from the large state-owned financialinstitutions. For the same reason, they are more vulnerable to adverse competitive, economic orregulatory conditions, and create greater credit risks relating to the Group’s loan financing and supply-chain finance business than larger or more established enterprises with longer operating histories. Forthe direct short-term loans granted to other state-owned enterprises, the Group conducts very limited duediligence and the repayment of such loans are subject to the liquidity and policies of the government.

Although the Group seeks to manage its credit risk exposure through internal customer due diligence,credit approvals, requiring collateral and guarantees and other risk management measures, the Group’srisk management systems and internal control policies may not be effective in mitigating the exposure toall types of risk, including unidentified or unanticipated risks in its loan financing business and supply-chain finance business. Some risk management and control methods are based upon historical marketbehaviour and past events. As such, the Group may not be able to adequately identify or estimate future

24

risk exposures, which could be significantly greater than those indicated by measures based on historicaldata. Other risk management methods depend on evaluation of information regarding markets, customersor other relevant matters, which may be inaccurate, incomplete, obsolete or improperly evaluated. Forinstance, there is no extensive and unified nationwide credit information system so that the Group isonly able to rely on publicly available sources and internal sources to assess credit risks associated witha particular customer. Such assessment may not be based on complete, accurate or reliable information.In particular, the accounting records or other financial information of Electronic Information SMEsmight not have been well maintained, their business model and procedures might not have beendocumented and they may not have effective internal controls as larger corporate entities. Inadequateinformation not only could result in additional work and related costs, it may also undermine theeffectiveness of its customer due diligence. Furthermore, as the Group enters new industry sectors,approaches other customer segments or develops additional product and service offerings, it may not bein a position to adequately identify and predict future risk exposures. There is no assurance that theGroup is able to manage its credit risk effectively with its existing risk management system. In July2015, Chongqing Nan’an Property Leasing and Management Co., Ltd.（重慶市南岸資產經營管理有限

公司）, a subsidiary of the Issuer, filed a lawsuit against a third-party borrower based on its non-paymentunder an entrusted loan agreement in the total principal amount of RMB250 million and requested therecovery of an overdue payment of RMB110.0 million. As of the date of this Offering Circular, thelawsuit is still pending.

The Group normally conducts customer due diligence independently. There can be no assurance that theGroup’s investigation is able to procure all material information necessary to make a fully informeddecision, or that its due diligence is sufficient to detect customer fraud. In addition, the Group typicallydoes not monitor the use of the financing it provided to its customers. If its customers engage in anyillegal transactions, such as money laundering activities, the Group may face administrative and criminalliabilities and suffer financial and/or reputational damage. Any failure of the risk managementprocedures or any failure to identify applicable risks may have a material adverse effect on the Group’sresults of operations and financial condition.

The Group’s loan financing business and supply-chain finance business could be affected by materialchanges and fluctuations in the PRC banking industry.

The Group’s loan financing business and supply-chain finance business are to some extent premised onthe fact that Electronic Information SMEs it targets are generally underserved by the banking industrybecause large commercial banks in the PRC have historically been reluctant to provide lending to SMEswithout sufficient credit support or adequate security. This has created opportunities for manyenterprises, such as the Group, to develop and expand SMEs financing business. However, the bankingindustry in the PRC has been evolving. The significant capital demand from the SMEs is causing manylarge commercial banks to adjust their loan portfolios to adapt to the changing market conditions. Ifthose large commercial banks increase their loans to SMEs on an unsecured basis or require a lowerlevel of credit guarantee in return for higher risk-based interest rates, it may cause a decrease in themarket demand for the Group’s loan financing business and supply-chain finance business. Directcompetition with those large commercial banks may also undermine the Group’s relationship with themin respect of its financing activities and adversely affect its business and prospects.

The Group’s loan financing business and supply-chain finance business may be subject to other factorsaffecting the banking industry, such as material fluctuation in the interbank rates and media reports onany increase in non-performing loans in the PRC banking industry. These factors which generally affectthe banking industry may result in a liquidity crunch and the subsequent reductions in the amount of, ortightened approval requirements for loans available to the Group’s customers or the Group. If thecustomers’ business are negatively affected as a result of tightened liquidity, the default risk in respectof the Group’s customers may increase. In addition, the business performance in the SME sector may beadversely affected by turmoil in regional financial markets as well as changes in global credit policies.This may result in a reduction in the amount of, or tightened approval requirements for, funding from

25

banks or other financial institutions to Electronic Information SMEs in Chongqing Nan’an District whichmay consequently be exposed to greater liquidity risks. In this situation, the quality of the Group’s loanportfolio and related results of operations may be adversely and materially affected.

Any failure of the Group to maintain an effective quality control system could have an adverse effecton the Group’s business and operations.

The Group relies on its quality control system to ensure the safety and quality of its projects. Theeffectiveness of the Group’s quality control system may be affected by a number of factors, such astimely update of the quality control system to address the changing business need and the Group’s andthe contractors’ willingness and ability to adhere to its quality control policies and guidelines. There isno assurance that the quality of the projects developed by the Group will not be undermined by theunderperformance of the Group’s contractors. Any failure or deterioration of the Group’s quality controlsystem could result in defects in its projects, which in turn may subject the Group to contractual,product liability and other claims. Any such claims, regardless of whether they are ultimately successful,could cause the Group to incur significant costs, harm its business reputation and result in significantdisruption to its operations. If any of such claims were ultimately successful, the Group could berequired to pay substantial monetary damages or penalties.

The insurance coverage of the Group may not adequately protect it against all operational risks.

The Group faces various operational risks in connection with its business, including but not limited to:

• mechanical production interruptions, electricity outages and equipment failure;

• operating limitations imposed by environmental or other regulatory requirements;

• work-related personal injuries;

• on-site occupational accidents;

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

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

• loss on investments;

• environmental or industrial accidents; and

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

The Group maintains insurance policies that provide different types of risk coverage, which the Groupbelieves to be consistent with applicable law and industry and business practice in the PRC. However,claims under the insurance policies may not be honoured fully or on time, or the insurance coveragemay not be sufficient to cover costs associated with accidents incurred in the Group’s operations due tothe above-mentioned operational risks. Certain types of losses (such as from wars, acts of terrorism oracts of God, business interruption, property risks and third party (public) liability) are not insured in thePRC because they are either uninsurable or not economically insurable. To the extent that the Groupsuffers loss or damage that is not covered by insurance or that exceeds the limit of its insurancecoverage, its business, financial condition, results of operations and cash flow may be materially andadversely affected.

26

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

The Group is required to comply with extensive environmental, safety and health regulations in thePRC. Failure to comply with such regulations may result in fines or suspension or revocation of theGroup’s licenses or permits to conduct its business. Given the volume and complexity of theseregulations, compliance may be difficult or involve significant financial and other resources to establishefficient compliance and monitoring systems. There is no assurance that the Group will be able tocomply with all applicable requirements or obtain these approvals and permits on a timely basis, if atall. As of the date of this Offering Circular, the Group has not received any notice regarding non-compliance with the applicable safety regulations or requirements from any governmental authority. Inaddition, PRC laws and regulations are constantly evolving. There can be no assurance that the PRCGovernment will not impose additional or stricter laws or regulations, which may increase compliancecosts of the Group.

Labour shortages, labour disputes or increases in labour costs of the third-party contractors engagedfor the Group’s projects could materially and adversely affect the Group’s business and results ofoperations.

The Group relies on third-party contractors to carry out infrastructure construction and primary landdevelopment. In recent years, work stoppages, employee suicide and other similar events in certain citiesin the PRC have caused the PRC Government to amend labour laws to enhance protection of employees’rights. Increasing awareness of labour protection as well as increasing minimum wages is likely toincrease the labour costs afforded by PRC enterprises in general, including the Group or the contractorsparticipating in the Group’s projects. As such, labour shortages, labour disputes or increases in labourcosts of the Group’s third-party contractors could cause an extension of the construction progress and anincrease in the Group’s fees payable to the contractors, which could in turn materially and adverselyaffect the Group’s business and results of operations.

The Ministry of Land and Resources may impose fines or penalties on the Group or revoke the landuse rights with respect to certain land held by the Group.

Under applicable PRC laws and regulations, the Ministry of Land and Resources may impose an idleland fee equal to 20 per cent. of the land premium or allocation fees if the Group does not commencedevelopment of the land held by the Group for more than one year after the date specified in therelevant land use rights grant contract, or the Group commences development on an area which is lessthan one-third of the area granted, or the capital invested in the development is less than one-fourth ofthe total investment approved for the development, and the development is suspended for more than oneyear without governmental approval. The Ministry of Land and Resources has the power to revoke theland use rights certificate without compensation if the Group does not commence development for morethan two years after the date specified in the relevant land use rights grant contract without compellingcauses. 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 implementationrules concerning the levy of land appreciation fees on idle land. Furthermore, the Ministry of Land andResources issued in August 2009 the Notice on Restricting the Administration of Construction Land andPromoting 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）whichreiterates its policy on idle land.

27

The Group may not be able to fully detect money laundering and other illegal or improper activitiesin its business operations on a timely basis.

The Group is required to comply with applicable anti-money laundering, anti-terrorism laws and otherregulations in the PRC and other relevant jurisdictions. The PRC’s anti-money laundering law requiresfinancial institutions to establish sound internal control policies and procedures with respect to anti-money laundering monitoring and reporting activities. Such policies and procedures require the Group,in particular, the subsidiaries and associated companies in its supply-chain finance business segment to,among other things, establish a customer identification system in accordance with the relevant rules,record the details of customer activities and report suspicious transactions to the relevant authorities.

While the Group has adopted policies and procedures aimed at detecting and preventing the use of itsbusiness vehicles to facilitate money laundering activities and terrorist acts, such policies and proceduresin some cases have only been recently adopted and may not completely eliminate instances in which itmay be used by other parties to engage in money laundering and other illegal activities. In the event thatthe Group fails to detect money laundering or other illegal or improper activities or fails to fully complywith applicable laws and regulations, the relevant government agencies may freeze its assets or imposefines or other penalties on it. Any of these may materially and adversely affect its business reputation,financial condition and results of operations.

The Group’s business may be adversely affected if it is unable to retain and hire qualified employees.

The success of the Group’s business is dependent to a large extent on its ability to attract and retain keypersonnel who possess in-depth knowledge and understanding of investment, as well as the industries inwhich the Group invests or operates. These key personnel include members of the Group’s seniormanagement, experienced investment managers and finance professionals, project development andmanagement personnel, legal professionals, risk management personnel, information technology andother operation personnel. Competition for attracting and retaining these individuals is intensive. Suchcompetition may require the Group to offer higher compensation and other benefits in order to attractand retain qualified professionals, which could materially and adversely affect the Group’s financialcondition and results of operations. As a result, the Group may be unable to attract or retain thesepersonnel to achieve its business objectives and the failure to do so could severely disrupt its businessand prospects. For example, the Group may not be able to hire enough qualified personnel to support itsnew investment projects or business expansion. As the Group expands its business or hires newemployees, the employees may take time to get accustomed to any new standard procedures andconsequently may not comply with the standard procedures of any new business in an accurate andtimely manner. The occurrence of any of the events discussed above could lead to unexpected loss to theGroup and adversely affect its financial condition and results of operations.

The Group may not be able to detect and prevent fraud or other misconduct committed by itsemployees, representatives, agents, customers or other third parties.

The Group may be exposed to fraud or other misconduct committed by its employees, representatives,agents, customers or other third parties that could subject it to financial losses and sanctions imposed bygovernmental authorities, which in turn affects its reputation. These misconducts could include:

• hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risks orlosses;

• intentionally concealing material facts, or failing to perform necessary due diligence proceduresdesigned to identify potential risks, which are material to the Group in deciding whether to makeinvestments or dispose of assets;

• improperly using or disclosing confidential information;

28

• recommending products, services or transactions that are not suitable for the Group’s customers;

• misappropriation of funds;

• conducting transactions that exceed authorised limits;

• engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities whenmarketing or selling products;

• engaging in unauthorised or excessive transactions to the detriment of the Group’s customers;

• making or accepting the bribery activities;

• conducting any inside dealing; or

• otherwise not complying with applicable laws or the Group’s internal policies and procedures.

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 of non-compliance or suspicious transactions in a timely manner if at all. Furthermore, it is not always possibleto detect and prevent fraud and other misconduct, and the precautions the Group takes to prevent anddetect such activities may not be effective. There is no assurance that fraud or other misconduct will notoccur in the future. If such fraud or other misconduct does occur, it may cause negative publicity as aresult.

The Group is exposed to litigation risks.

The Group may from time to time be involved in disputes with governmental entities, indigenousresidents, contractors, suppliers, employees and other third party service providers during the course ofits daily operations. Claims may be brought against members of the Group based on a number of causessuch as defective or incomplete work, personal injuries, property damages, breach of warranty or delayin completion and delivery projects. In addition, the Group may bring up claims against projectcontractors for additional costs incurred as a result of the contractors’ underperformance or non-performance, project defects or default by the contractors. If the disputes or claims are not resolved orsettled through negotiation or mediation, the Group may be involved in lengthy and costly litigation orarbitration proceedings, which may distract the Group’s financial and managerial resources. In the eventthat the Group prevails in those legal proceedings, there is no assurance that the judgement or awardswill be effectively enforced. If a judgment or award is rendered against the Group, the amounts payableby the Group may not be fully covered by the Group’s insurance, and the amounts could differ from theprovisions made by the Group based on its estimates. Any material charges associated with claimsbrought against the Group and material write downs associated with the Group’s claims could have amaterial adverse impact on its financial condition, results of operations and cash flow. As of the date ofthis Offering Circular, the results of searches against the Issuer and its subsidiaries on the onlinedatabase of judgment debtors maintained by the Supreme People’s Court of the PRC did not reveal anyof the aforesaid entities as a judgment debtor.

The Group relies heavily on information technology systems for its business and any informationtechnology system limitations or failures could adversely affect its business, financial condition andresults of operations.

The Group’s business depends on the integrity and performance of the business, accounting and otherdata processing systems at the holding company and at its subsidiaries. If the Group’s systems may notbe able to effectively address the issues arising from an increased business or may otherwise fail toperform, the Group could experience unanticipated disruptions in business, slower response times andlimitation on its ability to monitor and manage data and risk exposures, control financial and operation

29

conditions, and keep accurate records. These consequences could result in operating outages, pooroperating performance, financial losses, and intervention of regulatory authorities. Although the Group’ssystems have not experienced major systems failures and delays in the past, there is no assurance thatthe Group’s systems would not experience future systems failures and delays, or the measures taken bythe Group to reduce the risk of system disruptions are adequate. If internet traffic and communicationvolume increase unexpectedly or other unanticipated events occur, the Group may need to expand andupgrade the Group’s technology, systems and network infrastructure. There is no assurance that theGroup will be able to accurately project the rate, timing or cost of any increases, or expand and upgradethe Group’s systems and infrastructure to accommodate any increases in a timely manner.

The Group is subject to joint venture risks.

Certain of the Group’s operations are conducted through jointly controlled entities and associatedcompanies. In January 2015, the Group formed another investment fund in an amount of RMB250million with an independent third party partner to invest in lightweight aluminium alloy material or newpolymer material projects. Co-operation and agreement among the Group’s joint venture partners on itsexisting or any future projects are important factors for the smooth operation and financial success ofsuch projects. The Group’s joint venture partners may (i) have economic or business interests or goalsthat are inconsistent with those of the Group; (ii) be unable or unwilling to fulfil their obligations underthe relevant joint venture or other agreements; or (iii) experience financial or other difficulties. Further,the Group may not be able to control the decision-making process of the joint ventures as, in somecases, it does not have majority control of the joint venture. The Group does, however, throughcontractual provisions or representatives appointed by it, typically have the ability to influence certainmaterial decisions. Although the Group has not to date experienced any significant problems with itspartners, no assurance can be given that disputes among its partners will not arise in the future thatcould adversely affect such projects.

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

The Group has historically diversified its business portfolio by acquisition of other companies and maycontinue to do so in the future. Although the Group conducts due diligence investigations on the targetcompanies, the due diligence may not reveal all facts that are necessary or material in evaluating thetarget company and the acquisition. Any failure to discover material risks and liabilities relating to thetarget company before the acquisition could increase the Group’s exposure to financial and legal risksand liabilities. When determining the price for any acquisition, the Group needs to consider variousfactors, including the quality of the target business, estimated costs associated with the acquisition andthe management of the target business, prevailing market conditions and intensity of competition. TheGroup needs to address different issues arising from the acquisition after the relevant transaction iscompleted, such as business, operation and management integration. There is no assurance that theGroup is able to address these issues effectively at all times. In addition, any major acquisition ortransaction of similar nature may consume substantial management attention and financial resources ofthe Group or even cause the Group to incur significant indebtedness. Any material decrease in itsfinancial resources may limit the Group’s ordinary operating activities and increase pressure on itsliquidity, and in turn could adversely affect its business, financial condition and results of operations.

The Group’s business may be affected by an outbreak, or threatened outbreak, of any severecontagious disease which may in turn significantly reduce demand for the Group’s services and havean adverse effect on its financial condition and results of operations.

The Group’s business may be affected by natural disasters, epidemics and other acts of God which arebeyond the Group’s control. Outbreak of earthquake, sandstorm, snowstorm, fire, drought, or epidemicssuch as Middle East Respiratory Syndrome (MERS), Severe Acute Respiratory Syndrome (SARS),H5N1 avian flu, human swine flu (also known as Influenza A (H1N1)) or the recent cases of H7N9 hasa material adverse impact on the economic and social condition in the affected regions. For instance,

30

two serious earthquakes hit Sichuan Province in May 2008 and April 2013 and resulted in significantloss of lives and destruction of economic condition and development in Sichuan Province. Chongqingwas distant from the centres of the earthquakes and thus did not suffer direct damages as a result of theearthquakes. However, if similar catastrophes take place again in the future, there is no assurance thatChongqing, its economy, social conditions and city infrastructure will be damaged. Any adverse impacton the economic and social conditions in Chongqing, particularly in Chongqing Nan’an District, willhave a material adverse effect on the Group’s business, financial condition and results of operations.

The Issuer published and may continue to publish periodical financial information in the PRCpursuant to applicable PRC regulatory rules. Investors should be cautious and not place any relianceon the financial information other than that disclosed in this Offering Circular.

The Issuer from time to time issues corporate bonds and short-term commercial paper in the domesticcapital markets in the PRC. According to applicable PRC securities regulations on debt capital markets,the Issuer needs to publish its semi-annual and annual financial information to satisfy its continuingdisclosure obligations relating to its corporate bonds and short-term commercial paper. After the Bondsare issued, the Issuer is obligated by the terms of the Bonds, among others, to provide holders of theBonds with its audited financial statements and certain unaudited but reviewed periodical financialstatements. The semi-annual financial information published by the Group in the PRC is normallyderived from the Group’s management accounts which have not been audited or reviewed byindependent auditors. As such, this financial information published in the PRC should not be referred toor relied upon by potential purchasers to provide the same quality of information associated with anyaudited information. The Issuer is not responsible to holders of the Bonds for the unaudited andunreviewed financial information from time to time published in the PRC and therefore Investors shouldnot place any reliance on any such financial information.

The Group’s historical financial information is not directly comparable with its financial informationin 2014 and beyond.

The historical financial information of the Issuer is sometimes adjusted or restated to address subsequentchanges in accounting standards, the Issuer’s accounting policies and/or applicable laws and regulationswith retrospective impact on the Group’s financial reporting or to reflect the comments provided by theGroup’s independent auditors during the course of their audit or review in subsequent financial periods.Such adjustment or restatement may cause discrepancies between the financial information with respectto a particular period or date contained in the Issuer’s historical financial statements and that containedin its future financial statements.

The Issuer’s consolidated financial information as at and for the year ended 31 December 2014 includedin its 2015 Audited Financial Statements has been adjusted to reflect the Relevant Adjustments. See noteV (Adjustment on Prior Year Audited Financial Statements) to the 2015 Audited Financial Statementson page F-34. The Issuer’s consolidated financial information as at and for the years ended 31 December2013 and 2014 contained in its 2014 Audited Financial Statements has not been revised to reflect theRelevant Adjustments. Therefore, the Issuer’s consolidated financial information as at and for the yearsended 31 December 2013 and 2014 contained in the 2014 Audited Financial Statements is not directlycomparable to the Issuer’s adjusted consolidated financial information as at and for the year ended 31December 2014 or its consolidated financial information as at and for the year ended 2015, both ofwhich are contained in the 2015 Audited Financial Statements. Potential investors must exercise cautionwhen using the Issuer’s historical financial information to evaluate the financial condition and results ofoperations of the Issuer.

31

The Issuer’s accounts were audited in accordance with PRC GAAP which may be different fromIFRS. The Issuer’s auditors have limited international capital markets experience.

The Issuer’s consolidated financial statements as at and for the years ended 31 December 2014 and 2015were prepared in accordance with the PRC GAAP. Although PRC GAAP are substantively in line withIFRS, PRC GAAP are, to a certain extent, different from IFRS. See ‘‘Summary of Certain DifferencesBetween PRC GAAP and IFRS’’. There is no guarantee that the PRC GAAP will fully converge withIFRS or there will be no additional differences between the two accounting standards in the future.Potential investors should consult their own professional advisers for an understanding of anydifferences that may exist between PRC GAAP and IFRS, and how those differences might affect thefinancial information included in this Offering Circular.

The Issuer’s current independent auditors, Baker Tilly China, is a registered member of The ChineseInstitute of Certified Public Accountants and although it has significant audit experience in the PRC, ithas limited international capital markets experience. Prospective investors should consider these factorsprior to making any investment decision.

Historical consolidated financial information of the Group may not be indicative of its current orfuture results of operations.

The historical financial information of the Group included in this Offering Circular is not indicative ofits future financial results. This financial information is not intended to represent or predict the results ofoperations of any future periods. The Group’s future results of operations may change materially if itsfuture growth does not follow the historical trends for various reasons, including factors beyond itscontrol, such as changes in economic environment, PRC environmental rules and regulations and thedomestic and international competitive landscape of the industries in which the Group operates itsbusiness.

RISKS RELATING TO THE PRC

China has experienced a slowdown in its economic development and the future performance ofChina’s economy is uncertain.

The economy of the PRC experienced rapid growth in the past 30 years. There has been a slowdown inthe growth of the PRC’s GDP since the second half of 2013 and this has raised market concerns that thehistoric rapid growth of the economy of the PRC may not be sustainable. According to the NationalStatistics Bureau of the PRC, the annual growth rate of China’s GDP in 2015 slowed down to 6.9 percent. on a year-on-year basis compared to 7.3 per cent. in 2014, and it further decreased to 6.7 per cent.in the first quarter of 2016 on a year-on-year basis. In March 2016, Moody’s Investors Service andStandard & Poor’s Ratings Services changed China’s credit rating outlook to ‘‘negative’’ from ‘‘stable’’,which highlighted the country’s surging debt burden and questioned the government’s ability to enactreforms.

The future performance of China’s economy is not only affected by the economic and monetary policiesof the PRC Government, but it is also exposed to material changes in global economic and politicalenvironments as well as the performance of certain major developed economies in the world, such as theUnited States and the European Union. For example, on 23 June 2016, the United Kingdom voted in anational referendum to withdraw from the European Union. The result of the referendum does notlegally obligate the United Kingdom to exit the European Union, and it is unclear if or when the UnitedKingdom will formally serve notice to the European Council of its desire to withdraw. There issubstantial uncertainty relating to the implementation of the United Kingdom’s exit or its impact on theeconomic conditions of other part of the world, such as China’s, including but not limited to furtherdecreases in global stock exchange indices, increased foreign exchange volatility (in particular a further

32

weakening of the pound sterling and euro against other leading currencies) and a possible economicrecession involving more countries and areas. Therefore, there exists continued uncertainty for theoverall prospects for the global and the PRC economies this year and beyond.

Changes in the economic, political and social conditions in the PRC and government policies adoptedby the PRC Government could affect the Group’s business and prospects.

The economy of the PRC differs from the economies of most developed countries in many respects,including with respect to government involvement, level of development, economic growth rate, controlof foreign exchange and allocation of resources. The economy of the PRC has been transitioning from aplanned economy to a more market-oriented economy. In recent years, the PRC Government hasimplemented a series of measures emphasising market forces for economic reform, the reduction of stateownership of productive assets and the establishment of sound corporate governance in businessenterprises.

However, a large portion of productive assets in the PRC remain owned by the PRC Government. ThePRC Government continues to play a significant role in regulating industrial development, the allocationof resources, production, pricing and management, and there can be no assurance that the PRCGovernment will continue to pursue the economic reforms or that any such reforms will not have anadverse effect on the Group’s business.

The Group’s operations and financial results could also be affected by changes in political, economicand social conditions or the relevant policies of the PRC Government, such as changes in laws andregulations (or the interpretation thereof). In addition, the growth of development in the economic andtechnology development zones and infrastructure construction demand in the PRC depends heavily oneconomic growth. If the PRC’s economic growth slows down or if the economy of the PRC experiencesa recession, the growth of development in Chinese economic and technology development zones andinfrastructure construction demand may also slow down, and the Group’s business prospects may bematerially and adversely affected. The Group’s operations and financial results, as well as its ability tosatisfy its obligations under the Bonds, could also be materially and adversely affected by changes to orintroduction of measures to control changes in the rate or method of taxation and the imposition ofadditional restrictions on currency conversion.

Uncertainty with respect to the PRC legal system could affect the Group.

As substantially all of the Group’s business are conducted, and substantially all of the Group’s assets arelocated, in the PRC, the Group’s operations are governed principally by PRC laws and regulations. ThePRC legal system is based on written statutes while prior court decisions can only be cited as reference.Since 1979, the PRC Government has promulgated laws and regulations in relation to economic matterssuch as foreign investment, corporate organisation and governance, commerce, taxation, foreignexchange and trade, with a view to developing a comprehensive system of commercial law. However,China has not developed a fully integrated legal system and recently enacted laws and regulations thatmay not sufficiently cover all aspects of economic activities in the PRC. In particular, because theselaws and regulations are relatively new, and because of the limited volume of published decisions andtheir non-binding nature, the interpretation and enforcement of these laws and regulations involveuncertainties. In addition, the PRC legal system is based, in part, on government policies and internalrules (some of which are not published on a timely basis or at all) that may have a retroactive effect. Asa result, the Group may not be aware of the Group’s violation of these policies and rules until sometimeafter the violation. In addition, any litigation in the PRC may be protracted and result in substantialcosts and diversion of resources and management’s attention and it may be difficult to obtain a swift andequitable enforcement of laws in the PRC, or the enforcement of judgements by a court of anotherjurisdiction. These uncertainties relating to the interpretation and implementation of PRC laws andregulations may adversely affect the legal protections and remedies that are available to the Group in itsoperations and to the holders of the Bonds.

33

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

The Group and a number of the Group’s subsidiaries are incorporated in the PRC. A substantial portionof the Group’s assets are located in the PRC. In addition, most of the Issuer’s directors, supervisors andexecutive officers reside within the PRC and the assets of the Group’s directors and officers may belocated within the PRC. As a result, it may not be possible to effect service of process outside the PRCupon most of the Group’s directors, supervisors and senior management, including for matters arisingunder applicable securities law. A judgment of a court of another jurisdiction may be reciprocallyrecognised or enforced if the jurisdiction has a treaty with China or if judgments of the PRC courts havebeen recognised before in that jurisdiction, subject to the satisfaction of other requirements. However,China does not have treaties providing for the reciprocal recognition and enforcement of judgments ofcourts with many countries, including Japan, the United States and the United Kingdom. Therefore, itmay be difficult for Investors to enforce any judgments obtained from foreign courts against the Group,the Issuer, any of their respective directors, supervisors or senior management in the PRC.

Government control of currency conversion may adversely affect the value of investors’ investments.

Most of the Group’s operating income is denominated in Renminbi, which is also the reporting currency.Renminbi is not a freely convertible currency. A portion of the Group’s cash may be required to beconverted into other currencies in order to meet the Group’s foreign currency needs, including cashpayments on declared dividends, if any, on the Bonds. However, the PRC Government may restrictfuture access to foreign currencies for current account transactions at its discretion. If this were to occur,the Group might not be able to pay dividends to the holders of the Bonds in foreign currencies. On theother hand, foreign exchange transactions under capital account in the PRC continue to be not freelyconvertible and require the approval of the SAFE. These limitations could affect the Group’s ability toobtain foreign currencies through equity financing, or to obtain foreign currencies for capitalexpenditures.

The payment of dividends by the Issuer’s operating subsidiaries in the PRC is subject to restrictionsunder the PRC law.

The PRC laws require that dividends be paid only out of net profit, calculated according to the PRCaccounting principles, which differ from generally accepted accounting principles in other jurisdictions.In addition, 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 Issuer’s operations and toservice its indebtedness depends upon dividends received from these subsidiaries, any legal restrictionson the availability and usage of dividend payments from the Issuer’s subsidiaries may impact the Issuer’sability to fund its operations and to service its indebtedness.

The implementation of PRC employment regulations may increase labour costs in the PRC generally.

The PRC Labour Contract Law（中華人民共和國勞動合同法）became effective on 1 January 2008 inthe PRC and was amended on 28 December 2012. It imposes more stringent requirements on employersin relation to entry into fixed-term employment contracts and dismissal of employees. Pursuant to thePRC Labour Contract Law, the employer is required to make compensation payment to a fixed-termcontract employee when the term of their employment contract expires, unless the employee does notagree to renew the contract even though the conditions offered by the employer for renewal are the sameas or better than those stipulated in the current employment contract. In general, the amount ofcompensation payment is equal to the monthly wage of the employee multiplied by the number of fullyears that the employee has worked for the employer. A minimum wage requirement has also beenincorporated into the PRC Labour Contract Law. In addition, unless otherwise prohibited by the PRC

34

Labour Contract Law or objected to by the employees themselves, the employer is also required to enterinto non-fixed-term employment contracts with employees who have previously entered into fixed-termemployment contracts for two consecutive terms.

In addition, under the Regulations on Paid Annual Leave for Employees（職工帶薪年休假條例）, whichbecame effective on 1 January 2008, employees who have worked continuously for more than one yearare entitled to paid annual leave ranging from 5 to 15 days, depending on the length of the employees’work time. Employees who consent to waive such vacation at the request of employers shall becompensated an amount equal to three times their normal daily salaries for each vacation day beingwaived. Under the National Leisure and Tourism Outline 2013-2020（國民旅遊休閑綱要2013-2020)which became effective on 2 February 2013, all workers must receive paid annual leave by 2020. As aresult of the PRC Labour Contract Law, the Regulations on Paid Annual Leave for Employees and theNational Leisure and Tourism Outline 2013-2020, the Group’s labour costs (inclusive of those incurredby contractors) may increase. Further, under the PRC Labour Contract Law, when an employerterminates its PRC employees’ employment, the employer may be required to compensate them for suchamount which is determined based on their length of service with the employer, and the employer maynot be able to efficiently terminate non-fixed-term employment contracts under the PRC Labour ContractLaw without cause. In the event the Group decides to significantly change or decrease its workforce, thePRC Labour Contract Law could adversely affect its ability to effect these changes in a cost-effectivemanner or in the manner that the Group desires, which could result in an adverse impact on the Group’sbusiness, financial condition and results of operations.

Further, in the event that there is a labour shortage or a significant increase to labour costs, the Group’sbusiness operation costs is likely to increase. In such circumstances, the profit margin may decrease andthe financial results may be adversely affected. In addition, inflation in the PRC has increased in recentyears. Inflation in the PRC increases the costs of raw materials required by the Group for conducting itsbusiness and the costs of labour as well. Rising labour costs may increase the Group’s operating costsand partially erode the cost advantage of the Group’s operations and therefore negatively impact theGroup’s profitability.

There can be no assurance of the accuracy or comparability of facts and statistics contained in thisOffering Circular with respect to the PRC, its economy or the relevant industry.

Facts and other statistics in this Offering Circular relating to the PRC, its economy or the relevantindustry in which the Group operates have been directly or indirectly derived from official governmentpublications and certain other public industry sources and although the Group believes such facts andstatistics are accurate and reliable, it cannot guarantee the quality or the reliability of such sourcematerials. They have not been prepared or independently verified by the Issuer, the Trustee, the Agentsor any of its or their respective affiliates, employees, directors, agents, advisors or representatives, and,therefore, the Issuer, the Trustee, the Agents or any of its or their respective affiliates, employees,directors, agents, advisors or representatives makes no representation as to the completeness, accuracy orfairness of such facts or other statistics, which may not be consistent with other information compiledwithin or outside the PRC. Due to possibly flawed or ineffective collection methods or discrepanciesbetween published information and market practice and other problems, the statistics herein may beincomplete, inaccurate or unfair or may not be comparable to statistics produced for other economies orthe same or similar industries in other countries and should not be unduly relied upon. Furthermore,there is no assurance that they are stated or compiled on the same basis or with the same degree ofaccuracy as may be the case elsewhere. In all cases, Investors should give consideration as to how muchweight or importance they should attach to or place on such facts or other statistics.

35

RISKS RELATING TO THE BONDS

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

The NDRC issued the NDRC Circular on 14 September 2015, which came into effect on the same day.According to the NDRC Circular, domestic enterprises and their overseas controlled entities shallprocure the registration of any debt securities issued outside the PRC with the NDRC prior to the issueof the securities and notify the particulars of the relevant issues within 10 working days after thecompletion of the issue of the securities. The NDRC Circular is silent on the legal consequences of non-compliance with the pre-issue registration requirement. The Issuer has obtained the NDRC pre-issuanceregistration on 17 May 2016. Similarly, there is no clarity on the legal consequences of non-compliancewith the post-issue notification requirement under the NDRC Circular. In the worst case scenario, suchnon-compliance with the post-issue notification requirement under the NDRC circular may result in itbeing unlawful for the Issuer to perform or comply with any of its obligations under the Bonds and theBonds might be subject to enforcement as provided in Condition 9 (Events of Default) of the Terms andConditions of the relevant series. Potential investors of the Bonds are advised to exercise due cautionwhen making their investment decisions. The Issuer has undertaken to notify the NDRC of theparticulars of the issue of the Bonds within 10 Registration Business Days after the Issue Date.

In accordance with the Administrative Measures for Foreign Debt Registration（外債登記管理辦法）(the‘‘Foreign Debt Registration Measures’’) issued by the SAFE on 28 April 2013, which came into effecton 13 May 2013, the Issuer shall complete foreign debt registration in respect of the issue of the Bondswith the local branches of SAFE in accordance with laws and regulations. According to the OperationGuidelines for Administration of Foreign Debt Registration（外債登記管理操作指引）promulgatedtogether with the Foreign Debt Registration Measures, the Issuer is required to register the Bondswithin 15 working days after execution of the Trust Deed and complete such registration in accordancewith the Foreign Debt Registration Measures. Before such registration of the Bonds is completed, it isuncertain whether the Bonds are enforceable as a matter of PRC law and it may be difficult forBondholders to recover amounts due from the Issuer, and the Issuer may not be able to remit theproceeds of the offering into the PRC or remit money out of the PRC in order to meet its paymentobligations under the Bonds. Pursuant to article 27(5) of the Foreign Debt Registration Measures, afailure to comply with registration requirements may result in a warning and fine as set forth underarticle 48 of the Foreign Exchange Administrative Regulations（外匯管理條例）promulgated by theState Council in 2008. However, pursuant to article 40 of the Foreign Debt Administration ProvisionalRules（外債管理暫行辦法）promulgated by MOF, the NDRC and SAFE, a failure by a domestic entityto register a foreign debt contract will render the contract not legally binding and unenforceable. Underthe Conditions, the Issuer has undertaken to use its best endeavours, and it intends, to complete theregistration of the Bonds with SAFE within 120 Registration Business Days of the Issue Date. TheIssuer has already consulted with local SAFE in connection with the registration procedures anddocumentary requirements. The Issuer does not foresee any obstacle in completing the registrationwithin the abovementioned period. However, in the unlikely event that having exercised its bestendeavours, the Issuer is unable to complete such registration within the abovementioned time period,holders will not have the right to require the Issuer to redeem the Bonds and such failure to completethe registration will not, in and of itself, give rise to a right to accelerate the Issuer’s paymentobligations under the Bonds. If the Issuer is unable to complete the registration with the local branchesof SAFE, the Issuer may have difficulty in remitting funds offshore to service payments in respect of theBonds and investors may encounter difficulties in enforcing judgments obtained in the Hong Kongcourts with respect to the Bonds and the Trust Deed in the PRC. In such circumstances, the value andsecondary market price of the Bonds may also be materially and adversely affected.

36

The Bonds are unsecured obligations.

As the Bonds are unsecured obligations of the Issuer, the repayment of the Bonds may be compromisedif:

• the Issuer enters into bankruptcy, liquidation, reorganisation or other winding-up proceedings;

• there is a default in payment under the Issuer’s secured indebtedness or other unsecuredindebtedness; or

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

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

Additional procedures may be required to be taken to bring English law governed matters or disputesto the Hong Kong courts and the Bondholders would need to be subject to the exclusive jurisdictionof the Hong Kong courts. There is also no assurance that the PRC courts will recognise and enforcejudgments of the Hong Kong courts in respect of English law governed matters or disputes.

The Terms and Conditions and the transaction documents are governed by English law, whereas partiesto these documents have submitted to the exclusive jurisdiction of the Hong Kong courts. In order tohear English law governed matters or disputes, Hong Kong courts may require certain additionalprocedures to be taken. Under the Arrangement on Reciprocal Recognition and Enforcement ofJudgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong KongSpecial Administrative Region Pursuant to Choice of Court Agreements between Parties 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）, judgmentsof Hong Kong courts are likely to be recognised and enforced by the PRC courts where the contractingparties to the transactions pertaining to such judgments have agreed to submit to the exclusivejurisdiction of Hong Kong courts. However, recognition and enforcement of a Hong Kong courtjudgment could be refused if the PRC courts consider that the enforcement of such judgment is contraryto the social and public interest of the PRC or meets other circumstances specified by the Arrangementon Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by theCourts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice ofCourt Agreements between Parties Concerned. While it is expected that the PRC courts will recogniseand enforce a judgment given by Hong Kong courts governed by English law, there can be no assurancethat the PRC courts will do so for all such judgments as there is no established practice in this area.Compared to other similar debt securities issuances in the international capital markets where therelevant holders of the debt securities would not typically be required to submit to an exclusivejurisdiction, the holders of the Bonds will be deemed to have submitted to the exclusive jurisdiction ofthe Hong Kong courts, and thus the holder’s ability to initiate a claim outside of Hong Kong will belimited.

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

The Bonds may be purchased as a way to reduce risk or enhance yield with a measured and appropriateaddition of risk to the investor’s overall portfolios. A potential investor should not invest in the Bondsunless they have the expertise (either alone or with the help of a financial adviser) to evaluate how theBonds will perform under changing conditions, the resulting effects on the value of such Bonds and theimpact this investment will have on the potential investor’s overall investment portfolio.

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 (a) Bonds are legal investments for it, (b) Bonds

37

can be used as collateral for various types of borrowing and (c) other restrictions apply to its purchaseof any Bonds. Financial institutions should consult their legal advisers or the appropriate regulators todetermine the appropriate treatment of Bonds under any applicable risk-based capital or similar rules.

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

• have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, themerits and risks of investing in the Bonds and the information contained or incorporated byreference in this Offering Circular or any applicable supplement;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the Bonds and the impact such investment will haveon its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in theBonds;

• understand thoroughly the terms of the Bonds and be familiar with the behaviour of any relevantindices and financial markets; and

• be able to evaluate (either alone or with the help of a financial adviser) possible economicscenarios, such as interest rate and other factors which may affect its investment and the ability tobear the applicable risks.

An active trading market for the Bonds may not develop.

The Bonds are a new issue of securities for which there is currently no trading market. Althoughapplication will be made to the SGX-ST for the Bonds to be admitted for trading on the SGX-ST, noassurance can be given as to the ability of holders to sell their Bonds or the price at which holders willbe able to sell their Bonds or that a liquid market will develop. The liquidity of the Bonds will beadversely affected if the Bonds are held or allocated to limited investors. Further, some investors may beaffiliates of the Issuer. None of the Joint Lead Managers is obligated to make a market in the Bonds,and if the Joint Lead Managers do so, they may discontinue such market making activity at any time attheir sole discretion. In addition, the Bonds are being offered pursuant to exemptions from registrationunder the Securities Act and, as a result, holders will only be able to resell their Bonds in transactionsthat have been registered under the Securities Act or in transactions not subject to or exempt fromregistration under the Securities Act.

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

The Bonds are denominated and payable in U.S. dollars. An investor who measures investment returnsby reference to a currency other than U.S. dollars would be subject to foreign exchange risks by virtueof an investment in the Bonds, due to, among other things, economic, political and other factors overwhich the Issuer has no control. Depreciation of the U.S. dollar against such currency could cause adecrease in the effective yield of the Bonds below their stated coupon rates and could result in a losswhen the return on the Bonds is translated into such currency. In addition, there may be taxconsequences for investors as a result of any foreign currency gains resulting from any investment in theBonds.

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

The price and trading volume of the Bonds may be highly volatile. Factors such as variations in theIssuer’s turnover, earnings and cash flows, proposals for new investments, strategic alliances and/oracquisitions, changes in interest rates, fluctuations in price for comparable companies, changes in

38

government regulations and changes in general economic conditions nationally or internationally couldcause the price of the Bonds to change. Any such developments may result in large and sudden changesin the trading volume and price of the Bonds. There is no assurance that these developments will notoccur in the future.

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

The market price of the Bonds may be adversely affected by declines in the international financialmarkets and world economic conditions. The market for the Bonds is, to varying degrees, influenced byeconomic and market conditions in other markets, especially those in Asia. Although economicconditions are different in each country, investors’ reactions to developments in one country can affectthe securities markets and the securities of issuers in other countries, including the PRC. Since theglobal financial crisis in 2008 and 2009, the international financial markets have experienced significantvolatility. If similar developments occur in the international financial markets in the future, the marketprice of the Bonds could be adversely affected.

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

On the Maturity Date (as defined in the Terms and Conditions) of the relevant series, the Bonds of suchseries will be redeemed at their principal amount, or following the occurrence of a Change of Control(as defined in the Terms and Conditions), the Issuer may, at the option of any Bondholder, be requiredto redeem all, but not some only, of such Bondholder’s Bonds at 101 per cent. of their principal amount,together with accrued interest. On the Maturity Date of the relevant series or if such an event were tooccur, the Issuer may not have sufficient cash in hand and may not be able to arrange financing toredeem the Bonds in time, or on acceptable terms, or at all. The ability to redeem the Bonds on theMaturity Date of the relevant series or in such event may also be limited by the terms of other debtinstruments. The Issuer’s failure to repay, repurchase or redeem tendered Bonds could constitute anevent of default under the Bonds of the relevant series, which may also constitute a default under theterms of the Issuer’s other indebtedness.

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

The Bonds will be structurally subordinated to any debt and other liabilities and commitments, includingtrade payables and lease obligations, of the Issuer’s existing or future subsidiaries, whether or notsecured. The Bonds will not be guaranteed by any of the Issuer’s subsidiaries, and the Issuer may nothave direct access to the assets of such subsidiaries unless these assets are transferred by dividend orotherwise to the Issuer. The ability of such subsidiaries to pay dividends or otherwise transfer assets tothe Issuer is subject to various restrictions under applicable laws. The Issuer’s subsidiaries will beseparate legal entities that have no obligation to pay any amounts due under the Bonds or make anyfunds available therefore, whether by dividends, loans or other payments. The Issuer’s right to receiveassets of any of the Issuer’s subsidiaries, respectively, upon that subsidiary’s liquidation orreorganisation will be effectively subordinated to the claim of that subsidiary’s creditors (except to theextent that the Issuer is creditor of that subsidiary). Consequently, the Bonds will be effectivelysubordinated to all liabilities, including trade payables and lease obligations, of any subsidiaries that theIssuer may in the future acquire or establish.

The Bonds are the Issuer’s unsecured obligations and will (i) rank at least equally in right of paymentwith all the Issuer’s other present and future unsecured and unsubordinated obligations; (ii) beeffectively subordinated to all of the Issuer’s present and future secured indebtedness to the extent of thevalue of the collateral securing such obligations; and (iii) be senior to all of the Issuer’s present andfuture subordinated obligations, subject in all cases to exceptions as may be provided by applicablelegislation. As a result, claims of secured lenders, whether senior or junior, with respect to assets

39

securing their loans will be prior with respect to those assets. In the event of the Issuer’s bankruptcy,insolvency, liquidation, reorganisation, dissolution or other winding up, or upon any acceleration of theBonds, these assets will be available to pay obligations on the Bonds only after all other debt secured bythese assets has been repaid in full. Any remaining assets will be available to the Bondholders rateablywith all of the Issuer’s other unsecured and unsubordinated creditors, including trade creditors. If thereare insufficient assets remaining to pay all these creditors, then all or a portion of the Bonds thenoutstanding would remain unpaid.

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

The Issuer is incorporated under the laws of the PRC. Any bankruptcy proceeding relating to the Issuerwould likely involve PRC bankruptcy laws, the procedural and substantive provisions of which maydiffer from comparable provisions of the local insolvency laws of jurisdictions with which the holders ofthe Bonds are familiar.

If the Issuer is unable to comply with the restrictions and covenants in its debt agreements (if any), orthe Bonds, there could be a default under the terms of these agreements, or the Bonds, which couldcause repayment of the Issuer’s debt to be accelerated.

If the Issuer is unable to comply with the restrictions and covenants in the Bonds, or current or futuredebt obligations and other agreements (if any), there could be a default under the terms of theseagreements. In the event of a default under these agreements, the holders of the debt could terminatetheir commitments to lend to the Issuer, accelerate repayment of the debt, declare all amounts borroweddue and payable or terminate the agreements, as the case may be. Furthermore, some of the debtagreements of the Issuer, contain cross-acceleration or cross-default provisions. As a result, the defaultby the Issuer under one debt agreement may cause the acceleration of repayment of debt, including theBonds, or result in a default under its other debt agreements, including the Bonds. If any of these eventsoccur, there can be no assurance that the Issuer’s assets and cash flows would be sufficient to repay allof the Issuer’s indebtedness in full, or that it would be able to find alternative financing. Even if theIssuer could obtain alternative financing, there can be no assurance that it would be on terms that arefavourable or acceptable to the Issuer.

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

The Terms and Conditions are governed by English law. No assurance can be given as to the impact ofany possible judicial decision or change English law or administrative practice after the date of issue ofthe Bonds.

Modifications and waivers may be made in respect of the Terms and Conditions and the Trust Deedby the Trustee or less than all of the holders of a series of Bonds, and decisions may be made onbehalf of all holders of such series of Bonds that may be adverse to the interests of the individualholders of such series of Bonds.

The Terms and Conditions contain provisions for calling meetings of the holders of the Bonds of aseries to consider matters affecting their interests generally. These provisions permit defined majoritiesto bind all Bondholders of a series including those Bondholders of such series who did not attend andvote at the relevant meeting and those Bondholders of such series who voted in a manner contrary to themajority. There is a risk that the decision of the majority of holders of the Bonds may be adverse to theinterests of the individual holders of the Bonds.

The Terms and Conditions also provide that the Trustee may, without the consent of the holders of theBonds of a series, agree to any modification of the Trust Deed, the Terms and Conditions and/or theAgency Agreement (other than in respect of a reserved matter) which in the opinion of the Trustee willnot be materially prejudicial to the interests of the holders of the Bonds of such series and to any

40

modification of the Bonds of such series, the Trust Deed or the Agency Agreement which in the opinionof the Trustee is of a formal, minor or technical nature or is to correct a manifest error or to complywith any mandatory provision of applicable law.

In addition, the Trustee may, without the consent of the holders of the Bonds of a series, authorise orwaive any proposed breach or breach of the Bonds of such series, the Trust Deed or the AgencyAgreement (other than a proposed breach, or a breach relating to the subject of certain reserved matters)if, in the opinion of the Trustee, the interests of the holders of the Bonds of such series will not bematerially prejudiced thereby.

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

In certain circumstances (including without limitation the giving of notice pursuant to Condition 9(Events of Default) of the Terms and Conditions of the relevant series and the taking of enforcementsteps pursuant to Condition 13 (Enforcement) of the Terms and Conditions of the relevant series), theTrustee may (in its sole discretion) request the Bondholders to provide an indemnity and/or security and/or pre-funding to its satisfaction before it takes any action on behalf of Bondholders. The Trustee shallnot be obliged to take any such actions if not indemnified and/or secured and/or pre-funded to itssatisfaction. Negotiating and agreeing to any indemnity and/or security and/or pre-funding can be alengthy process and may impact on when such actions can be taken. The Trustee may not be able to takeactions, notwithstanding the provision of an indemnity or security or pre-funding to it, in breach of theterms of the Trust Deed (as defined in the Terms and Conditions) and in such circumstances, or wherethere is uncertainty or dispute as to the applicable laws or regulations, to the extent permitted by theagreements and the applicable law, it will be for the Bondholders to take such actions directly.

Gains on the transfer of the Bonds and interest payable by the Issuer to overseas Bondholders may besubject to income tax and value-added tax under PRC tax laws.

Under the Enterprise Income Tax Law of the PRC (the ‘‘EIT Law’’) which took effect on 1 January2008 and its implementation rules, any gains realised on the transfer of the Bonds by holders who aredeemed under the EIT Law as non-resident enterprises may be subject to PRC enterprise income tax ifsuch gains are regarded as income derived from sources within the PRC. Under the EIT Law, a ‘‘non-resident enterprise’’ means an enterprise established under the laws of a jurisdiction other than the PRCand whose actual administrative organisation is not in the PRC, which has established offices orpremises in the PRC, or which has not established any offices or premises in the PRC but has obtainedincome derived from sources within the PRC. There remains uncertainty as to whether the gains realisedon the transfer of the Bonds by enterprise holders would be treated as incomes derived from sourceswithin the PRC and be subject to PRC enterprise income tax. In addition, there is uncertainty as towhether gains realised on the transfer of the Bonds by individual holders who are not PRC citizens orresidents will be subject to PRC individual income tax. If such gains are subject to PRC income tax, the10 per cent. enterprise income tax rate and 20 per cent. individual income tax rate will applyrespectively unless there is an applicable tax treaty or arrangement that reduces or exempts such incometax. The taxable income will be the balance of the total income obtained from the transfer of the Bondsminus all costs and expenses that are permitted under PRC tax laws to be deducted from the income.According to the Arrangement between the Mainland of China and the Hong Kong SpecialAdministrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion withRespect to Taxes on Income (the ‘‘Arrangement’’) which was promulgated on 21 August 2006,Bondholders 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 Bonds ifsuch capital gains are not connected with an office or establishment that the Bondholders have in thePRC and all the other relevant conditions are satisfied.

Pursuant to the EIT Law, the PRC Individual Income Tax Law (the ‘‘IIT Law’’) which took effect on30 June 2011, and the implementation regulations in relation to both the EIT Law and IIT Law, PRCincome tax at a rate of 10 per cent. or 20 per cent. is normally applicable to PRC-source income derived

41

by non-resident enterprises or individuals respectively, subject to adjustment by applicable treaty. As theIssuer is a PRC resident enterprise for tax purposes, interest paid to non-resident Bondholders may beregarded as PRC-sourced, and therefore be subject to PRC income tax at a rate of 10 per cent. for non-resident enterprise Bondholders and at a rate of 20 per cent. for non-resident individual Bondholders (ora lower treaty rate, if any).

On 23 March 2016, MOF and the State Administration of Taxation issued the Circular of FullImplementation of Replacing Business Tax with Value-Added Tax Reform (Caishui [2016] No. 36)(‘‘Circular 36’’), which introduced a new value-added tax (‘‘VAT’’) from 1 May 2016. VAT isapplicable where entities or individuals provide services within the PRC. The Issuer will be obligated towithhold VAT of 6 per cent. and certain surcharges (as described below) on VAT for payments ofinterest and certain other amounts on the Bonds paid by the Issuer to Bondholders that are non-residententerprises or individuals. VAT is unlikely to be applicable to any transfer of Bonds between entities orindividuals located outside of the PRC and therefore unlikely to be applicable to gains realised uponsuch transfers of Bonds, but there is uncertainty as to the applicability of VAT if either the seller orbuyer of Bonds is located inside the PRC. Circular 36 together with other laws and regulationspertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulationsinvolve uncertainties. Pursuant to Interim Regulation of the PRC on City Maintenance and ConstructionTax（中華人民共和國城市維護建設稅暫行條例(2011修訂）, Interim Provisions on the Collection ofEducational Surcharges（徵收教育費附加的暫行規定(2011修訂）, Notice of the Ministry of Finance onthe Relevant Matters regarding Unifying the Policies on Local Education Surcharges（財政部關於統一

地方教育附加政策有關問題的通知）, Administrative Measures on the Collection and Utilisation ofLocal Educational Surcharges in Chongqing（重慶市地方教育附加徵收使用管理辦法）and based onconsultation with the Chongqing local taxation bureau, a city maintenance and construction tax (7 percent.), an educational surcharge (3 per cent.) and a local educational surcharge (2 per cent.) will beapplicable when entities and individuals are obliged to pay VAT (for an aggregate of 12 per cent. onany VAT payable).

If a Bondholder, being a non-resident enterprise or non-resident individual, is required to pay any PRCincome tax on interest or gains on the transfer of the Bonds, the value of the relevant Bondholder’sinvestment in the Bonds may be materially and adversely affected.

Each series of Bonds will be represented by a Global Certificate and holders of a beneficial interest ina Global Certificate must rely on the procedures of the Clearing Systems.

Each series of Bonds will be represented by beneficial interests in a Global Certificate. Each GlobalCertificate will be registered in the name of a nominee for, and deposited with, a common depositary forEuroclear and Clearstream (the ‘‘Clearing Systems’’). Except in the circumstances described in a GlobalCertificate, investors will not be entitled to receive definitive Certificates. The Clearing Systems willmaintain records of the beneficial interests in a Global Certificate. While the Bonds are represented by aGlobal Certificate, investors will be able to trade their beneficial interests only through the ClearingSystems.

While any series of Bonds are represented by a Global Certificate, the Issuer will discharge its paymentobligations under such series of Bonds by making payments to the relevant Clearing System fordistribution to their account Bondholders.

A holder of a beneficial interest in a Global Certificate must rely on the procedures of the relevantClearing System to receive payments under the relevant series of Bonds. The Issuer has no responsibilityor liability for the records relating to, or payments made in respect of, beneficial interests in a GlobalCertificate.

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

42

Bondholders should be aware that a Definitive Certificate which has a principal amount that is notan integral multiple of the minimum specified denomination may be illiquid and difficult to trade.

In relation to any Bond which has a principal amount consisting of a minimum specified denominationplus a higher integral multiple of another smaller amount, it is possible that the Bonds may be traded inamounts in excess of the minimum specified denomination that are not integral multiples of suchminimum specified denomination. In such a case a Bondholder who, as a result of trading such amounts,holds a principal amount of less than the minimum specified denomination will not receive a DefinitiveCertificate in respect of such holding (should definitive Bonds be printed) and would need to purchase aprincipal amount of Bonds such that it holds an amount equal to one or more specified denominations. Ifdefinitive Bonds are issued, holders should be aware that a Definitive Certificate which has a principalamount that is not an integral multiple of the minimum specified denomination may be illiquid anddifficult to trade.

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

The Issuer may redeem the Bonds at its option, in whole but not in part, at a redemption price equal totheir principal amount, together with interest accrued to the date fixed for redemption if, subject tocertain conditions, as a result of a change in tax law, the Issuer has or will become obliged to payAdditional Tax Amounts (as defined in the Terms and Conditions of the relevant series), as furtherdescribed in Condition 6(b) (Redemption for Taxation Reasons) of the Terms and Conditions of therelevant series.

If the Issuer redeems the Bonds prior to the Maturity Date of the relevant series, investors may notreceive the same economic benefits they would have received had they held the Bonds to maturity, andthey may not be able to reinvest the proceeds they receive in a redemption in similar securities. Inaddition, the Issuer’s ability to redeem the Bonds may reduce the market price of the Bonds.

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

The Bonds are expected to be assigned a rating of ‘‘BBB+’’ by S&P and ‘‘BBB+’’ by Fitch. The ratingsrepresent only the opinions of the rating agencies and their assessment of the ability of the Issuer toperform their respective obligations under the Bonds, the Trust Deed and the Agency Agreement andcredit risks in determining the likelihood that payments will be made when due under the Bonds.Ratings are not recommendations to buy, sell or hold the Bonds and may be subject to revision,qualification, suspension, reduction or withdrawn at any time. The Issuer cannot assure investors that arating will remain for any given period of time or that a rating will not be lowered or withdrawn entirelyby the relevant rating agency if in its judgment circumstances in the future so warrant. The Issuer is notobligated to inform holders of the Bonds of any such revision, downgrade or withdrawal. Each ratingshould be evaluated independently of any other rating of the Bonds or other securities of the Issuer (ifany). A revision, qualification, suspension or withdrawal at any time of any rating assigned to the Bondsmay adversely affect the market price of the Bonds.

The Issuer may issue additional Bonds in the future.

The Issuer may, from time to time, and without prior consultation of the Bondholders of a series, createand issue further securities having the same terms and conditions as the Bonds of such series in allmaterial respects (or in all material respects save for the first payment of interest on them and the timingfor compliance with the Registration Conditions and the making of the NDRC Post-issue filings (see‘‘Terms and Conditions of the Bonds – Further Issues’’) or otherwise raise additional capital throughsuch means and in such manner as it may consider necessary. There can be no assurance that such futureissuance or capital raising activity will not adversely affect the market price of the Bonds.

43

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

The Bonds will carry a fixed interest rate. Consequently, investment in the Bonds involves the risk thatsubsequent changes in market interest rates may adversely affect the value of the Bonds. If Bondholderssell the Bonds they hold before the maturity of such Bonds, they may receive an offer less than theirinvestment.

44

EXCHANGE RATES

The PBOC sets and publishes on a daily basis a base exchange rate with reference primarily to thesupply and demand of Renminbi against a basket of currencies in the market during the prior day. ThePBOC takes into account other factors, such as the general conditions existing in the internationalforeign exchange markets. On 21 July 2005, the PRC Government introduced a managed floatingexchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based onmarket supply and demand and by reference to a basket of currencies. On the same day, the value of theRenminbi appreciated by two per cent. against the U.S. dollar. The PRC government has since made andin the future may make further adjustments to the exchange rate system. On 18 May 2007, the PBOCenlarged, effective on 21 May 2007, the floating band for the trading prices in the inter-bank spotexchange market of Renminbi against the U.S. dollar from 0.3 per cent. to 0.5 per cent. around thecentral parity rate. This allows the Renminbi to fluctuate against the U.S. dollar by up to 0.5 per cent.above or below the central parity rate published by the PBOC. The floating band was further widened to1.0 per cent. on 16 April 2012. These changes in currency policy resulted in the Renminbi appreciatingagainst the U.S. dollar by approximately 26.9 per cent. from 21 July 2005 to 31 December 2013. On 14March 2014, the PBOC further widened the floating band against the U.S. dollar to 2.0 per cent. On 11August 2015, the PBOC announced to improve the central parity quotations of Renminbi against theU.S. dollar by authorizing market-makers to provide central parity quotations to the China ForeignExchange Trading Centre daily before the opening of the interbank foreign exchange market withreference to the interbank foreign exchange market closing rate of the previous day, the supply anddemand for foreign exchange as well as changes in major international currency exchange rates.Following the announcement by the PBOC on 11 August 2015, Renminbi depreciated significantlyagainst the U.S. dollar. In January and February 2016, Renminbi experienced further fluctuation in valueagainst the U.S. dollar. The PRC Government may adopt further reforms of its exchange rate system,including making the Renminbi freely convertible in the future.

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

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

Period Period end Average(2) High Low

(RMB per U.S.$1.00)2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2939 6.4475 6.6364 6.29392012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2301 6.2990 6.3879 6.22212013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0537 6.1412 6.2438 6.05372014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2046 6.1704 6.2591 6.04022015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4778 6.2869 6.4896 6.18702016

January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5752 6.5726 6.5932 6.5219February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5525 6.5501 6.5975 6.5154March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4450 6.5027 6.5500 6.4480April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4738 6.4754 6.5004 6.4571May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5798 6.5259 6.5798 6.4738June (through 24 June 2016) . . . . . . . . . . . . . . . . 6.6150 6.5772 6.6150 6.5590

Notes:

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

(2) Annual averages have been calculated from month-end rates. Monthly averages have been calculated using the average ofthe daily rates during the relevant period.

45

TERMS AND CONDITIONS OF THE 2019 BONDS

The following are the terms and conditions of the Bonds (as defined below) substantially in the form inwhich they (other than the text in italics) will be endorsed on the definitive Certificates and referred toin the global certificate.

The U.S.$300,000,000 2.875 per cent. bonds due 2019 (the ‘‘Bonds’’, which expression, unless thecontext requires otherwise, includes any further securities issued pursuant to Condition 15 and to beconsolidated and forming a single series therewith) of Chongqing Nan’an Urban Construction &Development (Group) Co., Ltd.（重慶市南岸區城市建設發展（集團）有限公司）(the ‘‘Issuer’’) areconstituted by a trust deed (as amended or supplemented from time to time, the ‘‘Trust Deed’’) datedon or about 19 July 2016 (the ‘‘Issue Date’’) made between the Issuer, and The Bank of New YorkMellon, London Branch (the ‘‘Trustee’’, which expression shall include its successor(s)) as trustee forthe holders of the Bonds. The statements in these Conditions include summaries of, and are subject to,the detailed provisions of and definitions in the Trust Deed.

The issue of the Bonds was authorised by a resolution of the board of directors of the Issuer dated 30March 2016 and a shareholders’ resolution of the Issuer dated 15 April 2016.

Copies of the Trust Deed and the agency agreement dated on or about 19 July 2016 (as amended orsupplemented from time to time, the ‘‘Agency Agreement’’) made between the Issuer, the Trustee, TheBank of New York Mellon, London Branch as principal paying agent (the ‘‘Principal Paying Agent’’),The Bank of New York Mellon (Luxembourg) S.A. as registrar (the ‘‘Registrar’’) and as transfer agent(the ‘‘Transfer Agent’’) and any other Agents appointed thereunder are available for inspection duringnormal business hours by the holders (as defined below) of the Bonds at the principal office for the timebeing of the Trustee, being at the date of issue of the Bonds at One Canada Square, London E14 5AL,United Kingdom and at the specified office of the Principal Paying Agent. References herein to ‘‘PayingAgents’’ includes the Principal Paying Agent, and ‘‘Agents’’ means the Principal Paying Agent, theRegistrar, the Transfer Agent and any other agent or agents appointed from time to time with respect tothe Bonds. The Bondholders are entitled to the benefit of, are bound by, and are deemed to have noticeof, all the provisions of the Trust Deed and those provisions of the Agency Agreement applicable tothem.

All capitalised terms that are not defined in these terms and conditions (these ‘‘Conditions’’) will havethe meanings given to them in the Trust Deed.

1 FORM, SPECIFIED DENOMINATION AND TITLE

The Bonds are issued in the specified denomination of U.S.$200,000 and integral multiples ofU.S.$1,000 in excess thereof. The Bonds are represented by registered certificates (the‘‘Certificates’’) and, save as provided in Condition 3(b), each Certificate shall represent the entireholding of Bonds by the same holder.

Title to the Bonds shall pass by transfer and registration in the Register as described in Condition3. The holder of any Bond shall (except as otherwise required by law) be treated as its absoluteowner for all purposes whether or not it is overdue and regardless of any notice of ownership, trustor an interest in it, any writing on the Certificate (other than the endorsed form of transfer)representing it or the theft or loss of such Certificate and no person shall be liable for so treatingthe holder.

In these Conditions, ‘‘Bondholder’’, ‘‘holder of the Bonds’’ or, in respect of a Bond, ‘‘holder’’means the person in whose name a Bond is registered in the Register (or in the case of a jointholding, the first name thereof).

46

Upon issue, the Bonds will be represented by a Global Certificate registered in the name of anominee of, and deposited with, a common depository for Euroclear Bank S.A./N.V. andClearstream Banking S.A. The Conditions are modified by certain provisions contained in suchGlobal Certificate while any of the Bonds are represented by such Global Certificate. See‘‘Summary of Provisions relating to the Bonds in Global Form’’.

2 STATUS

The Bonds constitute direct, unconditional, unsubordinated and (subject to Condition 4(a))unsecured obligations of the Issuer and shall at all times rank pari passu and without anypreference among themselves. The payment obligations of the Issuer under the Bonds shall, savefor such exceptions as may be provided by applicable legislation and subject to Condition 4(a), atall times rank at least equally with all its other present and future unsecured and unsubordinatedobligations.

3 TRANSFERS OF BONDS AND ISSUE OF CERTIFICATES

(a) Register

The Issuer will cause the register (the ‘‘Register’’) to be kept at the specified office of theRegistrar and in accordance with the terms of the Agency Agreement, on which shall beentered the names and addresses of the holders of the Bonds and the particulars of the Bondsheld by them and of all transfers of the Bonds. Each holder shall be entitled to receive onlyone Certificate in respect of its entire holding of Bonds.

(b) Transfer

Subject to the Agency Agreement and Conditions 3(e) and 3(f) herein, a Bond may betransferred by surrendering the Certificate issued in respect of that Bond, with the form oftransfer on the back of the Certificate duly completed and signed, at the specified office ofthe Registrar or any Transfer Agent and any other evidence as the Registrar or such TransferAgent may require to prove the title of the transferor and the authority of the individuals whohave executed such form of transfer. In the case of a transfer of only part of a holding ofBonds represented by one Certificate, a new Certificate shall be issued to the transferee inrespect of the part transferred and a further new Certificate in respect of the balance of theholding not transferred shall be issued to the transferor. In the case of a transfer of the Bondsto a person who is already a holder of the Bonds, a new Certificate representing the enlargedholding shall only be issued against surrender of the Certificate representing the existingholding. No transfer of title to a Bond will be valid unless and until entered on the Register.

Transfers of interests in the Bonds evidenced by the Global Certificate will be effected inaccordance with the rules of the relevant clearing systems.

(c) Delivery of New Certificates

Each new Certificate to be issued upon transfer of Bonds pursuant to Condition 3(b) shall bemade available for delivery within seven business days of receipt of a duly completed formof transfer and surrender of the existing Certificate(s). Delivery of the new Certificate(s) shallbe made at the specified office of any Transfer Agent or of the Registrar (as the case may be)to whom delivery or surrender of such form of transfer and Certificate shall have been madeor, at the option of the holder making such delivery or surrender as aforesaid and as specifiedin the relevant form of transfer or otherwise in writing, be mailed by uninsured post at therisk of the holder entitled to the new Certificate to such address as may be so specified,unless such holder requests otherwise and pays in advance to the relevant Transfer Agent orthe Registrar (as the case may be) the costs of such other method of delivery and/or suchinsurance as it may specify.

47

In this Condition 3(c) and in Condition 3(e), ‘‘business day’’ means a day, other than aSaturday, Sunday or public holiday, on which commercial banks are generally open forbusiness in the place of the specified office of the relevant Transfer Agent or the Registrar(as the case may be).

Except in the limited circumstances described herein (see ‘‘Summary of Provisions relating tothe Bonds in Global Form’’), owners of interests in the Bonds will not be entitled to receivephysical delivery of Certificates.

(d) Formalities Free of Charge

Registration of a transfer of Bonds and issuance of new Certificates will be effected withoutcharge by or on behalf of the Issuer or any Agent but upon (i) payment (or the giving of suchindemnity and/or security and/or prefunding as the Issuer or any Agent may require) inrespect of any tax or other governmental charges which may be imposed in relation to suchtransfer; (ii) the Registrar being satisfied in its absolute discretion with the documents of titleor identity of the person making the application and (iii) the relevant Agent (afterconsultation with the Issuer if so required) being satisfied that the regulations concerningtransfer of Bonds have been complied with.

(e) Closed Periods

No holder may require the transfer of a Bond to be registered (i) during the period of sevendays ending on (but excluding) the due date for any payment of principal (or premium) inrespect of that Bond; or (ii) during the period of seven days ending on (and including) anyRecord Date (as defined in Condition 7(a)); or (iii) during the period of seven days prior to(and including) any date on which Bonds may be called for redemption by the Issuerpursuant to Condition 6(b); or (iv) after any such Bond has been put for redemption pursuantto Condition 6(c).

(f) Regulations

All transfers of Bonds and entries on the Register will be made subject to the detailedregulations concerning transfer of Bonds scheduled to the Agency Agreement. Theregulations may be changed by the Issuer, with the prior written approval of the Registrarand the Trustee or by the Registrar, with the prior written approval of the Trustee. A copy ofthe current regulations will be mailed (free of charge to the Bondholders) by the Registrar toany Bondholder who requests one in writing.

4 COVENANTS

(a) Negative Pledge

So long as any Bond remains outstanding (as defined in the Trust Deed), the Issuer will not,and the Issuer will ensure that none of its Subsidiaries will create, or have outstanding, anymortgage, charge, lien, pledge or other security interest, upon the whole or any part of itspresent or future undertaking, assets or revenues (including any uncalled capital) to secureany Relevant Indebtedness or to secure any guarantee or indemnity in respect of any RelevantIndebtedness, without at the same time or prior thereto according to the Bonds the samesecurity as is created or subsisting to secure any such Relevant Indebtedness, guarantee orindemnity or such other security as either (i) the Trustee shall in its absolute discretion deemnot materially less beneficial to the interest of the Bondholders or (ii) shall be approved byan Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

48

(b) Undertakings relating to Foreign Debt Registration

The Issuer undertakes that it will (i) within 15 Registration Business Days after the IssueDate, register or cause to be registered with SAFE the Bonds pursuant to the AdministrativeMeasures for Foreign Debt Registration and its operating guidelines, effective as of 13 May2013 (‘‘Foreign Debt Registration’’), (ii) use its best endeavours to complete the ForeignDebt Registration and obtain a registration record from SAFE on or before the RegistrationDeadline and (iii) comply with all applicable PRC laws and regulations in relation to theBonds.

(c) Notification to NDRC

The Issuer undertakes that it will (i) within 10 Registration Business Days after the IssueDate file or cause to be filed with the NDRC the requisite information and documents inaccordance with the Circular on Promoting the Reform of the Administrative System on theIssuance by Enterprises of Foreign Debt Filings and Registrations（國家發展改革委關於推進

企業發行外債備案登記制管理改革的通知（發改外資[2015]2044號））issued by the NDRCand effective 14 September 2015 and any implementation rules as issued by the NDRC fromtime to time (the ‘‘NDRC Post-issue Filing’’) and (ii) comply with all applicable PRC lawsand regulations in connection with the Bonds.

(d) Notification of Completion of the Foreign Debt Registration and the NDRC Post-IssueFiling

The Issuer shall before the Registration Deadline provide the Trustee with (i) a certificate inEnglish by an Authorised Signatory (as defined in the Trust Deed) of the Issuer confirmingthe completion of the NDRC Post‑issue Filing and the Foreign Debt Registration; and (ii)copies of the documents evidencing due filing with the NDRC and the registration recordfrom SAFE, each certified in English as true and complete copies of the originals by anAuthorised Signatory of the Issuer; and (iii) an English translation of each document andrecord referred to in (ii) above of this Condition 4(d) (and the Trustee may rely conclusivelywithout liability to any Bondholder or any other person on any such translation being acomplete and accurate translation of the original) (the items specified in (i), (ii) and (iii)together, the ‘‘Registration Documents’’). In addition, the Issuer shall procure that within 10Registration Business Days after the documents comprising the Registration Documents aredelivered to the Trustee, the Issuer gives notice to the Bondholders (in accordance withCondition 16) confirming the completion of the NDRC Post-Issue Filing and the ForeignDebt Registration.

(e) Financial Information

So long as any Bond remains outstanding (as defined in the Trust Deed) the Issuer willfurnish the Trustee with (A) a Compliance Certificate (on which the Trustee may rely as tosuch compliance) and a copy of the relevant Audited Financial Reports within 150 days ofthe end of each Relevant Period prepared in accordance with the Accounting Standards forBusiness Enterprises in China (‘‘PRC GAAP’’) (audited by a nationally recognised firm ofindependent accountants) of the Issuer and its Subsidiaries (if any) and if such statementsshall be in the Chinese language, together with an English translation of the same translatedby (aa) a nationally recognised firm of independent accountants or (bb) a professionaltranslation service provider and checked by a nationally recognised firm of independentaccountants, together with a certificate signed by an Authorised Signatory of the Issuercertifying that such translation is complete and accurate; and (B) a copy of the UnauditedFinancial Reports within 120 days of the end of each Relevant Period prepared on a basisconsistent with the audited consolidated financial statements of the Issuer and its Subsidiaries(if any) and if such statements shall be in the Chinese language, together with an Englishtranslation of the same and translated by (aa) a nationally recognised firm of independent

49

accountants or (bb) a professional translation service provider and checked by a nationallyrecognised firm of independent accountants, together with a certificate signed by anAuthorised Signatory of the Issuer certifying that such translation is complete and accurate.

(f) Ratings

For so long as any Bond remains outstanding, save with the approval of an ExtraordinaryResolution of the Bondholders, the Issuer will maintain ratings on the Bonds by two RatingAgencies.

(g) In these Conditions:

‘‘Audited Financial Reports’’ means annual audited consolidated balance sheet, incomestatement, statement of cash flows and statements of changes in owners’ equity of the Issuertogether with any statements, reports (including any directors’ and auditors’ reports) andnotes attached to or intended to be read with any of them;

‘‘Compliance Certificate’’ means a certificate of the Issuer signed by any AuthorisedSignatory of the Issuer that, having made all reasonable enquiries, to the best of theknowledge, information and belief of the Issuer as at a date (the ‘‘Certification Date’’) notmore than five days before the date of the certificate:

(i) no Event of Default (as defined in Condition 9) or Potential Event of Default hadoccurred since the Certification Date of the last such certificate or (if none) the date ofthe Trust Deed or, if such an event had occurred, giving details of it; and

(ii) the Issuer has complied with all its obligations under the Trust Deed and the Bonds;

‘‘Issue Date’’ means 19 July 2016;

‘‘NDRC’’ means the National Development and Reform Commission of the PRC or its localcounterparts;

‘‘person’’ means any individual, corporation, partnership, limited liability company, jointventure, trust, unincorporated organisation or government or any agency or politicalsubdivision thereof;

‘‘PRC’’ means the People’s Republic of China, which shall for the purpose of theseConditions only, exclude the Hong Kong Special Administrative Region, the Macau SpecialAdministrative Region and Taiwan;

‘‘Rating Agencies’’ means (1) Fitch Ratings and its successors (‘‘Fitch’’); and (2) Standard& Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., and its successors(‘‘S&P’’); or (3) if either Fitch or S&P shall not make a rating of the Bonds publiclyavailable, the Issuer shall select and substitute Fitch or S&P, as the case may be, withMoody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors orany other reputable credit rating agency of international standing;

‘‘Registration Business Day’’ means a day, other than a Saturday, Sunday or public holiday,on which commercial banks are generally open for business in Beijing, PRC;

‘‘Registration Deadline’’ means the day falling 120 Registration Business Days after theIssuer Date;

50

‘‘Relevant Indebtedness’’ means any indebtedness issued outside the PRC which is in theform of, or represented or evidenced by, bonds, notes, debentures, loan stock or othersecurities with a maturity of more than one year which for the time being are, or are intendedto be or capable of being, quoted, listed or dealt in or traded on any stock exchange or over-the-counter or other securities market;

‘‘Relevant Period’’ means (i) in relation to the Audited Financial Reports, each period oftwelve months ending on the last day of the Issuer’s financial year (being 31 December ofthat financial year); (ii) in relation to the Unaudited Financial Reports, each period of sixmonths ending on the last day of the Issuer’s first half financial year (being 30 June of thatfinancial year);

‘‘SAFE’’ means the State Administration of Foreign Exchange or its local branch;

‘‘Subsidiary’’ means, with respect to (a) any person, any corporation, association or otherbusiness entity of which more than 50 per cent. of the voting power of the outstandingVoting Stock is owned, directly or indirectly, by such person and one or more otherSubsidiaries of such person; or (b) any corporation, association and other business entitywhich at any time has its accounts consolidated with those of that person or which, under thelaw, regulations or generally accepted accounting principles of the jurisdiction ofincorporation of such person from time to time, should have its accounts consolidated withthose of that person;

‘‘Unaudited Financial Reports’’ means semi-annual unaudited consolidated balance sheet,income statement, statement of cash flows and statements of changes in owners’ equity of theIssuer together with any statements, reports (including any directors’ and auditors’ reviewreports, if any) and notes attached to or intended to be read with any of them, if any; and

‘‘Voting Stock’’ means, with respect to any person, capital stock of any class or kindordinarily having the power to vote for the election of directors, managers or other votingmembers of the governing body of such person.

5 INTEREST

(a) Interest Rate and Interest Payment Dates

The Bonds bear interest on their outstanding principal amount from and including 19 July2016 (the ‘‘Issue Date’’) at the rate of 2.875 per cent. per annum, payable semi-annually inarrear in equal instalments of U.S.$14.375 per Calculation Amount (as defined below) on 19January and 19 July in each year (each an ‘‘Interest Payment Date’’) commencing on 19January 2017.

Each Bond will cease to bear interest from the due date for redemption unless, uponsurrender of the Certificate representing such Bond, payment of principal or premium (if any)is improperly withheld or refused. In such event it shall continue to bear interest at such rate(both before and after judgment) until whichever is the earlier of (a) the day on which allsums due in respect of such Bond up to that day are received by or on behalf of the relevantholders, and (b) the day falling seven days after the Trustee or the Principal Paying Agenthas notified Bondholders of receipt of all sums due in respect of all the Bonds up to thatseventh day (except to the extent that there is failure in the subsequent payment to therelevant holders under these Conditions).

If interest is required to be calculated for a period of less than a complete Interest Period (asdefined below), the relevant day-count fraction will be determined on the basis of a 360-dayyear consisting of 12 months of 30 days each and, in the case of an incomplete month, the

51

number of days elapsed. In these Conditions, the period beginning on and including the IssueDate 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 is called an ‘‘Interest Period’’.

Interest in respect of any Bond shall be calculated per U.S.$1,000 in principal amount of theBonds (the ‘‘Calculation Amount’’). The amount of interest payable per Calculation Amountfor any period shall, save as provided above in relation to equal instalments, be equal to theproduct of the rate of interest specified above, the Calculation Amount and the day-countfraction for the relevant period, rounding the resulting figure to the nearest cent (half a centbeing rounded upwards).

6 REDEMPTION AND PURCHASE

(a) Final Redemption

Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at theirprincipal amount on 19 July 2019 (the ‘‘Maturity Date’’). The Bonds may not be redeemedat the option of the Issuer other than in accordance with this Condition 6.

(b) Redemption for Taxation Reasons

The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time,on giving not less than 30 nor more than 60 days’ notice (a ‘‘Tax Redemption Notice’’) tothe Bondholders in accordance with Condition 16 (which shall be irrevocable) and in writingto the Trustee and the Principal Paying Agent, at their principal amount (together with anyinterest accrued to the date fixed for redemption) if (i) the Issuer satisfies the Trusteeimmediately prior to the giving of such notice that the Issuer has or will become obliged topay Additional Tax Amounts as provided or referred to in Condition 8 as a result of anychange in, or amendment to, the laws or regulations of the PRC or any political subdivisionor any authority thereof or therein having power to tax, or any change in the application orofficial interpretation of, or the stating of an official position with respect to, such laws orregulations (including but not limited to any decision by a court of competent jurisdiction),which change or amendment becomes effective on or after 12 July 2016, and (ii) suchobligation cannot be avoided by the Issuer taking reasonable measures available to it,provided that no Tax Redemption Notice shall be given earlier than 90 days prior to theearliest date on which the Issuer would be obliged to pay such Additional Tax Amounts werea payment in respect of the Bonds then due. Prior to the giving of any Tax RedemptionNotice pursuant to this Condition 6(b), the Issuer shall deliver to the Trustee (A) a certificatesigned by any one Director of the Issuer who is also an Authorised Signatory stating that theobligation referred to in (i) above of this Condition 6(b) cannot be avoided by the Issuertaking reasonable measures available to it, and (B) an opinion, in form and substancesatisfactory to the Trustee, of independent tax or legal advisers of recognised standing to theeffect that the Issuer has or will become obliged to pay such Additional Tax Amounts as aresult of such change or amendments and opinion. The Trustee shall be entitled (but shall notbe obliged) to accept and reply upon such certificate and opinion as sufficient evidence of thesatisfaction of the conditions precedent set out in (i) and (ii) above of this Condition 6(b), inwhich event they shall be conclusive and binding on the Bondholders.

(c) Redemption for Change of Control

Following the occurrence of a Change of Control, the holder of any Bond will have the right(the ‘‘Change of Control Put Right’’), at such holder’s option, to require the Issuer toredeem all, but not some only, of such holder’s Bonds on the Put Settlement Date (as definedbelow in this Condition 6(c)) at 101 per cent. of their principal amount, together with accruedinterest to (but excluding) the Put Settlement Date. To exercise such right, the holder of the

52

relevant Bond must deposit at the specified office of the Principal Paying Agent or any otherPaying Agent a duly completed and signed notice of redemption, in the form for the timebeing current, obtainable from the specified office of any Paying Agent (a ‘‘Put ExerciseNotice’’), together with the Certificate evidencing the Bonds to be redeemed, by not laterthan 30 days following a Change of Control, or, if later, 30 days following the date uponwhich notice thereof is given to Bondholders by the Issuer in accordance with Condition 16.

The ‘‘Put Settlement Date’’ shall be the 14th day after the expiry of such period of 30 daysas referred to above.

A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem theBonds the subject of Put Exercise Notices delivered as aforesaid on the Put Settlement Date.

Not later than 14 days following the day on which the Issuer becomes aware of a Change ofControl, the Issuer shall procure that notice regarding such Change of Control shall bedelivered to the Trustee in writing and to the holders (in accordance with Condition 16)stating:

(i) the Put Settlement Date;

(ii) the date of the Change of Control and, briefly, the events causing, as applicable, theChange of Control;

(iii) the date by which the Put Exercise Notice must be given;

(iv) the redemption amount and the method by which such amount will be paid;

(v) the names and addresses of all Paying Agents;

(vi) the procedures that holders must follow and the requirements that holders must satisfyin order to exercise the Change of Control Put Right; and

(vii) that a Put Exercise Notice, once validly given, may not be withdrawn.

For the purpose of these Conditions:

(A) ‘‘Control’’ means (i) the ownership or control of more than 50 per cent. of the votingrights of the issued share capital of the Issuer or (ii) the right to appoint and/or removeall or the majority of the members of the Issuer’s board of directors or other governingbody, whether obtained directly or indirectly, and whether obtained by ownership ofshare capital, the possession of voting rights, contract or otherwise; the term‘‘Controlled’’ has meanings correlative to the foregoing; and

(B) a ‘‘Change of Control’’ occurs when:

(i) (x) the Chongqing Nan’an District Bureau of Finance, and (y) any other persondirectly or indirectly Controlled by the Chongqing Municipal Government,together directly or indirectly hold or own less than 80 per cent. of the issuedshare capital of the Issuer; or

(ii) the Issuer consolidates with or merges into or sells or transfers all or substantiallyall of the Issuer’s assets to any other person or persons, acting together, that is/arenot directly or indirectly less than 80 per cent. held or owned by the ChongqingMunicipal Government;

53

(d) Purchase

The Issuer or any of its Subsidiaries may at any time purchase Bonds in the open market orotherwise at any price. The Bonds so purchased, while held by or on behalf of the Issuer orany such Subsidiary, shall not entitle the holder to vote at any meetings of the holders andshall not be deemed to be outstanding for certain purposes, including without limitation forthe purpose of calculating quorums at meetings of the holders or for the purposes ofCondition 9, Condition 12(a) and Condition 13.

(e) Notice of redemption

All Bonds in respect of which any notice of redemption is given under this Condition 6 shallbe redeemed on the date, in such place and in such manner as specified in such notice inaccordance with this Condition. If there is more than one notice of redemption given inrespect of any Bond (which shall include any notice given by the Issuer pursuant toCondition 6(b) and any Put Exercise Notice given by a Bondholder pursuant to Condition6(c)), the notice given first in time shall prevail and in the event of two notices being givenon the same date, the first to be given shall prevail. Neither the Trustee nor any of theAgents shall be responsible for calculating or verifying any calculations of any amountspayable under any notice of redemption and shall not be liable to Bondholders, the Issuer orany other person for not doing so.

(f) Cancellation

All Certificates representing Bonds purchased by or on behalf of the Issuer and itsSubsidiaries may be held, resold or surrendered to the Registrar for cancellation. AnyCertificates surrendered for cancellation may not be reissued or resold and the obligations ofthe Issuer in respect of any such Bonds shall be discharged.

7 PAYMENTS

(a) Method of Payment:

(i) Payments of principal and premium (if any) shall be made (subject to surrender of therelevant Certificates at the specified office of the Principal Paying Agent or any otherPaying Agent if no further payment falls to be made in respect of the Bonds representedby such Certificates) in the manner provided in paragraph (ii) of this Condition 7(a)below.

(ii) Interest on each Bond shall be paid to the person shown on the Register at the close ofbusiness on the fifth Payment Business Day before the due date for payment thereof(the ‘‘Record Date’’). Payments of interest on each Bond shall be made in U.S. dollarsby cheque drawn on a bank and mailed to the holder (or to the first named of jointholders) of such Bond at its address appearing in the Register. Upon application by theholder to the specified office of the Registrar or any Transfer Agent before the RecordDate, such payment of interest may be made by transfer to an account in the relevantcurrency maintained by the payee with a bank.

(iii) If the amount of principal being paid upon surrender of the relevant Certificate is lessthan the outstanding principal amount of such Certificate, the Registrar will annotatethe Register with the amount of principal so paid and will (if so requested in writing bythe Issuer or a Bondholder) issue a new Certificate with a principal amount equal to theremaining unpaid outstanding principal amount. If the amount of premium (if any) orinterest being paid is less than the amount then due, the Registrar will annotate theRegister with the amount of premium (if any) or interest so paid.

54

(b) Payments subject to Fiscal Laws: Payments will be subject in all cases to (i) any fiscal orother laws and regulations applicable thereto in the place of payment, but without prejudiceto the provisions of Condition 8 and (ii) any withholding or deduction required pursuant toan agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the‘‘Code’’) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, anyregulations or agreements thereunder, any official interpretations thereof, or (withoutprejudice to the provisions of Condition 8) any law implementing an intergovernmentalapproach thereto. No commission or expenses shall be charged to the Bondholders in respectof such payments.

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

(d) Appointment of Agents: The Principal Paying Agent, the Registrar and the Transfer Agentinitially appointed by the Issuer and their respective specified offices are listed below. ThePrincipal Paying Agent, the Registrar and the Transfer Agent act solely as agents of theIssuer and do not assume any obligation or relationship of agency or trust for or with anyBondholder. The Issuer reserves the right at any time with the prior written approval of theTrustee to vary or terminate the appointment of the Principal Paying Agent, the Registrar,any Transfer Agent or any of the other Agents and to appoint additional or other Agents,provided that the Issuer shall at all times maintain (i) a Principal Paying Agent, (ii) aRegistrar with a specified office outside the United Kingdom, (iii) a Transfer Agent and (iv)such other agents as may be required by any other stock exchange on which the Bonds maybe listed.

Notice of any such termination or appointment or any change of any specified office of anAgent shall promptly be given by the Issuer to the Bondholders.

(e) Delay in Payment: Bondholders will not be entitled to any interest or other payment for anydelay after the due date in receiving the amount due on a Bond if the due date is not aPayment Business Day, if the Bondholder is late in surrendering or cannot surrender itsCertificate (if required to do so or if a cheque mailed in accordance with Condition 7(a)(ii)arrives after the due date for payment).

(f) Non-Payment Business Days: If any date for payment in respect of any Bond is not abusiness day, the holder shall not be entitled to payment until the next following businessday nor to any interest or other sum in respect of such postponed payment. In this Condition7, ‘‘Payment Business Day’’ means a day (other than a Saturday, a Sunday or a publicholiday) on which commercial banks and foreign exchange markets are open for business inNew York City, the place in which the specified office of the Principal Paying Agent islocated, the place where payment is to be made by transfer to an account maintained with abank in US dollars and the place on which foreign exchange transactions may be carried onin US dollars in the principal financial centre of the country of such currency.

55

8 TAXATION

All payments of principal, premium (if any) and interest by or on behalf of the Issuer in respect ofthe Bonds shall be made free and clear of, and without withholding or deduction for, any taxes,duties, assessments or governmental charges of whatever nature imposed, levied, collected,withheld or assessed by the PRC or any political subdivision or any authority therein or thereofhaving power to tax, unless such withholding or deduction is required by law.

Where such withholding or deduction is made by the Issuer by or within the PRC up to andincluding the aggregate rate applicable on 12 July 2016 (the ‘‘Applicable Rate’’), the Issuer willincrease the amounts paid by it to the extent required, so that the net amount received byBondholders equals the amounts which would otherwise have been receivable by them had no suchwithholding or deduction been required.

As at the date of this Offering Circular, the ‘‘Applicable Rate’’ shall be 16.72 per cent., pursuantto (a) the Enterprise Income Tax Law of the PRC and (b) the rate calculated pursuant to theCircular of Full Implementation of Business Tax to VAT Reform (which introduced a new value-added tax from 1 May 2016) as explained in more details in ‘‘Taxation – PRC’’.

If the Issuer is required to make a deduction or withholding in respect of PRC tax in excess of theApplicable Rate, the Issuer shall pay such additional amounts (‘‘Additional Tax Amounts’’) aswill result in receipt by the Bondholders of such amounts as would have been received by themhad no such withholding or deduction been required, except that no Additional Tax Amounts shallbe payable in respect of any Bond:

(i) Other connection: to a holder (or to a third party on behalf of a holder) who is liable to suchtaxes, duties, assessments or governmental charges in respect of such Bond by reason of hishaving some connection with the PRC other than the mere holding of the Bond; or

(ii) Surrender more than 30 days after the Relevant Date: in respect of which the Certificaterepresenting it is presented (where presentation is required) for payment more than 30 daysafter the Relevant Date except to the extent that the holder of it would have been entitled tosuch Additional Tax Amounts on surrendering the Certificate representing such Bond forpayment on the last day of such period of 30 days.

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

‘‘Relevant Date’’ in respect of any Bond means the date on which payment in respect of it firstbecomes due or (if any amount of the money payable is improperly withheld or refused) the dateon which payment in full of the amount outstanding is made or (if earlier) the date seven daysafter that on which notice is duly given to the Bondholders that, upon further surrender of theCertificate representing such Bond being made in accordance with these Conditions, such paymentwill be made, provided that payment is in fact made upon such surrender.

9 EVENTS OF DEFAULT

If an Event of Default (as defined below) occurs the Trustee at its discretion may, and if sorequested in writing by holders of at least 25 per cent. of the aggregate principal amount of theBonds then outstanding or if so directed by an Extraordinary Resolution shall (provided in anysuch case that the Trustee shall have first been indemnified and/or secured and/or pre-funded to itssatisfaction), give written notice to the Issuer that the Bonds are, and they shall immediatelybecome, due and payable at their principal amount together (if applicable) with accrued interest.

56

An ‘‘Event of Default’’ occurs if:

(a) Non-Payment: there has been a failure to pay (i) the principal of any of the Bonds when dueor (ii) any interest on any of the Bonds when due and such failure continues for a period of14 days; or

(b) Breach of Other Obligations: the Issuer does not perform or comply with any one or moreof its obligations under the Bonds or the Trust Deed and such default (i) is in the opinion ofthe Trustee incapable of remedy or, (ii) if in the opinion of the Trustee capable of remedy, isnot remedied within 30 days after the Trustee has given written notice thereof to the Issuer;or

(c) Cross-Acceleration: (i) any other present or future indebtedness of the Issuer or any of itsSubsidiaries for or in respect of moneys borrowed or raised becomes due and payable prior toits stated maturity by reason of any actual or potential default, event of default or the like(howsoever described), or (ii) any such indebtedness is not paid when due or, as the casemay be, within any originally applicable grace period, or (iii) the Issuer or any of itsSubsidiaries fails to pay when due any amount payable by it under any present or futureguarantee for, or indemnity in respect of, any moneys borrowed or raised provided that theaggregate amount of the relevant indebtedness, guarantees and indemnities in respect ofwhich one or more of the events mentioned above in this Condition 9(c) have occurred inaggregate equals or exceeds U.S.$40,000,000 or its equivalent (on the basis of the middlespot rate for the relevant currency against the U.S. dollar as quoted by any leading bank onthe day on which this Condition 9(c) operates); or

(d) Enforcement Proceedings: a distress, attachment, execution or other legal process is levied,enforced or sued out on or against any material part of the property, assets or revenues of theIssuer or any of its Material Subsidiaries and is not discharged or stayed for a period of 45days; or

(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present orfuture, created or assumed by the Issuer or any of its Material Subsidiaries over all or amaterial part of the assets of the Issuer or the relevant Material Subsidiary 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 within 45days; or

(f) Insolvency: the Issuer or any of its Material Subsidiaries is (or is, or could be, deemed bylaw or a court to be) insolvent or bankrupt or unable to pay its debts as and when such debtsfall due, stops, suspends or threatens to stop or suspend payment of all or a material part ofits debts, proposes or makes any agreement for the deferral, rescheduling or otherreadjustment of all of (or all of a particular type of) its debts (or of any material part whichit will or might otherwise be unable to pay when due), proposes or makes a generalassignment or an arrangement or composition with or for the benefit of the relevant creditorsin respect of any of such debts or a moratorium is agreed or declared in respect of oraffecting all or any material part of the debts of the Issuer or any of its Material Subsidiaries;or

(g) Winding-up: an order of any court of competent jurisdiction is made or an effectiveresolution passed for the winding-up or dissolution of the Issuer or any of its MaterialSubsidiaries (except for the voluntary solvent winding up of any Material Subsidiary), or theIssuer or any of its Material Subsidiaries ceases or threatens to cease to carry on all orsubstantially all of its business or operations, except for the purpose of and followed by areconstruction, amalgamation, reorganisation, merger or consolidation (i) on terms approved

57

by the Trustee acting on an Extraordinary Resolution of the Bondholders, or (ii) in the caseof a Material Subsidiary, whereby the undertaking and assets of such Material Subsidiary aretransferred to or otherwise vested in the Issuer or another Subsidiary; 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 the Issueror any of its Material Subsidiaries which individually or in aggregate would have a materialadverse impact to the ability of the Issuer to perform its obligation under the Bonds and theTrust Deed; 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) toenable the Issuer lawfully to enter into, exercise its rights and perform and comply with itsobligations under the Bonds and the Trust Deed, (ii) to ensure that those obligations arelegally binding and enforceable and (iii) to make the Bonds and the Trust Deed admissible inevidence in the courts of Hong Kong is not taken, fulfilled or done; or

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

(k) Analogous Events: any event occurs which under the laws of any relevant jurisdiction has ananalogous effect to any of the events referred to in any of Conditions 9(a) to 9(j) (bothinclusive).

In this Condition 9:

‘‘Material Subsidiary’’ means any Subsidiary of the Issuer:

(a) whose total operating income or (in the case of a Subsidiary which itself has Subsidiaries)consolidated total operating income, as shown by its latest audited income statement is atleast five per cent. of the consolidated total operating income as shown by the latestpublished audited consolidated income statement of the Issuer and its Subsidiaries including,for the avoidance of doubt, the Issuer and its consolidated Subsidiaries’ share of profits ofSubsidiaries not consolidated and of jointly controlled entities and after adjustments forminority interests;

(b) whose total profit or (in the case of a Subsidiary which itself has Subsidiaries) consolidatedtotal profit, as shown by its latest audited income statement are at least five per cent. of theconsolidated total profit as shown by the latest published audited consolidated incomestatement of the Issuer and its Subsidiaries including, for the avoidance of doubt, the Issuerand its consolidated Subsidiaries’ share of profits of Subsidiaries not consolidated and ofjointly controlled entities and after adjustments for minority interests; or

(c) whose total assets or (in the case of a Subsidiary which itself has Subsidiaries) consolidatedgross assets, as shown by its latest audited balance sheet are at least five per cent. of theamount which equals the amount included in the consolidated gross assets of the Issuer andits Subsidiaries as shown by the latest published audited consolidated balance sheet of theIssuer and its Subsidiaries including, for the avoidance of doubt, the investment of the Issuerin each Subsidiary whose accounts are not consolidated with the consolidated auditedaccounts of the Issuer and after adjustment for minority interests;

provided that, in relation to paragraphs (a), (b) and (c) above of this definition:

58

(i) 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 Issuerrelate, the reference to the then latest consolidated audited accounts of the Issuer for thepurposes of the calculation above shall, until consolidated audited accounts of the Issuerfor the financial period in which the relevant corporation or other business entitybecomes a Subsidiary are published be deemed to be a reference to the then latestconsolidated audited accounts of the Issuer adjusted to consolidate the latest auditedaccounts (consolidated in the case of a Subsidiary which itself has Subsidiaries) of suchSubsidiary in such accounts;

(ii) if at any relevant time in relation to the Issuer or any Subsidiary which itself hasSubsidiaries no consolidated accounts are prepared and audited, total operating income,total profit or total assets of the Issuer and/or any such Subsidiary shall be determinedon the basis of pro forma consolidated accounts prepared for this purpose by the Issuer;

(iii) if at any relevant time in relation to any Subsidiary, no accounts are audited, its totaloperating income, total profit or total assets (consolidated, if appropriate) shall bedetermined on the basis of pro forma accounts (consolidated, if appropriate) of therelevant Subsidiary prepared for this purpose by the Issuer;

(iv) if the accounts of any subsidiary (not being a Subsidiary referred to in proviso (i) aboveof this definition) are not consolidated with those of the Issuer, then the determinationof whether or not such subsidiary is a Material Subsidiary shall be based on a proforma consolidation of its accounts (consolidated, if appropriate) with the consolidatedaccounts (determined on the basis of the foregoing) of the Issuer prepared for thispurpose by the Issuer; and

(v) in the case of a Subsidiary to which is transferred the whole or substantially the wholeof the assets of a Subsidiary which immediately prior to such transfer was a MaterialSubsidiary, the Material Subsidiary which so transfers its assets shall forthwith uponsuch transfer cease to be a Material Subsidiary and the Subsidiary to which the assetsare so transferred shall become a Material Subsidiary upon such transfer but shall ceaseto be a Material Subsidiary at the date on which the first published audited accounts(consolidated, if appropriate) of the Issuer prepared as of a date later than such transferare issued unless such Subsidiary would continue to be a Material Subsidiary on thebasis of such accounts by virtue of the provisions of paragraphs (a), (b) or (c) above ofthis definition.

10 PRESCRIPTION

Claims against the Issuer for payment in respect of the Bonds shall be prescribed and become voidunless made within 10 years (in the case of principal or premium (if any)) or five years (in thecase of interest) from the appropriate Relevant Date in respect of them.

11 REPLACEMENT OF CERTIFICATES

If any Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced, subject toapplicable laws, regulations or other relevant regulatory authority regulations, at the specifiedoffice of the Registrar or any Transfer Agent, in each case on payment by the claimant of the feesand costs incurred in connection therewith and on such terms as to evidence, security, indemnityand otherwise as the Issuer, the Registrar or the relevant Transfer Agent may require. Mutilated ordefaced Certificates must be surrendered before replacements will be issued.

59

12 MEETINGS OF BONDHOLDERS, MODIFICATION, WAIVER, AUTHORISATION,DETERMINATION AND ENTITLEMENT OF TRUSTEE

(a) Meetings of Bondholders

The Trust Deed contains provisions for convening meetings of the Bondholders to considerany matter affecting their interests, including the sanctioning by Extraordinary Resolution ofa modification of any of these Conditions or any of the provisions of the Trust Deed. Such ameeting may be convened by the Trustee or the Issuer and shall be convened by the Trusteeupon request in writing from Bondholders holding not less than 10 per cent. in aggregateprincipal amount of the Bonds for the time being outstanding and subject to the Trusteebeing indemnified and/or secured and/or pre-funded to its satisfaction against all costs andexpenses. The quorum for any meeting convened to consider an Extraordinary Resolutionwill be two or more persons holding or representing more than 50 per cent. in aggregateprincipal amount of the Bonds for the time being outstanding, or at any adjourned meetingtwo or more persons being or representing Bondholders whatever the principal amount of theBonds held or represented unless the business of such meeting includes the modification orabrogation of certain of the provisions of these Conditions and certain of the provisions ofthe Trust Deed, including consideration of proposals, inter alia, (i) to modify the MaturityDate of the Bonds or the dates on which interest is payable in respect of the Bonds, (ii) toreduce or cancel the principal amount of, any premium payable on redemption of, or intereston, the Bonds, (iii) to change the currency of payment of the Bonds or (iv) to modify theprovisions concerning the quorum required at any meeting of Bondholders or the majorityrequired to pass an Extraordinary Resolution, in which case the necessary quorum for passingan Extraordinary Resolution will be two or more persons holding or representing not lessthan 75 per cent., or at any adjourned such meeting not less than 25 per cent., in aggregateprincipal amount of Bondholders for the time being outstanding. Any ExtraordinaryResolution duly passed shall be binding on Bondholders, whether or not they were present atthe meeting at which such resolution was passed.

The Trust Deed provides that a resolution in writing signed by or on behalf of theBondholders of not less than 90 per cent. in principal amount of the Bonds for the time beingoutstanding shall for all purposes be as valid and effective as an Extraordinary Resolutionpassed at a meeting of Bondholders duly convened and held. Such a resolution in writingmay be contained in one document or several documents in the same form, each signed by oron behalf of one or more Bondholders.

(b) Modification, Waiver, Authorisation and Determination

The Trustee may (but shall not be obliged to) agree, without the consent of the Bondholders,to any modification of, or to the waiver or authorisation of any breach or proposed breach of,or any failure to comply with any of these Conditions or any of the provisions of the TrustDeed which in its opinion is not materially prejudicial to the interest of the Bondholders, ormay agree, without any such consent as aforesaid, to any modification which, in its opinion,is of a formal, minor or technical nature or to correct a manifest error or to comply with anymandatory provision of applicable law. Any such modification, waiver or authorisation shallbe binding on the Bondholders and, unless the Trustee agrees otherwise, such modification,waiver or authorisation shall be notified to the Bondholders by the Issuer as soon aspracticable thereafter in accordance with Condition 16.

(c) Entitlement of the Trustee

In connection with the exercise of its functions, rights, powers and/or discretions (includingbut not limited to those referred to in this Condition 12), the Trustee shall have regard to theinterests of the Bondholders as a class and shall not have regard to the consequences of suchexercise for individual Bondholders and the Trustee shall not be entitled to require, nor shallany Bondholder be entitled to claim, from the Issuer or the Trustee any indemnification orpayment in respect of any tax consequence of any such exercise upon individualBondholders.

60

13 ENFORCEMENT

At any time after the Bonds become due and payable, the Trustee may, at its discretion andwithout further notice, institute such proceedings against the Issuer as it may think fit to enforcethe terms of the Trust Deed and/or the Bonds, but it need not take any such proceedings unless (a)it shall have been so directed by an Extraordinary Resolution or so requested in writing byBondholders holding at least 25 per cent. in principal amount of the Bonds then outstanding, and(b) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction. NoBondholder may proceed directly against the Issuer unless the Trustee, having become bound so toproceed, fails to do so within a reasonable time and such failure is continuing.

14 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 and/or anyentity related to the Issuer without accounting for any profit.

None of the Trustee or any Agent shall be liable to any Bondholder, the Issuer or any other personfor any action taken by the Trustee or such Agent in accordance with the instructions, direction orrequest of the Bondholders. The Trustee shall be entitled to rely on any direction, request orresolution of Bondholders given by Bondholders holding the requisite principal amount of Bondsoutstanding or passed at a meeting of Bondholders convened and held in accordance with the TrustDeed.

The Trustee shall have no obligation to monitor compliance with the provisions of the Trust Deed,the Agency Agreement or these Conditions or whether an Event of Default or a Potential Event ofDefault or a Change of Control or any event which could lead to the occurrence of a Change ofControl has occurred, and shall not be liable to the Bondholders or any other person for not doingso.

Whenever the Trustee is required or entitled by the terms of the Trust Deed, the AgencyAgreement or these Conditions to exercise any discretion or power, take any action, make anydecision or give any direction, the Trustee is entitled, prior to its exercising any such discretion orpower, taking any such action, making any such decision, or giving any such direction, to seekdirections from the Bondholders by way of an Extraordinary Resolution, and the Trustee is notresponsible for any loss or liability incurred by any person as a result of any delay in it exercisingsuch discretion or power, taking such action, making such decision, or giving such direction wherethe Trustee is seeking such directions or in the event that no such directions are received.

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

15 FURTHER ISSUES

The Issuer is at liberty from time to time without the consent of the Bondholders to create andissue further securities having the same terms and conditions as the Bonds in all material respects(or in all material respects save for the first payment of interest on them and the timing for

61

registering and completing the Foreign Debt Registration and the NDRC Post-issue Filing) and sothat the same shall be consolidated and form a single series with the outstanding Bonds. Anyfurther securities shall be constituted by a deed supplemental to the Trust Deed.

16 NOTICES

All notices to the Bondholders will be valid if (i) mailed to them by uninsured mail at theirrespective addresses in the Register and (ii) published in a leading newspaper having generalcirculation in Asia. The Issuer shall also ensure that notices are duly published in a manner thatcomplies with the rules and regulations of any stock exchange or other relevant authority on whichthe Bonds are for the time being listed. Any notice shall be deemed to have been given, on thedate of such publication or, if published more than once, on the first date on which publication ismade.

So long as the Bonds are represented by a Global Certificate and such Global Certificate is heldon behalf of Euroclear Bank S.A./N.V. or Clearstream Banking S.A. or the Alternative ClearingSystem (as defined in the form of such Global Certificate), notices to the holders of the Bondsshall be validly given by the delivery of the relevant notice to Euroclear Bank S.A./N.V. orClearstream Banking S.A. or the Alternative Clearing System, for communication by it to entitledaccountholders in substitution for notification as required by the Conditions.

17 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No person shall have any right to enforce any term or condition of the Bonds under the Contracts(Rights of Third Parties) Act 1999.

18 GOVERNING LAW AND JURISDICTION

(a) Governing Law

The Trust Deed, the Agency Agreement and the Bonds and any non-contractual obligationsarising out of or in connection with them are governed by, and shall be construed inaccordance with, English law.

(b) Jurisdiction

The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes that mayarise out of or in connection with the Bonds, the Trust Deed and the Agency Agreement andaccordingly any legal action or proceedings arising out of or in connection with any Bonds,the Trust Deed and the Agency Agreement (‘‘Proceedings’’) may be brought in such courts.The Issuer has in the Trust Deed, irrevocably submitted to the jurisdiction of such courts andwaived any objection to Proceedings in any such courts whether on the ground of venue oron the ground that the Proceedings have been brought in an inconvenient forum.

(c) Agent for Service of Process

The Issuer has irrevocably appointed in the Trust Deed an agent in Hong Kong to receiveservice of process in any Proceedings in Hong Kong based on any of the Bonds.

(d) Waiver of Immunity

The Issuer has waived any right to claim sovereign or other immunity from jurisdiction orexecution and any similar defence, and has irrevocably consented to the giving of any reliefor the issue of any process, including, without limitation, the making, enforcement orexecution against any property whatsoever (irrespective of its use or intended use) of anyorder or judgment made or given in connection with any Proceedings.

62

TERMS AND CONDITIONS OF THE 2021 BONDS

The terms and conditions of the 2021 Bonds will be identical to those under the ‘‘Terms and Conditionsof the 2019 Bonds’’, except as set out below. References to ‘‘Bonds’’ shall be construed as references tothe 2021 Bonds. Any italicised text in the section ‘‘Terms and Conditions of the 2019 Bonds’’ shallapply to the 2021 Bonds.

1. The principal amount of the Bonds shall be U.S.$500,000,000.

2. The rate of interest of the Bonds shall be 3.625 per cent. per annum.

3. The Maturity Date of the Bonds shall be 19 July 2021.

4. The first paragraph in Condition 5(a) of the Terms and Conditions of the 2019 Bonds shall bedeleted in its entirety and replaced with the following:

The Bonds bear interest on their outstanding principal amount from and including 19 July 2016 (the‘‘Issue Date’’) at the rate of 3.625 per cent. per annum, payable semi-annually in arrear in equalinstalments of U.S.$18.125 per Calculation Amount (as defined below) on 19 January and 19 July ineach year (each an ‘‘Interest Payment Date’’) commencing on 19 January 2017.

63

SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM

The Global Certificate of each series of Bonds contains provisions which apply to the relevant series ofBonds while they are in global form, some of which modify the effect of the Terms and Conditions of therelevant series set out in this Offering Circular. The following is a summary of certain of thoseprovisions.

Terms defined in the Terms and Conditions of the relevant series set out in this Offering Circular havethe meaning in the paragraphs below.

Each series of Bonds will be represented by a Global Certificate which will be registered in the name ofa nominee of, and deposited with, a common depositary on behalf of Euroclear and Clearstream.

Under each Global Certificate, the Issuer, for value received, will promise to pay such principal, interestand premium (if any) on the relevant series of Bonds to the holder of such series of Bonds on such dateor dates as the same may become payable in accordance with the Terms and Conditions of the relevantseries.

Owners of interests in any series of Bonds in respect of which a Global Certificate is issued will beentitled to have title to such series of Bonds registered in their names and to receive individualdefinitive Certificates if either Euroclear or Clearstream or any other clearing system (an ‘‘AlternativeClearing System’’) is closed for business for a continuous period of 14 days (other than by reason ofholidays, statutory or otherwise) or announces an intention permanently to cease business or does in factdo so.

Individual definitive Certificates will be issued in an aggregate principal amount equal to the principalamount of a Global Certificate. Such exchange will be effected in accordance with the provisions of theTrust Deed, the Agency Agreement and the regulations concerning the transfer and registration of eachseries of Bonds scheduled thereto and, in particular, shall be effected without charge to any holder ofthe Bonds or the Trustee, but against such indemnity and/or security as the Registrar or the relevantAgent may require in respect of any tax or other duty of whatsoever nature which may be levied orimposed in connection with such exchange.

The Issuer will cause sufficient individual definitive Certificates to be executed and delivered to theRegistrar for completion, authentication and despatch to the relevant holders of any series of Bonds. Aperson with an interest in a series of Bonds in respect of which a Global Certificate is issued mustprovide the Registrar not less than 30 days’ notice at its specified office of such holder’s intention toeffect such exchange and a written order containing instructions and such other information as the Issuerand the Registrar may require to complete, execute and deliver such individual definitive Certificates.

In addition, each Global Certificate will contain provisions which modify the Terms and Conditions ofthe relevant series as they apply to the relevant series of Bonds evidenced by such Global Certificate.The following is a summary of certain of those provisions:

Payment

So long as any series of Bonds are represented by a Global Certificate, each payment in respect of suchGlobal Certificate will be made to, or to the order of, the person shown as the holder of such series ofBonds in the Register at the close of business (of the relevant clearing system) on the Clearing SystemBusiness Day immediately prior to the due date for such payments, where ‘‘Clearing System BusinessDay’’ means Monday to Friday, inclusive except 25 December and 1 January.

64

Notices

So long as any series of Bonds is represented by a Global Certificate and such Global Certificate is heldon behalf of Euroclear or Clearstream or any Alternative Clearing System, notices to holders of suchseries of Bonds shall be given by delivery of the relevant notice to Euroclear or Clearstream or suchAlternative Clearing System, for communication by it to accountholders entitled to an interest in suchseries of Bonds in substitution for notification as required by the Terms and Conditions of the relevantseries.

Meetings

For the purposes of any meeting of Bondholders, the holder of any series of Bonds represented by aGlobal Certificate shall (unless such Global Certificate represents only one Bond) be treated as twopersons for the purposes of any quorum requirements of a meeting of Bondholders and as being entitledto one vote in respect of each U.S.$1,000 in principal amount of such series of Bonds for which suchGlobal Certificate is issued.

Bondholder’s Redemption

The Bondholder’s redemption option in Condition 6(c) (Redemption for Change of Control) of theTerms and Conditions of the relevant series may be exercised by the holder of the relevant GlobalCertificate giving notice to the Principal Paying Agent of the principal amount of Bonds of the relevantseries in respect of which the option is exercised within the time limits specified in the Terms andConditions of the relevant series.

Issuer’s Redemption

The option of the Issuer provided for in Condition 6(b) (Redemption for Taxation Reasons) of the Termsand Conditions of the relevant series shall be exercised by the Issuer giving notice to the Bondholderswithin the time limits set out in and containing the information required by the Terms and Conditions ofthe relevant series.

Transfers

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

Cancellation

Cancellation of any Bond by the Issuer following its redemption or purchase by the Issuer or itsrespective Subsidiaries will be effected by a reduction in the principal amount of the relevant series ofBonds in the register of Bondholders.

Trustee’s Powers

In considering the interests of Bondholders while a Global Certificate is registered in the name of anominee for a clearing system, the Trustee may, to the extent it considers it appropriate to do so in thecircumstances, but without being obligated to do so, (a) have regard to any information as may havebeen made available to it by or on behalf of the relevant clearing system or its operator as to the identityof its accountholders (either individually or by way of category) with entitlements in respect of theBonds and (b) consider such interests on the basis that such accountholders were the holders of theBonds in respect of which such Global Certificate is issued.

A Global Certificate shall not become valid for any purpose until authenticated by or on behalf of theRegistrar.

65

USE OF PROCEEDS

The Issuer estimates that the total net proceeds from the offering of the Bonds, after deducting estimatedexpenses payable in connection with the offering of the Bonds, but before payment of any commissions,will be approximately U.S.$790 million. The net proceeds will be used for general corporate purposes.

66

CAPITALISATION AND INDEBTEDNESS

The following table sets forth the consolidated total indebtedness (both current and non-currentportions), total equity and total capitalisation of the Issuer as at 31 December 2015 (i) on an actual basisand (ii) on an adjusted basis to give effect to the issue of the Bonds before deducting the fees andcommissions and other estimated expenses payable in connection with this offering. The summaryconsolidated financial information below should be read in conjunction with the Issuer’s consolidatedfinancial statements and the notes to those statements included elsewhere in this Offering Circular.

As at 31 December 2015

Actual As adjusted

(RMB’000) (U.S.$’000) (RMB’000) (U.S.$’000)(audited) (unaudited) (unaudited) (unaudited)

Short-term indebtednessShort-term borrowings . . . . . . . . . . . . . . . . . . . . 1,200,000 185,248 1,200,000 185,248

Total short-term indebtedness . . . . . . . . . . . . . . . . 1,200,000 185,248 1,200,000 185,248Long-term indebtedness

Long-term borrowings . . . . . . . . . . . . . . . . . . . . 7,817,350 1,206,791 7,817,350 1,206,791Bond payables . . . . . . . . . . . . . . . . . . . . . . . . . 3,293,678 508,456 3,293,678 508,4562019 Bonds to be issued(1) . . . . . . . . . . . . . . . . . – – 1,943,340 300,0002021 Bonds to be issued(2) . . . . . . . . . . . . . . . . . – – 3,238,900 500,000

Total long-term indebtedness . . . . . . . . . . . . . . . . 11,111,028 1,715,247 16,293,268 2,515,247

Total Indebtedness(3) . . . . . . . . . . . . . . . . . . . . . . 12,311,028 1,900,495 17,493,268 2,700,495Owners’ equity

Paid-in capital (share capital) . . . . . . . . . . . . . . . 3,641,241 562,111 3,641,241 562,111Capital reserves. . . . . . . . . . . . . . . . . . . . . . . . . 14,768,734 2,279,900 14,768,734 2,279,900Other comprehensive income. . . . . . . . . . . . . . . . 9,944 1,535 9,944 1,535Surplus reserves . . . . . . . . . . . . . . . . . . . . . . . . 131,617 20,318 131,617 20,318Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 1,303,642 201,248 1,303,642 201,248

Total owners’ equity attributable to the company . . 19,855,178 3,065,111 19,855,178 3,065,111Minority interests . . . . . . . . . . . . . . . . . . . . . . . . 569,164 87,864 569,164 87,864

Total Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . 20,424,343 3,152,975 20,424,343 3,152,975

Total Capitalisation(4). . . . . . . . . . . . . . . . . . . . . . 32,735,371 5,053,470 37,917,611 5,853,470

Notes:

(1) This amount represents the aggregate principal amount of the 2019 Bonds to be issued, before deducting the fees andcommissions, offering discounts and other expenses payable by the Issuer in connection with the issuance of the 2019Bonds.

(2) This amount represents the aggregate principal amount of the 2021 Bonds to be issued, before deducting the fees andcommissions, offering discounts and other expenses payable by the Issuer in connection with the issuance of the 2021Bonds.

(3) Total indebtedness equals the sum of short-term indebtedness and long-term indebtedness.

(4) Total capitalisation equals the sum of total indebtedness and total owners’ equity.

The Group’s total indebtedness (comprising short-term and long-term borrowings and bonds payable)increased by approximately 23 per cent. as at 30 April 2016 compared to the balance as at 31 December2015. The substantial increase in the Group’s indebtedness was largely due to a substantial increase inits long-term borrowings as at 30 April 2016, which were mainly used to fund its project development.

Except as otherwise disclosed above, there has been no material change in the consolidatedcapitalisation and indebtedness of the Issuer since 31 December 2015.

67

OVERVIEW OF CHONGQING AND CHONGQING NAN’AN DISTRICT

The information contained in this section has been derived, from various government publicationsunless otherwise indicated. This information has not been independently verified by the Issuer or theJoint Lead Managers or any of them and their respective affiliates or advisers. This information maynot be consistent with other information compiled within or outside the PRC.

CHONGQING

Chongqing is the most populous and the largest (in terms of size) municipality to hold provincial-levelstatus in the PRC, covering an area of approximately 82,400 square kilometres with a residentialpopulation of over 30 million. Chongqing, together with Beijing, Shanghai and Tianjin, is one of thefour municipalities that are under direct administration by the PRC Government, and is the onlymunicipality in Western China. It is designated as one of the five national central cities（國家中心城市）together with Beijing, Shanghai, Tianjin and Guangzhou.

Chongqing is the only transportation hub that is accessible by river, railway and air transportation inWestern China. There are 13 ports in Chongqing with a total throughput capacity of approximately 180million tons, making Chongqing the most important city along the Yangtze River Economic Belt.Chongqing is the starting station of the ‘‘Sichuan-Xinjiang-Europe’’ railway（渝新歐鐵路）in China,which runs across a number of countries from Western China, Eastern Asia to Europe, such asKazakhstan, Russia, Poland and Germany, and it plays a key role in implementing the PRCGovernment’s ‘‘One Belt, One Road’’ strategy.

The following map shows the geographical location of Chongqing in the PRC:

Since 2000, the PRC Government has implemented the Go West Strategy, the Development of NewRural Areas and the Coordinated Urban and Rural Development. Increasing production costs in coastalareas of Eastern China have caused enterprises and capitals in Eastern China to gradually move toWestern China, resulting in improved infrastructure and accelerated economic growth in Chongqing.Rising income level, robust foreign direct investment and trade flows underpin Chongqing’s sustainedeconomic growth, which has been faster than the national average over the past few years. During theperiod from 2009 to 2015, Chongqing’s nominal GDP increased at a CAGR of 13.37 per cent. comparedto the CAGR of China’s nominal GDP of 10.07 per cent. during the same period. According to theNational Bureau of Statistics of the PRC, Chongqing is now the sixth largest city in China in terms ofnominal GDP, as of 31 December 2015, with a nominal GDP of RMB1,572.0 billion.

68

The following table sets forth certain key economic indicators of Chongqing from 2009 to 2015 (unlessotherwise specified):

2009 2010 2011 2012 2013 2014 2015

CAGR(2009 –

2015)

Nominal GDP (RMB in billion, except CAGR) . . . . . . . . 653.0 792.6 1,001.1 1,141.0 1,265.7 1,426.5 1,572.0 13.37As a percentage of China’s GDP . . . . . . . . . . . . . . . . . 1.92 1.99 2.12 2.20 2.23 2.24 2.32 N/AGDP growth rate (per cent.) . . . . . . . . . . . . . . . . . . . . 14.9 17.1 16.4 13.6 12.3 12.7 11.0 N/AChina’s GDP growth rate (per cent.) . . . . . . . . . . . . . . . 9.2 10.4 9.3 7.8 7.7 7.3 6.9 N/AGDP per capita (RMB, except CAGR) . . . . . . . . . . . . . . 22,920 27,596 34,500 39,083 42,795 47,687 52,112 12.45Fixed asset investments (RMB in billion, except CAGR) . . 486 617 763 938 1,121 1,322 1,548 18.00Growth rate of fixed asset investment (per cent.) . . . . . . . N/A 23.7 30.0 22.9 19.5 18.0 17.1 N/A

Source: National Statistics Bureau of China; Statistics Bureau of Chongqing Municipality

Note: N/A denotes not available

Chongqing has historically been a notable industrial hub in Western China with an established and solidfoundation of manufacturing industry. Modern heavy machinery (including automotive manufacturing,construction equipment and power generation equipment), chemical and pharmaceutical and electronicsand information technology manufacturing are three major industries of Chongqing. In recent years, theChongqing Municipal Government has begun developing Chongqing into the economic and financialcentre of the upper reach of the Yangtze River.

Chongqing has a relatively balanced urban-to-rural area population distribution. In 2009, Chongqing hada split of 51.6 per cent. and 48.4 per cent. between its urban area population and rural area populationwhile urban population accounted for 85.0 per cent., 88.6 per cent. and 78.0 per cent. of the totalpopulation in Beijing, Shanghai and Tianjin, respectively. In June 2007, Chongqing was designated bythe NDRC as a pilot area for China’s Coordinated Urban and Rural Development ComprehensiveReform（全國統籌城鄉綜合配套改革試驗區）. According to the Statistics Bureau of ChongqingMunicipality, the per capita disposable income for urban residents in 2015 was RMB27,239,representing a CAGR of 8.14 per cent. since 2009; and the per capita disposable income of ruralresidents was RMB10,505 in 2015, representing a CAGR of 12.95 per cent. since 2009.

The following table sets forth the population of the urban areas and the rural areas from 2009 to 2015:

2009 2010 2011 2012 2013 2014 2015

CAGR(2009 –

2015)

Total population (million, except CAGR) . . . . . . . . . . . . 28.6 28.9 29.2 29.5 29.7 29.9 30.2 0.77Urban population . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7 15.3 16.1 16.8 17.3 17.8 18.4 3.20Rural area population (million, except CAGR) . . . . . . . . . 13.8 13.6 13.1 12.7 12.4 12.1 11.8 –2.28Urbanisation rate(1) (per cent.) . . . . . . . . . . . . . . . . . . . 51.59 53.02 55.02 56.98 58.34 59.60 60.90 N/APer capital disposable income of urban residents(RMB, except CAGR) . . . . . . . . . . . . . . . . . . . . . . . 15,749 17,532 20,250 22,968 25,216 25,147 27,239 8.14

Per capital disposable income of rural residents(RMB, except CAGR) . . . . . . . . . . . . . . . . . . . . . . . 4,478 5,277 6,480 7,383 8,332 9,490 10,505 12.95

Source: National Statistics Bureau of China; Statistics Bureau of Chongqing Municipality

Note:

(1) Urbanisation rate of a city or region equals the urban population of this city or region during one period divided by the totalpopulation of this city or region during the same period.

(2) N/A denotes not available.

69

In November 2015, the PRC Government and the Singapore Government entered into the FrameworkAgreement regarding Construction of the China-Singapore (Chongqing) Demonstration Initiative onStrategic Connectivity（關於建設中新（重慶）戰略性互聯互通示範項目的實施協議）together with asupplement and its implementation guidelines during the visit of China’s President Xi Jinping inSingapore. In January 2016, the China-Singapore (Chongqing) Demonstration Initiative on StrategicConnectivity（中新（重慶）戰略性互聯互通示範項目）was officially announced, which is the third state-level cooperation project between the two countries since President Xi’s visit. This project aims topromote the communication and cooperation between Singapore and Chongqing in four areas, namelyfinancial services, aviation, transportation and logistics, and information and communicationstechnology. With more beneficial policies to be announced, the Issuer believes that this project willpromote a more comprehensive and extensive cooperation between Chongqing and Singapore which willcreate more opportunities in the industries in which the Group operates.

CHONGQING NAN’AN DISTRICT

Chongqing Nan’an District is located in the south-western area of Chongqing, to the south bank of theYangtze River. It is in the centre of Chongqing in terms of concentration of business and commercialactivities. With existing highways of approximately 640 kilometres, seven major bridges and foursubways travelling across the district, Chongqing Nan’an District is fully connected with other centralareas in Chongqing and plays a key role in building the ‘‘One-hour Economic Circle’’ of Chongqing,within which nine core districts in Chongqing are within one-hour’s reach. It is also a transportation hubin Southern Chongqing accessible by both river and land transportation.

The following map shows the geographical location of Chongqing Nan’an District in Chongqing:

70

Chongqing Nan’an District is one of the most well-established industrial bases in Chongqing. Accordingto the Analysis on the Economic Performance of Chongqing Nan’an District in 2015 issued by theChongqing Nan’an District Government, Chongqing Nan’an District’s GDP in 2015 was RMB67.9billion, representing a year-on-year increase of 11.3 per cent. and accounting for 4.3 per cent. ofChongqing’s nominal GDP in 2015. During the ‘‘12th Five-Year’’ period from 2010 to 2015, ChongqingNan’an District’s GDP grew at a CAGR of 14.1 per cent.

The following table sets forth certain key economic indicators of Chongqing Nan’an District from 2009to 2015 (unless otherwise specified):

2009 2010 2011 2012 2013 2014 2015

CAGR(2009 –

2015)

Nominal GDP (RMB in billion, except CAGR) . . . . . . . . 30.0 35.1 43.4 46.6 53.2 60.8 67.9 12.38As a percentage of Chongqing’s GDP . . . . . . . . . . . . . . 4.59 4.43 4.34 4.08 4.20 4.26 4.32 N/AGDP growth rate (per cent.) . . . . . . . . . . . . . . . . . . . . 15.3 15.9 16.1 12.2 13.2 12.4 11.3 N/AGDP per capita (RMB, except CAGR) . . . . . . . . . . . . . . 42,307 N/A 56,042 58,035 64,720 72,848 N/A N/AFixed asset investments (RMB in billion, except CAGR) . . 30.6 35.3 34.2 40.3 45.7 48.8 50.1 7.29Growth rate of fixed asset investment (per cent.) . . . . . . . 14.3 15.2 18.2 18.0 13.2 7.0 2.6 N/A

Source: Statistics Bureau of Chongqing Municipality; Statistics Bureau of Chongqing Nan’an District

Note: N/A denotes not available

In recent years, the Chongqing Nan’an District Government continues to optimise the economicstructure within the district and has placed increasing attention to developing transportation equipment(automobile, motorcycle and ships manufacturing), intelligent home appliances, pharmaceuticals (activepharmaceutical ingredients and finished drugs), machinery manufacturing (numerically-controlledmachine tools, general machinery and electrical equipment), electronics and information technology(cell phones and Internet) and new service industries such as e-commerce and cultural innovation.Chongqing Nan’an District is being developed into a high-tech industries demonstration zone attractingan increasing number of electronics and information technology enterprises. In 2015, the totalproduction of mobile phones in Chongqing Nan’an District was 106.58 million units, representing ayear-on-year increase of 43.5 per cent., and the total gross value of those products was RMB52.55billion, representing a year-on-year increase of 79.1 per cent., according to the Analysis on theEconomic Performance of Chongqing Nan’an District in 2015 issued by the Chongqing Nan’an DistrictGovernment.

The financial sector in Chongqing Nan’an District demonstrated faster growth than Chongqing Nan’anDistrict’s GDP in 2015. According to the Analysis on the Economic Performance of Chongqing Nan’anDistrict in 2015 issued by the Chongqing Nan’an District Government, the financial sector contributedapproximately RMB4.1 billion, or 5.8 per cent. in Chongqing Nan’an District’s total GDP in 2015,which represented a year-on-year increase of 3.0 per cent.; RMB loans of financial institutions inChongqing Nan’an District increased by 18.9 per cent. to RMB92.4 billion as at 31 December 2015.

According to the ‘‘13th Five-Year Plan’’ (2016-2020) of Chongqing Nan’an District, the GDP ofChongqing Nan’an District is expected to reach RMB110 billion by the end of 2020, representing anexpected CAGR of approximately 10 per cent. The Chongqing Nan’an District Government plans todevelop Chongqing Nan’an District into an advanced manufacturing base in Chongqing by taking itselectronics and information technology industries as a lead and accelerating the development of strategicemerging industries and transforming and upgrading traditional manufacturing industries. The Groupbelieves that the ‘‘13th Five-Year Plan’’ of Chongqing Nan’an District will invite additional investmentsin the district and stimulate rapid development of the electronics and information technology industries.As the key participant of Chongqing Nan’an District’s infrastructure construction and municipaldevelopment, as well as the important investment and financing platform, the Group is confident that itcan seize the opportunities and tap the growth potential.

71

DESCRIPTION OF THE GROUP

OVERVIEW

The Group is the largest investment and financing platform of the Chongqing Nan’an DistrictGovernment, in terms of total assets as at 31 December 2015, which engages in city construction andmunicipal development. It has historically focused on primary land development and infrastructureconstruction in Chongqing Nan’an District to implement the Chongqing Nan’an District Government’splans to develop Chongqing Nan’an District. By taking advantage of the administrative status andlocation of Chongqing and strong supports of the Chongqing Nan’an District Government, the Grouphas undertaken and completed a large number of civil projects of strategic importance to ChongqingNan’an District since its establishment in 2003. In recent years, the Group has diversified its businessand provides loan financing and supply-chain finance services for enterprises operating in ChongqingNan’an District, especially those operating in the electronics and information technology industries. TheIssuer believes that its business expansion is an active response to the Chongqing Nan’an DistrictGovernment’s strategy to promote the development of the electronics and information technologyindustries and gives the Group opportunities to diversify into the industries that have greater growthpotential in the future.

The Group’s business now consists of six segments, namely (i) primary land development; (ii)infrastructure construction; (iii) property leasing and management; (iv) loan financing; (v) supply-chainfinance and (vi) miscellaneous. Set forth below is a summary of each of the Group’s business segments:

• Primary land development: The Group is one of the designated entities to conduct primary landdevelopment in Chongqing Nan’an District. As at 31 December 2015, the Group held the land userights of approximately 6.5 million square metres of land under development, which were allocatedto the Issuer by the Chongqing Nan’an District Government before 2013. The Group’s operatingincome from primary land development derives from the land development fee paid by ChongqingNan’an District Government, which is in turn generated from the grant of land use rights to realestate developers.

• Infrastructure construction: Infrastructure construction has been the Group’s core business since itsestablishment, which primarily involves construction of municipal roads, tunnels, transportationhubs, bridges, stadiums and parks. The Group is commissioned by the Chongqing Nan’an DistrictGovernment to undertake all the infrastructure projects in Chongqing Nan’an District. As at 31December 2015, the Group had completed infrastructure projects with an estimated buybackamount of RMB19,015.6 million.

• Property leasing and management: The Group leases its properties in Chongqing Nan’an District,including commercial properties, office buildings and warehouses. The Group normally enters intoleases for terms of two to three years for commercial property leasing, three to five years for officebuilding leasing and one to five years for warehouse leasing. As at 31 December 2015, the Grouphad leasable properties with a total gross floor area (‘‘GFA’’) of 223,104 square metres, of whichapproximately 85 per cent. had been leased. The Group also sells its properties selectivelyaccording to the instructions of the Chongqing Nan’an District Government if the sale provides asatisfactory return.

72

• Loan financing: The Group provides financing in the forms of short-term direct loans andentrusted loans to companies operating in Chongqing Nan’an District, which mainly includeenterprises owned or controlled by the Chongqing Nan’an District Government and electronics andinformation technology companies. The Group’s lending normally bears interest at a rate equal to apremium above the prevailing lending interest rate charged by major PRC commercial banks forthe same period and the Chongqing Nan’an District Government reviews each lending of theGroup before the lending is provided to customers. As at 31 December 2015, the principal amountof the Group’s outstanding loans was RMB2,790 million.

• Supply-chain finance: The Group began to offer supply-chain finance services in 2015, primarilyfor raw material sourcing and export agency services. The Group’s operating income fromprovision of supply chain finance services is derived from the consulting fee and handling feepayable by its customers.

• Miscellaneous: The Group is also engaged in certain tourism-related business. The Group owns theoperation rights to the Nanshan Tourism Highway, which allows the Group to receive an annualfixed income of RMB13.7 million in each of 2013, 2014 and 2015.



2013 2014 2015

Amount(RMB’000)

Per cent. oftotal

Amount(RMB’000)

Per cent. oftotal

Amount(RMB’000)

Per cent. oftotal




Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,828,517 100.0 619,719 100.0 630,975 100.0

Notes:

(1) The Group had no operating income from primary land development in 2014 and 2015 because there was no grant of landuse rights for the land developed by the Group in 2014 and the procedures relating to land grants in 2015 had not been fullycompleted by the end of 2015.



The Group’s infrastructure projects are conducted under the BT model. Details of a project or a group ofprojects (such as scope of work, estimated investment amount and estimated buyback amount) arenormally set out in a project development master agreement between the Group and the ChongqingNan’an District Government or an administrative notice issued by the Chongqing Nan’an DistrictGovernment relating to the project. Depending on the scale of the project, the Chongqing Nan’anDistrict Government sometimes provides start-up capital equal to certain percentage of the totalestimated investment amount and the Group is responsible for obtaining the remaining portion offinancing for project development. The Group may apply for project buyback after the construction iscompleted (or a later time depending on the Group’s financial condition and cash demand) by submittingthe actual cost of development to the Chongqing Nan’an District Government for audit, and the buybackamount determined by the government normally includes a 15 per cent. gross profit based on the auditedcost of development. The buyback amount is paid by instalments during a period ranging from five toten years. It generally takes less than six months for the Group to receive the payment of the firstinstalment of the buyback amount.

73

The Group engages third-party contractors to carry out the construction of its infrastructure and landdevelopment projects. It generally selects third-party contractors through its standardised public tenderprocess. During the construction period, third-party contractors are responsible for the procurement ofconstruction materials and construction in accordance with the requirements of the contract. The Grouphas established a stable business relationship with a number of state-owned construction companies.

The Group relies on its internal cash, funds allocated by the Chongqing Nan’an District Government andexternal financing to fund its business operations. The Group maintains long-term relationships withapproximately 40 commercial banks and other financial institutions in the PRC, which have providedlow-cost capital to support its business. As at 30 April 2016, the Group had credit facilities in a totalamount of approximately RMB14.3 billion, of which approximately RMB4.4 billion had not beenutilised.

For the three years ended 31 December 2013, 2014 and 2015, the Group’s net profit was RMB187.8million, RMB261.7 million and RMB318.0 million, respectively, and its net profit margin was 10.3 percent., 42.2 per cent., and 50.4 per cent., respectively. As at 31 December 2013, 2014 and 2015, theGroup’s total assets were RMB38,863.5 million, RMB41,493.3 million and RMB45,925.5 million,respectively.

In the future, the Group will continue to consolidate its leading position as a key entity in theconstruction of infrastructure and primary land development in Chongqing Nan’an District and to furtherdevelop its business in the industries with long-term growth potential. The Group also aims to continueto grow its asset base, optimise its capital structure and enhance operational efficiency.

COMPETITIVE STRENGTHS

The Group believes that its competitive strengths outlined below are important to its success and futuredevelopment:

Well-positioned to leverage the administrative status and strategic location of Chongqing andChongqing Nan’an District to achieve stable business growth

The Issuer believes that its business success and future growth potential are largely attributable to theadministrative status and location of Chongqing and Chongqing Nan’an District where all its businessactivities are conducted. Chongqing, together with Beijing, Shanghai and Tianjin, is one of the fourmunicipalities that are under direct administration of the PRC Government, and is designated as one ofthe five national central cities（國家中心城市）together with Beijing, Shanghai, Tianjin and Guangzhou.Being the only municipality in Western China, Chongqing has leveraged its administrative status and(which is paralleled with provincial governments) and greater decision-making authorities in economicdevelopment and has been developed into the economic centre of the upper reach of the Yangtze River.In addition, Chongqing is the only transportation hub that is accessible by river, railway and airtransportation in Western China. It is the starting station of the ‘‘Sichuan-Xinjiang-Europe’’ railway inthe PRC, which runs across a number of countries from Western China, Eastern Asia to Europe, such asKazakhstan, Russia, Poland and Germany, and it plays a key role in implementing the PRCGovernment’s ‘‘One Belt, One Road’’ strategy. Chongqing’s international status and awareness has beenfurther enhanced as a result of the entry of the Framework Agreement regarding Construction of theChina-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity（關於建設中新（重慶）戰略性互聯互通示範項目的實施協議）between the PRC Government and the Singapore Government.See ‘‘Overview of Chongqing Nan’an District – Chongqing’’.

74

Chongqing Nan’an District is located in the south-western area of Chongqing and on the south bank ofthe Yangtze River. It is in the centre of Chongqing in terms of concentration of business andcommercial activities. According to the Analysis on the Economic Performance of Chongqing Nan’anDistrict in 2015 issued by the Chongqing Nan’an District Government, the GDP in Chongqing Nan’anDistrict was RMB67.9 billion in 2015, representing a year-on-year increase of 11.3 per cent. andaccounting for 4.3 per cent. of Chongqing’s nominal GDP in 2015. During the ‘‘12th Five-Year’’ periodfrom 2010 to 2015, Chongqing Nan’an District’s GDP grew at a CAGR of 14.1 per cent. In recent years,Chongqing Nan’an District Government continues to optimise the economic structure in ChongqingNan’an District by focusing on the electronics and information technology and other high-technologyindustries. According to the ‘‘13th Five-Year Plan’’ (2016-2020) of Chongqing Nan’an District, the GDPof Chongqing Nan’an District is expected to reach RMB110 billion by the end of 2020, representing anexpected CAGR of approximately 10 per cent. See ‘‘Overview of Chongqing and Chongqing Nan’anDistrict – Chongqing Nan’an District’’.

The Group believes that the ‘‘13th Five-Year Plan’’ of the Chongqing Nan’an District Government willattract significant investments in and create a large number of opportunities for the development of theelectronics sector and the companies operating in this sector in Chongqing Nan’an District. As a keyparticipant of the city construction and municipal development in Chongqing Nan’an District and animportant investment and financing arm of the Chongqing Nan’an District Government, the Group hasbeen well positioned to capitalise the growth potential to further develop its business.

Strong support of the Chongqing Nan’an District Government

The strong support from the Chongqing Nan’an District Government have been key for the Group tosuccessfully carry out the development of capital-intensive and large-scale city construction projects. In2014, MOF rolled out the Debt Swap Programme which allows local governments to replace the short-term and high-interest financial liabilities incurred by their financing vehicles for developing publicinterest projects (primarily bank loans) with long-term and low-interest financial liabilities (suchgovernment bonds). It is expected to provide the financing vehicles of local governments an opportunityto better match their operating cash flow and repayment schedules of outstanding indebtedness, therebyreducing liquidity pressures and enhancing the flexibility to increase investments in their projectdevelopment. The Chongqing Nan’an District Bureau of Finance has indicated that it will give a priorityto the qualified debts of the Issuer under the Debt Swap Programme.

In addition to the preferential governmental policies, the Chongqing Nan’an District Bureau of Financehas increased the registered capital of the Issuer in by cash for four times in a total amount of RMB2.22billion and by transfer of land use rights with a value of RMB0.992 billion since its establishment,increasing the Issuer’s registered capital from RMB200.0 million to RMB3,412.2 million as of the dateof this Offering Circular. Furthermore, a majority of the Group’s lending and supply-chain financing hasbeen provided to enterprises owned or controlled by the Chongqing Nan’an District Government andbased on the administrative notices of the Chongqing Nan’an District Government. The nature of thosestate-owned enterprises and their close relationships with the Chongqing Nan’an District Governmenthelp ensure the solvency of the customers, thereby reducing the credit risks of the Group’s loanfinancing and supply-chain financing business.

A key entity of city construction and municipal development in Chongqing Nan’an District

The Group is the largest investment and financing platform of the Chongqing Nan’an DistrictGovernment in terms of total assets as at 31 December 2015, which focuses on infrastructureconstruction in Chongqing Nan’an District. The Group is commissioned by the Chongqing Nan’anDistrict Government to undertake all the infrastructure projects in Chongqing Nan’an District. Over theyears, the Group has undertaken and completed a large number of projects of strategic importance toChongqing Nan’an District since its establishment in 2003. The Group’s road construction projectsinclude Nanbin Road（南濱路）, Jingguan Avenue（景觀大道）, Furen Road（輔仁路）, Xianghuang Road

（向黃路）, Yunan Road, Cimu Mountain tunnel etc., among which the Nanbin Road project received the

75

award of ‘‘Best Living Environment Demonstration Project’’. Other landmark projects that the Groupundertook include the Huangjuewan Overpass project, which is believed to be one of the largest and themost complex overpass in Chongqing, and Jiangnan Sports Centre, which occupies a site area ofapproximately 28,500 square metres and is the first riverside stadium in Chongqing. As at 31 December2015, the Group had completed infrastructure projects with an estimated buyback amount ofRMB19,015.6 million. By leading the development of major infrastructure projects in ChongqingNan’an District, the Group not only has accumulated experience in the development and management oflarge scale projects, but it also consolidates its position as a key entity to implement the ChongqingNan’an District Government’s blueprint for developing Chongqing Nan’an District and further align itsbusiness with the interest of Chongqing Nan’an District Government and Chongqing Nan’an District.

A strong project pipeline with abundant land reserves warranting sustainable revenue and operatingcash inflow from primary land development in the future

The Issuer believes that its abundant land reserves are critical for the Group to achieve sustainableoperating income and operating cash inflow from primary land development in the future. As at 31December 2015, the Group held the land use rights of approximately 6.5 million square metres of landunder development which had a book value of RMB9,505 million, which the Group believes issufficient for its primary land development business in the next five years. The Issuer believes that thisstrong project pipeline will provide increasing operating income and operating cash inflow after the landunder development is granted for real property development. According to the Statistics Bureau ofChongqing Nan’an District, total investments in commodity property development in Chongqing Nan’anDistrict increased by 13.1 per cent. from approximately RMB24.1 billion in 2013 to approximatelyRMB27.2 billion in 2014, and further increased by 6.6 per cent. to approximately RMB29.0 billion in2015, and the total GFA of commodity properties under construction increased by 6.7 per cent. to 19.2million square metres in 2015. See ‘‘Overview of Chongqing and Chongqing Nan’an District –

Chongqing Nan’an District’’.

The Issuer believes that the prospects of sustainable and increasing operating income and operating cashinflow from primary land development are also warranted by the preferential land development policiesin Chongqing and Chongqing Nan’an District. In 2010, the Chongqing Nan’an District Governmentissued the Notice on Returning Land Grant Premium of the Reserved Land (Nan Caizheng [2010] No.397)（重慶市南岸區財政局關於返還儲備用地收益的通知（南財政[2010]397號））, pursuant to which theGroup was entitled to all of the land grant premium from primary land development projects involvingold town reconstruction it undertakes, and according to the Notice on Improving the MunicipalDistribution Policy of Land Grant Premium (Yu Caijian [2011] No. 797)（重慶市財政局關於完善市級

土地出讓收益分配政策的通知（渝財建 [2011] 797號））issued by the Finance Bureau of ChongqingMunicipality in 2011, the Group would be entitled to 50 per cent. of the land grant premium from otherprimary land development projects, in both cases, after deduction of statutory taxes and charges. As ofthe date of this Offering Circular, a majority of the land held by the Group for primary landdevelopment are in old town areas. The Issuer expects that with continued urbanisation in ChongqingNan’an District will continue to drive the demand for land and infrastructure construction and the Groupis well-positioned to capture the capitalise this growth by taking of its abundant land reserves.

An important investment vehicle of the Chongqing Nan’an District Government with significance tothe development of the enterprises operating in Chongqing Nan’an District

As an important investment vehicle of the Chongqing Nan’an District Government, the Group plays avital role in improving the economic structure of Chongqing Nan’an District and the development of theelectronics and information technology sector in Chongqing Nan’an District. By acquiring a controllingstake in Chongqing Wufeng Technology Co., Ltd.（重慶五峰科技有限公司）(‘‘Chongqing Wufeng’’)and Nantou Intelligent Terminal Investment Co., Ltd., the Group provides one-stop supply-chainfinancing services to enterprises engaging in economics manufacturing in Chongqing Nan’an District,including import agency service, domestic procurement agency service, export agency service andsettlement agency service, thereby promoting the import and export trade of electronics products in

76

Chongqing Nan’an District. In January 2015, the Group, with another independent third party,established a fund with a total size of RMB250 million to invest in lightweight aluminium materials andnew polymer materials which are widely used in automotive, IT, information industry and other sectors.The Group also provides financing in the forms of short-term direct loans and entrusted loans tocompanies operating in Chongqing Nan’an District, including selected contractors of the Group’sinfrastructure and primary land development projects and electronics and information technologyenterprises.

The Group’s net profit was RMB187.8 million, RMB261.7 million and RMB318.0 million, respectively,and its net profit margin was 10.3 per cent., 42.2 per cent. and 50.4 per cent., respectively. Theincreases in the Group’s net profit and net profit margin were in part due to an increase in the revenuecontribution of the Group’s loan financing and supply-chain financing business. For the years ended 31December 2013, 2014 and 2015, the Group’s operating income from provision of loan financing andsupply-chain financing services was RMB184.1 million, RMB132.8 million and RMB536.1 million,respectively, representing 10.1 per cent., 21.4 per cent. and 85.0 per cent., respectively of its totaloperating income.

Access to diversified financing channels

The Group has access to diversified financing channels to fund its project development in the PRC, suchas bank loans and issuance of debt securities in the PRC capital markets. The Group maintains long-termrelationships with approximately 40 commercial banks and other financial institutions in the PRC, whichhave provided low-cost capital to the Group. As at 30 April 2016, the Group had credit facilities in thetotal amount of approximately RMB14.3 billion, of which approximately RMB4.4 billion had not beenutilised. From September 2015 to March 2016, the Issuer successfully invited CDB Development FundCo., Ltd. as a shareholder to invest RMB408 million in cash in itself to further enhance its financialstrength. In addition, the Group has successfully raised capital by issuing corporate bonds, privatebonds, short-term financing paper and medium-term notes in the PRC capital market.

The Issuer believes that the Group’s strong financing capability will provide adequate funding sources tothe repayment of its debt and expansion of its business. In recent years, the Group has been developingdifferent types of innovative financing products, including but not limited to private bills, corporatebonds, industrial funds, financial leasing, trust products, medium-term notes and overseas bonds. TheIssuer believes that through comprehensive budget management, scientific and prudent financialmanagement, the Group would be able to effectively reduce financing costs.

Dedicated management team with extensive experience in the management of state-owned enterprises

The Issuer has set up an operational management system with five departments, namely the generaloffice, the finance department, the investment and financing department, the asset managementdepartment and the assets disposition department. As the controlling shareholder of the Issuer, theChongqing Nan’an District Bureau of Finance closely participates in and monitors the decision-makingprocess of key investment projects as well as the appointment of directors, supervisors and seniormanagement of the Issuer. The Issuer has maintained a close relationship with the Chongqing Nan’anDistrict Government. The Issuer’s senior management and the Chongqing Nan’an District Governmentregularly conduct in-depth discussion over the key investment projects and essential appraisalprocedures are conducted before investment decisions are taken. The Group has an experienced seniormanagement team with experience in the management of large state-owned enterprises and companiesoperating in the same business sectors as the Group. See ‘‘Directors, Supervisors and SeniorManagement of the Issuer’’. Under the sound leadership of its management team and leveraging on theirpast experience, the Group has successfully achieved its missions over the years and distinguished itselffrom its competitors.

77

BUSINESS STRATEGIES

The Group aims to maintain its leading position in implementing the Chongqing Nan’an Government’sblueprint of urban planning, municipal construction and industrial upgrade. Its goal is to continue togrow its asset base, optimise its capital structure and enhance operational efficiency. The Group intendsto focus on the following strategies:

Actively continue to focus on primary land and municipal infrastructure development in Chongqing

The Group plans to continue to actively leverage the strategic location of Chongqing and ChongqingNan’an District and increase its focus on infrastructure construction. According to the ‘‘13th Five YearPlan’’ of the Chongqing Nan’an District Government, Chongqing Nan’an District will continue toconstruct a number of important civil projects including the construction of Chongqing East Station, theairport express and city subways, which will help promote the implementation of ‘‘Three Districts, TwoRegions’’ strategy of Chongqing. With the ever-evolving regulatory environment in the PRC, the Groupwill work closely with the Chongqing Municipal Government and the Chongqing Nan’an DistrictGovernment to develop innovative business models, which will further enhance its dominant marketposition in the infrastructure construction field. In the meantime the Group has abundant land reserveand there are two ongoing primary land development projects. It is expected that there will be a largeamount of land to be developed in the future, which also is expected to bring steady income to theGroup.

Further diversify the business portfolio, creating new sources of income

The Group plans to further diversify its business portfolio and to create new sources of revenue. Withthe high growth potential of electronics and information technology industries in Chongqing Nan’anDistrict and the ever-growing volume of export and import transactions, the Group will continue toprovide value-added financial services to the fast-growing enterprises which in turn increases theGroup’s capital turnover rate and income. In the meantime, the Group will further expand its businessportfolio and develop new business lines by taking into consideration of the macro environment andindustrial cycle. In light of the large capital demand driven by the various construction projects as partof the ‘‘13th Five Year Plan’’, the Group will better manage its resources to support the high-qualifycompanies with great growing potential in Chongqing Nan’an District.

Invest in high-quality companies

The Group will continue to invest in the high-quality companies which are in the key industriessupported by the Chong Nan’an District Government by means of a variety of financial instrumentsincluding shares, bonds, industry guidance funds and supply-chain financing. The Group anticipatesfurther alignment of its business strategies and corporate interest with the Chongqing Nan’anGovernment’s blueprint for industrial upgrading. It also intends to focus on the investment in theprojects that are implementing the ‘‘One Belt, One Road’’ strategy and under the Framework Agreementregarding Construction of the China-Singapore (Chongqing) Demonstration Initiative. Through servicingthe companies with the help of government resources, the Group will further establish itself as thecrucial government platform of investment and financing.

Over the years, the Group has invested in Chongqing Wufeng and Chongqing Nantou IntelligentTerminal Investment Co., Ltd. to support the electronics and information technology industries in theChongqing Nan’an District. The Group also has co-founded funds with two independent third parties,respectively, to support the development of high-tech industries such as intelligent transportation. TheGroup will continue to discover and nurture high-quality companies, to take part in the acceleratedindustrial upgrading process and to achieve a win-win situation.

78

Explore new financing channels

The Group has funded its business operation and working capital by, or in the process of applying for,various financing instruments, including private placement notes, corporate bonds, financial leasing,trusts, medium-term notes, as well as overseas bonds. The Group plans to further expand its financingchannels into short-term financing bills, project bonds, insurance funds, asset securitisation, as well aspublic offering. The Group aims to lower the cost of capital by adopting comprehensive budgeting,exercising prudent control over the costs and exploring and implementing the strategy of diversifiedfinancing.

Adhere to prudent financial management with stringent risk control

The Group believes that a prudent financial management system can reduce operational and financialrisks and help achieve long-term sustainable growth. The Group will continue to implement its dividendpolicies to ensure stable distribution from its subsidiaries. In addition, the Group will continue toimplement and enhance its prudent financial management system with well-defined policies andprocedures, including stringent financial reporting and control system that emphasises centralisedmanagement and administration, consistent controlling policies and full compliance with legal andregulatory requirements, established standardised capital management mechanism to monitor capital,capital efficiency and capital risk prevention, thereby effectively enhancing the results and efficiency ofthe overall management, prudent investment policy that targets to achieve balance between assets andliabilities, between investment return and risk taking, and between principal business and other ancillarybusiness and strengthened cooperation with banks, to seek alternative sources of financing and maintaina balanced indebtedness structure consisting of short-term, medium-term and long-term credit facilities.Further, the Group will closely monitor the changes in foreign exchange market to manage the risksrelating to its assets and liabilities denominated in foreign currencies. The Group strives to prudentlymanage its financials while fulfilling investment and development needs to drive its profitability.

79

HISTORY AND DEVELOPMENT

On 12 September 2003, the Chongqing Nan’an District Government approved the establishment ofChongqing Nan’an Urban Construction and Development Co., Ltd. (the predecessor of the Issuer). Atthe time of its establishment, the Issuer had registered capital of RMB200.0 million, funded entirely bythe Chongqing Nan’an District Bureau of Finance on behalf of the Chongqing Nan’an DistrictGovernment. As of the date of this Offering Circular, the registered capital of the Issuer is RMB3,820.2million.

The following table sets out the important events during the Group’s development:

2003 Chongqing Nan’an Urban Construction and Development Co., Ltd. (the predecessor ofthe Issuer) was established.

2006 Chongqing Nan’an Urban Construction and Development Co., Ltd. was renamed asChongqing Nan’an Urban Construction & Development (Group) Co., Ltd.

Pursuant to the Approval Regarding the Formation of Chongqing Nan’an UrbanConstruction & Development (Group) Co., Ltd. issued by the Chongqing Nan’anDistrict Government, Chongqing Nan’an Property Leasing and Management Co., Ltd.,Chongqing Begonia Sports Industrial Co., Ltd., Chongqing Jiangnan UrbanConstruction and Property Management Co., Ltd. and Chongqing Nan’anTransportation Project Construction Co., Ltd. became wholly owned subsidiaries of theIssuer.

Chongqing Nan’an District Bureau of Finance injected RMB930.9 million to theIssuer’s registered capital by transfer of tangible assets, land use rights and cash. TheIssuer’s registered capital increased to RMB1,130.9 million.

2007 Chongqing Nan’an District Bureau of Finance injected RMB1,481.3 million to theIssuer’s registered capital by transfer of cash and cash equivalents and land use rights.The Issuer’s registered capital increased to RMB 2,612.2 million.

In the same year, the Issuer became the controlling shareholder of ChongqingGuangyang Island Real Estate Development Co., Ltd and Chongqing Nan’an BinjiangRoad Development Construction Co., Ltd. by increasing capital contribution.

2011 Chongqing Nan’an District Bureau of Finance injected RMB200.0 million to theIssuer’s registered capital. The Issuer’s registered capital became RMB2,812.2 million.

2013 Chongqing Nan’an District Bureau of Finance injected RMB600.0 million to theIssuer’s registered capital. The Issuer’s registered capital became RMB3,412.2 million.

2015 CDB Development Fund Co., Ltd. injected RMB229.0 million to the Issuer’s registeredcapital. The Issuer’s registered capital became RMB3,641.2 million.

2016 CDB Development Fund Co., Ltd. injected RMB179.0 million to the Issuer’s registeredcapital. The Issuer’s registered capital became RMB3,820.2 million.

80

CORPORATE STRUCTURE

The following chart presents a simplified structure of the Group and the shareholding of the Issuer as ofthe date of this Offering Circular:

100% 60% 90% 55% 97.6% 95%

93.33%

94.79% 90.55% 98.29% 97.48% 94.26% 92.59%

89.32% 10.68%

100%

Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd.

（重慶市南岸區城市建設發展（集團）有限公司）

Ch

ong

qin

g N

an’an

Bin

jiang

Ro

ad

Dev

elop

men

t Co

nstru

ction

Co., L

td.

（重慶南岸濱江路開發建設

有限公司）（

4）

Ch

ong

qin

g N

an’an

Tran

spo

rtation

Pro

ject Con

structio

n C

o., L

td.

（重慶南岸交通項目建設

有限公司）

Chongqing Nan’an District

Bureau of Finance

（重慶市南岸區財政局）

Chongqing Nan’an District Government

（重慶市南岸區政府）

Ch

ong

qin

g B

ego

nia S

po

rts

Indu

strial Co., L

td.

（重慶海棠體育實業有限公司）

CDB Development Fund Co., Ltd.

(國開發展基金有限公司）

Ch

ong

qin

g N

anyi U

rban

and R

ural

Con

structio

n D

evelo

pm

ent C

o., L

td.

（重慶南宜城鄉建設發展

有限公司）（

5）

Ch

ong

qin

g H

ualian

Mall

Hon

gru

i Dep

artmen

t Sto

re

Co

., Ltd

.

（重慶華聯商廈鴻瑞百貨

有限公司）

Ch

ong

qin

g N

anpin

g W

estern

New

District D

evelo

pm

ent

and

Co

nstru

ction C

o., L

td.

（重慶南坪西部新區開發

建設有限責任公司）

Le T

ou

r Cho

ng

qin

g T

ou

rism

Dev

elop

men

t Co

., Ltd

.

（重慶樂旅旅遊發展

有限責任公司）

Chong

qin

g W

ufen

g

Tech

no

logy

Co., L

td.

（重慶五鋒科技有限公司）

(6)

Ch

ong

qin

g N

anto

u

Intellig

ent T

ermin

al In

vestm

ent C

o., L

td.

（重慶南投智能終端投資

有限公司）

Ch

ong

qin

g N

an’an

Scien

ce

and

Tech

no

logy

Ven

ture

Dev

elop

men

t Co

., Ltd

.

（重慶市南岸科技創業

發展有限責任公司）

Ch

ong

qin

g Y

ing

long

Lak

e

Indu

strial Co., L

td.

（重慶迎龍環湖實業有限公司）

Ch

ong

qin

g G

uan

gy

ang

Island

Real E

state Dev

elop

men

t Co., L

td.

（重慶市廣陽島置業發展

有限公司）（

3）

Ch

ong

qin

g Y

inglo

ng

Geru

i

Ag

ricultu

re Dev

elop

men

t Co

., Ltd

.

（重慶迎龍歌銳農業發展

有限公司）

Ch

ong

qin

g N

an’an

Pro

perty

Leasin

g an

d M

anag

emen

t Co

., Ltd

.

（重慶市南岸資產經營管理

有限公司）（

1）

Ch

ong

qin

g Jian

gn

an U

rban

Constru

ction an

d P

rop

erty

Man

agem

ent C

o., L

td.

（重慶市江南城市建設資產

經營管理有限公司）（

2）

Direct Supervision

56.01%

Notes:

(1) Chongqing Nan’an Property Leasing and Management Co., Ltd.（重慶市南岸資產經營管理有限公司）primarily engages insupply-chain finance and property leasing and management business. As at 31 December 2015, its total assets wereRMB6.71 billion.

81

(2) Chongqing Jiangnan Urban Construction and Property Management Co., Ltd.（重慶市江南城市建設資產經營管理有限公

司）primarily engages in infrastructure construction and property leasing and management business. As at 31 December2015, its total assets were RMB3.76 billion.

(3) Chongqing Guangyang Island Real Estate Development Co., Ltd.（重慶市廣陽島置業發展有限公司）primarily engages inprimary land development business. As at 31 December 2015, its total assets were RMB5.15 billion.

(4) Chongqing Nan’an Binjiang Road Development Construction Co., Ltd.（重慶南岸濱江路開發建設有限公司）primarilyengages in infrastructure construction and property leasing and management business. As at 31 December 2015, its totalassets were RMB1.64 billion.

(5) Chongqing Nanyi Urban and Rural Construction Development Co., Ltd.（重慶南宜城鄉建設發展有限公司）primarilyengages in infrastructure construction, primary land development and supply-chain finance business. As at 31 December2015, its total assets were RMB23.55 billion.

(6) Chongqing Wufeng Technology Co., Ltd.（重慶五鋒科技有限公司）primarily engages in supply-chain finance business. Asat 31 December 2015, its total assets were RMB0.47 billion.

DESCRIPTION OF THE GROUP’S BUSINESS

Overview

The Group is the largest investment and financing platform of the Chongqing Nan’an DistrictGovernment, in terms of total assets as at 31 December 2015, which engages in city construction andmunicipal development. It has historically focused on primary land development and infrastructureconstruction in Chongqing Nan’an District to implement the Chongqing Nan’an District Government’splans to develop Chongqing Nan’an District. Over a decade of development, the Group has graduallyestablished six business segments, namely (i) primary land development, (ii) infrastructure construction,(iii) property leasing and management, (iv) loan financing, (v) supply-chain finance and (vi)miscellaneous. For the years ended 31 December 2013, 2014 and 2015, the Group’s operating incomewas RMB1,828.5 million, RMB619.7 million and RMB631.0 million, respectively, and its net profit wasRMB187.8 million, RMB261.7 million and RMB318.0 million, respectively.



2013 2014 2015

Amount(RMB’000)

Per cent. oftotal

Amount(RMB’000)

Per cent. oftotal

Amount(RMB’000)

Per cent. oftotal




Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,828,517 100.0 619,719 100.0 630,975 100.0

Notes:

(1) The Group had no operating income from primary land development in 2014 and 2015 because there was no grant of landuse rights for the land developed by the Group in 2014 and the procedures relating to land grants in 2015 had not been fullycompleted by the end of 2015.



82

Primary Land Development

Overview

The Group is one of the designated entities to conduct primary land development in Chongqing Nan’anDistrict. The Group commenced primary land development in 2010, primarily through Chongqing NanyiUrban and Rural Construction and Development Co., Ltd.（重慶南宜城鄉建設發展有限公

司）(‘‘Chongqing Nanyi’’), a subsidiary of the Issuer. Primary land development involves demolition ofbuildings, relocation and resettlement of residents, land clearance and construction of networks ofelectricity, water, transportation, telecommunication, sewerage, gas and heat thereby transforming theland into a condition ready for secondary real property development. The Chongqing Nan’an DistrictGovernment grants land use rights of the land cleared by the Group through public invitation to tenderor auction to real estate property developers.

As at 31 December 2015, the Group held the land use rights of approximately 6.5 million square metresof land under development which had a book value of RMB9,505 million, which the Group believes issufficient for its primary land development business in the next five years.

The Group’s operating income from primary land development derives from the land development feepayable by Chongqing Nan’an District Government, which in turn is generated from the grant of landuse rights for the land developed by the Group. The amount of land development fee covers the Group’scost of development (such as quota fee, plan and design fee, maintenance fee, demolition fee and the feefor converting collectively-owned land into state-owned land) and profit which is equal to a certainpercentage of the land grant premium. According to the General Office of the Chongqing MunicipalGovernment issued the Notice on Regulating the Administration of Income and Expenditure of LandUse Right Grant Premium of the State-Owned Land (Yuban Fa [2007] No.74)（重慶市人民政府辦公廳

關於規範國有土地使用權出讓收支管理的通知（渝辦發[2007]74號）) promulgated in December 2006,the land grant premium payable by real estate developers in land grant by the Chongqing Nan’anDistrict Government should be transferred to the Group after deducting statutory taxes and charges. In2010, the Chongqing Nan’an District Government issued the Notice on Returning Land Grant Premiumof the Reserved Land (Nan Caizheng [2010] No. 397)（重慶市南岸區財政局關於返還儲備用地收益的

通知（南財政[2010]397號））, pursuant to which the Group would be entitled to all of the land grantpremium from primary land development projects involving old town reconstruction it undertakes, andaccording to the Notice on Improving the Municipal Distribution Policy of Land Grant Premium (YuCaijian [2011] No. 797)（重慶市財政局關於完善市級土地出讓收益分配政策的通知（渝財建 [2011]797號））issued by the Finance Bureau of Chongqing Municipality in 2011, the Group would be entitledto 50 per cent. of the land grant premium from other projects, in both cases, after deduction of statutorytaxes and charges. As of the date of this Offering Circular, a majority of the land held by the Group forprimary land development are in old town areas.

For the year ended 31 December 2013, the Group’s operating income generated from primary landdevelopment was RMB802.5 million, representing 43.9 per cent. of its total operating income for thesame period. The Group had no operating income from primary land development in 2014 and 2015because there was no grant of land use rights for the land developed by the Group in 2014 and theprocedures relating to land grants in 2015 had not been fully completed by the end of 2015.

Business Model

The Group’s primary land development is generally carried out in three steps, namely (i) primary landdevelopment by the Group (including demolition of buildings and relocation and resettlement ofresidents), (ii) grant of land use rights by invitation to tender or auction to real estate developers, and(iii) payment made by the Chongqing Nan’an District Government to the Group. The Group normallyfunds its primary land development with its internal cash and external funding, such as bank loans orissuance of corporate bonds.

83

The Group used to perform the land reserve function on behalf of the Chongqing Nan’an DistrictGovernment to hold the land use rights of the land pending development that were allocated to it by theChongqing Nan’an District according to the policies of the Chongqing Land and Resources Bureau andthe approval of the Chongqing Municipal Government before 2013. Land use rights of the landdeveloped by the Group were transferred to the Chongqing Nan’an District Government for invitation totender or auction after the development is completed. Since 2013, the Group has ceased to perform theland reserve function as a result of the promulgation of the Notice regarding Strengthening theAdministration of Land Reserve and Financing (Guotuzi Fa [2012] No. 162)（關於加強土地儲備與融資

管理的通知（國土資發[2012]162號）. Without prejudice to the previous land use rights acquired, theGroup will only be able to carry out primary land development business on an agency basis in whichcase the Group conducts primary land development business as an agent only without obtaining land userights of the land underlying the project. As at 31 December 2015, all the land on which the Groupconducted primary land development was allocated to the Group before 2013.

Upon completion of the development of a parcel of land, the Chongqing Municipal Land and ResourcesBureau normally conducts auditing of the costs and fees incurred by the Group to determine the basetender or auction price of land grant. Following a successful granting of land use rights by invitation totender or auction, the Chongqing Municipal Land and Resources Bureau will arrange auditing of thecost of development submitted by the Group. According to the Group’s accounting policies, the Grouprecognises its operating income from primary land development upon completion of the audit andsigning of the relevant land grant contract.

Payment of the land development is made by instalments. The Group receives the payment of theaudited development costs and fees generally within six months after the written notice is issued. Itusually takes up to two years for it to receive full payment of the remaining amount representing theprofit of primary land development, which is in line with the real estate developers’ payment scheduleof land purchase price to the Chongqing Municipal Land and Resources Bureau.

Project Description

During the three years ended 31 December 2015, the Group had completed approximately 0.49 millionsquare metres of primary land development projects out of which approximately 0.17 million squaremetres had completed the land use rights grant procedure while the Group had not recognised revenue asthe procedures relating to land grants had not been fully completed by the end of 2015.

As at 31 December 2015, the Group was developing land with a total site area of approximately 6.5million square metres. The following table sets forth the particulars of primary land developmentprojects under construction:

Project Site area

Totalestimatedinvestment

Investedamount

(Squaremetres inmillion)

(RMB inmillion)

(RMB inmillion)

Liaojia Mountain Area Project（廖家山地塊） . . . . . . . . . . . . . . . . . . . 1.5 2,838 658.0Tanzishi Standard Area A Project（彈子石A標準分區）. . . . . . . . . . . . . 1.5 2,860 775.4Sigongli Area Project（四公里地塊）. . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 1,641 800.0Lianhua Mountain Area Project（蓮花地塊）. . . . . . . . . . . . . . . . . . . . 0.3 572 308.0Tushan Town Area Project（塗山鎮地塊）. . . . . . . . . . . . . . . . . . . . . . 0.1 114 114.0Huangjue Bay Area Project（黃桷灣地塊） . . . . . . . . . . . . . . . . . . . . . 0.1 * *Nan’an District Garden Village Street Project（南岸區花園村街道）. . . . 2.2 6,732 40.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 14,757 2,695.4

* This amount is less than 1 million.

84

Infrastructure Construction

Overview

Infrastructure construction has been the Group’s core business since its establishment. The Group iscommissioned by the Chongqing Nan’an District Government to undertake all the infrastructure projectsin Chongqing Nan’an District involving the construction of municipal roads, tunnels, transportationhubs, bridges, stadiums and parks.

For the years ended 31 December 2013 and 2014, the Group’s operating income generated frominfrastructure construction was RMB746.1 million and RMB398.7 million, respectively, representing40.8 per cent. and 64.3 per cent., respectively, of its total operating income for the same periods. TheGroup had no operating income from infrastructure construction in 2015, primarily because the Groupdid not apply for project buyback during the relevant period.

Historically, certain infrastructure projects of the Group were based on governmental notices ordirectives in which the Chongqing Nan’an District Government did not make specific buybackcommitment. The uncertainty relating to the Chongqing Nan’an District Government’s buybackcommitment remained even after the relevant projects were completed. For this reason, the Issuer couldnot recognise the operating income from the development of those projects according to its accountingprinciples and resulted in a high level of inventories on the Issuer’s consolidated balance sheet. On 12January 2016, the Group and the Chongqing Nan’an District Government entered into a supplementalagreement to the master agency construction and project buyback agreement dated 11 February 2014pursuant to which the Chongqing Nan’an District Government undertook to pay all the outstandingbuyback amount payable to the Group as of the date of such agreement by instalments within ten yearscommencing from 2016. In June 2016, the Group and the Chongqing Nan’an District Governmententered into a supplemental buyback agreement pursuant to which the Chongqing Nan’an DistrictGovernment undertook to buyback substantially all of the Group’s infrastructure projects that arecompleted under governmental notices or directives without prior commitment of buyback. See ‘‘RiskFactors – Risks Relating to the Group’s Business – The Group faces risks associated with contractingwith public bodies, such as the Chongqing Nan’an District Government.’’

Business Model

The Group conducts infrastructure construction under the BT model. Details of the infrastructureprojects to be developed by the Group (such as the scope of work, estimated investment amount andestimated buyback amount for a number of projects) are normally set out in a project developmentmaster agreement (‘‘Master Agreement’’) between the Group and the Chongqing Nan’an DistrictGovernment, or an administrative notice issued by the Chongqing Nan’an District Government relatingto the project. The Group finances its infrastructure construction projects with funds allocated by theChongqing Nan’an District Government and through self-financing methods. The Chongqing Nan’anDistrict Government normally provide the Group with subsidies equal to certain percentage of the totalestimated investment amount as start-up capital to carry out infrastructure construction. The ChongqingNan’an District Government regularly reviews the project progress and includes the amount of subsidiesinto its annual budget in consideration of factors including number, scales, and payment schedules of theconstruction projects in the current year and previous years. The remaining investment amount isfinanced by the Group, usually with proceeds of bank and other borrowings.

The Group may apply for project buyback after the construction is completed (or a later time dependingon the Group’s financial condition and cash demand) by submitting the actual cost of development to theChongqing Nan’an District Government for audit. The Chongqing Nan’an District Government willarrange auditing and issue a buyback notice to the Group to confirm the buyback amount and paymentschedule, whereupon the Issuer recognises the operating income relating to the related project accordingto its accounting policies.

85

The final buyback amount is determined based on the total cost of development after audit and normallyreflects a 15 per cent. gross profit margin for the development of the project. In addition, the ChongqingNan’an District Government will refund the taxes paid and expensed incurred and paid by the Group inrelation to the buyback. The buyback amount is paid on an instalment basis for five to ten years. Itgenerally takes less than six months for the Group to receive full payment of first instalment of thebuyback amount relating to infrastructure projects.

The Group engages third-party construction companies to carry out the construction of its infrastructureconstruction projects through its standardised public tender process in accordance with applicable PRClaws and regulations. When selecting contractors, the Group considers a number of factors such as thereputation of the contractors, track records in similar projects, creditworthiness, technical capabilities,proposed construction blueprint and price. These construction companies carry out various types ofwork, including foundation digging, construction, equipment installation, internal decoration and variousengineering work. The quality and timeliness of the construction is usually warranted by contract. In theevent of delay or poor workmanship, the Group may require the construction contractor to rectify thedefect or pay a penalty.

Project Description

Over the years, the Group has undertaken and completed a large number of projects of strategicimportance to Chongqing Nan’an District since its establishment in 2003. As at 31 December 2015, theGroup had completed infrastructure projects with an estimated buyback amount of RMB19,015.6million. Below is a summary of some signature projects of the Group:

• Nanbin Road（南濱路）: Nanbin Road is located in the core area of Chongqing, surrounded by theYangtze River and the South Mountain. As a 25-kilometers-long tourism avenue, it is now thesignature road in Chongqing that not only serves multiple purposes, including flood control, urbantransportation and city reconstruction, but also features a dynamic area of dining, entertainmentand leisure. This project demonstrates the Group’s ability to reconstruct and rejuvenate old-townareas.

• Cimu Mountain Tunnel（慈母山隧道）: Cimu Mountain Tunnel is a major transportation projectwhich connects the Chayuan New Area（茶園新區）with the core area of Chongqing, the twomajor economic areas of the Chongqing Nan’an District. It extends over eight kilometres and asthe fastest highway from the east to the south of the city, it is considered as a major transportationbreakthrough in mountainous Chongqing.

• Nanping Central Transportation Hub Project（南坪中心交通樞紐工程）: Nanping CentralTransportation Hub Project is a complicated, multi-layered transportation hub combining apedestrian walkway, ground business, rail transportation and automobile underpass, which showsthe Group’s capability to undertake complex infrastructure projects. This project greatly eased thetraffic pressure and promoted the business development in the area.

• Jiangnan Sports Centre（江南體育中心）: Jiangnan Sports Centre is located at the heart of thecentral area of the Chongqing Nan’an District and it is the first riverside stadium in Chongqing.This project covers an area of approximately 28,500 square meters, with a total investment ofapproximately RMB240 million. It has a gymnasium which can accommodate 3,500 people, anindoor swimming pool which can accommodate 1,500 people, a youth activity centre of 15,000square metres and a sports leisure theme plaza of 80,000 square meters. This project is ademonstration project concerning people’s livelihood in Chongqing.

86

The following table sets forth the key projects of the Group outstanding as at 31 December 2015:

Project Status

Estimatedbuybackamount(1)

(RMB inmillion)

Narrows Flood Prevention and Bank Protection Treatment Project（峽口防洪護岸整治工程）(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 598.0

Harbour Road Project（港口大道工程）(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 529.0Cimu Mountain Tunnel and Connected Road Project（慈母山隧道及連接道）(2) . . . . . completed 1,707.8Forest Project Phase I（綠森工程一期）(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 309.7Binjiang Road Project Phase VI（濱江路六期工程）(2) . . . . . . . . . . . . . . . . . . . . . . . completed 720.1Nantong Road Datian Dam Part Project（南銅路大田壩段）(2) . . . . . . . . . . . . . . . . . completed 261.1Jiangnan Overpass Reconstruction Project（江南立交改造）(2) . . . . . . . . . . . . . . . . . completed 348.5Binshan Road Project（濱山大道）(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 2,012.5Ciyun Road 慈雲路(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . uncompleted 411.9East Water Gate and South Overpass Project（東水門南立交）(2) . . . . . . . . . . . . . . . uncompleted 1,380.0Old and Dilapidated Buildings Reconstruction Project（危舊房改造）(2) . . . . . . . . . . . uncompleted 8,740.0People’s Bank Vault（人民銀行金庫）(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . uncompleted 368.0Eastern Project（東部項目）(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 742.9Flood Protection Project（防洪工程）(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 604.9Exhibition II project (the Central Park)（會展二期工程（原中央公園））(3) . . . . . . . . . completed 158.7Dan Long Road Project（丹龍路工程）(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . completed 122.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,015.6

Notes:

(1) These amounts represent the estimated buyback amounts set out in the buyback agreements or buyback commitments of theChongqing Nan’an District Government. They are based on the estimated investment amounts of the relevant projectsprovided by the Group before the projects are completed and may be different from the final buyback amounts determinedbased on the actual cost of development of the relevant projects after audit.

(2) In February 2014, the Group and the Chongqing Nan’an District Government entered into a master agency construction andproject buyback agreement pursuant to which the Nan’an District Government undertook to buyback a number of theGroup’s infrastructure projects.

(3) In June 2016, the Group and the Chongqing Nan’an District Government entered into a supplemental buyback agreementpursuant to which the Chongqing Nan’an District Government undertook to buyback substantially all of the Group’sinfrastructure projects that were constructed pursuant to governmental notices without prior commitment of buyback. See‘‘Risk Factors – Risks Relating to the Group’s Business – The Group faces risks associated dealing with public bodies, suchas the Chongqing Nan’an District Government’’.

Property Leasing and Management

Overview

The Group engages in property leasing and management business through its subsidiary, ChongqingNan’an Property Leasing and Management Co., Ltd.（重慶市南岸資產經營管理有限公司）. It leases andmanages the properties owned by the Group in Chongqing Nan’an District ranging from commercialproperties, office buildings to factories. A majority of the properties owned and operated by the Groupwere allocated to it by the Chongqing Nan’an District Government. As at 31 December 2015, the Grouphad 161,300 square metres of property allocated by the Chongqing Nan’an District Government,including 88,955.4 square metres of office buildings, 68,248.3 square metres of commercial properties,1,979.9 square metres of residential buildings and 2,824 square metres of garage, of which 102,500square metres are leasable property.

For the years ended 31 December 2013, 2014 and 2015, the Group’s operating income from propertyleasing and management business was RMB63.5 million, RMB72.6 million and RMB79.1 million,respectively, representing 3.5 per cent., 11.7 per cent. and 12.5 per cent., respectively, of the Group’stotal operating income for the same periods.

87

Business Description

The Group leases its properties in Chongqing Nan’an District, including commercial properties, officebuildings and warehouses. The Group usually enters into leases for terms of two to three years forcommercial property leasing, three to five years for office building leasing and one to five years forwarehouse leasing. As at 31 December 2015, the Group had leasable property with GFA totalling223,104 square metres, of which 190,401 square metres had been leased out, representing 85.34 percent. of the total GFA of its leasable property. The Group also sells properties, from time to time, asinstructed by the Chongqing Nan’an District Government. The following table sets forth the details ofthe Group’s leasable property as at 31 December 2015:

Property Leasable GFA Leased GFA Leasing rate

Average rentper square

metre

(squaremetres)

(squaremetres)

(per cent.) (RMB/Month)

Retail Units（門面）. . . . . . . . . . . . . . . . . . . . . . . . 171,791 155,812 90.7 35.2Houbao Market（後堡市場）. . . . . . . . . . . . . . . . . . 3,373 1,901 56.4 20.6Weiguo Road Market（衛國路市場）. . . . . . . . . . . . . 10,322 7,000 67.8 20.2Xiaofang Village（小芳村）. . . . . . . . . . . . . . . . . . . 16,236 4,306 26.5 51.1Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,382 21,382 100.0 33.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223,104 190,401 85.3 –

Loan Financing

Overview

The Group provides financing in the forms of short-term direct loans and entrusted loans to companiesoperating in Chongqing Nan’an District, primarily under the instruction and supervision of theChongqing Nan’an District Government. The Group normally charges interest at rates equal to apremium above the prevailing market interest rate charged by commercial banks for the same period.For the years ended 31 December 2013, 2014 and 2015, the Group’s operating income from provision ofloan financing was RMB184.1 million, RMB132.8 million and RMB155.7 million, respectively,representing 10.1 per cent., 21.4 per cent. and 24.7 per cent. of its total operating income for the sameperiods.

The Group’s customers of short-term direct loans are enterprises owned or controlled by the ChongqingNan’an District Government and the Group normally provides lending to such customers according tothe instructions or directives of the Chongqing Nan’an District Government. The Group also providesentrusted loans to private companies, particularly electronics and information technology enterprises,through entrusted banks. The Group has maintained stable cooperation relationships with approximately40 commercial banks and other financial institutions in the PRC which has enhanced the Group’scapability to provide financing services to various types of customers.

The following table sets forth the details of the Group’s top five customers of its loan financing businessand the loan amounts granted to such customers for the year ended 31 December 2015:

Customer Type of loans Details of customer Balance of loans

(RMB in million)Customer 1 . . . . . . . . . Direct Short-term Loan Government platform enterprise in charge of old town reconstruction 11.5Customer 2 . . . . . . . . . Direct Short-term Loan Government platform enterprise in charge of primary land development 7.2Customer 3 . . . . . . . . . Direct Short-term Loan Government public service institution in charge of relocation works of the

administration centre of the Chongqing Nan’an District Government4.1

Customer 4 . . . . . . . . . Direct Short-term Loan Government platform enterprise in charge of logistics work 2.0Customer 5 . . . . . . . . . Direct Short-term Loan Government platform enterprise in charge of development of industrial parks 1.6

Total . . . . . . . . . . . . 26.4

88

Business Model

A majority of the loans granted by the Group are direct short-term loans to the state-owned enterprisesin Chongqing Nan’an District and the remaining loans are granted in the form of entrusted loans to theGroup’s customers. As at 31 December 2015, the Group had granted direct short-term loans in the totalprincipal amount of RMB2,549 million and entrusted loans in the total principal amount of RMB241million.

Direct Short-term Loans

The Group usually grants direct short-term loans to the state-owned enterprises in Chongqing Nan’anDistrict with the instruction by the Chongqing Nan’an District Government. The Group normally onlyprovides short-term direct loans to the other state-owned enterprises controlled by the ChongqingNan’an District Government with an average term of loan of one year to three years and an averageinterest rate of 6 per cent. to 12 per cent. Each of the direct loans to state-owned enterprises isaccompanied by a set of approval documents issued by the Chongqing Nan’an District Government.

Entrusted Loans

In entrusted loan transactions, the Group acts as the principal and deposits with an entrusted bank whichwill on-lend the money to the ultimate borrowers. Under an entrusted loan arrangement, the Groupselects and approves borrowers and applies the Group’s lending policies. Most of the Group’s entrustedloan customers are the electronic enterprises in the Chongqing Nan’an District, and part of them are alsothe customers of the Group’s supply-chain finance business. The entrusted banks follow the Group’sinstructions and do not bear the credit risks on repayment by such borrowers. Entrusted bank willsupervise the use and collection of the loan and monitor the use of proceeds, outstanding amount, termand interest rates. Upon receipt of the principal and interest on the loan, the entrusted bank will transfersuch amounts to the Group. A typical entrusted loan usually involves three parties, namely principal,borrower and entrusted bank. The following diagram illustrates the relationship among the three parties:

Borrower

Entrusted Bank

The Group

(Principal) (1) Three parties

sign entrusted loan

contract

(2) Principal opens

a bank account and

deposits entrusted

fund into the

account

(5) Entrusted bank

deposits principal

and interest

payment to the

Principal’s specific

account

(4) Borrower pays

commission fee,

principal and

interest as agreed

(3) Bank provides

loan to borrower

after receiving

lending notice issued

by the Principal

Risk Management

The Group endeavours to control the level of non-performing loans by establishing and implementing aset of risk management system. The Group normally considers the credit risks, market position andregional significance of the customer in managing the risks of its loan financing business. In addition,the Group conducts loan financing business under the supervision of the Chongqing Nan’an DistrictGovernment. For all the loans to be granted, no matter short-term direct loans to the other state-ownedenterprises controlled by the Chongqing Nan’an District Government or entrusted loans to privatecompanies, the Group conducts internal risk assessment, as well as obtains approvals from theChongqing Nan’an District Government. In particular, the Group provides unsecured loans to platformenterprises of the Chongqing Nan’an District Government.

89

For the private companies, the Group usually requires the borrowers to provide collateral or guaranteesas credit enhancement. Eligible collateral includes tax rebates, account receivables, plants, machineryequipment or other fixed assets which can be liquidised to effectively reduce the default risk andpotential loss. For example, for the customers who have export business, the Group will require them toprovide raw material sourcing agreements, export agreements, declaration documents, VAT invoices andtax rebate application forms and the Group generally grant loans to such customers in an amount nomore than 80 per cent. of the tax rebate; for the customers who are entitled to enjoy governmentsubsidies under project investment agreements, the Group will make a calculation of the estimatesubsidies the customer may obtain from the government and grant loans to such customers in an amountno more than 90 per cent. of their respective expected subsidies.

Notwithstanding the governmental approval process and the risk management system established, theGroup is exposed to credit risks and other risks inherent in the loan financing business. See ‘‘RiskFactors – Risk Relating to the Group’s Business – The Group’s risk management systems and internalcontrol policies may not be effective in mitigating the risk exposure.’’

Supply-chain Finance

Overview

The Group provides supply-chain finance services through Chongqing Wufeng, a subsidiary of theIssuer since 2015. As at 31 December 2015, the Group held 55 per cent. of the equity interest inChongqing Wufeng. For the year ended 31 December 2015, the Group’s operating income generatedfrom provision of supply-chain finance services was RMB380.4 million, representing 60.3 per cent. ofits total operating income for the same period. The Group believes that the operating income generatedby its supply chain finance business will maintain a sustainable growth in light of its strategy ofoptimising business structure. Electronics and information technology enterprises in Chongqing Nan’anDistrict are the most important target customers of the Group’s supply-chain finance business.

The Group normally funds its supply chain finance business through self-owned funds and creditfacilities. To support the development of electronics and information technology industries in theChongqing Nan’an District, the Export-Import Bank of China, Chongqing Branch has provided a specialcredit facility in an amount of RMB300 million to four designated companies (two of which are theGroup’s subsidiaries) in the Chongqing Nan’an District, for conducting agency services of domestic oroverseas raw materials sourcing for electronics and information technology enterprises.

The Group’s supply-chain finance services primarily include (1) raw materials sourcing, and (2) exportagency.

Descriptions of Supply-chain Finance Services

Raw Materials Sourcing

In an agency arrangement of raw material sourcing, the Group and the customer enter into (a) a supply-chain financing service master agreement and (b) the customer issues a separate power of attorney tospecify each batch of targeted raw materials to be purchased by the Group after both parties agreed onthe quantity, quality, price and other specifications of the targeted raw materials. Normally the Groupwould require the customer to pay a deposit in an amount of 20 per cent. to 30 per cent. of the totalprice of the goods in advance. Then the Group will purchase the targeted raw materials from one of theagreed-upon selected suppliers and make payment to the supplier, usually by letter of credit issued bythe Export-Import Bank of China, Chongqing Branch. The Group sells the raw materials sourced to thecustomer under a separate purchase and sale contract. If the customer defaults in the payment, penalty isnormally 0.1 per cent. of the overdue amount per day for consecutive 10 days, after which the Group isentitled to dispose the goods at its sole discretion.

90

The Group usually charges (1) service fees and (2) if applicable, interest on the payment made by theGroup on the customer’s behalf in the course of raw material sourcing, such as payment of the rawmaterials and expenses and fees incurred in connection with the importing.

Export Agency

In an export agency arrangement, the Group and the customer enter into (a) a supply-chain financingservice master agreement and (b) a purchase and sale agreement under which the legal title of goods tobe exported are transferred to the Group without instant payment. The customer negotiates with theoverseas buyer on its own and, upon completion of the manufacturing of relevant goods, delivers thedesignated goods to the Group for export and sales on terms and condition agreed upon between thecustomer and the buyer. The Group is usually responsible for the logistics and export of the goods, aswell as the exchange settlement and advance payment of relevant value-added taxes. The Group alsoprovides value-added services, such as inventory management and replenishment, for which thecustomer pays extra fees as set out in relevant supplemental agreements. The Group will pay back thecustomer export proceeds after all the goods are exported and it has received all the payment of goodsfrom the buyer and deduction has been made for all fees payable to it.

The Group usually charges service fee based on the actual services it provides and the amount andduration of the capital employed. Commission fee is normally determined by the declared value of thegoods multiplied by a certain percentage.

Risk Management

In evaluating and selecting customers, the Group conducts pre- and post-transaction due diligence. Forpre-transaction due diligence, the Group verifies both the operational and accounting materials of apotential customers by on-site firm visits and conversations with the managers of the enterprises. Afterthe engagement, the Group continues to monitor and review the operation of the customers. At leasttwice a year, the Group files requests to the relevant tax authorities to confirm if the customers are incompliance with relevant tax laws and regulations. In addition, in conducting supply-chain financebusiness, the Group assesses the credit risks of the small to medium sized enterprises from a newperspective, shifting the focus of risk management of individual small and medium sized enterprise tothe whole supply chain and the related transactions.

Raw materials sourcing

The Group mainly manages its risks relating to the raw materials sourcing agency service in three ways:(1) requiring the customer to provide collateral for a value equals to the price of raw materials to beprocured and/or personal guarantees; (2) requiring the customer to provide deposits in an amount of 20per cent. to 30 per cent. of the total price of goods to be procured if the Group are to make the paymenton behalf of the customer; and (3) holding the legal titles to the raw materials procured. The total valueof the collateral, deposits and raw materials procured should be much more than the payables due to theGroup. In addition, the nature of supply-chain business ensures that the Group is familiar with theupstream and downstream industries which makes the disposal of raw materials easier.

Export agency

The Group manages its risks relating to the export agency service by (1) obtaining the legal titles to thegoods without instant payment and (2) requiring the customer to take out export credit insurance withChina Export & Credit Insurance Corporation, which covers 90 per cent. of the payment of goods if thebuyer defaults in the payment and the Group would only make payment to the customer/exportenterprise after it receives the insurance indemnity and deducts all the taxes it paid, service fees andinterest thereon payable to it, and other costs and expenses.

91

Miscellaneous

The Group’s other business primarily includes tourism-related business. The Group currently undertakestwo tourism development projects which are operated through its subsidiaries Chongqing Nanyi Urbanand Rural Construction and Development Co., Ltd. and Yinglong Huanhu Industrial Co., Ltd.（迎龍環湖

實業有限公司）, respectively. For the years ended 31 December 2013, 2014 and 2015, the Group’soperating income from other business was RMB32.4 million, RMB15.5 million and RMB15.7 million,respectively, representing 1.8 per cent., 2.5 per cent. and 2.5 per cent., respectively, of the Group’s totaloperating income for the same periods.

In December 2010, Chongqing Nanyi Urban and Rural Construction and Development Co., Ltd.repurchased the Nanshan Tourism Highway of a total length of 34.1 square kilometres, which allows theGroup to receive an annual fixed income of RMB13.7 million starting from 2012. There is no term forsuch arrangement.

Yinglong Huanhu Industrial Co., Ltd. is primarily responsible for the development and construction ofthe modern urban agriculture park in Chongqing Nan’an District and the Yinglong Lake NationalWetland Park within the park. As of the date of this Offering Circular, the Group has not recorded anyincome from this project.

ENVIRONMENT MATTERS

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 thegovernmental authorities in the PRC. The Group believes that it is in compliance in all material respectswith applicable environmental laws and regulations. As at the date of this Offering Circular, the Groupis not aware of any environmental proceedings or investigations to which it is or might become a party.

INSURANCE

The Group is required to obtain contractors all-risk and third-party liability insurance for most of theprojects it undertakes. Such policies generally extend for the entire contract period, including themaintenance period following completion of the project. In addition, with regard to its constructionbusiness, the Group generally purchases insurance for its fixed assets, such as its key equipment, stockand office buildings. The Group also purchases pension insurance, unemployment insurance and medicalinsurance for its employees according to the relevant PRC laws and regulations. The Group maintainsinsurance coverage in amounts that it believes are commensurate with its risk of loss and industrypractice. Consistent with what the Group believes to be customary practice in the PRC, it does not carryany business interruption insurance, key-man insurance or insurance covering potential environmentaldamage claims. Such insurance is not mandatory under the laws and regulations of the PRC, and suchinsurance is either unavailable in the PRC or requires substantial cost.

EMPLOYEES

As at 31 December 2015, the Group had approximately 80 employees.

In accordance with the applicable regulations of local governments in regions where the Group hasbusiness operations, the Group makes contributions to the pension contribution plan, medical insurance,unemployment insurance, maternity insurance and personal injury insurance. The amount ofcontributions is based on the specified percentages of employees’ aggregate salaries as required byrelevant PRC authorities. The Group also makes contributions to an employee housing fund according toapplicable PRC regulations. In addition to statutory contributions, the Group provides annual bonusesand supplemental commercial insurance policies to employees. The Group enters into an employment

92

contract with each of its employees in accordance with applicable PRC laws. Such contracts includeprovisions on wages, vacation, employee benefits, training programmes, health and safety,confidentiality obligations and grounds for termination.

LEGAL PROCEEDINGS

The Group is from time to time involved in disputes and legal proceedings arising in the ordinary courseof its business. See ‘‘Risk Factors – Risks Relating to the Group’s Business – The Group is exposed tolitigation risks’’.

To the best of its knowledge, there are no current litigation or arbitration proceedings against the Groupor any of its directors as of the date of this Offering Circular that could have a material adverse effecton its financial condition or results of operations.

93

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE ISSUER

Directors

The board of directors of the Issuer consists of three members, including a chairman and two directors.The board of directors determines major matters of the Issuer and is primarily responsible forimplementing the decisions of and reporting to the Chongqing Nan’an Bureau of Finance anddetermining the business plans and investment proposals, making the annual financial budget plans andmajor financing and restructuring plans, determining the management structure of the Issuer andappointing general manager of the Issuer. The following table sets forth the Issuer’s directors as at thedate of this Offering Circular:

Name Age Position

Yuan Guangmin（袁光敏）. . . . . . . . . . . . . . . . . 45 Chairman and general managerZhao Jian（趙健）. . . . . . . . . . . . . . . . . . . . . . . . 39 DirectorMa Qiang（馬強）. . . . . . . . . . . . . . . . . . . . . . . 42 Director

Ms. Yuan Guangmin（袁光敏）, age 45, has been the chairman and general manager of the Issuer since1 January 2014 and is a member of the Communist Party of China (the ‘‘CPC’’). Ms. Yuan previouslyworked at Chongqing Nan’an District Securities Company（重慶市南岸區證券公司）and served as adirector of Nan’an District State-owned Assets Operations Centre（南岸區國有資產營運中心）. Ms.Yuan obtained her bachelor’s degree in law from the Party School of CPC Chongqing MunicipalCommittee（中共重慶市委黨校）in 1999.

Mr. Zhao Jian（趙健）, age 39, has been a director of the Issuer since 1 January 2014 and is a memberof the CPC. Mr. Zhao previously worked at Chongqing Nan’an District Commercial Facilities IntegratedDevelopment and Construction Company（重慶市南岸區商業設施綜合開發建設公司）and served as thesection chief of Chongqing Nan’an Asset Operations and Management Co., Ltd.（重慶市南岸資產經營

管理有限公司）. Mr. Zhao obtained his bachelor’s degree in business administration from ChongqingTechnology and Business University（重慶工商大學）in 2006.

Mr. Ma Qiang（馬強）, age 42, has been a director of the Issuer since 1 January 2014. Mr. Mapreviously worked at Chongqing Nan’an District Commercial Facilities Integrated Development andConstruction Company（重慶市南岸區商業設施綜合開發建設公司）and Chongqing Nan’an AssetOperations and Management Co., Ltd（重慶市南岸資產經營管理有限公司）. Mr. Ma obtained hisbachelor’s degree in real estate from Chongqing Jianzhu University（重慶建築大學）in 1995.

Supervisors

The board of supervisors is responsible for monitoring the Issuer’s financial matters and overseeing theactions of the board of directors and the management of the Issuer. The board of supervisors currentlyconsists of five supervisors.

The following table sets forth the Issuer’s board of supervisors as at the date of this Offering Circular:

Name Age Position

Gao Jianglin（高江琳）. . . . . . . . . . . . . . . . . . . . 44 Chairman of the board of supervisorsLi Yingxue（李映雪）. . . . . . . . . . . . . . . . . . . . . 47 SupervisorTan Jun（譚軍）. . . . . . . . . . . . . . . . . . . . . . . . . 45 SupervisorXu Hao（徐豪）. . . . . . . . . . . . . . . . . . . . . . . . . 30 SupervisorZhang Hao（張豪）. . . . . . . . . . . . . . . . . . . . . . . 27 Supervisor

Ms. Gao Jianglin（高江淋）, age 44, has been the chairperson of the board of supervisors since 1January 2014 and is a member of the CPC. Ms. Gao previously served as an accountant of GuizhouProvince Zunyi City Wuchuan Supply and Marketing Cooperative（貴州省遵義市務川供銷社）, anaccountant of Wuchang Hongli Clothing Garment Factory（武昌紅利服裝制衣廠）, the finance executiveof Chongqing South Jewellery and Jade Co., Ltd.（重慶南珠寶玉石有限公司）and the finance executiveof Chongqing Junli Plastics Products Co., Ltd.（重慶均利橡膠製品有限公司）, and had worked at

94

Chongqing Nan’an District Bureau of Finance. She also served as the finance executive of ChongqingNan’an Asset Operations and Management Co., Ltd.（重慶市南岸資產經營管理有限公司）. Ms. Gaoobtained her bachelor’s degree in law from the Party School of CPC Chongqing Municipal Committee

（中共重慶市委黨校）in 2009.

Ms. Li Yingxue（李映雪）, age 47, has been a supervisor of the Issuer since 1 January 2014 and is amember of the CPC. Ms. Li previously served as an accountant of the finance department of ChinaUnicom (Chongqing Branch)（中國聯通公司重慶公司）and Chongqing Nan’an Asset Operations andManagement Co., Ltd（重慶市南岸區資產經營管理有限公司）, respectively. Ms. Li obtained herbachelor’s degree in accounting from Chongqing Business School（重慶市商學院）in 1999.

Ms. Tan Jun（譚軍）, age 45, has been a supervisor of the Issuer since 1 January 2014 and is a memberof the CPC. Ms. Tan previously worked at the Chongqing Nan’an District Commercial Services OutletOffice（南岸區商業服務網點辦公室）, Chongqing Nan’an Asset Operations and Management Co.,Ltd.（重慶市南岸資產經營管理有限公司）, the Chongqing Nan’an District State-owned AssetsOperations Centre（南岸區國有資產營運中心）, and the Chongqing Nan’an District State-owned AssetsManagement Centre（南岸區國有資產管理中心）. Ms. Tan obtained his bachelor’s degree in economicsand management from Chongqing Nan’an District Party School of CPC（中共重慶市南岸區黨校）in1997.

Mr. Xu Hao（徐豪）, age 30, has been a supervisor of the Issuer since 1 January 2014 and is a memberof the CPC. Mr. Xu previously served as customer manager of Oupeng Media of Chongqing OupengGroup（重慶市歐鵬集團歐鵬傳媒）, Chongqing Chaoya Media（重慶市超亞傳媒）and Chongqing RuiteFitness Co., Ltd.（重慶瑞特健身有限公司）, respectively. Mr. Xu also worked at Chongqing ChayuanIndustrial Park Zone Construction and Development Co., Ltd.（重慶市茶園工業園區建設開發有限公

司）, Chongqing Nanfa Urban Construction and Development Co., Ltd.（重慶市南發城建發展有限公

司）, Nan’an District Residential Construction and Development Centre（南岸區住宅建設發展中心）andNan’an District State-owned Assets Management Centre（南岸區國資管理中心）. Mr. Xu obtained hisbachelor’s degree in computer application from Chongqing Communication Institute（重慶通信學院）in2013.

Ms. Zhang Hao（張豪）, age 27, has been a supervisor of the Issuer since 1 January 2014 and is amember of the CPC. Ms. Zhang previously served as volunteer soldier at the back office of theChongqing Armed Police Force Hospital Service（重慶武警總隊醫院勤務後勤基地）.

Senior Management

The following table sets forth the Issuer’s senior management as at the date of this Offering Circular:

Name Age Position

Yuan Guangmin（袁光敏）. . . . . . . . . . . . . . . . . 45 Chairman and general managerGao Jianglin（高江琳）. . . . . . . . . . . . . . . . . . . . 44 Head of the finance department

Ms. Yuan Guangmin（袁光敏）, age 45, has been the general manager of the Issuer since 1 January2014. For Ms. Yuan’s biography, see ‘‘Directors’’ above.

Ms. Gao Jianglin（高江琳）, age 44, has been the head of finance of the Issuer since 1 January 2014.For Ms. Gao’s biography, see ‘‘Supervisors’’ above.

95

Corporate Governance

The Issuer has established and implemented an effective corporate governance structure. It has set upfive departments at the headquarter level (namely the General Office, the Operation and FinanceDepartment, the Investment and Financing Department, the Asset Disposal Department and the AssetManagement Department). The primary duties of these five departments are set forth as follows:

• General Office is primarily responsible for carrying out daily administrative work, recruitment,internal training, appraisal and secretarial works, establishing human recourses system and policiesand coordinating different departments of the Issuer.

• Finance Department is primarily responsible for drafting, improving and implementing theaccounting system and financial management policies, supervising and monitoring the income andexpenses of the Issuer and preparing budget and financial accounts and analysing the financialstatus of the Issuer and its affiliates.

• Investment and Financing Department is primarily responsible for establishing and implementingthe investment and financing strategies of the Issuer and reporting the proposed investmentprojects to the management.

• Asset Disposal Department is primarily responsible for improving the state-owned assets beinggranted and implementing the transfer of assets.

• Asset Management Department is primarily responsible for managing the Issuer’s real assets andfixed asset investment projects and the leasing of the Issuer’s assets.

In addition, the Issuer has established several effective internal control systems, including the financemanagement system, the contract management system, the human resources management system, thesubsidiaries management system, the external guarantee management system, the connected transactionmanagement system, the information disclosure system and the budget management system.

96

PRC REGULATIONS

This section is a high-level overview of the PRC legal system and a summary of the principal PRC lawsand regulations relevant to the issue of the Bonds by the Issuer. As this is a summary, it does notcontain a detailed analysis of the PRC laws and regulations.

MAIN REGULATORY AUTHORITIES AND CONTENTS OF SUPERVISION

China’s building and construction industry implements a regulatory system with the combination ofcomprehensive supervision and professional supervision. Government supervision over the building andconstruction industry mainly includes three aspects: the management on the competency andqualification of market players, the whole process management on the construction projects, and themanagement on the economic and technical standards of construction projects. The main regulatoryauthorities include:

• Ministry of Housing and Urban-Rural Development of the PRC (the ‘‘MOHURD’’) (formerlyMinistry of Construction of the PRC, the ‘‘MOC’’) and the competent local departments ofMOHURD at various levels are responsible for the comprehensive supervision over theconstruction industry as well as the real estate development qualifications. Such managementmainly includes: management on the competency and qualification of market players, approval andverification of the qualifications of various construction enterprises for access to market,examination and approval of occupational qualifications of individuals in the constructionindustry, supervision over and management on construction projects, and establishment ofindustrial standards.

• Ministry of Transport of the PRC (the ‘‘MOT’’) and the competent local departments of MOT atvarious levels are responsible for the construction projects of ports and highways nationwide.

• NDRC and the local development and reform commissions at various levels are responsible for theinvestment planning, examination and approval of city infrastructure construction projects.

• Ministry of Environmental Protection of the PRC (former State Environmental ProtectionAdministration, the ‘‘SEPA’’) and the competent local departments of environmental protection atvarious levels are responsible for the environmental protection management of constructionprojects.

MAJOR LAWS AND REGULATIONS

Regulation on Fiscal Debts of Local Governments

In accordance with Guidance on Strengthening Fiscal Financial Management of Government InvestedProjects Construction Agency System（財政部關於切實加強政府投資項目代建制財政財務管理有關問

題的指導意見）issued by the Ministry of Finance of the PRC on 16 September 2004, the constructionagency established (or authorised to be established) by the government can be deemed as a departmentof the government and can directly prepare annual investment plan and annual budget for cityinfrastructure construction. In accordance with Guidance on Further Strengthening Adjustment of CreditStructure to Promote Fast and Smooth Development of National Economy（中國人民銀行、中國銀行業

監督管理委員會關於進一步加強信貸結構調整促進國民經濟平穩較快發展的指導意見）issued jointlyby the PBOC and CBRC in March 2009, local governments are encouraged to establish financingplatforms to issue financing instruments such as enterprise bonds and medium term notes. In order tostrengthen the management of financing platforms and effectively prevent fiscal financial risks, Circular19 and Circular 2881 were separately promulgated in June 2010 and November 2010, respectively. Inaccordance with Circular 19, all levels of local governments shall clear up the debts of their respectivefinancing platform. In accordance with Circular 2881, indebtedness of local governments will impactfinancing platform’s issuance of enterprise bonds.

97

To effectively regulate the construction of public works projects financed by local governments throughthe BT business model, the Ministry of Finance, NDRC, the PBOC and CBRC jointly promulgatedCircular 463 on 24 December 2012. According to Circular 463, all levels of local governments and theirgovernment departments and offices generally shall not incur government debts through agent-construction projects on BT business model basis where repurchase fee would be paid in instalments.For public works projects which are eligible for incurring government debts, Circular 463 makes it clearthat the government must carefully plan the construction scale and the repurchase schedule inaccordance with the construction plan of the relevant project and the repayment ability of thegovernment itself if the relevant project is to be constructed on BT business model basis.

On 21 September 2014, Circular 43 was promulgated by the State Council. Circular 43 aims atregulating financing system of local government and the three channels are presented. In accordancewith Circular 43, financing platforms shall no longer serve the fiscal financing functions nor incur newgovernment debts. Public interest projects may be funded by the government through issuinggovernment bonds, since the new Budget Law of the PRC (the ‘‘New Budget Law’’), which took effecton 1 January 2015, empowers local governments to issue government bonds, and public interest projectswith income generated, such as city infrastructure construction, may be operated independently by socialinvestors or jointly by the government and social investors through the establishment of special purposecompanies. Social investors or such special purpose companies shall invest in accordance with market-oriented principles and may be funded by, among other market-oriented approaches, bank loans,enterprise bonds, project revenue bonds and asset-backed securitisation. Social investors or the specialpurpose companies shall bear the obligation to pay off such debts and the government shall not be liablefor any of the social investors’ or special purpose companies’ debts. Circular 43 also sets forth thegeneral principles of dealing with existing debts of financing platforms. Based on the auditing results ofsuch debts run by the local governments, the existing debts that should be repaid by the localgovernments shall be identified, reported to State Council for approval, and then included in the budgetplan of local governments.

On 11 May 2015, Opinion on the Proper Solution of the Follow-up Financing Issues for Projects underConstruction of Financing Platform of Local Governments issued jointly by the Ministry of Finance ofthe PRC, the PBOC and the CBRC（財政部人民銀行銀監會關於妥善解決地方政府融資平臺公司在建

項目後續融資問題意見）(‘‘Circular 40’’) was promulgated by the General Office of the State Councilof the PRC. In accordance with Circular 40, local governments at all levels and banking financialinstitutions shall properly deal with follow-up financing issues for projects under construction offinancing platform companies. Projects under construction refer to projects that have started constructionupon the completion of examination, approval or filing procedures in accordance with relevantregulations manuscript by competent investment authorities before the date when the Circular 43 waspromulgated.

The key tasks of local governments and banking financial institutions are as followings:

• Support stock financing needs for projects under construction. Local governments at all levels andbanking financial institutions shall ensure the orderly development of projects under construction.For the loans to the projects under construction of financing platform companies, if the loancontracts with legal effect have been signed before 31 December 2014 and the loans have beengranted but the contracts have not yet expired, banking financial institutions shall, under thepremise of fully controlling risks and implementing credit conditions, continue to grant loans asagreed in the contracts, and shall not blindly call in loans in advance, delay or suspend thegranting of loans.

• Regulate increment financing for projects under construction. Local governments at all levels shallpay close attention to the increment financing needs which are expected to be given fiscal supportfor the projects under construction of the financing platform companies, and shall, under thepremise of compliance with laws and regulations and standard administration, make overall

98

arrangements for various kinds of capitals such as fiscal capital and social capital and ensure thecontinuation and completion of projects under construction. For the projects under construction offinancing platform companies for which the loan amount in the contracts that have been signedfails to meet the construction needs, if it is suitable for them to adopt government and socialcapital cooperation mode, they shall prioritise such mode to make up the needs. And if they are incompliance with the relevant state provisions without any other funding sources for construction,but temporarily the government and social capital cooperation mode is not suitable, the incrementfinancing needs shall be incorporated into government budget management and solved throughissuing government bonds by local governments as required by laws and relevant regulations.

• Administer in an effective and proper manner follow-up financing for projects under construction.Banking financial institutions shall carefully check the destinations of the loans, and focus onsupporting the projects under construction of financing platform companies in respects such asfarmland water conservancy facilities, affordable housing projects and urban railway systems.

• Improve supporting measures. Under the premise of ensuring fiscal expenditure needs, in theregions where there are corresponding amount of government bonds issuance and where thetreasury balances exceed the treasury payment for one and a half months, the local financialdepartments are allowed to, within the limit of the amount of government bonds issuance, makemore efforts to effectively use the stock of fiscal funds in the previous years and use the surplusamount of the treasury for capital flow before government bond issuance, so as to address the timedifference between the financing for projects under construction and government bonds issuance.

Regulation on the Issuance of Foreign Bonds

Pursuant to the NDRC Circular, which was promulgated by the NDRC and became effective on 14September 2015, where domestic enterprises, overseas enterprises controlled by them or their overseasbranches issue foreign debts, which are debt instruments of no less than one year of tenor that aredenominated in domestic currency or foreign currency with the capital repaid and interest paid asagreed, including bonds issued overseas and long and medium-term international commercial loans, theenterprises shall apply to the NDRC for dealing with the formalities of record-filing and registrationbefore issuance. The NDRC shall decide to accept it or not within five working days upon the receipt ofthe application and provide the Record-filing and Registration Certification of Issuance of Foreign Debtsby Enterprises within seven working days after acceptance. The enterprises shall submit the issuanceinformation to the NDRC within 10 working days after the end of issuance each time.

Bidding and Tendering Management

Bidding and tendering of various construction projects have been provided in the Bidding and TenderingLaw of the People’s Republic of China（中華人民共和國招標投標法）promulgated by SCNPC on 30August 1999 which became effective on 1 January 2000, Regulation on the Implementation of theBidding and Tendering Law of the People’s Republic of China（中華人民共和國招標投標法實施條例）promulgated by State Council on 20 December 2011 which became effective on 1 February 2012,Measures for the Construction Bidding and Tendering of Construction Projects（工程建設項目施工招標

投標辦法）jointly promulgated by NDRC, MOC, MOR, MOT, Ministry of Information Industry of thePeople’s Republic of China, Ministry of Water Resources of the People’s Republic of China, and CivilAviation Administration of China in 8 March 2003 which became effective on 1 May 2003,Administrative Measures for the Bidding and Tendering of Design of Construction Projects（建設工程設

計招標投標管理辦法）issued by MOC on 18 October 2000 and became effective on the same date,Provisions on the Tendering Scope and Scale Standards of Construction Projects（工程建設項目招標範

圍和規模標準規定）issued by NDRC on 1 May 2000 and became effective on the same date,Administrative Measures for the Bidding and Tendering of Housing Construction and MunicipalInfrastructure Work（房屋建築和市政基礎設施工程施工招標投標管理辦法）issued by MOC on 1 June

99

2001 and became effective on the same date, and Administrative Measures for the Bidding andTendering of Highway Engineering Construction（公路工程施工招標投標管理辦法）promulgated byMOT on 23 June 2006 which became effective on 1 August 2006.

In accordance with the Bidding and Tendering Law of the People’s Republic of China, certain types ofprojects shall go through bidding processes during phases, including project survey, design,construction, supervision and procurement of the essential equipment and materials relating to theproject construction. Such projects include the projects related to social public interests and publicsecurity, including large infrastructure and utilities; projects invested by using state-owned fund orfinanced by the government in whole or in part; and projects using loans or aid funds of internationalorganisations or foreign government.

The process of bidding and tendering consists of five stages including bid invitation, tendering, bidopening, bid evaluation and bid award. The principle of openness, fairness and equal competition shallbe followed in the bidding and tendering for construction project contracting, and the contractor shall bechosen after evaluation. After the contractor is determined, the tenderee shall issue the notification to thesuccessful bidder. The notification is legally binding on both the tenderee and the bid winner.

In accordance with the Bidding and Tendering Law of the People’s Republic of China and Measures forthe Construction Bidding and Tendering of Construction Projects, if any project that shall undergobidding as required by law fails to go through the bidding process, or the items subject to bidding arebroken up into pieces or the bidding requirement is otherwise evaded, the relevant administrativesupervision department shall order rectification within a specified period, and may impose a fine of 0.5per cent. up to 1 per cent. of the contract amount of the project. For projects using the state-ownedfunds in whole or in part, the project approval authority may suspend the implementation of the projector suspend the fund appropriation, and impose punishment on the person direct in charge of the entity orother person directly liable. Further, in accordance with the provisions of the Interpretations of theSupreme People’s Court on Issues of Law Application during the Trial of Construction Contracts forBuilding Projects（最高人民法院關於審理建設工程施工合同糾紛案件適用法律問題的解釋）issued bythe Supreme People’s Court on 25 October 2004 and became effective on 1 January 2005, if any projectthat is required to undergo a bidding process fails to go through the bidding process or the bid award isinvalid, the construction contract for building projects shall become invalid.

Quality Management

Laws and regulations on project quality mainly include Construction Law of the People’s Republic ofChina, Regulation on Quality Management of Construction Projects（建設工程質量管理條例）issued bythe State Council on 30 January 2000 and became effective on the same date, Administrative Measuresfor Quality Management of Construction Project Survey（建設工程勘察質量管理辦法）amended byMOC on 22 November 2007 and became effective on the same date, Interim Measures for theAdministration of Quality Warranty Funds of Construction Projects（建設工程質量保證金管理暫行辦

法）issued jointly by MOC and MOF on 12 January 2005 and became effective on the same date,Administrative Measures for Completion Acceptance Record of Building Construction and MunicipalInfrastructure Projects（房屋建築和市政基礎設施工程竣工驗收備案管理辦法）issued by MOHURD on19 October 2009 and became effective on the same date, Measures for Quality Warranty of BuildingConstruction Projects（房屋建築工程質量保修辦法）issued by MOC on 30 June 2000 and becameeffective on the same date, Measures for Completion Acceptance of Port Works（港口工程竣工驗收辦

法）promulgated by MOT on 12 April 2005 which became effective on 1 June 2005 and amended on 5September 2014 and Measures for Completion (Delivery) Acceptance of Highway Works（公路工程竣

（交）工驗收辦法）promulgated by MOT on 31 March 2004 and became effective on 1 October 2004,and its Implement which is promulgated on 1 May 2010.

100

According to the Regulation on Quality Management of Construction Projects, all the building,surveying, designing, construction and supervision units shall be responsible for the quality of theconstruction projects. The competent administrative department of construction at or above county levelis the competent authority for quality supervision and management of construction projects.

Environmental Protection Management

Major laws and regulations on environmental protection during the project construction process includethe Environmental Protection Law of the People’s Republic of China（中華人民共和國環境保護法）amended by SCNPC on 24 April 2014 which became effective on 1 January 2015, Law onEnvironmental Impact Assessment of the People’s Republic of China（中華人民共和國環境影響評價法）promulgated by SCNPC on 28 October 2002 which became effective on 1 September 2003,Administrative Regulations on Environmental Protection of Construction Projects（建設項目環境保護管

理條例）issued by State Council on 29 November 1998 and became effective on the same date, andAdministrative Measures for Environmental Protection Acceptance of Construction Projects uponCompletion（建設項目竣工環境保護驗收管理辦法）promulgated by SEPA on 27 December 2001 whichbecame effective on 1 February 2002 and amended on 22 December 2010 which amendment becameeffective on the same date.

In accordance with the provisions of the Administrative Regulations on Environmental Protection ofConstruction Projects and Administrative Measures for Environmental Protection Acceptance ofConstruction Projects upon Completion, the PRC Government implements the system of environmentalimpact assessment on construction projects. After the completion of a construction project, thecompetent administrative department of environmental protection will undergo environmental protectionacceptance process and assess whether the construction project has met the requirements forenvironmental protection.

Environmental Protection

The Environmental Protection Law（環境保護法）, promulgated on 26 December 1989 by the StandingCommittee of the National People’s Congress, which became effective on 26 December 1989, asamended on 24 April 2014, establishes the legal framework for environmental protection in the PRC.The environmental protection department of the State Council supervises environmental protection workin the PRC, and establishes national standards for the discharge of pollutants. Each of the localenvironmental protection bureaus is responsible for the environmental protection work within theirrespective jurisdictions.

Air Pollution

The Air Pollution Prevention Law（大氣污染防治法）, promulgated on 29 April 2000 by the StandingCommittee of the National People’s Congress, which became effective on 1 September 2000, establishesthe legal framework for air pollution prevention in the PRC. The environmental protection department ofthe State Council formulates national air quality standards. Each of the local environmental protectionbureaus is authorised to regulate air pollution within each of their respective jurisdictions by formulatingmore specific local standards, and may impose penalties for violation.

Water Pollution

The Water Pollution Prevention Law（水污染防治法）, promulgated on 11 May 1984 by the StandingCommittee of the National People’s Congress, which became effective on 1 November 1984, andamended on 15 March 1996 and 28 February 2008, establishes the legal framework for water pollutionprevention in the PRC. The environmental protection department of the State Council formulatesnational waste discharge standards. Enterprises that discharge waste into water shall pay a treatment fee.Each of the local environmental protection bureaus is authorised to regulate water pollution within eachof their respective jurisdictions by formulating more specific local standards, and may impose penaltiesfor violation, including suspending operations.

101

Noise Pollution

The Noise Pollution Prevention Law（環境雜訊污染防治法）, promulgated by the Standing Committeeof the National People’s Congress on 29 October 1996, which became effective on 1 March 1997,establishes the framework for noise pollution prevention in the PRC. Under the Noise PollutionPrevention Law, any person undertaking a construction, decoration or expansion project which mightcause environmental noise pollution, shall prepare and submit an environmental impact report to theenvironmental protection authority for approval. Facilities for prevention and control of environmentalnoise pollution shall be designed and approved by the environmental protection authority prior to thecommencement of the project, and be built and put into use simultaneously with the project works.Facilities for prevention and control of environmental noise pollution may not be dismantled orsuspended without the approval of the environmental protection authority.

Construction Projects

The Environmental Impact Appraisal Law（環境影響評價法）, promulgated by the Standing Committeeof the National People’s Congress on 28 October 2002, which became effective on 1 September 2003,the Administration Rules on Environmental Protection of Construction Projects（建設項目環境保護管理

條例）, promulgated by the State Council on 29 November 1998, which became effective on 29November 1998, and the Measures for the Administration of Examination and Approval ofEnvironmental Protection Facilities of Construction Projects（建設專案竣工環境保護驗收管理辦法）,promulgated by the Ministry of Environmental Protection on 27 December 2001, which became effectiveon 1 February 2002, require enterprises planning construction projects to engage qualified professionalsto provide assessment reports on the environmental impact of such projects. The assessment report shallbe filed with and approved by the relevant environmental protection bureau, prior to the commencementof any construction work. The construction project shall not commence operation, unless inspected andapproved by the relevant environmental protection bureau.

Labour

Employment Contracts

The Labour Contract Law（勞動合同法）, promulgated by the Standing Committee of the NationalPeople’s Congress on 29 June 2007, which became effective on 1 January 2008 and was amended on 28December 2012 and became effective on 1 July 2013, governs the relationship between employers andemployees and provides for specific provisions in relation to the terms and conditions of an employeecontract. The Labour Contract Law stipulates that employee contracts shall be in writing and signed. Itimposes more stringent requirements on employers in relation to entering into fixed-term employmentcontracts, hiring of temporary employees and dismissal of employees. Pursuant to the Labour ContractLaw, employment contracts lawfully concluded prior to the implementation of the Labour Contract Lawand continuing as at the date of its implementation shall continue to be performed. Where anemployment relationship was established prior to the implementation of the Labour Contract Law, butno written employment contract was concluded, a contract shall be concluded within one month after itsimplementation.

Employee Funds

Under applicable PRC laws, regulations and rules, including the Social Insurance Law（社會保險法）,promulgated by the Standing Committee of the National People’s Congress on 28 October 2010, whichbecame effective on 1 July 2011, the Interim Regulations on the Collection and Payment of SocialInsurance Premiums（社會保險費征繳暫行條例）, promulgated by the State Council on 22 January1999, which became effective on 22 January 1999, and Administrative Regulations on the HousingProvident Fund（住房公積金管理條例）, promulgated by the State Council on 3 April 1999, whichbecame effective on 3 April 1999 and as amended on 24 March 2002, employers are required tocontribute, on behalf of their employees, to a number of social security funds, including funds for basicpension insurance, unemployment insurance, basic medical insurance, occupational injury insurance,

102

maternity leave insurance, and to housing provident funds. These payments are made to localadministrative authorities and any employer who fails to contribute may be fined and ordered to pay theoutstanding amount within a stipulated time period.

REGULATIONS REGARDING OVERSEAS INVESTMENT, FINANCING AND ACQUISITIONACTIVITIES

NDRC Supervision

According to the Measures for the Administration of Approval and Filing of Overseas InvestmentProjects（境外投資項目核准和備案管理辦法）effective from 1 May 2014 and amended on 27 December2014, the procedure of approval and filing shall be respectively applied to different overseas investmentprojects. Specifically, if the amount of the investment made by the Chinese party is U.S.$1 billion ormore, or if the project is related to sensitive countries, regions or industries, regardless of the investmentamount, the projects shall be subject to the approval of NDRC. If the amount of the investment made bythe Chinese party is U.S.$2 billion or more, and the project is related to the sensitive countries, areas orindustries, the projects shall be subject to the examination of NDRC and then shall be reported to theState Council for approval. Projects other than as specified above shall be subject to the filing with thecompetent governmental body.

Specifically, overseas investment projects carried out by enterprises under central management, or thosecarried out by local enterprises in which the amount of Chinese investment reaches or exceeds U.S.$300million shall be subject to the filing with NDRC. Those carried out by local enterprises in which theamount of Chinese investment is below U.S.$300 million shall be subject to the filing with competentinvestment departments of the provincial government.

Investment projects to be carried out in Hong Kong and/or the Macau Special Administrative Regionshall be governed by the Measures for the Administration of Approval and Filing of OverseasInvestment Projects.

According to the NDRC Circular, which was issued by the NDRC on 14 September 2015 and came intoeffect on the same day, if a PRC enterprise or an offshore enterprise controlled by a PRC enterprisewishes to issue bonds outside of the PRC with a maturity of more than one year, such enterprise must inadvance of issuing such bonds, file certain prescribed documents with the NDRC and procure aregistration certificate from the NDRC in respect of such issue.

The NDRC Circular relates to the matters as listed below:

• remove the quota review and approval system for the issuance of foreign debts by enterprises,reform and innovate the ways that foreign debts are managed, and implement the administration ofrecord-filing and the registration system. Realise the supervision and administration of the size offoreign debts borrowed on a macro level with the record-filing, registration, and informationreporting of the issuance of foreign debts by enterprises;

• before the issuance of foreign debts, enterprises shall first apply to the NDRC for the handling ofthe record-filing and registration procedures and shall report the information on the issuance toNDRC within 10 working days of completion of each issuance;

• record-filing and registration materials to be submitted by an enterprise for the issuance of foreigndebts shall include: application report for the issuance of foreign debts and issuance plan,including the currency, size, interest rate, and maturity of foreign debts, the purpose of the fundsraised, back flow of funds, etc. The applicant shall be responsible for the authenticity, legality, andcompleteness of the application materials and information;

103

• the NDRC shall decide whether to accept the application for record-filing and registration within 5working days of receiving it and shall issue a Certificate for Record-filing and Registration of theIssuance of Foreign Debts by Enterprises within 7 working days of accepting the application andwithin the limit of the total size of foreign debts;

• the issuer of foreign debts shall handle the procedures related to the outflow and inflow of foreigndebt funds with the Certificate for Record-filing and Registration according to the regulations.When the limit of the total size of foreign debts is exceeded, the NDRC shall make a publicannouncement and no longer accept applications for record-filing and registration;

• if there is a major difference between the actual situation of the foreign debts issued by theenterprises and the situation indicated in the record-filing and registration, an explanation shall begiven when reporting relevant information. The NDRC shall enter the poor credit record of anenterprise which maliciously and falsely reports the size of its foreign debts for record-filing andregistration into the national credit information platform.

MOFCOM Supervision

MOFCOM issued the new version of the Overseas Investment Administration Rules（境外投資管理辦

法）on 6 September 2014, effective from 6 October 2014 (the ‘‘New Overseas Investment Rules’’).Under the New Overseas Investment Rules, a domestic enterprise intending to carry out any overseasinvestment shall report to the competent department of commerce for verification or filing and thecompetent department of commerce shall, with regard to an enterprise so verified or filed, issue theretoan Enterprise Overseas Investment Certificate（企業境外投資證書）. If two or more enterprises makejoint investment to establish an overseas enterprise, the larger (or largest) shareholder shall beresponsible for the verification or filing procedure after obtaining written consent of other investingparties.

An enterprise that intends to invest in a sensitive country or region or a sensitive industry shall applyfor the verification by MOFCOM. ‘‘Sensitive countries and regions’’ refer to those countries without adiplomatic relationship with the PRC, or subject to the UNSC sanctions or otherwise under the list ofverified countries and regions published by MOFCOM from time to time. ‘‘Sensitive industries’’ refer tothose industries involving the products and technologies which are restricted from being exported, oraffecting the interests of more than one country (or region). In accordance with the New OverseasInvestment Rules, a central enterprise shall apply to MOFCOM for verification and MOFCOM shall,within 20 working days after accepting such application, decide whether or not the verification isgranted. For a local enterprise, it shall apply through the provincial department of commerce toMOFCOM for such verification. The provincial department of commerce shall give a preliminaryopinion within 15 working days after accepting such local enterprise’s application, and submit allapplication documents to MOFCOM. MOFCOM shall decide whether or not to grant the verificationwithin 15 working days of receipt of such preliminary opinion from the provincial department ofcommerce. Upon verification, the Enterprise Overseas Investment Certificate shall be issued to theinvesting enterprise by MOFCOM.

All overseas investments other than those subject to MOFCOM verification as described above aresubject to a filing procedure. The investing enterprise shall complete the filing form through theOverseas Investment Management System, an online system maintained by MOFCOM, print out a copyof such filing form for stamping with the company chop, and then submit such stamped filing formtogether with a copy of its business licence for filing at MOFCOM (for a central enterprise（中央企業））or the provincial department of commerce (for a local enterprise) respectively.

MOFCOM or the provincial department of commerce shall accept the filing and issue the EnterpriseOverseas Investment Certificate within three working days upon receipt of such filing form.

104

The investing enterprise must carry out the investment within two years of the date of the relevantEnterprise Overseas Investment Certificate, otherwise such certificate will automatically become invalidand a new filing or verification application has to be made by the investing enterprise. In addition, ifany item specified in such certificate is changed, the investing enterprise shall make the change ofregistration at MOFCOM or the provincial department of commerce (as the case may be).

If an overseas invested company carries out a re-investment activity offshore, the investing enterpriseshall report such re-investment activity to MOFCOM or the provincial department of commerce (as thecase may be) after the legal process of the investment is completed offshore. The investing enterpriseshall complete and print out a copy of the Overseas Chinese-invested Enterprise Re-investment ReportForm（境外中資企業再投資報告表）from the Overseas Investment Management System and stamp andsubmit such form to MOFCOM or the provincial department of commerce.

Foreign Exchange Administration

According to Circular of the State Administration of Foreign Exchange on Further Improving andRevising the Foreign Exchange Control Policy on Direct Investment（國家外匯管理局關於進一步改進

和調整直接投資外匯管理政策的通知）, corporations, enterprises or other economic organisations(domestic investors) that have been permitted to make outbound investment shall go through theprocedures of registration to the Foreign Exchange Bureau（外匯管理機構）. The Foreign ExchangeBureau shall issue the Foreign Exchange Registration Certificate（外匯登記證）for overseas directinvestment or an IC card to the domestic institution. The domestic institution shall go through theformalities for outward remittance of funds for overseas direct investment at a designated foreignexchange bank by presenting the approval document issued by the department in charge of overseasdirect investment and the Foreign Exchange Registration Certificate for overseas direct investment. Thescope of foreign exchange funds for overseas direct investment of domestic institutions includes theirown foreign exchange funds, domestic loans in foreign currencies in compliance with relevantprovisions, foreign exchange purchased with Renminbi, material objects, intangible assets and otherforeign exchange funds approved by the Foreign Exchange Bureaus for overseas direct investment. Theprofits gained from overseas direct investment of domestic institutions may be deposited in overseasbanks and used for overseas direct investment.

According to the Administrative Measures for Foreign Debt Registration and its operating guidelines,effective as at 13 May 2013, issuers of foreign debts are required to register with the SAFE. Issuersother than banks and financial departments of the government shall go through registration or record-filing procedures with the local branch of the SAFE within 15 business days of entering into a foreigndebt agreement. If the receipt and payment of funds related to the foreign debt of such issuer is nothandled through a domestic bank, the issuer shall, in the event of any change in the amount of moneywithdrawn, principal and interest payable or outstanding debt, go through relevant record-filingprocedures with the local branch of the SAFE.

On 29 April 2016, the PBOC issued the Circular of the People’s Bank of China on the NationwideImplementation of the Macro-prudence Management of Cross-border Financing in Full Aperture（中國人

民銀行關於在全國範圍內實施全口徑跨境融資宏觀審慎管理的通知）(the ‘‘Cross Border FinancingCircular’’), which came into effect on 3 May 2016. The Cross Border Financing Circular established amechanism aimed at regulating cross border financing activities based on the capital or net asset of theborrowing entities using a prudent management principle on a macro nationwide scale. The Issuer hasconfirmed with the local counterpart of SAFE that the Cross Border Financing Circular is not applicableto the Issuer since it is regarded a financing platform of a local government.

105

State-owned Assets Supervision

The Interim Measures for Administration of Overseas State-owned Property Rights of CentralEnterprises（中央企業境外國有產權管理暫行辦法）and the Interim Measures for the Supervision andAdministration of Overseas State-owned Assets of Central Enterprises（中央企業境外國有資產監督管理

暫行辦法）also apply to overseas investment projects. Where overseas enterprises wholly owned orcontrolled by central enterprises or their subsidiaries at all levels conduct economic activities such astransferring or acquiring properties, making non-monetary contribution, changing the state-ownedshareholding in non-listed companies, consolidation, division, dissolution or liquidation, they shallappoint a professional agency with the corresponding qualifications, professional experiences and goodreputation to evaluate or assess the subject matters, and the evaluation items or valuation results shall besubmitted to SASAC for record-filing or approval (as the case may be).

Pursuant to the Interim Measures for Administration of Overseas State-owned Property Right of CentralEnterprises, the central enterprise shall, in a unified way, apply for property right registration with theSASAC, where any of the following events take place in connection with a central enterprise or itssubsidiaries at all levels:

(1) where an overseas enterprise is established by way of investment, division or consolidation, or theproperty right of an overseas enterprise is obtained for the first time by way of acquisition orequity investment;

(2) where any change occurs to an overseas enterprise’s basic information including its name,registration place, registered capital and the main business scope, or the overseas enterprise’sproperty right information changes due to any changes in the capital contributors, amount ofcapital contributions and proportions of capital contributions;

(3) where an overseas enterprise no longer keeps state-owned property right due to dissolution,bankruptcy, or property right transfer and capital reduction; or

(4) other circumstances in which property right registration needs to be made.

106

TAXATION

The following summary of certain tax consequences of the purchase, ownership and disposition of theBonds is based upon applicable laws, regulations, rulings and decisions in effect as at the date of thisOffering Circular, all of which are subject to change (possibly with retroactive effect). This discussiondoes not purport to be a comprehensive description of all the tax considerations that may be relevant toa decision to purchase, own or dispose of the Bonds and does not purport to deal with consequencesapplicable to all categories of investors, some of which may be subject to special rules. Neither thesestatements nor any other statements in this Offering Circular are to be regarded as advice on the taxposition of any Bondholder or any persons acquiring, selling or otherwise dealing in the Bonds or onany tax implications arising from the acquisition, sale or other dealings in respect of the Bonds.Persons considering the purchase of the Bonds should consult their own tax advisors concerning thepossible tax consequences of buying, holding or selling any Bonds under the laws of their country ofcitizenship, residence or domicile.

PRC

The following summary accurately describes the principal PRC tax consequences of ownership of theBonds by beneficial owners who, or which, are not residents of mainland China for PRC tax purposes.These beneficial owners are referred to as non-PRC Bondholders in this ‘‘Taxation-PRC’’ section. Inconsidering whether to invest in the Bonds, investors should consult their individual tax advisors 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. Reference is made to PRC taxes from the taxableyear beginning on or after 1 January 2008.

Pursuant to the EIT Law, the IIT Law and the implementation regulations in relation to both the EITLaw and the IIT Law, PRC income tax at a rate of 10 per cent. or 20 per cent. is normally applicable toPRC-source income derived by non-resident enterprises or individuals, respectively, subject toadjustment by applicable treaty. As the Issuer is a PRC resident enterprise for tax purposes, interestpaid to non-resident Bondholders may be regarded as PRC-sourced, and therefore be subject to PRCincome tax at a rate of 10 per cent. for non-resident enterprise Bondholders and at a rate of 20 per cent.for non-resident individual Bondholders (or a lower treaty rate, if any).

Such income tax shall be withheld by the Issuer that is acting as the obligatory withholder and suchPRC enterprise shall withhold the tax amount from each payment or payment due. To the extent that thePRC has entered into arrangements relating to the avoidance of double taxation with any jurisdiction,such as Hong Kong, that allow a lower rate of withholding tax, such lower rate may apply to qualifiednon-PRC resident enterprise Bondholders.

Under the EIT Law and its implementation rules, any gains realised on the transfer of the Bonds byholders who are deemed under the EIT Law as non-resident enterprises may be subject to PRCenterprise income tax if such gains are regarded as income derived from sources within the PRC. Underthe EIT Law, a ‘‘non-resident enterprise’’ means an enterprise established under the laws of ajurisdiction other than the PRC and whose actual administrative organisation is not in the PRC, whichhas established offices or premises in the PRC, or which has not established any offices or premises inthe PRC but has obtained income derived from sources within the PRC. There remains uncertainty as towhether the gains realised on the transfer of the Bonds by enterprise holders would be treated asincomes derived from sources within the PRC and be subject to PRC enterprise income tax. In addition,under the IIT Law, any individual who has no domicile and does not live within the territory of the PRCor who has no domicile but has lived within the territory of China for less than one year shall payindividual income tax for any income obtained within the PRC. There is uncertainty as to whether gainsrealised on the transfer of the Bonds by individual holders who are not PRC citizens or residents will besubject to PRC individual income tax. If such gains are subject to PRC income tax, the 10 per cent.enterprise income tax rate and 20 per cent. individual income tax rate will apply respectively unlessthere is an applicable tax treaty or arrangement that reduces or exempts such income tax. The taxable

107

income will be the balance of the total income obtained from the transfer of the Bonds minus all costsand expenses that are permitted under PRC tax laws to be deducted from the income. According to theArrangement, Bondholders who are Hong Kong residents, including both enterprise holders andindividual holders, will be exempted from PRC income tax on capital gains derived from a sale orexchange of the Bonds if such capital gains are not connected with an office or establishment that theBondholders have in the PRC and all the other relevant conditions are satisfied.

On 23 March 2016, the Ministry of Finance and the State Administration of Taxation issued Circular 36,which introduced a new VAT from 1 May 2016. Under Circular 36, VAT is applicable where theentities or individuals provide services within the PRC. The operating income generated from theprovision of taxable sale of services by entities and individuals, such as financial services, shall besubject to PRC VAT if the seller or buyer of the services is within PRC. In the event that foreignentities or individuals do not have a business establishment in the PRC, the purchaser of services shallact as the withholding agent. According to the Explanatory Notes to Sale of Services, Intangible Assetsand Real Property attached to Circular 36, financial services refer to the business activities of financialand insurance operation, including loan processing services, financial services of direct charges,insurance services and the transfer of financial instruments, and the VAT rate is 6 per cent. Accordingly,the interest and other interest like earnings received by a non-PRC resident Bondholder from the Issuerwill be subject to PRC VAT at the rate of 6 per cent. The Issuer will be obligated to withhold VAT of 6per cent. and certain surcharges on VAT for payments of interest and certain other amounts on theBonds paid by the Issuer to Bondholders that are non-resident enterprises or individuals. And as thewithholding agent, the Issuer shall calculate the withholding tax according to the following formula:withholding tax = price paid by the purchaser ÷ (1 + tax rate) × tax rate. Pursuant to Interim Regulationof the PRC on City Maintenance and Construction Tax（中華人民共和國城市維護建設稅暫行條

例(2011修訂）, Interim Provisions on the Collection of Educational Surcharges（徵收教育費附加的暫行

規定(2011修訂）, Notice of the Ministry of Finance on the Relevant Matters regarding Unifying thePolicies on Local Education Surcharges（財政部關於統一地方教育附加政策有關問題的通知）,Administrative Measures on the Collection and Utilisation of Local Educational Surcharges inChongqing（重慶市地方教育附加徵收使用管理辦法）and based on consultation with the Chongqinglocal taxation bureau, a city maintenance and construction tax (7 per cent.), an educational surcharge (3per cent.) and a local educational surcharge (2 per cent.) will be applicable when entities and individualsare obliged to pay VAT (for an aggregate of 12 per cent. on any VAT payable). However, there isuncertainty as to whether gains derived from a sale or exchange of Bonds consummated outside of thePRC between non-PRC resident Bondholders will be subject to PRC VAT. VAT is unlikely to beapplicable to any transfer of Bonds between entities or individuals located outside of the PRC andtherefore unlikely to be applicable to gains realised upon such transfers of Bonds, but there isuncertainty as to the applicability of VAT if either the seller or buyer of Bonds is located inside thePRC. Circular 36 together with other laws and regulations pertaining to VAT are relatively new, theinterpretation and enforcement of such laws and regulations involve uncertainties.

However, despite the withholding of the PRC tax by the Issuer, the Issuer has agreed to pay additionalamounts to holders of the Bonds so that holders of the Bonds would receive the full amount of thescheduled payment, as further set out in ‘‘Terms and Conditions’’.

No PRC stamp duty will be imposed on non-PRC Bondholders either upon issuance of the Bonds orupon a subsequent transfer of Bonds to the extent that the register of holders of the Bonds is maintainedoutside the PRC and the issuance and the sale of the Bonds is made outside of the PRC.

FATCA

Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA,a ‘‘foreign financial institution’’ may be required to withhold on certain payments it makes (‘‘foreignpassthru payments’’) to persons that fail to meet certain certification, reporting, or relatedrequirements. The issuer may be a foreign financial institution for these purposes. A number ofjurisdictions have entered into, or have agreed in substance to, intergovernmental agreements with theUnited States to implement FATCA (‘‘IGAs’’), which modify the way in which FATCA applies in theirjurisdictions. Under the provisions of IGAs as currently in effect, a foreign financial institution in an

108

IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from paymentsthat it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments suchas the Bonds, including whether withholding would ever be required pursuant to FATCA or an IGAwith respect to payments on instruments such as the Bonds, are uncertain and may be subject to change.Even if withholding would be required pursuant to FATCA or an IGA with respect to payments oninstruments such as the Bonds, such withholding would not apply prior to 1 January 2019. Holdersshould consult their own tax advisors regarding how these rules may apply to their investment in theBonds.

109

SUBSCRIPTION AND SALE

The Issuer has entered into a subscription agreement with the Joint Lead Managers dated 12 July 2016(the ‘‘Subscription Agreement’’), pursuant to which and subject to certain conditions contained therein,the Issuer has agreed to sell to the Joint Lead Managers, and the Joint Lead Managers have agreed to,severally but not jointly, subscribe and pay for, or to procure subscribers to subscribe and pay for, theaggregate principal amount of the Bonds indicated in the following table.

Principalamount of the2019 Bonds tobe subscribed

Principalamount of the2021 Bonds tobe subscribed

U.S.$ U.S.$China International Capital Corporation Hong Kong Securities Limited . . . . . . . . . . . . . . . 230,000,000 390,000,000Bank of China Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 20,000,000Industrial and Commercial Bank of China (Asia) Limited . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 20,000,000Oversea-Chinese Banking Corporation Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 20,000,000Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch . . . . . . . . . . . . . . . . . 20,000,000 10,000,000Standard Chartered Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 20,000,000Wing Lung Bank Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000 20,000,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000,000 500,000,000

The Subscription Agreement provides that the Joint Lead Managers and their respective affiliates, andtheir respective directors, officers and employees will be indemnified against certain liabilities inconnection with the offer and sale of the Bonds. The Subscription Agreement provides that theobligations of the Joint Lead Managers are subject to certain conditions precedent, and entitles the JointLead Managers to terminate it in certain circumstances prior to payment being made to the Issuer.

The Joint Lead Managers and certain of their respective subsidiaries or affiliates have performed certaininvestment banking and advisory services for, and entered into certain commercial banking transactionswith, the Issuer and/or its subsidiaries, from time to time, for which they have received customary feesand expenses. The Joint Lead Managers and their respective subsidiaries or affiliates may, from time totime, engage in transactions with and perform services for the Issuer and/or its subsidiaries in theordinary course of business.

In connection with the offering of the Bonds, the Joint Lead Managers and/or their respective affiliate(s)may act as an investor for its own account and may take up Bonds in the offering and in that capacitymay retain, purchase or sell for its own account such securities and any securities of the Issuer and mayoffer or sell such securities or other investments otherwise than in connection with the offering.Accordingly, references herein to the Bonds being ‘‘offered’’ should be read as including any offering ofthe Bonds to the Joint Lead Managers and/or their respective affiliates acting in such capacity. Suchpersons do not intend to disclose the extent of any such investment or transactions otherwise than inaccordance with any legal or regulatory obligation to do so. The Joint Lead Managers or their respectiveaffiliates may purchase the Bonds for its own account or for the accounts of their customers and enterinto transactions, including credit derivative, such as asset swaps, repackaging and credit default swapsrelating to the Bonds and/or other securities of them or their subsidiaries or associates at the same timeas the offer and sale of the Bonds or in secondary market transactions. Such transactions would becarried out as bilateral trades with selected counterparties and separately from any existing sale or resaleof the Bonds to which this Offering Circular relates (notwithstanding that such selected counterpartiesmay also be purchasers of the Bonds).

In connection with the issue of the Bonds, any of the Joint Lead Managers appointed and acting in itscapacity as a Stabilising Manager or any person acting on behalf of the Stabilising Manager may, to theextent permitted by applicable laws and regulations, over-allot the Bonds or effect transactions with aview to supporting the market price of the Bonds at a level higher than that which might otherwiseprevail, but in so doing, the Stabilising Manager or any person acting on behalf of the StabilisingManager shall act as principal and not as agent of the Issuer. However, there is no assurance that the

110

Stabilising Manager or any person acting on behalf of the Stabilising Manager will undertakestabilisation action. Any stabilisation action may begin on or after the date on which adequate publicdisclosure of the terms of the Bonds is made and, if begun, may be ended at any time, but must endafter a limited period. Any loss or profit sustained as a consequence of any such over-allotment orstabilisation shall be for the account of the Stabilising Manager.

General

The distribution of this Offering Circular or any offering material and the offering, sale or delivery ofthe Bonds is restricted by law in certain jurisdictions. Therefore, persons who may come into possessionof this Offering Circular or any offering material are advised to consult their own legal advisers as towhat restrictions may be applicable to them and to observe such restrictions. This Offering Circular maynot be used for the purpose of an offer or invitation in any circumstances in which such offer orinvitation is not authorised.

No action has been or will be taken in any jurisdiction by the Issuer or the Joint Lead Managers thatwould permit a public offering, or any other offering under circumstances not permitted by applicablelaw, of the Bonds, or possession or distribution of this Offering Circular, any amendment or supplementthereto issued in connection with the proposed resale of the Bonds or any other offering or publicitymaterial relating to the Bonds, in any country or jurisdiction where action for that purpose is required.Accordingly, the Bonds may not be offered or sold, directly or indirectly, and neither this OfferingCircular nor any other offering material or advertisements in connection with the Bonds may bedistributed or published, by the Issuer or the Joint Lead Managers, in or from any country orjurisdiction, except in circumstances which will result in compliance with all applicable rules andregulations of any such country or jurisdiction and will not impose any obligations on the Issuer or theJoint Lead Managers. If a jurisdiction requires that an offering of Bonds be made by a licensed brokeror dealer and the Joint Lead Managers or any affiliate of the Joint Lead Managers is a licensed broker ordealer in that jurisdiction, such offering shall be deemed to be made by the Joint Lead Managers or suchaffiliate on behalf of the Issuer in such jurisdiction.

United States

The Bonds have not been and will not be registered under the Securities Act and may not be offered orsold within the United States except pursuant to an exemption from, or in a transaction not subject to,the registration requirements of the Securities Act. Each Joint Lead Manager has represented andwarranted that it has not offered or sold, and will not offer or sell, any Bonds constituting part of itsallotment within the United States except in accordance with Rule 903 of Regulation S under theSecurities Act and, accordingly, that neither it nor any of its affiliates (including any person acting onbehalf of such Joint Lead Manager or any of its affiliates) has engaged or will engage in any directedselling efforts with respect to the Bonds.

Terms used in the paragraph above have the meanings given to them by Regulation S under theSecurities Act.

United Kingdom

Each of the Joint Lead Managers has represented, warranted and agreed that:

(a) it has only communicated or caused to be communicated, and will only communicate or cause tobe communicated any invitation or inducement to engage in investment activity (within themeaning of Section 21 of the Financial Services and Markets Act 2000 (the ‘‘FSMA’’)) receivedby it in connection with the issue or sale of any Bonds in circumstances in which Section 21(1) ofthe FSMA does not apply to the Issuer; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect toanything done by it in relation to the Bonds in, from or otherwise involving the United Kingdom.

111

Hong Kong

Each of the Joint Lead Managers has represented, warranted and agreed that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, anyBonds other than (a) to ‘‘professional investors’’ as defined in the Securities and Futures Ordinance(Chapter 571 of the Laws of Hong Kong) (the ‘‘SFO’’) and any rules made under the SFO; or (b)in other circumstances which do not result in the document being a ‘‘prospectus’’ as defined in theCompanies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws ofHong Kong) or which do not constitute an offer to the public within the meaning of thatOrdinance; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in itspossession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,invitation or document relating to the Bonds, which is directed at, or the contents of which arelikely to be accessed or read by, the public in Hong Kong (except if permitted to do so under thesecurities laws of Hong Kong) other than with respect to the Bonds which are or are intended to bedisposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ as defined inthe SFO and any rules made thereunder.

The People’s Republic of China

Each of the Joint Lead Managers has represented, warranted and agreed that the Bonds are not beingoffered or sold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, notincluding the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted bythe securities laws of the PRC.

Singapore

Each of the Joint Lead Managers has acknowledged that this Offering Circular has not been and will notbe registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each of the JointLead Managers has represented, warranted and agreed that it has not offered or sold any Bonds orcaused such Bonds to be made the subject of an invitation for subscription or purchase, and will notoffer or sell such Bonds or cause such Bonds to be made the subject of an invitation for subscription orpurchase, and has not circulated or distributed, nor will it circulate or distribute this Offering Circular orany other document or material in connection with the offer or sale, or invitation for subscription orpurchase, of such Bonds, whether directly or indirectly, to persons in Singapore other than (i) to aninstitutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the‘‘SFA’’), (ii) to a relevant person pursuant to Section 275(1) of the SFA, or any person pursuant toSection 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFAor (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provisionof the SFA.

Where the Bonds 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 solebusiness of which is to hold investments and the entire share capital of which is owned by one ormore 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 hold investmentsand each beneficiary of the trust is an individual who is an accredited investor,

112

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rightsand interests (howsoever described) in that trust shall not be transferred within six months afterthat corporation or that trust has acquired the Bonds pursuant to an offer made under Section 275of the SFA except:

(1) to an institutional investor or to a relevant person as defined in Section 275(2) of the SFA, orto any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) ofthe SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law;

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments), (Sharesand Debentures) Regulations 2005 of Singapore.

Japan

The Bonds 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’’) and,accordingly, each of the Joint Lead Managers has represented, warranted and agreed that it has not,directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Bonds in Japanor to, or for the benefit of, any resident of Japan (which term as used herein means any person residentin Japan, including any corporation or other entity organised under the laws of Japan) or to others forre-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japanexcept pursuant to an exemption from the registration requirements of, and otherwise in compliance withthe Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.

113

SUMMARY OF CERTAIN DIFFERENCES BETWEEN PRC GAAP AND IFRS

The Group’s Financial Statements and the Group’s Interim Financial Statements included in thisOffering Circular were prepared and presented in accordance with PRC GAAP. PRC GAAP aresubstantially in line with IFRS, except for certain modifications between PRC GAAP and IFRS. Thefollowing is a general summary of certain differences between PRC GAAP and IFRS on recognition andpresentation as applicable to the Issuer. The Issuer is responsible for preparing the summary below.Since the summary is not meant to be exhaustive, there is no assurance regarding the completeness ofthe financial information and related footnote disclosure between PRC GAAP and IFRS and no attempthas been made to quantify such differences. Had any such quantification or reconciliation beenundertaken by the Issuer, other potentially significant accounting and disclosure differences may haverequired that are not identified below. Additionally, no attempt has been made to identify possible futuredifferences between PRC GAAP and IFRS as a result of prescribed changes in accounting standards.Regulatory bodies that promulgate PRC GAAP and IFRS have significant ongoing projects that couldaffect future comparisons or events that may occur in the future.

REVERSAL OF AN IMPAIRMENT LOSS

Under PRC GAAP, once an impairment loss is recognised for a long term asset (including fixed assets,intangible assets and goodwill, etc.), it shall not be reversed in any subsequent period.

Under IFRS, an impairment loss recognised in prior periods for an asset other than goodwill could bereversed if there has been a change in the estimates used to determine the asset’s recoverable amountsince the last impairment loss was recognised.

RELATED PARTY DISCLOSURES

Under PRC GAAP, government-related entities are not treated as related parties except suchgovernment-related entities can exercise significant influence over the reporting entity.

Under IFRS, government-related entities are treated as related parties.

114

GENERAL INFORMATION

1. Clearing System: The 2019 Bonds have been accepted for clearance through Euroclear andClearstream under Common Code 143842789 and the ISIN for the 2019 Bonds is XS1438427897.The 2021 Bonds have been accepted for clearance through Euroclear and Clearstream underCommon Code 144217756 and ISIN for the 2021 Bonds is XS1442177561.

2. Authorisations: The Issuer has obtained all necessary consents, approvals and authorisations inconnection with the issue and performance of its obligations under the Bonds, the Trust Deed andthe Agency Agreement. The issue of the Bonds was authorised by a board resolution of the Issuerdated 30 March 2016 and a shareholders’ resolution of the Issuer dated 15 April 2016. PRCcounsels to the Issuer and PRC counsels to the Joint Lead Managers have advised that no otherapprovals or consents are required from any regulatory authorities or other relevant authorities inthe PRC for the Issuer to issue the Bonds except for (i) the submission of the Bonds forregistration with the Chongqing Branch of the SAFE within 15 working days after the Issue Dateand (ii) the filing of the requisite information and documents with the NDRC within 10 workingdays after the Issue Date. For consequences of non-registration, see ‘‘Risk Factors – Risks Relatingto the Bonds – Any failure to complete the relevant filings under the NDRC Notice and therelevant registration under SAFE within the prescribed time frame following the completion of theissue of the Bonds may have adverse consequences for the Issuer and/or the investors of theBonds’’.

3. No Material and Adverse Change: Except for otherwise disclosed in this Offering Circular, therehas been no material adverse change, or any development or event involving a prospective change,in the condition (financial or other), prospects, results of operations or general affairs of the Issueror the Group since 31 December 2015.

4. Litigation: Except for otherwise disclosed in this Offering Circular, none of the Issuer or anymember of the Group is involved in any litigation or arbitration proceedings which could have amaterial and adverse effect on their business, results of operations and financial condition nor isthe Issuer aware that any such proceedings are pending or threatened.

5. Available Documents: Copies of the 2014 Audited Financial Statements, the 2015 AuditedFinancial Statements, the Trust Deed and the Agency Agreement relating to the Bonds will beavailable for inspection from the Issue Date upon prior written request and proof of holding at theprincipal place of business in London of the Trustee, being at the date of this Offering Circular atOne Canada Square, London E14 5AL, United Kingdom, and at the specified office of thePrincipal Paying Agent from time to time, at all reasonable times during normal business hours(being 9.00 a.m. to 3.00 p.m.), so long as any Bond is outstanding.

6. Financial Statements: The 2014 Audited Financial Statements, which are included elsewhere inthis Offering Circular, have been audited by Baker Tilly China as stated in its reports dated 28April 2015. The 2015 Audited Financial Statements, which are included elsewhere in this OfferingCircular, have been audited by Baker Tilly China as stated in its reports dated 25 April 2016.

7. Listing of Bonds: Application will be made for the listing of and quotation for each series ofBonds on the SGX-ST. Each Series of Bonds will be traded on the SGX-ST in a minimum boardlot size of U.S.$200,000 for so long as such series of Bonds is listed on the SGX-ST and the rulesof the SGX-ST so require. For so long as such series of Bonds are listed on the SGX-ST and therules of the SGX-ST so require, the Issuer shall appoint and maintain a paying agent in Singapore,where the Bonds may be presented or surrendered for payment or redemption, in the event that aGlobal Certificate is exchanged for Certificates in definitive form. In addition, in the event that aGlobal Certificate is exchanged for Certificates in definitive form, announcement of such exchangeshall be made by or on behalf of the Issuer through the SGX-ST and such an announcement willinclude all material information with respect to the delivery of the Certificates in definitive form,including details of the paying agent in Singapore.

115

INDEX TO FINANCIAL STATEMENTS

Audited consolidated financial statements of the Issuer as at and for the year ended31 December 2015

Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4

Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6

Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

Consolidated Statement of Changes in Owner’s Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8

Consolidated Statement of Asset Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10

Balance Sheet of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11

Income Statement of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13

Cash Flow Statement of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14

Statement of Changes in Owner’s Equity of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-15

Statement of Asset Impairment of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-17

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18

Audited consolidated financial statements of the Issuer as at and for the year ended31 December 2014

Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-76

Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-78

Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-80

Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-81

Consolidated Statement of Changes in Owner’s Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-82

Consolidated Statement of Asset Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-84

Balance Sheet of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-85

Income Statement of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-87

Cash Flow Statement of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-88

Statement of Changes in Owner’s Equity of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-89

Statement of Asset Impairment of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-91

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-92

F-1

1

Auditor’s Report

Baker Tilly China [2016] No. 10386-1


We have audited the accompanying financial statements of Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd. (hereinafter referred to as the “Company”), which comprise the balance sheet and consolidated balance sheet as at 31 December 2015, income statement and consolidated income statement, cash flow statement and consolidated cash flow statement for the year then ended, and notes to the financial statements.

Management’s responsibility for the financial statements

Management of the Company is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) Preparing the financial statements in accordance with Accounting Standards for Business Enterprises and Accounting System for Business Enterprises to achieve fair presentation of the financial statements; and (2) Designing, implementing and maintaining internal control which is necessary to enable that the financial statements are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an audit opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards for Chinese Certified Public Accountants. These standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making these assessments, the auditor consider the internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes evaluating the appropriateness of accounting policies applied and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

F-2

Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd. 2015-12-31 Monetary Unit: RMB

ITEM Closing balance Opening balance Notes

Current Assets:

Cash and bank balances 3,524,782,260.50 2,333,055,559.92 VIII.1

Balances with clearing agencies

Placements with banks and other financial institutions

Held-for-trading financial assets

Notes receivable

Accounts receivable 6,198,727,411.81 7,668,406,111.83 VIII.2

Prepayments 4,222,822,274.65 4,172,044,746.45 VIII.3

Premiums receivable

Accounts receivable under reinsurance contracts

Reinsurer's share of insurance contract reserves

Interest receivable

Dividends receivable

Other receivables 4,717,077,894.32 3,795,279,242.92 VIII.4

Financial assets purchased under resale agreements

Inventories 19,491,219,237.22 18,537,422,423.65 VIII.5

Non-current assets due within one year

Other current assets 383,748.22 VIII.6

Total current assets 38,155,012,826.72 36,506,208,084.77

Non-current assets:

Loans and advances to customers

Available-for-sale financial assets 1,159,336,983.80 809,834,982.82 VIII.7

Held-to-maturity investments

Long-term receivables

Long-term equity investments 47,452,749.27 VIII.8

Investment properties 1,843,731,623.00 1,627,755,383.00 VIII.9

Fixed assets 1,227,780,114.27 1,205,873,541.26 VIII.10

Construction in progress 891,307,306.82 766,856,916.80 VIII.11

Materials for construction of fixed assets

Disposal of fixed assets

Bearer biological assets

Oil and gas assets

Intangible assets 563,370,932.12 571,116,623.08 VIII.12

Development expenditure

Goodwill

Long-term prepaid expenses

Deferred tax assets 5,497,650.93 5,620,375.95 VIII.13

Other non-current assets 2,032,000,000.00 VIII.14

Total Non-current Assets 7,770,477,360.21 4,987,057,822.91

Total Assets 45,925,490,186.93 41,493,265,907.68

Legal representative：Yuan Guangmin Chief accountant：Yuan Guangmin Person in charge of accounting body：Gao Jianglin

Consolidated Balance Sheet

3

F-4



Current liabilities:

Short-term borrowings 1,200,000,000.00 48,500,000.00 VIII.16

Loans from the central bank

Customer deposits and deposits from banks and other financial institutions

Taking from banks and other financial institution

Held-for-trading financial liabilities

Notes payable 195,073,033.62 VIII.17

Accounts payable 252,678,844.63 294,905,132.40 VIII.18

Receipts in advance 363,769,576.60 492,841,506.74 VIII.19

Financial assets sold under repurchase agreements

Fees and commissions payable

Employee benefits payable 137,994.46 52,107.35 VIII.20

Taxes payable 175,276,013.63 404,562,894.85 VIII.21

Interest payable 88,103,537.11 81,747,500.00 VIII.22

Dividends payable

Other payable 5,982,913,024.12 6,894,787,017.36 VIII.23

Amounts payable under reinsurance contracts

Insurance contract reserves

Funds from securities trading agency

Funds from underwriting securities agency

Non-current liabilities due within one year

Other current liabilities

Total Current Liabilities 8,257,952,024.17 8,217,396,158.70

Non-current Liabilities:

Long-term borrowings 7,817,350,000.00 6,632,130,000.00 VIII.24

Bonds payable 3,293,677,533.60 2,069,345,961.75 VIII.25

Long-term payables 1,060,536,031.59 110,952,552.09 VIII.26

Special payables 4,874,697,908.61 4,516,590,814.59 VIII.27

Provisions

Deferred tax liabilities 196,934,055.47 192,873,164.18 VIII.13

Other non-current liabilities

Total Non-current Liabilities 17,243,195,529.27 13,521,892,492.61

Total Liabilities 25,501,147,553.44 21,739,288,651.31

Owners' equity:

Paid-in capital (share capital) 3,641,241,200.00 3,412,241,200.00 VIII.28

Capital reserves 14,768,734,218.76 14,470,900,688.32 VIII.29

Less: Treasury shares

Special reserves

Other comprehensive income 9,943,675.55 7,496,700.25 VIII.30

Surplus reserves 131,617,118.61 82,996,124.43 VIII.31

General risk reserves

Retained earnings 1,303,641,982.39 1,287,255,310.18 VIII.32

Translation difference arising on translation of financial statements

denominated in foreign currencies

Total Owners' Equity Attributable To the Company 19,855,178,195.31 19,260,890,023.18

Minority interests 569,164,438.18 493,087,233.19 VIII.33

Total Owners' Equity 20,424,342,633.49 19,753,977,256.37

Total Liabilities and Owners' Equity 45,925,490,186.93 41,493,265,907.68



4

F-5

Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd. Year 2015 Monetary Unit: RMB

ITEM Amount for the current period Amount for the prior period Notes

I. Total operating income 630,974,577.68 619,719,255.35

Including: Operating income 630,974,577.68 619,719,255.35 VIII.34

Interest income

Premiums earned

Fee and commission income

II. Total operating costs 801,509,417.79 694,791,513.15

Including: Operating costs 461,969,139.13 484,016,719.55 VIII.34

Interest expenses

Fee and commission expenses

Surrenders

Claims and policyholder benefits (net of mounts recoverable from reinsurers' share)

Changes in insurance contract reserves (net of reinsurers' share)

Insurance policyholder dividends

Expenses for reinsurance accepted

Business taxes and levies 27,163,650.07 24,739,614.40 VIII.35

Selling expenses 214,787.23 31,099.30

Administrative expenses 74,960,885.12 63,119,038.95

Financial expenses 242,226,779.27 106,599,711.00 VIII.36

Impairment losses of assets -5,025,823.03 16,285,329.95 VIII.37

Add: Gains from changes in fair values (Losses are indicated by "-") -12,441,214.69 -19,126,271.00 VIII.38

Investment income (Loss is indicated by "-") 5,410,867.93 4,076,803.99 VIII.39

Including: Income from investments in associates and joint ventures

Foreign exchange gains (Losses are indicated by "-")

III. Operating profit (Loss is indicated by "-") -177,565,186.87 -90,121,724.81

Add: Non-operating income 501,570,552.51 356,365,161.86 VIII.40

Less: Non-operating expenses 46,127.68 486,711.46 VIII.41

Including: Losses from disposal of non-current assets

IV. Total profit (Total Loss is indicated by "-") 323,959,237.96 265,756,725.59

Less: Income tax expenses 6,005,822.21 4,015,305.32 VIII.42

V. Net profit (Net loss is indicated by "-") 317,953,415.75 261,741,420.27

Net profit attributed to parent company 318,483,733.27 262,685,589.28

Minority interest -530,317.52 -944,169.01

VI. Earnings per share

(I) Basic earnings per share

(II) Diluted earnings per share

VII. Other comprehensive income 2,446,975.30 4,017,134.37

VIII. Total comprehensive income 320,400,391.05 265,758,554.64

Total comprehensive income attributed to parent company 320,930,708.57 266,702,723.65

Minority interest -530,317.52 -944,169.01

Consolidated Income Statement


5

F-6



I. Cash Flows from Operating Activities: VIII.43

Cash receipts from the sale of goods and the rendering of services 391,899,509.96 359,517,116.02

Net increase in customer deposits and deposits from banks and other financial institutions

Net increase in loans from the central bank

Net increase in taking from banks and other financial institutions

Cash receipts from premiums under direct insurance contracts

Net cash receipts from reinsurance business

Net cash receipts from policyholders’ deposits and investment contract liabilities

Net cash receipts from disposal of financial assets held for trading

Cash receipts from interest, fees and commissions

Net increase in taking from banks

Net increase in financial assets sold under repurchase arrangements

Receipts of tax refunds

Other cash receipts relating to operating activities 3,527,019,831.65 3,700,146,845.70

Sub-total of cash inflows from operating activities 3,918,919,341.61 4,059,663,961.72

Cash payments for goods purchased and services received 969,419,172.37 2,687,695,798.25

Net increase in loans and advances to customers

Net increase in balance with the central bank and due from banks and other financial institutions

Cash payments for claims and policyholders' benefits under direct insurance contracts

Cash payments for interest, fees and commissions

Cash payments for insurance policyholder dividends

Cash payments to and on behalf of employees 12,246,828.07 11,592,312.18

Payments of various types of taxes 286,238,570.52 86,635,394.29

Other cash payments relating to operating activities 2,268,649,052.07 1,421,198,398.51

Sub-total of cash outflows from operating activities 3,536,553,623.03 4,207,121,903.23

Net Cash Flow from Operating Activities 382,365,718.58 -147,457,941.51

II. Cash Flows from Investing Activities:

Cash receipts from disposals and recovery of investments 427,005,439.45

Cash receipts from investment income 5,410,867.93 4,076,803.99

Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets

Net cash receipts from disposals of subsidiaries and other business units

Other cash receipts relating to investing activities 661,383.57

Sub-total of cash inflows from investing activities 5,410,867.93 431,743,627.01

Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets 184,456,441.21 133,923,596.08

Cash payments to acquire investments 360,860,000.00 380,194,681.41

Net increase in pledged loans receivables

Net cash payments for acquisitions of subsidiaries and other business units

Other cash payments relating to investing activities 2,032,000,000.00 12,000,000.00

Sub-total of cash outflows from investing activities 2,577,316,441.21 526,118,277.49

Net Cash Flow from Investing Activities -2,571,905,573.28 -94,374,650.48

III. Cash Flows from Financing Activities:

Cash receipts from capital contributions 275,500,000.00

Including: cash receipts from capital contributions from minority owners of subsidiaries 46,100,000.00

Cash receipts from borrowings 4,756,590,000.00 2,714,130,000.00

Cash receipts from issue of bonds 1,220,110,000.00

Other cash receipts relating to financing activities 350,280,505.74

Sub-total of cash inflows from financing activities 6,602,480,505.74 2,714,130,000.00

Cash repayments of borrowings 2,419,870,000.00 2,299,460,000.00

Cash payments for distribution of dividends or profits or settlement of interest expenses 751,489,626.89 642,817,415.05

Including: payments for distribution of dividends or profits to minority owners of subsidiaries

Other cash payments relating to financing activities 1,630,590,000.00 50,000,000.00

Sub-total of cash outflows from financing activities 4,801,949,626.89 2,992,277,415.05

Net Cash Flow from Financing Activities 1,800,530,878.85 -278,147,415.05

IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents 145,676.43

V. Net Increase in Cash and Cash Equivalents -388,863,299.42 -519,980,007.04

Add: Opening balance of Cash and Cash Equivalents 2,283,055,559.92 2,803,035,566.96

VI. Closing Balance of Cash and Cash Equivalents 1,894,192,260.50 2,283,055,559.92 VIII.43


Consolidated Cash Flow Statement

6

F-7

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital (

shar

e

capi

tal)

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es O

ther

com

preh

ensi

ve

inco

me

Spe

cial

res

erve

s S

urpl

us r

eser

ves

Gen

eral

ris

k re

serv

es R

etai

ned

earn

ings

Min

ority

inte

rest

Tot

al o

wne

rs' e

quity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

3,41

2,24

1,20

0.00

14

,470

,900

,688

.32

7,49

6,70

0.25

82,9

96,1

24.4

3

1,28

7,25

5,31

0.18

49

3,08

7,23

3.19

19,7

53,9

77,2

56.3

7

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-476

,066

.88

-

-476

,066

.88

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

14,4

70,9

00,6

88.3

2

-

7,49

6,70

0.25

-

82

,996

,124

.43

-

1,

286,

779,

243.

30

493,

087,

233.

19

19

,753

,501

,189

.49

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)22

9,00

0,00

0.00

297,

833,

530.

44

-

2,44

6,97

5.30

-

48

,620

,994

.18

-

16

,862

,739

.09

76

,077

,204

.99

67

0,84

1,44

4.00

(I)

Net

pro

fit-

-

-

31

8,48

3,73

3.27

-

318,

483,

733.

27

(II)

Oth

er c

ompr

ehen

sive

inco

me

2,44

6,97

5.30

-530

,317

.52

1,91

6,65

7.78

Sub

tota

l of (

I) a

nd (

II)-

-

-

2,

446,

975.

30

-

-

318,

483,

733.

27

-5

30,3

17.5

2

32

0,40

0,39

1.05

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l22

9,00

0,00

0.00

297,

833,

530.

44

-

-

-

-

-

-

76

,607

,522

.51

60

3,44

1,05

2.95

1. C

apita

l con

trib

utio

n fr

om o

wne

rs22

9,00

0,00

0.00

-

-

-

-

-

-

229,

000,

000.

00

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

3. O

ther

s-

29

7,83

3,53

0.44

-

-

-

-

76

,607

,522

.51

37

4,44

1,05

2.95

(IV

) P

rofit

dis

trib

utio

n-

-

-

-

-

48,6

20,9

94.1

8

-

-301

,620

,994

.18

-

-253

,000

,000

.00

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

48,6

20,9

94.1

8

-

-48,

620,

994.

18

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-2

53,0

00,0

00.0

0

-

-2

53,0

00,0

00.0

0

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

-

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

641,

241,

200.

00

14,7

68,7

34,2

18.7

6

-

9,94

3,67

5.55

-

13

1,61

7,11

8.61

-

1,30

3,64

1,98

2.39

56

9,16

4,43

8.18

20,4

24,3

42,6

33.4

9

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

Co

nso

lidat

ed S

tate

men

t o

f C

han

ges

in O

wn

er's

Eq

uit

y

ITE

M

Am

ount

for

the

curr

ent p

erio

d

C

hief

acc

ount

ant：

Wan

g C

huan

jun

Per

son

in c

harg

e of

the

acco

untin

g bo

dy：

Wan

g C

huan

jun

Yea

r 20

15C

hong

qing

Nan

’an

Urb

an C

onst

ruct

ion

& D

evel

opm

ent (

Gro

up)

Co.

, Ltd

.

7

F-8

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital/

shar

e

capi

tal

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es O

ther

com

preh

ensi

ve

inco

me

Spe

cial

res

erve

s S

urpl

us r

eser

ves

Gen

eral

res

erve

s R

etai

ned

earn

ings

Min

ority

inte

rest

Tot

al o

wne

rs' e

quity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

3,41

2,24

1,20

0.00

14,4

70,9

00,6

88.3

2

3,47

9,56

5.88

37,3

04,2

47.4

1

1,21

8,26

1,59

7.92

493,

810,

555.

38

19,6

35,9

97,8

54.9

1

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

14

,470

,900

,688

.32

-

3,

479,

565.

88

37

,304

,247

.41

-

1,

218,

261,

597.

92

49

3,81

0,55

5.38

19

,635

,997

,854

.91

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)-

-

-

4,

017,

134.

37

45

,691

,877

.02

-

68

,993

,712

.26

-7

23,3

22.1

9

11

7,97

9,40

1.46

(I)

Net

pro

fit-

-

-

-

26

2,68

5,58

9.28

-9

44,1

69.0

1

26

1,74

1,42

0.27

(II)

Oth

er c

ompr

ehen

sive

inco

me

4,01

7,13

4.37

4,01

7,13

4.37

Sub

tota

l of (

I) a

nd (

II)-

-

-

4,

017,

134.

37

-

26

2,68

5,58

9.28

-9

44,1

69.0

1

26

5,75

8,55

4.64

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l-

-

-

-

-

-

-

22

0,84

6.82

22

0,84

6.82

1. C

apita

l con

trib

utio

n fr

om o

wne

rs-

-

-

-

-

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity

-

-

-

-

-

-

-

3. O

ther

s-

-

-

-

-

22

0,84

6.82

22

0,84

6.82

(IV

) P

rofit

dis

trib

utio

n-

-

-

-

45

,691

,877

.02

-

-1

93,6

91,8

77.0

2

-

-1

48,0

00,0

00.0

0

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

45,6

91,8

77.0

2

-

-45,

691,

877.

02

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-1

48,0

00,0

00.0

0

-

-1

48,0

00,0

00.0

0

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

-

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

14

,470

,900

,688

.32

-

7,

496,

700.

25

82

,996

,124

.43

-

1,

287,

255,

310.

18

49

3,08

7,23

3.19

19

,753

,977

,256

.37

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

Chi

ef a

ccou

ntan

t：W

ang

Chu

anju

n

P

erso

n in

cha

rge

of th

e ac

coun

ting

body：

Wan

g C

huan

jun

Am

ount

for

the

sam

e pe

riod

last

yea

r

Yea

r 20

15

ITE

M

Co

nso

lidat

ed S

tate

men

t o

f C

han

ges

in O

wn

ers'

Eq

uit

y

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

8

F-9

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Mon

etar

y U

nit:

RM

B

Rec

orde

d in

curr

ent y

ear

Incr

ease

from

cons

olid

atio

n

Oth

er

incr

ease

Tot

alR

ever

se fr

om

rise

of v

alue

Writ

e of

f

Dec

reas

e

from

cons

olid

atio

n

Oth

er

decr

ease

Tot

al

-1

23

45

67

89

1011

Su

pp

lem

enta

ry in

form

atio

n-

12

1. B

ad d

ebt p

rovi

sion

1

101

,014

,601

.58

-

-

4,

534,

923.

03

200,

000.

00

-

4,

734,

923.

03

96,

279,

678.

551.

Net

ass

et im

pairm

ent t

o be

rea

sign

ed17

2. In

vent

ory

impa

irmen

t pro

visi

on2

-

-

-

-

-

-

-

-

-

-(1

) N

et lo

ss o

n cu

rren

t ass

et18

3. A

vaila

ble-

for-

sale

fina

ncia

l ass

ets

impa

irmen

t pro

visi

on3

22,

481,

503.

71

-

-

-

-

490,

900.

00

-

-

-

490,

900.

00

21,

990,

603.

71　

Incl

udin

g: b

ad d

ebt l

oss

19

4. H

eld-

to-m

atur

ity in

vest

men

ts im

pairm

ent p

rovi

sion

4

-

-

-

-

-

-

-

-

-

-

-

　

　

I

nven

tory

loss

20

5. L

ong-

term

equ

ity in

vest

men

ts im

pairm

ent p

rovi

sion

5

-

-

-

-

-

—

-

-

-

-

-

　　

Sho

rt te

rm in

vest

men

t los

s21

6. In

vest

men

t pro

pert

ies

impa

irmen

t pro

visi

on6

-

-

-

-

-—

-

-

-

-

-

(2)

Net

loss

on

fixed

ass

et22

7. F

ixed

ass

ets

impa

irmen

t pro

visi

on7

-

-

-

-—

-

-

-　

Inc

ludi

ng: l

oss

on fi

xed

asse

t sto

ckta

king

23

8. M

ater

ials

for

cons

truc

tion

impa

irmen

t pro

visi

on8

-

-

-

-

-—

-

-

-

-

-

　

　

D

amag

e on

fixe

d as

set

24

9. C

onst

ruct

ion

in p

rogr

ess

impa

irmen

t pro

visi

on9

-

-

-

-

-—

-

-

-

-

-

G

ain

on fi

xed

asse

t sto

ckta

king

25

10. B

eare

r bi

olog

ical

ass

ets

impa

irmen

t pro

visi

on10

-

-

-

-—

-

-

-(3

) N

et lo

ss o

n lo

ng te

rm in

vest

men

t26

11. O

il an

d ga

s as

sets

impa

irmen

t pro

visi

on11

-

-

-

-

-—

-

-

-

-

-

(4)

Net

loss

on

inta

ngib

le a

sset

27

12. I

ntan

gibl

e as

sets

impa

irmen

t pro

visi

on12

-

-

-

-

-—

-

-

-

-

-

(5)

Net

loss

on

cons

truc

tion

in p

rogr

ess

28

13. G

oodw

ill im

pairm

ent p

rovi

sion

13

-

-

-

-

-

—

-

-

-

-

-(6

) N

et lo

ss o

n en

trus

ted

loan

29

14. O

ther

impa

irmen

t pro

visi

on14

-

-

-

-

-

-

-

-

-

2. C

arry

ove

r of

prio

r ye

ar30

15

-

-3.

Los

s of

prio

r ye

ar31

To

tal

1612

3,49

6,10

5.29

-

-

5,02

5,82

3.03

20

0,00

0.00

-

-

5,22

5,82

3.03

11

8,27

0,28

2.26

In

clud

ing:

loss

of p

rior

year

rec

orde

d in

cur

rent

yea

r32

End

ing

bala

nce

Item

No.

Am

ount

Co

nso

lidat

ed S

tate

men

t o

f A

sset

Imp

airm

ent

201

5-12

-31

ITE

MB

egin

ning

bal

ance

Incr

ease

in c

urre

nt y

ear

Dec

reas

e in

cur

rent

yea

r

9

F-10



Current Assets:

Cash and bank balances 1,323,439,291.20 56,558,130.42




Notes receivable

Accounts receivable 87,554,688.00 87,554,688.00 XII. 1

Prepayments 80,173,819.41

Premiums receivable



Interest receivable


Other receivables 3,207,129,488.74 2,052,010,709.32 XII. 2


Inventories


Other current assets


Non-current assets:


Available-for-sale financial assets



Long-term equity investments 5,183,621,237.00 5,183,621,237.00 XII. 3

Investment properties 158,882,308.00 160,531,308.00

Fixed assets

Construction in progress




Oil and gas assets

Intangible assets


Goodwill


Deferred tax assets

Other non-current assets 883,000,000.00


Total Assets 10,923,800,832.35 7,540,276,072.74


Balance Sheet of the Company

10

F-11




Short-term borrowings 700,000,000.00





Notes payable

Accounts payable

Receipts in advance



Employee benefits payable

Taxes payable 4,770,209.79 25,467,306.09

Interest payable 75,023,055.56 75,023,055.56

Dividends payable

Other payable 19,585,196.22 82,192,896.69 XII. 4







Total Current Liabilities 799,378,461.57 182,683,258.34


Long-term borrowings 1,878,600,000.00 738,500,000.00

Bonds payable 2,104,570,240.69 1,990,113,376.08

Long-term payables 950,900,000.00 900,000.00

Special payables

Provisions

Deferred tax liabilities 20,064,327.00 20,001,577.00




Owners' equity:

Paid-in capital (share capital) 3,641,241,200.00 3,412,241,200.00

Capital reserves 629,000,037.00 629,000,037.00


Special reserves

Surplus reserves 131,617,118.61 82,996,124.43


Retained earnings 768,429,447.48 483,840,499.89




Minority interests





11

F-12



I. Total operating income 140,002.00 -

Including: Operating income 140,002.00

Interest income

Premiums earned



Including: Operating costs

Interest expenses


Surrenders





Business taxes and levies 7,840.11

Selling expenses


Financial expenses 104,245,380.12 13,280,739.04

Impairment losses of assets

Add: Gains from changes in fair values (Losses are indicated by "-") -1,649,000.00 -1,517,714.00

Investment income (Loss is indicated by "-") 253,000,000.00 148,000,000.00



III. Operating profit (Loss is indicated by "-") 145,972,691.77 130,154,341.66

Add: Non-operating income 440,300,000.00 326,860,000.00

Less: Non-operating expenses



Less: Income tax expenses 62,750.00 95,571.50


Net profit attributed to parent company

Minority interest




VII. Other comprehensive income


Total comprehensive income attributed to parent company

Minority interest


Income Statement of the Company

12

F-13



I. Cash Flows from Operating Activities: XII. 5

Cash receipts from the sale of goods and the rendering of services 140,002.00












Other cash receipts relating to operating activities 409,717,093.50 328,996,947.43

Sub-total of cash inflows from operating activities 409,857,095.50 328,996,947.43

Cash payments for goods purchased and services received






Cash payments to and on behalf of employees


Other cash payments relating to operating activities 325,181,694.69 127,555,191.79

Sub-total of cash outflows from operating activities 345,886,631.10 129,663,367.09

Net Cash Flow from Operating Activities 63,970,464.40 199,333,580.34


Cash receipts from disposals and recovery of investments

Cash receipts from investment income



Other cash receipts relating to investing activities

Sub-total of cash inflows from investing activities - -

Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets

Cash payments to acquire investments



Other cash payments relating to investing activities 883,000,000.00

Sub-total of cash outflows from investing activities 883,000,000.00 -

Net Cash Flow from Investing Activities -883,000,000.00 -



Including: cash receipts from capital contributions from minority owners of subsidiaries

Cash receipts from borrowings 1,840,100,000.00 200,000,000.00

Cash receipts from issue of bonds 111,000,000.00

Other cash receipts relating to financing activities

Sub-total of cash inflows from financing activities 2,180,100,000.00 200,000,000.00

Cash repayments of borrowings 160,700,000.00



Other cash payments relating to financing activities 1,037,100,000.00 200,000,000.00

Sub-total of cash outflows from financing activities 1,131,289,303.62 373,925,565.00

Net Cash Flow from Financing Activities 1,048,810,696.38 -173,925,565.00

IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents

V. Net Increase in Cash and Cash Equivalents 229,781,160.78 25,408,015.34

Add: Opening balance of Cash and Cash Equivalents 56,558,130.42 31,150,115.08

VI. Closing Balance of Cash and Cash Equivalents 286,339,291.20 56,558,130.42 XII. 5


Cash Flow Statement of the Company

13

F-14

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital (

shar

e

capi

tal)

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es S

peci

al r

eser

ves

Sur

plus

res

erve

s G

ener

al r

isk

rese

rves

Ret

aine

d ea

rnin

gs M

inor

ity in

tere

st T

otal

ow

ners

' equ

ity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

3,41

2,24

1,20

0.00

62

9,00

0,03

7.00

82,9

96,1

24.4

3

483,

840,

499.

89

4,

608,

077,

861.

32

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

629,

000,

037.

00

-

82,9

96,1

24.4

3

-

483,

840,

499.

89

-

4,60

8,07

7,86

1.32

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)22

9,00

0,00

0.00

-

-

48,6

20,9

94.1

8

-

284,

588,

947.

59

-

562,

209,

941.

77

(I)

Net

pro

fit-

-

-

58

6,20

9,94

1.77

-

58

6,20

9,94

1.77

(II)

Oth

er c

ompr

ehen

sive

inco

me

-

Sub

tota

l of (

I) a

nd (

II)-

-

-

-

58

6,20

9,94

1.77

-

58

6,20

9,94

1.77

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l22

9,00

0,00

0.00

-

-

-

-

-

-

229,

000,

000.

00

1. C

apita

l con

trib

utio

n fr

om o

wne

rs-

-

-

-

-

-

-

-

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

3. O

ther

s22

9,00

0,00

0.00

-

-

-

-

-

22

9,00

0,00

0.00

(IV

) P

rofit

dis

trib

utio

n-

-

-

48

,620

,994

.18

-

-3

01,6

20,9

94.1

8

-

-253

,000

,000

.00

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

48,6

20,9

94.1

8

-

-48,

620,

994.

18

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-2

53,0

00,0

00.0

0

-

-253

,000

,000

.00

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

641,

241,

200.

00

629,

000,

037.

00

13

1,61

7,11

8.61

-

76

8,42

9,44

7.48

-

5,

170,

287,

803.

09

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

ITE

M

Am

ount

for

the

curr

ent p

erio

d

C

hief

acc

ount

ant：

Wan

g C

huan

jun

Per

son

in c

harg

e of

the

acco

untin

g bo

dy：

Wan

g C

huan

jun

Sta

tem

ent

of

Ch

ang

es in

Ow

ner

's E

qu

ity

of

the

Co

mp

any

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Yea

r 20

15

14

F-15

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital/

shar

e

capi

tal

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es S

peci

al r

eser

ves

Sur

plus

res

erve

s G

ener

al r

eser

ves

Ret

aine

d ea

rnin

gs M

inor

ity in

tere

st T

otal

ow

ners

' equ

ity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

3,41

2,24

1,20

0.00

629,

000,

037.

00

37,3

04,2

47.4

1

22

0,61

3,60

6.75

4,29

9,15

9,09

1.16

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

62

9,00

0,03

7.00

-

37

,304

,247

.41

-

220,

613,

606.

75

-

4,

299,

159,

091.

16

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)-

-

-

45,6

91,8

77.0

2

-

26

3,22

6,89

3.14

-

308,

918,

770.

16

(I)

Net

pro

fit-

-

-

-

45

6,91

8,77

0.16

456,

918,

770.

16

(II)

Oth

er c

ompr

ehen

sive

inco

me

-

Sub

tota

l of (

I) a

nd (

II)-

-

-

-

45

6,91

8,77

0.16

-

456,

918,

770.

16

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l-

-

-

-

-

-

-

-

1. C

apita

l con

trib

utio

n fr

om o

wne

rs-

-

-

-

-

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity

-

-

-

-

-

-

-

3. O

ther

s-

-

-

-

-

-

-

(IV

) P

rofit

dis

trib

utio

n-

-

-

45,6

91,8

77.0

2

-

-1

93,6

91,8

77.0

2

-

-1

48,0

00,0

00.0

0

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

45

,691

,877

.02

-

-45,

691,

877.

02

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-1

48,0

00,0

00.0

0

-

-1

48,0

00,0

00.0

0

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

62

9,00

0,03

7.00

-

82

,996

,124

.43

-

483,

840,

499.

89

-

4,

608,

077,

861.

32

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

Chi

ef a

ccou

ntan

t：W

ang

Chu

anju

n

ITE

M

Am

ount

for

the

sam

e pe

riod

last

yea

r

Per

son

in c

harg

e of

the

acco

untin

g bo

dy：

Wan

g C

huan

jun

Sta

tem

ent

of

Ch

ang

es in

Ow

ner

s' E

qu

ity

of

the

Co

mp

any

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Yea

r 20

15

15

F-16

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Mon

etar

y U

nit:

RM

B

Rec

orde

d in

curr

ent y

ear

Incr

ease

from

cons

olid

atio

n

Oth

er

incr

ease

Tot

alR

ever

se fr

om

rise

of v

alue

Writ

e of

f

Dec

reas

e

from

cons

olid

atio

n

Oth

er

decr

ease

Tot

al

-1

23

45

67

89

1011

Su

pp

lem

enta

ry in

form

atio

n-

12

1. B

ad d

ebt p

rovi

sion

1

-

-

-1.

Net

ass

et im

pairm

ent t

o be

rea

sign

ed17

2. In

vent

ory

impa

irmen

t pro

visi

on2

-

-

-

-

-

-

-

-

-

-(1

) N

et lo

ss o

n cu

rren

t ass

et18

3. A

vaila

ble-

for-

sale

fina

ncia

l ass

ets

impa

irmen

t pro

visi

on3

-

-

-

-

-

-

-

　

In

clud

ing:

bad

deb

t los

s19

4. H

eld-

to-m

atur

ity in

vest

men

ts im

pairm

ent p

rovi

sion

4

-

-

-

-

-

-

-

-

-

-

-

　

　

I

nven

tory

loss

20

5. L

ong-

term

equ

ity in

vest

men

ts im

pairm

ent p

rovi

sion

5

-

-

-

-

-—

-

-

-

-

-

　　

Sho

rt te

rm in

vest

men

t los

s21

6. In

vest

men

t pro

pert

ies

impa

irmen

t pro

visi

on6

-

-

-

-

-

—

-

-

-

-

-

(2)

Net

loss

on

fixed

ass

et22

7. F

ixed

ass

ets

impa

irmen

t pro

visi

on7

-

-

-

-

—

-

-

-　

Inc

ludi

ng: l

oss

on fi

xed

asse

t sto

ckta

king

23

8. M

ater

ials

for

cons

truc

tion

impa

irmen

t pro

visi

on8

-

-

-

-

-

—

-

-

-

-

-

　

　

D

amag

e on

fixe

d as

set

24

9. C

onst

ruct

ion

in p

rogr

ess

impa

irmen

t pro

visi

on9

-

-

-

-

-

—

-

-

-

-

-

G

ain

on fi

xed

asse

t sto

ckta

king

25

10. B

eare

r bi

olog

ical

ass

ets

impa

irmen

t pro

visi

on10

-

-

-

-

—

-

-

-(3

) N

et lo

ss o

n lo

ng te

rm in

vest

men

t26

11. O

il an

d ga

s as

sets

impa

irmen

t pro

visi

on11

-

-

-

-

-

—

-

-

-

-

-

(4)

Net

loss

on

inta

ngib

le a

sset

27

12. I

ntan

gibl

e as

sets

impa

irmen

t pro

visi

on12

-

-

-

-

-

—

-

-

-

-

-

(5)

Net

loss

on

cons

truc

tion

in p

rogr

ess

28

13. G

oodw

ill im

pairm

ent p

rovi

sion

13

-

-

-

-

-—

-

-

-

-

-(6

) N

et lo

ss o

n en

trus

ted

loan

29

14. O

ther

impa

irmen

t pro

visi

on14

-

-

-

-

-

-

-

-

-2.

Car

ry o

ver

of p

rior

year

30

15

-

-3.

Los

s of

prio

r ye

ar31

To

tal

16-

-

-

Incl

udin

g: lo

ss o

f prio

r ye

ar r

ecor

ded

in c

urre

nt y

ear

32

End

ing

bala

nce

Item

No.

Am

ount

Sta

tem

ent

of

Ass

et Im

pai

rmen

t o

f th

e C

om

pan

y

201

4-12

-31

ITE

MB

egin

ning

bala

nce

Incr

ease

in c

urre

nt y

ear

Dec

reas

e in

cur

rent

yea

r

16

F-17

17

CHONGQING NAN’AN URBAN CONSTRUCTION & DEVELOPMENT (GROUP)

CO., LTD.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

(All amounts in CNY unless otherwise stated)

I. BASIC INFORMATION ABOUT THE COMPANY

Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd. (hereinafter referred to as “the

Company”) was originally Chongqing Nan'an District City Construction Development Co., Ltd. Established at 12

September 2003 under the approval by the Municipal Government of Nan’an District of Chongqing (document of

approval “Nan’an Fa (2003) No.77”), the Company is a state-owned limited-liability company solely invested by

the Treasury of the Municipal Government of Nan’an District of Chongqing.

Business license number: 500108000019489

Legal representative: Guangmin Yuan

Registered capital: CNY3,412,241,200.00

Registered office: Floor 15 Zheng Lian Tower, 199 Nan Cheng street, Nan’an District, Chongqing, China.

Investor Invested capital Persentage

the Treasury of the Municipal Government of Nan’an District of Chongqing 3,412,241,200.00 93.71%

China Development Fund 229,000,000.00 6.29%

The Company changed to its current name Chongqing Nan’an Urban Construction and Development (Group)

Co., Ltd.in 2005.

Governance structure: Board of Directors with 11 members appointed by the investor. The legal representative

appointed by the Treasury of the Municipal Government of Nan’an District of Chongqing acts as the Chairman of

the Board; Board of Supervisors with 5 members appointed by the investors and by the workers’ congress.

Managerial structure: the general manager is responsible for the management of the Company under the

supervision of the Board. The Company invests or jointly invests in 26 companies, including 16 subsidiaries

controlled by the Company.

Industry: infrastructure and public service investment and management.

Scope of business: infrastructure and public service investment and management. Land development and

F-18

18

management. Operations in various business models under authorization. (Not involved in operations prohibited

by laws and regulations, or operations pending approval.)

II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The preparation of the financial statements is based on the going concern assumption, according to the

transaction actually incurred, in accordance with Accounting Standards for Business Enterprises, and based on

the significant accounting policies and accounting estimates stated below.

III. STATEMENT OF COMPLIANCE WITH THE ASBE

The Company has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by the Ministry

of Finance ("MOF"). The financial statements present truly and completely the Company’s financial position,

operation, cash flow and other information.

IV. THE COMPANY’S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Accounting period

The Company adopts the calendar year as its accounting year and defines every accounting year as beginning

at January 1 and ending at December 31.

2. Functional currency

The Company’s functional currency is Chinese Yuan (“CNY”).

3. Principle of measurement

The principles of measurement adopted by the Company include historical cost, replacement cost, net realizable

value, present value and fair value.

4. Business combination

4.1 The accounting treatment of business combinations involving enterprises under common control

Assets and liabilities that are obtained in a business combination shall be measured at their carrying amounts at

the combination date as recorded by the party being absorbed in the consolidated financial statement of ultimate

controlling party. The difference between the carrying amount of the net assets obtained and the carrying

amount of the consideration paid for the combination (or the aggregate face value of shares issued as

consideration) shall be adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference,

any excess shall be adjusted against retained earnings.

4.2 The accounting treatment of business combinations not involving enterprises under common control

Where the cost of combination exceeds the investor’s interest in the fair value of the investee’s identifiable net

F-19

19

assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial

recognition. Where the cost of combination is less than the investor’s interest in the fair value of the investee’s

identifiable net assets, the investor firstly reassesses the measurement of the fair values of the investee’s

identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination. If after that

reassessment, the cost of combination is still less than the investor’s interest in the fair value of the investee’s

identifiable net assets, the investor recognizes the remaining difference immediately in profit or loss for the

current period.

5. Consolidated financial statements

The consolidated financial statements include the financial statements of the investee of which the Company

controls. The Company prepares consolidated financial statements based on the Accounting Standard for

Business Enterprises No. 33 Consolidated Financial Statements.

6. Cash and cash equivalents

Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the

Company's short-term (usually due within 3 months from the acquisition date), highly liquid investments that are

readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

7. Translation of transactions and financial statements denominated in foreign currencies

On initial recognition, a foreign currency amount is translated into functional currency by applying the spot

exchange rate on the date of the transaction. At the balance sheet date, foreign currency balance in foreign

account is translated into CNY, of which the exchange difference shall be recognized into profit or loss of the

period, except for exchange differences related to a specific-purpose borrowing and its interest denominated in

foreign currency for constructing an asset that qualifies for capitalization. Foreign non-monetary items measured

at historical cost are translated into CNY using the spot exchange rates at the transaction date with no change to

its amount in functional currency. Foreign non-monetary items measured at fair value are translated into CNY

using the spot exchange rates at the fair value date. Exchange differences are recognized as profit or loss for

the current period or capital reserve.

8. Financial instruments

(1) Classification, recognition and measurement of financial instruments

Financial assets shall be classified into the following four categories based on initial purpose when acquisition:

financial assets at fair value through profit or loss, including financial assets held for trading and those

designated as at fair value through profit or loss; held-to-maturity investments; loans and receivables;

available-for-sale financial assets.

Financial liabilities shall be classified into the following two categories based on initial purpose when acquisition:

financial liabilities at fair value through profit or loss, including financial liabilities held for trading and those

designated as at fair value through profit or loss; other financial liabilities.

F-20

20

(2)Recognition and measurement of financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual

provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For

financial assets and financial liabilities at fair value through profit or loss, transaction costs are immediately

recognized in profit or loss. For other financial assets and financial liabilities, transaction costs are included in

their initial recognized amounts.

Financial assets are subsequently measured affair value. The cost of disposing of financial assets shall not be

recognized, except for, ①Held-to-maturity investments, loans and receivables are subsequently measured at

amortized cost using the effective interest method.②If the financial assets are without quoted prices in an active

market and that fair values cannot be reliably measured, the cost method shall be employed in the

measurement.

Financial liabilities are subsequently measured at amortized cost using the effective interest method. Except for,

①Financial liabilities at fair value through profit or loss, transaction costs are immediately recognized in profit or

loss. The cost of disposing of financial liabilities shall not be recognized. ②If the financial liabilities are without

quoted prices in an active market and that fair values cannot be reliably measured, the cost method shall be

employed in the measurement.③Guarantee loans at fair value through profit or loss or the borrowing

agreements under market interest rate at fair value through profit or loss are subsequently measured in the one

of the follow situation with the higher amount: 1) In accordance with the Chapter 13 of Accounting System for

Business Enterprises. 2) The result of initial price subtracts accumulated amortization in accordance with the

Chapter 14 of Accounting System for Business Enterprises.

Any gains or loss from changes in the fair value of financial asset and financial liability shall be treated as follow,

except for hedging instruments. ①Any gains or loss from changes in the fair value of financial asset and

financial liability shall be recognized in profits and losses for the period. The interests or dividends gains from

held assets and recognized in investment gains. When the Company disposes of assets, the difference between

the acquisition price and the book value of account receivables shall be recognized in the current profits and

losses.②Any changes in the fair value of available-for-sale financial assets should be recognized in the capital

reserves for the period; Interests obtained and the dividends declared by the investee during the period in which

the available-for-sale financial assets are held, are recognized in investment gains.; Upon disposal of

available-for-sale financial assets, the difference between the acquisition price and the book value shall be

recognized in the gains or losses on investment; Meanwhile, the accumulate changes of the fair value which is

originally recognized in the owners’ equities shall be transferred to the gains or losses on investment.

The Company derecognizes a financial asset only when the right of the cash flow the contract discharges or the

risk and compensation of the financial asset is transferred; The Company derecognizes a financial liability (or

part of it) only when the underlying present obligation (or part of it) is discharged.

(3) Recognition and measurement of transfer of financial assets

F-21

21

Where the Company has transferred nearly all the risks and rewards of ownership of the financial asset to the

transferee, the financial asset is derecognized. If the Company neither transfers nor retains substantially all the

risks and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognizes the

financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an

associated liability.

If the overall transfer of the financial assets meets the conditions of the de-recognition, the difference between

the following two items shall be recognized in the current profits and losses: ①The carrying amount book value

of the financial assets transferred; ②The sum of the consideration received from the transfer and cumulative

gain or loss that has been recognized in other comprehensive income. If a part of the transferred financial asset

satisfies the conditions of de-recognition, 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 respective fair

values of those parts. The difference of followings shall be recognized in the current profits and losses: ①The

carrying amount allocated to the part derecognized; ②The sum of the consideration received for the part

derecognized and any cumulative gain or loss allocated to the part derecognized which has been previously

recognized in other comprehensive income.

(4) 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 the quoted price in the active market to establish its fair value. For a financial instrument which

has no 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.

(5) Impairment of financial assets

The Company assesses at each balance sheet date the carrying amounts of financial assets other than those at

fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Company

determines the amount of any impairment loss.

If financial assets carried at amortized cost are impaired, the carrying amounts of the financial assets are

reduced to the present value of estimated future cash flows (excluding future credit losses that have not been

incurred) discounted at the financial asset's original effective interest rate. The amount of reduction is recognized

as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets

carried at amortized cost, there is objective evidence of a recovery in value of the financial assets which can be

related objectively to an event occurring after the impairment is recognized, the previously recognized

impairment loss is reversed in the current profits and losses.

If the fair value of the available-for-sale financial assets experienced large falling at the end of a period, and it is

expected that such falling is not temporary, then it is not necessarily to be determined that there is impairment.

For the available-for-sale financial assets with the purpose of strategic cooperation and not be sold by the

F-22

22

change of stock price temperately, the operation of the invested company should be analyzed that: there is

impairment when the revenue of the invested company decreases 30% every year or earnings before Interest,

taxes, depreciation and amortization decreases 30% every year. For the available-for-sale financial assets

making profit from the stock price, those at fair value at each balance sheet date is 50% lower than the original

cost of it or is lower than the original price over 24 months, then there is impairment.

If, subsequent to the recognition of an impairment loss on available-for-sale financial assets, there is objective

evidence of a recovery in value of the financial assets which can be related objectively to an event occurring

after the impairment is recognized, the previously recognized impairment loss is reversed. The amount of

reversal of impairment loss on available-for-sale equity instruments is recognized as other comprehensive

income and included in the capital reserve, while the amount of reversal of impairment loss on available-for-sale

debt instruments is recognized in profit or loss.

9. Impairment of accounts receivable

(1) Receivables that are individually significant and for which bad debt provision is individually assessed

Method of determining provision for receivables

that are individually significant and for which

bad debt provision is individually assessed

Individually tested for impairment at each balance date, and compare the

expected present value of future cash flows for individual receivable to

carrying value, the less amount is accrued for bad debt.

As regards the accounts of administrative institutions and state-controlled corporation under Chongqing Nan’an

district which are with small risks, no bad debt provision is recorded if the positive response to confirmation

letters is received. If not, bad debt provision should be assessed as well.

(2)Accounts receivable for which bad debt allowance is assessed on portfolio basis

Aging analysis

Aging Provision as a proportion of accounts

receivable (%)

Provision as a proportion of other

receivable (%)

Within 1 year (inclusive) 0.00 0.00

1-2 years 10.00 10.00

2-3 years 30.00 30.00

Over 3 years 50.00 50.00

The difference between the present value of future cash flow and the book value of a note receivable,

prepayment, interest receivable, and long-term account receivable is for determining an impairment loss at the

balance sheet date.

10. Inventories

(1) Classification of inventories

Inventories include finished goods or merchandizes for sales, work in progress, materials and consumptions for

F-23

23

production or rendering of services etc.

(2) Measurement of inventories upon delivery

① Materials, processed goods, finished goods, stock, consumptive biological assets and semi-finished goods

are accounted for at actual cost and adjusted into weighted average basis upon delivery.

② Constructions are accounted for at actual cost and adjusted into the total actual cost upon completion.

③ Other materials, packing materials, and low cost and short-lived item are accounted for at planning cost and

adjusted into actual cost by amortizing the material differences in the end of each month.

(3)Basis for determining the net realizable value and provision for decline in value of inventories methods

At balance sheet date, inventories are measured at the lower of 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 recognized. For

held-for-sale inventories, the net realizable value is measured at the estimated price deducted by estimated

selling expenses and related tax expenses under normal production and operation process; For inventories

need to be processed, the net realizable value is measured at the estimated price of the finished goods

deducted by estimated cost, estimated selling expenses and related tax expenses under normal production and

operation process; at balance sheet date, part of the same inventory item is with contract price while the rest is

not with contract price, the net realizable value is measured separately by comparing with respective cost and

separately determine the amount of provision for decline in value and reversal.

Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off

method.

(4) Inventory count system

The perpetual inventory system is adopted for inventory verification.

(5) Amortization method for low cost and short-lived item and packing materials

(1) Low cost and short-lived item

Low cost and short-lived item are amortized as lump-sum when issued.

(2) Packing materials

Packing materials are amortized in accordance with the production.

11. Long-term equity investments

(1) Determination of investment costs

①For a business combination involving enterprises under common control, if the consideration of the

combination is satisfied by paying cash, transfer of non-cash assets, assumption of liabilities or issue of equity

securities, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of

F-24

24

the carrying amount of the owners’ equity of the party being absorbed in the consolidation financial statements of

the ultimate controlling party at combination date. The difference between the initial investment cost and the

carrying amount of cash paid, non-cash assets transferred, liabilities assumed and the face value of equity

securities issued shall be adjusted to capital reserve. If the balance of capital reserve is not sufficient, any

excess shall be adjusted to retained earnings.

②For a long-term equity investment acquired through business combination not involving enterprises under

common control, the investment cost of the long-term equity investment is the fair value of the cost of

acquisition.

④ Long-term equity investments acquired by other methods other than consolidation

The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost

which is actually paid.

The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair

value of the equity securities issued.

The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment

contract or agreement unless the value stipulated in the contract or agreement is unfair.

(2) Subsequent measurement and recognition of profits and losses

Where the Company is able to exercise control over an investee, the long-term equity investment shall be

measured by adopting the cost method, but be adjusted by adopting the equity method for preparation of

consolidated financial statement. A long-term equity investment in an associate or a joint venture shall be

accounted for using the equity method.

(3) Basis for determining joint control and significant influence over investee

Joint control is the contractually agreed sharing of control over an economic activity. Significant influence is the

power to participate in the financial and operating policy decisions of the investee but is not control or joint

control over those policies.

(4) Methods of impairment assessment and determining the provision for impairment loss

The Company reviews the long-term equity investments at each balance sheet date to determine whether there

is any indication that they have suffered an impairment loss. If an impairment indication exists, the recoverable

amount is estimated. If such recoverable amount is less than its carrying amount, a provision for impairment

losses in respect of the deficit is recognized in profit or loss for the current period.

12. Investment properties

Investment properties include leased or holding for sale land use rights, and leased buildings.

Investment properties are recorded at initial cost, and depreciated as fixed assets. At balance sheet day, if there

F-25

25

is any sign of impairment, the difference between book value and net realizable value is recorded as provision of

impairment loss.

13. Fixed assets

(1) Recognition criteria, measurement and depreciation of fixed assets

Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental

to others, or for administrative purposes, and have useful lives of more than one accounting year.

Fixed assets are initially measured at cost and depreciated on straight-line basis from the next month of the date

on which fixed assets come to the expected condition for its intended use.

(2) Depreciation of each category of fixed assets

Category Depreciation period (years) Residual value rate (%) Annual depreciation rate

(%)

Land 50 0 2

Building 50-70 5 1.90-1.36

Transportation 7 5 13.57

Machinery 10 5 9.5

Other 5 5 19.00

(3) Methods of impairment assessment and determining the provision for impairment losses of fixed assets

At balance sheet date, if there is any indication of impairment of fixed assets, an impairment loss is recognized

at the recoverable amount of an individual asset less its carrying amount.

(4) Identification basis and valuation methods for fixed assets acquired under finance leases

An asset is identified as a fixed asset acquired under finance lease when one or more conditions below are met:

(1) when the lease term expires, the ownership of the leased asset is transferred to the lessee; (2) the lessee

has the option to purchase the leased asset, and the contractual purchase price is estimated to be far below the

fair value of exercising the option of lease the asset. Thus the option of lease can be reasonably determined at

the lease start date; (3) even if the ownership of the assets is not to be transferred, lease term is the majority of

the service life of the leased asset [generally above 75% (inclusive) of the service life of the lease assets]; (4)

the present value of the minimum lease payment for the lease is almost equivalent to above 90% (inclusive) of

the fair value of the lease asset at the lease start date; (5) the leased asset is special in nature and can be only

used by the lessee unless a big reform been made.

At the commencement of the lease term, the Company records the leased asset at an amount equal to the lower

of the fair value of the leased asset and the present value of the minimum lease payments at the inception of the

lease and depreciate according to its own depreciation policy of fixed assets.

14. Construction in progress

F-26

26

Construction in progress is measured at its actual costs. The whole actual cost before it is ready for intended

use of the construction in progress shall be transferred to the fixed asset. If the construction in progress has

reached the intended use without finally settled, the estimated value of the construction in progress shall be

transferred into fixed assets from the date when it is ready for the intended use. After the completion is finally

settled, the original estimated value shall be adjusted in accordance with the actual cost. The Company’s

construction in progress mainly includes product lines, building under construction and available-for-install

equipment.

Provision for impairment is recognized at the difference between carrying amount and recoverable amount when

indications of impairment exist at balance sheet dates

15. Borrowing costs

(1) The recognition of the capitalized borrowing costs

The borrowing costs incurred to the Company, which can be directly attributable to the acquisition and

construction or production of assets eligible for capitalization, are capitalized and recorded into the costs of

relevant assets. Other borrowing costs are recognized as expenses on the basis of the actual amount incurred,

and are recorded into the current profits and losses.

The term "assets eligible for capitalization" shall refer to the fixed assets, investment real estate, inventories and

other assets, of which the acquisition and construction or production may take quite a long time to get ready for

its intended use or for sale.

(2) The period of capitalization

① The borrowing costs shall be capitalized when they simultaneously meet the following requirements: 1) The

asset expenditures have already incurred, which shall include the cash, transferred non-cash assets or interest

bearing debts paid for the acquisition and construction or production activities for preparing assets eligible for

capitalization; 2) The borrowing costs has already incurred; 3) The acquisition and construction or production

activities which are necessary to prepare the asset for its intended use or sale have already started.

②Capitalization of borrowing costs ceases when the capitalization of borrowing costs is suspended during

periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and

when the suspension is for a continuous period of more than 3 months. The borrowing cost during the

suspension period is recognized in the current cost until the acquisition, construction or production of a

qualifying asset starts again.

③ Where a qualified asset under acquisition and construction or production is for its intended use or sale, the

capitalization of the borrowing costs shall be ceased.

(3) Method for to-be-capitalized amount

The interest of a specific-purpose borrowings (deducting the interest revenue of the borrowings which is

deposited in the bank and or interest from temporary investment) and incurred before a qualified asset under

F-27

27

acquisition and construction or production shall be capitalized; Where funds are borrowed under

general-purpose borrowings, the Company determines the amount of interest to be capitalized on such

borrowings by applying a capitalization rate to the weighted average of the excess of cumulative expenditures

on the asset over the amounts of specific-purpose borrowings. The capitalization rate is the weighted average of

the interest rates applicable to the general-purpose borrowings.

Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during

each accounting period shall be determined by the real interest rate method, and an adjustment shall be made

to the amount of interests in each period.

16. Intangible assets

(1) The initial determination of the intangible assets

Intangible assets are that the Company owns or control the intangible and recognizable non-monetary assets.

Research and development expenses are recognized in the current profit and loss. Expenses are not capitalized

in the development stage when one or more criteria is satisfied as follow: intangible assets are ready for use and

sell of technical feasibility; intention of using or selling the intangible assets; the economic benefits of intangible

assets include the evidence of showing that the products are produced by the intangible assets or the intangible

assets itself has a market share. The intangible assets are for internal use to be determined effectively. There

are sufficient technology, financial sources and other support to accomplish the development of the intangible

assets in order to be used or sold; the research and development expenses are attributable to the intangible

assets and can be reliably measured. Otherwise, the expenses shall be recognized in the current profit and loss.

(2) The initial measurement of the intangible assets

The intangible assets are initially measured according to its cost.

①The cost of an item of intangible asset comprises its purchase price, relevant taxation and directly attributable

costs of bringing the asset to its working condition and location for its intended use. Where the payment of

purchase price for intangible assets is delayed beyond the normal credit conditions, which is of financial nature,

the cost of intangible assets shall be determined on the basis of the present value of the purchase price. The

difference between the actual paid price and purchase price is recognized in the current profit and loss during

the credit period.

②The cost of an investor’s investment in an intangible asset is measured based on the contract or agreement at

fair value.

③The expenses of intangible asset incurred during the research period are recognized in the current profit and

loss. The expenses incurred during the development period are recognized in the cost when the following criteria

are satisfied:

1) Finishing the research and development of the intangible assets which are ready for use or sell of technical

feasibility;

F-28

28

2) Intention of using or selling the intangible assets;

3) The economic benefits of intangible assets include the evidence of showing that the products are produced by

the intangible assets or the intangible assets itself has a market share. The intangible assets are for internal use

to be determined effectively;

4) There are sufficient technology, financial sources and other support to accomplish the development of the

intangible assets in order to be used or sold;

5) The research and development expenses are attributable to the intangible assets and can be reliably

measured.

(3) Subsequent measurement of intangible assets

① Amortization of intangible assets

As for the intangible assets with limited service life, the straight-line method is used for the amortization from the

beginning of the recognition until the end of it. If it is unable to forecast the time when the intangible asset can

bring economic benefits to the Company, the asset shall be regarded as an intangible asset with uncertain

useful life. An intangible asset with an indefinite useful life is not amortized. For an intangible asset with an

indefinite useful life, the Company reviews the useful life and amortization method every accounting year. If

there is any evidence to prove intangible asset with limited service life, the Company estimates the useful life

and amortize by the straight-line method.

An intangible asset is amortized in the same month when is obtained. An intangible asset is not amortized in the

same month when is disposed.

As for the intangible assets with limited service life, the amortization starts on the acquisition date; as for the

intangible assets with indefinite service life, the amortization period is no longer than ten years.

②Disposal of intangible asset

If it is unable to forecast the time when the intangible asset can bring economic benefits to the Company, the

book value of the intangible asset shall be written down.

17. Long-term prepaid expenses

Long-term prepaid expenses represent expenses incurred that should be borne and amortized over the current

and subsequent periods (together of more than one year). Long-term prepaid expenses are amortized using the

straight-line method over the expected periods in which benefits are derived.

18. Employee benefits

(1) In an accounting period in which an employee has rendered service to the Company, the Company

recognizes the employee benefits for that service as a liability or compensation for termination of employment

relationship with the employee. Short-term wages payable and termination benefits are included in employee

F-29

29

benefits. The benefits for employees’ spouses, children, dependents, widows and other relatives are included in

the employee benefits.

(2) Recognition of employee benefits

The Company records a liability for the employee benefits payable during the time the employee provides

service to the Company.

(3) Accounting methods for employee benefits

The Company recognizes the short-term wages payable for that service as a liability and records it in the current

profit and loss or the cost of related assets during the accounting period. Welfare funds are recorded in the

current profit and loss or the cost of related assets when they actually occur. Non-monetary benefits are

measured at the fair value.

Employee benefits attributable to manufacturing of products or providing services shall be recorded in product or

service cost.

Employee benefits attributable to construction in process or intangible assets shall be recorded in fixed asset or

intangible asset.

Employee benefits apart from the above shall be recorded in profit or loss account.

(4) Benefits after employment

The Company receives employees’ service and provides various compensations and benefits when the

employees are retired or terminates the employment contract. These benefits are recognized as benefits after

employment except for short-term wages payable and termination benefits. The Company determines its liability

based on the defined contribution plans and records the liability in the in the current profit and loss or the cost of

related assets during the employee service of the accounting period.

19. Bond payable

Bond payable shall be measured at cost (including related transaction cost) initially and at amortized cost

subsequently based on actual interest rate.

20. Provisions

(1) Provisions are recognized when the Company has a present obligation related to a contingency, such as

pending litigation and products quality assurance, etc. It is probable that an outflow of economic benefits will be

required to settle the obligation, and the amount of the obligation can be measured reliably.

(2) The Company makes appropriate adjustments of the provisions to conform to the best present estimate of

the consideration at the balance sheet date.

21. Revenue

F-30

30

(1) Revenue from sale of goods

Revenue from sale of goods is recognized when the Company has transferred to the buyer the significant risks

and rewards of ownership of the goods; the Company retains neither continuing managerial involvement to the

degree usually associated with ownership nor effective control over the goods sold; Revenue can be measured

reliably; it is probable that the associated economic benefits will flow to the Company; the associated revenue

and costs incurred or to be incurred can be measured reliably.

(2) Revenue from rendering of services

If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning

the labor services it provides, it shall recognize the revenue from providing services employing the percentage of

completion method.

If the Company cannot, on the date of the balance sheet, measure the result of a transaction concerning the

providing of labor services in a reliable way, it shall be conducted in accordance with the following circumstances,

respectively:

①If the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor

services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost

of labor services shall be carried forward at the same amount.

②If the cost of labor services incurred is not expected to compensate, the cost incurred should be included in

the current profits and losses, and no revenue from the providing of labor services may be recognized.

(3) Revenue from alienating the right to use assets

The relevant economic benefits are likely to flow into the Company, and the amount of revenues can be

measured in a reliable way, the Company shall ascertain the amount of revenues from the alienating of right to

use assets based on the following circumstances, respectively:

①The amount of interest revenue should be measured and confirmed in accordance with the length of time for

which the Company’s cash is used by others and the actual interest rate.

②The amount of royalty revenue should be measured and confirmed in accordance with the period and method

of charging as stipulated in the relevant contract or agreement.

22. Construction contracts

(1) The revenue and cost of construction contract shall be confirmed according to percentage of completion at

the balance sheet day if the outcome of the contract is reliably recognizable. If the outcome of the contract is not

reliably recognizable and the cost is recoverable, records the revenue as the amount of the recoverable cost and

records the cost as contract expense. If the cost is not recoverable, records the cost as contract expense without

recording revenue.

(2) Fixed price contract can be reliably measured when: contract revenue can be reliably measured, economic

F-31

31

benefit is likely to flow in, actual contract costs can be distinguished and measured, and percentage of

completion and future cost can be reliably measured. Cost plus contract can be reliably measured when:

economic benefit is likely to flow in, actual contract costs can be distinguished and measured.

(3) The stage of completion is determined by reference to the proportion that actual contract costs incurred to

date bear to the estimated total contract costs.

(4) At the balance sheet date, if the estimated total contract costs exceed total contract revenue, the expected

loss shall be recognized as an expense for the current period. For the construction is in the progress, provisions

for inventories are measured according to the difference. Provisions for executory onerous contracts are

measured according to the difference.

23. Government grants

(1) Government grants include asset related grants and income related grants.

(2) If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received

or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair

value cannot be reliably determined, it is measured at a nominal amount.

(3) A government grant related to an asset is recognized as deferred revenue, and evenly amortized to profit or

loss over the useful life of the related asset. For a government grant related to income, 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. If the grant is a compensation for related expenses or losses to be incurred in subsequent

periods, the grant is recognized as deferred revenue, and recognized in profit or loss over the periods in which

the related costs are recognized.

24. Income taxes

(1) Deferred tax assets and liabilities shall be measured at the temporary differences between the carrying

amounts of certain assets or liabilities and their tax base (or between the carrying amount of those Item that are

not recognized as assets or liabilities and their tax base that can be determined according to tax laws), and the

tax rates that are expected to apply to the period when the asset is realized or the liability is settled according to

the requirements of tax laws.

(2) Deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that

taxable profits will be available against which the deductible temporary differences can be utilized. At balance

sheet date, the carrying amount of deferred tax assets shall be reviewed and if it is probable that sufficient

taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized, the

Company shall recognize deferred tax assets that not been recognized in previous period.

(3) At the balance sheet date, the carrying amount of a deferred tax asset shall be reviewed. The Company shall

reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient

taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Any such

F-32

32

reduction in amount shall be reversed to the extent that it becomes probable that sufficient taxable profits will be

available.

(4) Current and deferred tax of the Company shall be recognized as income or an expense and included in profit

or loss for the current period, except to the extent that the tax arises from: a) a business combination; and b) a

transaction or event which is recognized directly into owner’s equity.

25. Leases

(1) Operating leases

When the Company is a lessee under operating leases, an operating lease are recognized on a straight-line

basis over the lease term. Initial direct costs are charged to profit or loss for the current period. Contingent rents

are charged to profit or loss in the period in which they are actually incurred.

When the Company is a lessor under operating leases, rental income from operating leases are recognized on a

straight-line basis over the lease term. Initial direct costs are charged to profit or loss for the current period,

except for the large amount which is capitalized periodically. Contingent rents are charged to profit or loss in the

period in which they are actually incurred.

(2) Financial leases

In finance leases, lessees should, at inception of the lease, record the fair value of rental assets and the present

value of minimum lease payments as of the date at inception of the lease, whichever is lower, as the value of

rental assets. The amount of minimum lease payments shall be recorded as the value of long-term payables and

the difference shall be recorded as unrecognized financing charges which shall be amortized using the

effective-interest method in each period within the lease term. The initial direct costs are charged to profit or loss

for the current period.

In finance leases, lessors shall, at inception of the lease, record the sum of minimum lease payments and initial

direct costs as of the date of inception of lease as the value of finance lease receivables while recording the

unguaranteed residual value. The difference between minimum lease payments and the sum of initial direct

costs and unguaranteed residual value shall be recognized as unrealized financing income. Unrealized financing

income shall be calculated and recognized as current financing income using the effective interest method

during the lease term.

26. Assets held for sale

The Company will classify business units (or non-current assets) as assets held for sale once satisfying below

conditions:(1) business unit that can be usually or in practice classified as a unit available to sale at once; (2)

Resolution or approval has been made for the disposal; (3)non-cancellable agreement with other parity of

disposal has been signed; (4) the deal in respect of disposal will be complete within one year.

The assets held for sale of the company should be measured at fair value less estimated cost of disposal (but

cannot exceed the original carrying amount). If the carrying amount exceed the fair value less estimated cost of

F-33

33

disposal, the difference regarded as impairments should be recognized in current profit or loss.

V. ADJUSTMENT ON PRIOR YEAR AUDITED FINANCIAL STATEMENTS

(1) Changes in accounting policies

1.1 According to ASBE, the change of Available-for-sale financial assets shall be recorded as other

comprehensive income. The company performed the above accounting standard and other 7 new release or

revised ASBE when preparing the financial statements in 2015, and in accordance with the relevant provisions

of the standards. The adjustments relevant to the changes of accounting policies are as follows:

1.2 The adjustments relevant to the changes of accounting policies

Item Before adjustment (2014) Adjustment After adjustment

Capital reserve 14,478,397,388.57 -7,496,700.25 14,470,900,688.32

Other comprehensive income 7,496,700.25 7,496,700.25

(2) Changes in accounting estimates

None.

(3) Adjustment on prior year audited financial statements

The adjustments were made according to report NO. 40 (2014) issued by Chongqing Nan’an District Finance

Bureau concerning the investment in Xiang Huang Road. Please find below the details of the adjustments.


Account receivable 7,758,366,915.41 -89,960,803.58 7,668,406,111.83

Inventory 18,551,783,534.75 -14,361,111.10 18,537,422,423.65

Tax payable 406,377,231.81 -1,814,336.96 404,562,894.85

Other payable 7,000,126,768.49 -105,339,751.13 6,894,787,017.36

Retained earnings 1,284,300,797.59 2,954,512.59 1,287,255,310.18

Minority interest 493,209,572.37 -122,339.18 493,087,233.19

Available-for-sale financial asset 809,634,982.82 200,000.00 809,834,982.82

Long-term investment 200,000.00 -200,000.00

VI. TAXATION

Category of tax Basis of tax computation Tax rate (%)

Business tax Taxable income 3%,5%

City maintenance tax Taxable turnover tax 7%

Education surcharge Taxable turnover tax 3%

Corporate income tax Taxable income 25%

F-34

34

VII. CONSOLIDATED FINANCIAL STATEMENTS

(1) Scope of consolidation

2015-12-31

No. Subsidiaries Location of

registration Scope of business

1 Chongqing south bank asset management co.,

Ltd. Chongqing operation and management of assets etc.

2 Asset management company of Chongqing

Jiangnan city construction

Chongqing Public facility construction etc.

3 Chongqing south traffic construction co., LTD Chongqing management of road construction

4 Chongqing haitang sports industrial co., LTD

Chongqing operation and management of athletic facility

etc.

5 South bank in Chongqing binjiang road

development and construction co., LTD

Chongqing Public facility construction etc.

6 Chongqing Guang Yang island real estate

development co., LTD

Chongqing Land development etc.

7 Chongqing hualian company's department store

co., LTD

Chongqing Selling of home supplies and appliances etc.

8 Chongqing south appropriate urban and rural

construction development co., LTD

Chongqing land reserve and operation etc.

9 Chongqing yinglong around industrial co., LTD Chongqing land reserve and comprehensive renovation etc.

10 In the west of Chongqing nanping district

development construction co., LTD

Chongqing land reserve and operation etc.

11 Chongqing yinglong song sharp agricultural

development co., LTD

Chongqing land development and renovation etc.

12 Chongqing le tour tourism development co., LTD Chongqing tourism development etc.

13 Chongqing south bank business development of

science and technology co., LTD

Chongqing technology consulting etc.

14 Chongqing five feng technology co., LTD Chongqing selling of mobile phone and parts etc.

15 Chongqing nantou intelligent terminal investment

co., LTD

Chongqing project investment and management

Continue:

2015-12-31

No. subsidiaries Reg. capital (10,000.00) Invested

amount(10,000.00) proportion%

F-35

35

2015-12-31

No. subsidiaries Reg. capital (10,000.00) Invested


1 Chongqing south bank asset management co.,

LTD 191,896.86 181,896.86 94.79

2 Asset management company of Chongqing

jiangnan city construction 21,157.03 19,157.03 90.55

3 Chongqing south traffic construction co., LTD 39,030.00 38,030.00 97.44

4 Chongqing haitang sports industrial co., LTD 58,337.55 57,337.00 98.29

5 South bank in Chongqing binjiang road

development and construction co., LTD 67,438.47 62.438.47 92.59


development co., LTD 34,864.21 32,864.21 94.26

7 Chongqing hualian company's department

store co., LTD 7,700.00 7,700.00 100.00


construction development co., LTD 30,000.00 20,400.00 68.00

9 Chongqing yinglong around industrial co., LTD 15,000.00 14,000.00 93.33


development construction co., LTD 14,000.00 14,000.00 100.00



12 Chongqing le tour tourism development co.,

LTD 500.00 450.00 90.00

13 Chongqing south bank business development

of science and technology co., LTD 1,000.00 950.00 95

14 Chongqing five feng technology co., LTD 10,000.00 5,500.00 55

15 Chongqing nantou intelligent terminal

investment co., LTD 10,000.00 9,760.00 97.60

(2) Change of scope of consolidation

Subsidiary not included in the consolidated financial statements

Chongqing Nan’an Xingnong financing guarantee Co., Ltd. is funded by Chongqing Nan’an asset management

Co., Ltd. (hereinafter referred to as the "Asset Management Ltd.") and Chongqing Xingnong financing guarantee

co., LTD（hereinafter referred to as“Xingnong Ltd.”）. Asset management Ltd. invested 90, 000,000 which holds

90% of the share while Xingnong Ltd. invests 10,000,000 which is 10%；According to the Shareholding

F-36

36

Entrustment Agreement, 41% of the equity owned by Asset Management Ltd. shall be operated by Xingnong

Ltd.; The dividend shall be paid by 10% as to Xingnong Ltd.; Xingnong Ltd. shall attend the board meeting on

behalf of Asset Management Ltd. and excise the voting rights independently to participate in material decision

making and management appointment. Based on the information above, Asset Management Ltd. cannot

implement control upon Chongqing Nan’an Xingnong financing guarantee Co., Ltd. although it holds 90% of the

share. Chongqing Nan’an Xingnong financing guarantee Co., Ltd. shall not be consolidated in the financial

statements.

VIII. NOTES TO IMPORTANT ITEMS IN FINANCIAL STATEMENTS

“The opening balance” refers to the balance on 1 January 2015 and “the closing balance” refers to the balance

on 31 December 2015. “The prior period” is the year of 2014 and “the current period” is the year of 2015.

1. Cash and bank balances

Item

Closing balance Opening balance

Original

currency

Exchange

rate Amount in CNY

Original

currency

Exchange

rate Amount in CNY

Cash： 252,926.69 252,926.69 214,038.89 214,038.89

Incl. CNY 252,926.69 252,926.69 214,038.89 214,038.89

Bank

balances 1,868,277,102.92

1,868,277,102.92 2,013,571,593.23

2,013,571,593.23

Incl. CNY 1,868,277,102.92 1,868,277,102.92 2,013,571,593.23 2,013,571,593.23

Other

currency 1,656,252,230.89

1,656,252,230.89 319,269,927.80

319,269,927.80

Incl. CNY 1,656,252,230.89 1,656,252,230.89 319,269,927.80 319,269,927.80

Total 3,524,782,260.50 3,524,782,260.50 2,333,055,559.92 2,333,055,559.92

Note: Other cash and cash equivalents includes 802,400,000.00 as pledge of deposit in China Zheshang

Bank，737,100,000.00 as pledge of deposit in China Merchants Bank，91,090,000.00 as pledge of deposit in

Xiamen international bank, 16,365,230.89 as deposit in Agricultural bank，9,297,000.00 as deposit in Xiamen

International Bank.

2. Accounts receivable

Category


Amount

Propor

tion

(%)

Bad debt

provision

Propor

tion

(%)

Amount

Propor

tion

(%)

Bad debt

provision

Prop

ortio

n (%)

Accounts receivable 6,277,359,287.31 100.00 78,631,875.50 1.25 7,741,788,120.27 100.00 73,382,008.44 0.95

F-37

37

Category


Amount

Propor

tion

(%)

Bad debt

provision

Propor

tion

(%)

Amount

Propor

tion

(%)

Bad debt

provision

Prop

ortio

n (%)

with provision for

bad debts made by

combinatorial test

Total 6,277,359,287.31 100.00 78,631,875.50 1.25 7,741,788,120.27 100.00 73,382,008.44 0.95

2.1 Accounts to assess bad debt provision on portfolio basis

2.1.1 Aging analysis

Item


Amount Bad debt

provision

amount

Amount Bad debt

provision

amount Amount

Proportion

(%) Proportion (%) Amount

Within 1 year（incl. 1 year） 295,361,126.54 54.78 177,183,755.00 54.16

1~2 years（incl. 2 years） 107,733,755.00 19.98 10,773,375.50 3,982,934.40 1.22 398,293.44

2~3years（incl. 3 years） 1,000,000.00 0.18 300,000.00

3years above 135,117,000.00 25.06 67,558,500.00 145,967,430.00 44.62 72,983,715.00

Total 539,211,881.54 100.00 78,631,875.50 327,134,119.40 100.00 73,382,008.44

2.2 On December 31, 2015, the first five accounts amount to 5,425,858,945.15 which make up 86.43% of

the total amount of accounts receivable.

Company name Amount Proportion %

The bureau of finance in Nan’an district of Chongqing city 3,858,599,578.77 61.47

Nan’an district the land reserve center 728,031,342.60 11.60

The relocation management office administrative center in

Nan’an district of Chongqing city 414,453,730.61 6.60

The vertical feng (Hong Kong) co., LTD 220,556,772.54 3.51

Authorities in Nan’an district of Chongqing city logistics service

center 204,217,520.63 3.25

Total 5,425,858,945.15 86.43

2.3 Closing balance of related parties

F-38

38

Related parties Amount Proportion%

the bureau of finance in Nan’an district of

Chongqing city 3,858,599,578.77 61.47

3. Prepayment

3.1Aging analysis

Aging

Ending balance Beginning balance

Balance Bad debt

allowance

Balance Bad debt

allowance Amount Percentage% Amount Percentage%

Within1 year 972,332,768.83 23.03 2,098,675,879.27 50.30

1-2year 2,090,673,575.27 49.51 1,383,095,706.30 33.15

2-3year 682,224,521.00 16.16 409,184,399.25 9.81

3year above 477,591,409.55 11.30 281,088,761.63 6.74

Total 4,222,822,274.65 100.00 4,172,044,746.45 100.00

3.2 As of December 31, 2015, the top five amounted to 3,665,598,290.41, which made up 86.80% of the

total amount of prepayments.

Company name Amount Proportion%

Nan’an district the land reserve center 1,556,965,419.41 36.87

Chongqing south urban construction development co., LTD 1,125,032,871.00 26.64

Land expropriation in Nan’an district of Chongqing city 600,600,000.00 14.22

Chongqing beautiful heart real estate development co., LTD 243,000,000.00 5.75

Municipal gardens bureau in Nan’an district of Chongqing

city 140,000,000.00 3.32

Total 3,665,598,290.41 86.80

4. Other receivable

Item


Book Value Bad debt

provision amount Book Value

Bad debt

provision amount

Amount Pro.(%) Amount Pro.(%) Amount Pro.

(%) Amount

Pro.

(%)

Accounts to set

up bad debt

provision in group

4,734,725,697.37 100.00 17,647,803.05 0.37 3,822,911,836.06 100.00 27,632,593.14 0.72

Total 4,734,725,697.37 100.00 17,647,803.05 0.37 3,822,911,836.06 100.00 27,632,593.14 0.72

F-39

39

4.1 Accounts to set up bad debt provision on basis of portfolio


Aging


Book Value Bad debt

provision

amount

Book Value Bad debt

provision

amount Amount Pro.(%) Amount Pro.(%)

Within 1 year（incl. 1 year） 287,346,299.39 87.04 27,800,087.63 17.15

1~2 years（incl. 2 years） 3,115,087.60 0.94 311,508.76 91,147,557.30 56.20 9,114,755.73

2~3years（incl. 3 years） 12,504,221.37 3.79 3,751,266.41 15,471,583.10 9.54 4,641,474.93

3years above 27,170,055.76 8.23 13,585,027.88 27,752,724.96 17.11 13,876,362.48

Total 330,135,664.12 100.00 17,647,803.05 162,171,952.99 100.00 27,632,593.14


the total amount of other receivable.

Company Name Amount proportion%


Chongqing south urban construction development co., LTD 1,150,000,000.00 24.29

Chongqing south coast road binjiangShiFanDai tourism economy development

and construction management committee 127,000,000.00 2.68

Chongqing south urban construction development co., LTD 100,002,377.47 2.11

Chongqing tea garden district construction development (group) co., LTD 96,880,000.00 2.05

Total 3,953,162,365.72 83.49




5. Inventory

5.1 Details

Item

Book value


Supplies 248,783.00 243,494.00

Development cost 19,490,970,454.22 18,537,178,929.65

F-40

40

Item

Book value


Total 19,491,219,237.22 18,537,422,423.65

Development cost includes land reserves amounted to 9,504,606,705.59.

5.2 Important capitalization of interests recorded as of inventory

project Capitalized amount Note

Liao Gushan project 66,676,899.97

Liao Gushan kraal shanty towns transformation projects in the list 63,342,465.75

Nan shan tunnel and connection way (tea garden road) phase of the project 46,139,387.72

Liao Gushan shantytowns project 19,855,000.00

Nan’an district urban forest project (municipal) 10,308,001.92

Liao home was tsui district project 9,820,273.97

Nanping town red area project 8,706,444.44

The big dam "village in city project 4,190,300.01

Nan’an district farming mouth forest engineering projects 3,714,595.30

Nanping center transportation hub project 3,696,979.16

Infrastructure construction fee (iron works bay flyover engineering) project 3,100,185.96

Infrastructure construction fee (university avenue) project 2,773,255.44

The flood control project 1,821,238.90

Furen road project 671,931.38

Wang Po JiGuanShi Town mountain, big club projects 94,120.00

Total 244,911,079.92

5.3 Provision for diminution in value of inventory

None.

6. Other current assets

Item Closing balance Opening balance

Office decoration 383,748.22

Total 383,748.22

7. Available-for-sale financial assets

F-41

41


Available-for-sale equity instrument 1,159,336,983.80 809,834,982.82

Incl. items calculated by fair value 22,032,225.53 18,590,224.55

Items calculated by cost method 1,137,304,758.27 791,244,758.27

Total 1,159,336,983.80 809,834,982.82

7.1 Available-for-sale equity instrument calculated by fair value

Item Closing balance

Book value Change in fair value Net value

1. Chongqing Rural Commercial Bank 2,192,000.00 2,636,024.88 4,828,024.88

2. Bank of Chongqing 5,853,104.00 11,351,096.65 17,204,200.65

Total 8,045,104.00 13,987,121.53 22,032,225.53

(Continued from previous sheet)

Item

Opening balance



2 .Bank of Chongqing 5,853,104.00 8,044,099.32 13,897,203.32

Total 8,045,104.00 10,545,120.55 18,590,224.55

7.2 Available-for-sale equity instrument calculated by cost method

Item

Closing balance

Book value Impairment

losses

Net value

1.Packaged enterprise creditor's rights 38,007,710.42 21,990,603.71 16,017,106.71

2.Agricultural Development Bank of China 1,438,409.60 1,438,409.60

3.Chongqing south urban construction development co., LTD 10,000,000.00 10,000,000.00

4.Chongqing by the open area investment group co., LTD 900,000,000.00 900,000,000.00

5.Chongqing electronic information of small and

medium-sized enterprises public service co., LTD 2,600,000.00

2,600,000.00

6.Chongqing Nan’an district xingnong financing guarantee

co., LTD 90,000,000.00

90,000,000.00

7.Chongqing melting) industrial development co., LTD 18,000,000.00 18,000,000.00

8.Chongqing chang hui culture communication co., LTD 2,989,241.96 2,989,241.96

9.China Construction Bank 15,000,000.00 15,000,000.00

F-42

42

Item

Closing balance


losses

Net value

10.Chongqing pulse kori agricultural seed seedling

technology co., LTD 200,000.00

200,000.00

11. Chongqing home tsuiziwei flowers grow professional

cooperatives 60,000.00

60,000.00

12.Chongqing Luobin information technology co., LTD 10,000,000.00 10,000,000.00

13.Chongqing wisdom big data, environmental protection co.,

LTD 3,000,000.00

3,000,000.00

14.Chongqing joint, the supply chain management co., LTD 10,000,000.00 10,000,000.00

15.Chongqing sadie of industry and information technology

research institute co., LTD 2,000,000.00

2,000,000.00

16.Chongqing DE he new applied materials venture

investment funds of the partnership 15,000,000.00

15,000,000.00

17.International trust co., LTD 5,000,000.00 5,000,000.00

18.Industrial and Commercial Bank of China 36,000,000.00 36,000,000.00

Total 1,159,295,361.98 21,990,603.71 1,137,304,758.27


Item

Opening balance

Book value Impairment losses Net value

1.Packaged enterprise creditor's rights 38,498,610.42 22,481,503.71 16,017,106.71

2.Agricultural Development Bank of China 1,438,409.60 1,438,409.60

3.Chongqingsouth urban construction development co.,

LTD 10,000,000.00 10,000,000.00

4.Chongqing by the open area investment group co., LTD 650,000,000.00 650,000,000.00

5.Chongqing electronic information of small and

medium-sized enterprises public service co., LTD 2,600,000.00 2,600,000.00


co., LTD 90,000,000.00 90,000,000.00


co., LTD 18,000,000.00 18,000,000.00


9.Chongqing pulse kori agricultural seed seedling

technology co., LTD 200,000.00 200,000.00

F-43

43

Item

Opening balance


Total 813,726,261.98 22,481,503.71 791,244,758.27

8. Long-term equity investment

8.1 Category

Item Opening balance Increase in the

current period

Decrease in the

current period Closing balance

Investment in associated corporation 47,452,749.27 47,452,749.27

Total 47,452,749.27 47,452,749.27

8.2 Details

Company name Investment cost Opening

balance

Investment income

calculated by equity

method

Closing balance

Associated corporation 45,000,000.00 2,452,749.27 47,452,749.27

Incl. 1.Chongqing blue shore

communication technology co., LTD 30,000,000.00 1,707,266.11 31,707,266.11

2.Chongqing traffic letter information

technology co., LTD 15,000,000.00 745,483.16 15,745,483.16

Total 45,000,000.00 2,452,749.27 47,452,749.27

9. Investment property

Details of Investment property calculated by fair value


1. Book value 1,318,336,681.43 1,016,212,240.20

Building 1,074,978,081.43 772,853,640.20

Land 243,358,600.00 243,358,600.00

2. Change in fair value 525,394,941.57 611,543,142.80

Building 456,074,551.57 539,550,282.80

Land 69,320,390.00 71,992,860.00

3. Net value 1,843,731,623.00 1,627,755,383.00

Building 1,531,052,633.00 1,312,403,923.00

Land 312,678,990.00 315,351,460.00

F-44

44

Chongqing China real estate land assets evaluation co., LTD was engaged by the company to assess the

fair value of the investment property on 31 December 2015 and issued Asset Appraisal Report (2016) 005 ,

according to which the company adjusted the current gain/loss in fair value changes.

10. Fixed assets


current period

Decrease in

the current

period

Closing balance

1. Total book value 1,376,704,477.45 59,296,951.18 1,436,001,428.63

Buildings 1,357,525,911.44 58,260,399.23 1,415,786,310.67

Equipments 592,680.00 592,680.00

Vehicle 14,172,599.38 618,566.00 14,791,165.38

Office equipment and others 4,413,286.63 417,985.95 4,831,272.58

2. Total depreciation 170,830,936.19 37,390,378.17 208,221,314.36

Buildings 158,085,547.38 35,414,320.31 193,499,867.69

Equipments 592,680.00 592,680.00

Vehicle 8,931,599.49 1,578,159.77 10,509,759.26

Office equipment and others 3,221,109.32 397,898.09 3,619,007.41

3. Provision for impairment

4. Total net value 1,205,873,541.26 1,227,780,114.27

Buildings 1,199,440,364.06 1,222,286,442.98

Equipments

Vehicle 5,240,999.89 4,281,406.12

Office equipment and others 1,192,177.31 1,212,265.17


11.1Book value

Project Opening

balance

Increase in the

current period

to fixed

assets in

the current

period

Other

decrease in

the current

period

Closing balance

Road and bridge construction

projects 440,741,542.67 3,051,538.00 4,705,897.88 439,087,182.79

The people's bank vault 159,206,267.16 44,413,858.54 203,620,125.70

F-45

45

Project Opening

balance

Increase in the

current period

to fixed

assets in

the current

period

Other

decrease in

the current

period

Closing balance

project

All road project 71,544,244.16 2,041,698.95 73,585,943.11

Dan dragon housing project 64,491,839.45 64,491,839.45

Disabled persons

rehabilitation foster centre

project

30,000,000.00 30,000,000.00

Heavy mail letter secco

project 27,666,903.00 27,666,903.00

Misty rain road project 15,660,082.54 1,980,098.93 17,640,181.47

Astronomical station project 12,981,142.00 12,981,142.00

River project 12,634,280.77 12,634,280.77

By the open area customs

project project 1,611,846.47 6,439,048.48 8,050,894.95

Haitang road sports company

white to black 757,397.97 757,397.97

Hao sheng factory building

project 585,000.00 585,000.00

Golf plot concept planning

project 105,828.23 105,828.23

Athletes apartment projects 97,668.73 97,668.73

Light purse Seine project 2,918.65 2,918.65

Example room project 3,000.00 3,000.00 -

Total 766,856,916.80 129,159,287.90 4,708,897.88 891,307,306.82

11.2 Provision for impairment

None.

11.3 Net value

Item Closing balance Opening balance Amount of capitalization

in closing balance

Road and bridge construction projects 439,087,182.79 440,741,542.67

F-46

46

Item Closing balance Opening balance Amount of capitalization

in closing balance

The people's bank vault project 203,620,125.70 159,206,267.16

All road project 73,585,943.11 71,544,244.16 2,041,698.94


Disabled persons rehabilitation foster

centre project 30,000,000.00

Heavy mail letter secco project 27,666,903.00


Astronomical station project 12,981,142.00

River project 12,634,280.77 12,634,280.77

By the open area customs project project 8,050,894.95 1,611,846.47

Haitang road sports company white to

black 757,397.97 757,397.97

Hao sheng factory building project 585,000.00

Golf plot concept planning project 105,828.23 105,828.23



Example room project 3,000.00

Total 891,307,306.82 766,856,916.80 4,021,797.87


Item Opening balance

Increase in the

current period

Opening

balance

Closing balance

1.Total book value 608,060,769.06 22,000.00 608,082,769.06

Incl. landuser right 525,933,563.66 525,933,563.66

Toll right 82,000,000.00 82,000,000.00

Financial software 127,205.40 22,000.00 149,205.40


Incl. land user right 10,840,382.33 1,208,012.96 12,048,395.29

Toll right 26,066,225.28 6,516,556.29 32,582,781.57


F-47

47

Item Opening balance

Increase in the

current period

Opening

balance

Closing balance


4. Total net value 571,116,623.08 563,370,932.12

Incl. land user right 515,093,181.33 513,885,168.37

Toll right 55,933,774.72 49,417,218.43

Financial software 89,667.03 68,545.32

13. Deferred tax assets and deferred tax liabilities

13.1 Details

Item


Deferred tax

assets/liabilities

Deductible /taxable

temporary

differences

Deferred tax

assets/liabilities

Deductible /taxable

temporary

differences

1. Deferred tax assets 5,497,650.93 21,990,603.72 5,620,375.95 22,481,503.72

Provision for impairment of assets:

Long-term equity investment - land

reserve center 4,004,276.68 16,017,106.72 4,004,276.68 16,017,106.72

Long-term equity investment-Credit

Assignment 1,493,374.25 5,973,497.00 1,616,099.27 6,464,397.00

2. Deferred tax liabilities 196,934,055.47 787,736,221.88 192,873,164.18 771,492,656.72

Change in fair value of

Available-for-sale financial assets 3,496,780.39 13,987,121.56 2,636,280.14 10,545,120.56

Change in fair value of Investment

property （building） 162,424,364.73 649,697,458.92 160,021,871.85 640,087,487.40


property（land user right） 31,012,910.35 124,051,641.40 30,215,012.19 120,860,048.76

* Deferred tax assets include the deductible differences from Changes in fair value of Long-term equity

investment - land reserve center and long-term equity investment-credit assignment. The tax rate is estimated

to be 25%

* Deferred tax liabilities include the taxable temporary differences from Changes in fair value of

Available-for-sale financial assets and Investment property. The tax rate is estimated to be 25%

F-48

48

14. Other non-current assets


Prepaid construction cost 2,032,000,000.00

Total 2,032,000,000.00

15. Assets with restricted ownership

Category Ownership documents Measureme

nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note

Buildings

106Certificate of real

estate2007ZI03469HAO

17,873.55 50040100-2009YIN

No.0011HAO

Agricultural

Development Bank

of China

(guarantee)

11,399.23

Hualian

company

property





Land user

right

106DCertificate of real


63,454.00 50040100-2010YING

BEN ZI0005HAO

Agricultural

Development Bank

of China, Chongqing

branch, sales

department

46,132.00

Nanyi

company

property











Land user

right



497,066.00

50040100-2010YING

BEN ZI0005HAO

Agricultural

Development Bank

of China, Chongqing

branch, sales

department

101,577.17

Nanyi

company

property




estate2011ZI00086HAO 5004200-2011YING

BENZI0002HAO

F-49

49


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note

Land user

right



424,952.00 50040100-2011YING

BEN（DI）ZI0013HAO

Agricultural

Development Bank

of China, Chongqing

branch, sales

department

93,353.00

Nanyi

company

property





Land user

right



445,973.00 55010420110000100

Agriculture

BankNan’an

sub-branch

87,221.00

Nanyi

company

property





Land

userright


estate2013ZI00078HAO 319,948.00

NAN 1270（11）

004HAO

Construction Bank

Chongqing Nan ping

sub-branch

56,653.01 Nanyi

company

property 106DCertificate of real

estate2013ZI00085HAO 133,707.04

Land user

right


estate2011ZI00008HAO 7,549.00

50040100-2013YING

BENZI0035HAO

Agricultural

Development Bank

of China, Chongqing

branch, sales

department

5,230.00 Nanyi

company


estate2012ZI00569HAO 297,477.00 103,881.00

Buildings


estate2012ZI11968HAO 8,034.00

50040100-2014YING

BEN (DI) ZI0009HAO

Agricultural

Development Bank

of China, Chongqing

branch, sales

department

1,595.51

Nanyi

company

property


estate2012ZI30297HAO 12,075.00 2,212.20


estate2012ZI30300HAO 12,075.00 798.55

Buildings


estate2013ZI35585HAO 1,869.07

50040100-2013YING

BENZI0035HAO

Agricultural

Development Bank

of China

1,776.00 Zichan

company

property 106Certificate of real

estate2013ZI35586HAO 2,336.71 1,519.00

F-50

50


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note


estate2013ZI35651HAO 2,037.45 1,324.00


estate2013ZI35644HAO 1,403.90 913.00


estate2013ZI35646HAO 5,018.04 3,262.00


estate2013ZI35641HAO 688.63 448.00


estate2013ZI35638HAO 688.63 448.00


estate2013ZI35634HAO 24.00 23.00


estate2013ZI35591HAO 33.00 31.00


estate2011ZI56196HAO 1,208.68 2,840.00


estate2011ZI56178HAO 1,208.68 2,840.00


estate2011ZI56174HAO 1,208.68 2,846.00


estate2011ZI56170HAO 1,208.68 2,846.00


estate2011ZI56200HAO 1,208.68 2,852.00


estate2010ZI07289HAO 1,488.59 4,109.00


estate2010ZI07282HAO 690.24 4,507.00


estate2010ZI07288HAO 1,139.45 4,398.00


estate2005ZI13008HAO 3,334.66 2,239.00

F-51

51


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note


estate2009ZI43223HAO 1,544.20 1,158.00


estate2005ZI11481HAO 1,041.05 3,028.00

Buildings


estate2005ZI07133HAO 4,762.91

50040100-2013YING

BENZI0035HAO

Agricultural

Development Bank

of China

5,360.00

Zichan

company

property


estate2010ZI07112HAO 249.35 165.00


estate2010ZI07281HAO 249.35 165.00


estate2010ZI07258HAO 249.35 165.00


estate2010ZI07273HAO 249.35 165.00


estate2009ZI43213HAO 1,562.70 938.00


estate2009ZI43221HAO 1,129.19 384.00


estate2009ZI43222HAO 727.71 619.00


estate2009ZI04861HAO 1,216.00 644.00


estate2007ZI06045HAO 154.07 186.00


estate2007ZI06046HAO 154.07 186.00


estate2007ZI06044HAO 101.31 123.00


estate2008ZI01318HAO 1,750.34 1,103.00


estate2008ZI01320HAO 299.43 234.00

F-52

52


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note


estate2008ZI01321HAO 94.74 158.00


estate2008ZI01322HAO 379.45 1,002.00


estate2008ZI01323HAO 114.65 80.00


estate2008ZI01324HAO 73.96 53.00


estate2010ZI07091HAO 254.22 257.00


estate2009ZI43225HAO 82.48 62.00


estate2009ZI43226HAO 103.48 78.00


estate2009ZI43224HAO 128.52 96.00


estate2009ZI43203HAO 1,924.83 2,060.00


estate2007ZI02026HAO 1,901.43 1,586.00


estate2005ZI09752HAO 102.51 45.00


estate2005ZI09754HAO 34.17 29.00


estate2008ZI00025HAO 132.90 105.00


estate2008ZI00026HAO 132.90 105.00


estate2008ZI00027HAO 132.90 105.00


estate2008ZI01333HAO 501.15 1,844.00

F-53

53


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note


estate2009ZI46581HAO 576.56 392.00


estate2009ZI04860HAO 112.00 59.00


estate2009ZI22047HAO 698.79 489.00


estate2009ZI22055HAO 40.70 26.00

Buildings


estate2009ZI22059HAO 45.91

50040100-2013YING

BENZI0035HAO

Agricultural

Development Bank

of China

30.00

Zichan

company

property


estate2009ZI22061HAO 54.26 35.00


estate2006ZI15247HAO 175.80 135.00


estate2007ZI06047HAO 2,264.65 1,698.00


estate2007ZI06048HAO 905.86 679.00


estate2006ZI15249HAO 216.00 162.00


estate2007ZI06123HAO 569.00 384.00


estate2006ZI15257HAO 551.61 729.00


estate2008ZI01328HAO 192.99 102.00


estate2008ZI01329HAO 2,906.64 2,562.00


estate2008ZI01330HAO 1,090.00 621.00


estate2008ZI01331HAO 89.00 60.00

106Certificate of real 175.68 97.00

F-54

54


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note



estate2008ZI01336HAO 516.00 232.00


estate2010ZI07301HAO 271.13 249.00


estate2010ZI07087HAO 353.48 467.00


estate2010ZI07083HAO 646.72 847.00


estate2005ZI10646HAO 98.88 131.00


estate2005ZI10644HAO 109.81 367.00


estate2009ZI761HAO 165.00 172.00


estate2009ZI766HAO 125.00 193.00

106Certificate of real estate2009

30557HAO 282.00 510.00


estate2008ZI00028HAO 2,846.22 2,261.00

Buildings


estate2007ZI06581HAO 2,346.58

50040100-2013YING

BENZI0035HAO

Agricultural

Development Bank

of China

1,854.00

Urban

construction

group

company

property


estate2007ZI06584HAO 2,077.12 1,641.00


estate2007ZI06586HAO 2,294.86 803.00


estate2007ZI06585HAO 2,081.49 729.00

F-55

55


nt (m2) Loan No.

Financing

institution

book

value/Appr

aisal

Value(10,0

00.00)

Note


estate2007ZI06594HAO 2,329.80 1,841.00

Buildings


estate2007ZI06591 1,899.49

50040100-2013YING

BENZI0035HAO

Agricultural

Development Bank

of China

Urban

construction

group

company

property


estate2007ZI06593 1,313.13

Land user

right

NAN GUO YONG（2004）

0414752 216,844.00

50040100-2011YING

BEN ZI0004HAO

Agricultural

Development Bank

of China Chongqing

branch, sales

department

Guangyang

dao

company

property


0414753 20,189.00


0414755 140,050.00

Restricted cash and cash equivalents

Category Nature Financing institution Amount Note

Cash and bank

balances Deposit pledge

China Zheshang Bank 300,000,000.00 Urban construction group

company property China Merchants Bank 737,100,000.00

Xiamen International Bank 91,090,000.00 Hualian company property

China Zheshang Bank 502,400,000.00

Assets whose loans have been fully paid back and are in the process of the release

Category Ownership certificate Measurement

(m2) Loan No.

Financing

institution

book

value/Appraisal

Value(10,000.00)

Note

Land user

right



376,830.00

bitc2012(t)-1666HAObitc

2012(or)-1669HAO、

1670HAO、1667HAO

Bohai

international trust

co., LTD

174,287.62

Nanyi

company

property





Buildings 106Certificate of real 703.74 Trust co., LTD 577.77 ZIchan

F-56

56


(m2) Loan No.

Financing

institution

book

value/Appraisal

Value(10,000.00)

Note

estate2010ZI07303HAO company


estate2010ZI07302HAO 857.00 409.64


estate2010ZI07113HAO 965.98 793.06


estate2010ZI07114HAO 575.00 274.85


estate2006ZI15248HAO 1937.01

China

Construction

Bank

982.06

Buildings


estate2010ZI10416HAO 1375.33

Trust co., LTD

397.47

ZIchan

company

property


estate2010ZI10415HAO 1202.61 840.62


estate2010ZI10414HAO 1718.43 941.69


estate2010ZI10412HAO 2528.70 1317.40


estate2010ZI10410HAO 2597.61 1301.40

Buildings


estate2006ZI17690HAO 1599.65

China

Construction

Bank

942.19

ZIchan

company

property


estate2006ZI15250HAO 2502.00

China

Construction

Bank

1448.60


estate2006ZI17139HAO 3041.71 1761.10



China

Construction

Bank

157.39


estate2006ZI17141HAO 665.66 279.57


estate2008ZI00029HAO 1236.45

China

Construction

Bank

678.81

F-57

57


(m2) Loan No.

Financing

institution

book

value/Appraisal

Value(10,000.00)

Note


estate2008ZI00178HAO 1685.73

China

Construction

Bank

679.34



China

Construction

Bank

138.82

16. Short-term loans

16.1Category

Category Closing balance Opening balance

Credit

Mortgage

Pledge 1,200,000,000.00 48,500,000.00

Guarantee

Total 1,200,000,000.00 48,500,000.00

16.2Financing institution

Financing institution Opening

balance

Increase in the

current period

Payback in the

current period

Closing balance

Xiamen international bank 48,500,000.00 45,800,000.00 94,300,000.00

China Merchants Bank 700,000,000.00 700,000,000.00

Industrial and Commercial Bank of China 4,000,000.00 4,000,000.00

China Zheshang Bank 500,000,000.00 500,000,000.00

Total 48,500,000.00 1,249,800,000.00 98,300,000.00 1,200,000,000.00

16.3Details

Financing institution Closing balance Category

China Merchants Bank 700,000,000.00 Pledge

China Zheshang Bank 500,000,000.00 Pledge

Total 1,200,000,000.00

17. Bills payable

Item Closing balance 0pening balance

Bills payable 195,073,033.62

F-58

58

Total 195,073,033.62

18. Accounts payable

18.1Aging analysis

Aging Closing balance 0pening balance

Within 1 year 209,183,194.53 188,916,712.56

1 year above 43,495,650.10 105,988,419.84

Total 252,678,844.63 294,905,132.40

18.2Accounts payable by the related parties

Related party Amount Proportion%

Chongqing Nan’an District Finance Bureau 51,275,031.67 20.29

19. Receipt in advance

19.1 Aging analysis

Aging Closing balance Opening balance

Within 1 year 14,965,578.48 124,993,324.61

1 year above 348,803,998.12 367,848,182.13

Total 363,769,576.60 492,841,506.74

19.2Receipt in advance by related parties

Related parties Amount Proportion %

Chongqing Nan An District Finance bureau 93,860,000.00 25.80

20. Employee benefits payable

20.1 Employee benefits payable

Item Opening

balance

Increase in the

current period

Decrease in the

current period

Closing

balance

1. Short term benefits 30,090.61 12,332,547.93 12,246,828.07 115,810.47

2. Defined Contribution Plan 22,016.74 1,166,393.25 1,166,226.00 22,183.99

3. Compensation for the cancellation

of labor relationship with the employees

4. Others on due within one year

5. Others

Total 52,107.35 13,498,941.18 13,413,054.07 137,994.46

F-59

59

20.2 short term benefits

Item Opening

balance

Increase in the

current period

Decrease in the


I. Wages or salaries, bonuses, allowances

and subsidies 10,045,182.66 9,952,969.44 92,213.22

II. Staff welfare 820,188.04 820,188.04

III. Social security contributions 21,684.61 482,994.29 488,359.65 16,319.25

Including: 1. Medical insurance 19,319.83 448,544.81 453,000.82 14,863.82

2. Endowment insurance 1,182.39 18,301.00 18,786.00 697.39

3.Annuity 1,182.39 16,148.48 16,572.83 758.04

4. Others

IV. Housing fund 8,406.00 944,461.86 945,589.86 7,278.00

V. Labor union fund and educational fund 39,721.08 39,721.08

Total 30,090.61 12,332,547.93 12,246,828.07 115,810.47

20.3 Defined Contribution Plan


current period

Decrease in the

current period

Closing

balance

1. Basic retirement security 16,074.63 1,066,977.34 1,070,301.14 12,750.83

2. Unemployment insurance 5,942.11 90,205.91 95,924.86 223.16

3. Enterprise annuity 9,210.00 9,210.00

Total 22,016.74 1,166,393.25 1,166,226.00 22,183.99

21. Tax payable

Item Opening balance Increase in the current

period

Decrease in the


VAT 23,996,621.26 23,735,582.55 261,038.71

Sales tax 97,324,761.18 24,191,610.10 110,698,759.89 10,817,611.39

City maintenance and

construction tax 7,274,436.93 1,704,861.01 7,739,415.37 1,239,882.57

Enterprise income tax 259,975,521.18 2,682,706.17 3,273,945.67 259,384,281.68

Property tax 34,385,659.83 2,836,458.56 35,240,715.52 1,981,402.87

Individual income tax 1,666.65 22,191.44 20,993.38 2,864.71

VAT on land 100,000,000.00 -100,000,000.00

education surplus 3,149,843.43 730,654.69 3,305,470.12 575,028.00

Local education surplus 1,627,954.60 487,103.10 2,129,580.92 -14,523.22

F-60

60

Item Opening balance Increase in the current

period

Decrease in the


Others 823,051.05 299,482.97 94,107.10 1,028,426.92

Total 404,562,894.85 56,951,689.30 286,238,570.52 175,276,013.63

22. Interest payable


Corporation bond interest 88,103,537.11 81,747,500.00

Total 88,103,537.11 81,747,500.00

23. Other payable

23.1 Aging analysis


Within 1 year 2,766,508,499.66 2,857,423,852.65

1 year above 3,216,404,524.46 4,037,363,164.71

Total 5,982,913,024.12 6,894,787,017.36

23.2Related parties

Related party Amount proportion%

Chongqing Nan’an District Finance Bureau 790,845,548.66 13.22

24. Long term debt

24.1 Category


Credit

Mortgage 4,259,930,000.00 5,281,500,000.00

Pledge

Guarantee 3,557,420,000.00 1,350,630,000.00

Total 7,817,350,000.00 6,632,130,000.00

24.2 Details

Financing institution Opening balance Increase in the

current period

Decrease in the

current period

Closing balance

China Development Bank 538,500,000.00 159,900,000.00 378,600,000.00

Industrial and Commercial Bank of

China 350,000,000.00 350,000,000.00

F-61

61


current period

Decrease in the

current period

Closing balance

Agricultural Development Bank of

China 1,553,000,000.00 800,000,000.00 821,000,000.00 1,532,000,000.00

China Construction Bank) 980,000,000.00 280,670,000.00 699,330,000.00

The Agricultural Bank of China 370,000,000.00 170,000,000.00 200,000,000.00

Bohai international trust co., LTD 800,000,000.00 800,000,000.00

Bank of three gorges 300,000,000.00 300,000,000.00

Chongqing guosen trust co., LTD 600,000,000.00 600,000,000.00

China citic bank 90,000,000.00 90,000,000.00

Hui tian rich capital management co.,

LTD 401,570,000.00 401,570,000.00

Beijing founder fubon and financial

assets management co., LTD 249,060,000.00 249,060,000.00

Catic trust co., LTD 200,000,000.00 200,000,000.00

Xiamen international bank co., LTD.,

xiamenzalman branches 200,000,000.00 188,340,000.00 200,000,000.00 188,340,000.00

Improve the securities co., LTD 606,720,000.00 606,720,000.00

Shenzhen financing capital wealth

management co., LTD 261,730,000.00 261,730,000.00

China merchants bank, south bank

branches 350,000,000.00 350,000,000.00

Shaanxi international trust co., LTD 1,000,000,000.00 1,000,000,000.00

Great Wall securities co., LTD 300,000,000.00 300,000,000.00

Total 6,632,130,000.00 3,506,790,000.00 2,321,570,000.00 7,817,350,000.00

24.3 Details of closing balance

Financing institution Amount Category

China Development Bank 378,600,000.00 mortgage

Industrial and Commercial Bank of China 350,000,000.00 pledge

Agricultural Development Bank of China 1,532,000,000.00 guarantee, mortgage

China Construction Bank) 699,330,000.00 mortgage

The Agricultural Bank of China 200,000,000.00 guarantee, mortgage

Bohai international trust co., LTD 800,000,000.00 guarantee, mortgage

Bank of three gorges 300,000,000.00 guarantee

F-62

62


Hui tian rich capital management co., LTD 401,570,000.00 guarantee

Beijing founder fubon and financial assets management co., LTD 249,060,000.00 guarantee

Catic trust co., LTD 200,000,000.00 guarantee

Xiamen international bank co., LTD., xiamenzalman branches 188,340,000.00 guarantee

Improve the securities co., LTD 606,720,000.00 guarantee

Shenzhen financing capital wealth management co., LTD 261,730,000.00 guarantee

China merchants bank, south bank branches 350,000,000.00 guarantee

Shaanxi international trust co., LTD 1,000,000,000.00 guarantee

Great Wall securities co., LTD 300,000,000.00 mortgage

Total 7,817,350,000.00

*Please refer to VIII. 15 as to assets with restricted ownership

25. Bonds payable


Book value 3,309,110,000.00 2,080,000,000.00

Interest adjustment -15,432,466.40 -10,654,038.25

Total 3,293,677,533.60 2,069,345,961.75

26. Long-term payable


Nan’an district fiscal borrowing money 95,568,194.31 95,568,194.31

By the open area finance bureau 13,067,837.28 13,067,837.28

deposit from lease 900,000.00 1,316,520.5

Tea garden new town construction company 1,000,000.00 1,000,000.00

Chongqing landscape construction development (group) co., LTD 950,000,000.00

Total 1,060,536,031.59 110,952,552.09

27. Special payables

Item Closing balance Opening Balance

Budget funding 3,095,606,852.88 2,995,963,455.00

Special financial funding 1,381,791,361.23 1,202,041,159.59

Other funding 374,563,494.50 295,850,000.00

Nan’an district immigration bureau 22,736,200.00 22,736,200.00

Total 4,874,697,908.61 4,516,590,814.59

F-63

63

28. Paid-in capital

Investor

OpeningBalance

Increase in the

current period

Decrease

in the

current

period

Closing balance

Amount proportio

n（%） Amount

Proport

ion（%）

Chongqing Nan’an District

Finance Bureau 3,412,241,200.00 100.00 3,412,241,200.00 93.71

CDB development fund

co., LTD 229,000,000.00 229,000,000.00 6.29

Total 3,412,241,200.00 100.00 229,000,000.00 3,641,241,200.00 100.00

The increase amount 229,000,000.00is investment from CDB development fund co., LTD

29. Capital reserve


current period

Decrease in the


1. Share/Capital premium 37.00 37.00

2. Other capital reserve 14,470,900,651.32 297,833,530.44 14,768,734,181.76

Others 14,470,900,651.32 297,833,530.44 14,768,734,181.76

3. Through original system

Total 14,470,900,688.32 297,833,530.44 14,768,734,218.76

Increase in the current period amounted 297,833,530.45 was invested by Chongqing south bank business

development of science and technology co., Ltd.

30. Other comprehensive income


current period

Decrease in the



Available-for-sale financial assets 7,496,700.25 2,446,975.30 9,943,675.55

Total 7,496,700.25 2,446,975.30 9,943,675.55

31. Surplus reserve


current period

Decrease in the


Statutory surplus reserve 82,996,124.43 48,620,994.18 131,617,118.61

Total 82,996,124.43 48,620,994.18 131,617,118.61

32. Retained earnings

F-64

64

Item Amount incurred in the current

period

Amount incurred in the

prior period

Closing balance in prior period 1,287,255,310.18 1,218,261,597.92

Plus adjustment on prior year audited financial statements

Others -476,066.88 204.95

Opening balance in the current period 1,286,779,243.30 1,218,261,802.87

Increase in the current period 318,483,733.27 262,685,384.33

Incl. net income 318,483,733.27 262,685,384.33

Other adjustment

Decrease in the current period 301,620,994.18 193,691,877.02

incl. surplus reserve appropriation in the current period 48,620,994.18 45,691,877.02

Risk Provision appropriation in the current period

Cash dividend appropriation in the current period 253,000,000.00 148,000,000.00

Capital appropriation

Other decrease

Closing balance in the current period 1,303,641,982.39 1,287,255,310.18

33. Minority interests


Minority interests 569,164,438.18 493,087,233.19

34. Operating revenue and operating cost

Item

Amount incurred in the current period Amount incurred in the prior period

Revenue cost Revenue cost

I. Sales from principal activities 628,989,934.08 461,969,139.13 617,904,734.53 484,016,719.55

Incl. leasing 79,123,520.59 38,070,998.58 72,604,458.45 30,784,751.50

Fund occupy 155,712,750.28 39,283,231.04 132,847,952.59 100,000,000.00

Toll fee 13,729,600.00 6,516,556.29 13,729,600.00 6,516,556.32

Exportation 380,424,063.21 378,098,353.22

Project repurchase 398,722,723.49 346,715,411.73

II. Sales from other activities 1,984,643.60 1,814,520.82

Incl. management fee 1,344,641.60 1,153,137.25

Others 640,002.00 661,383.57

Total 630,974,577.68 461,969,139.13 619,719,255.35 484,016,719.55

F-65

65

35. Business taxes and surcharges


period

Amount incurred in the prior

period

Business tax 24,243,512.59 22,088,985.29

City maintenance and construction tax 1,703,597.98 1,546,201.61

Education surplus and local education surplus 1,216,539.50 1,104,427.50

Total 27,163,650.07 24,739,614.40

36. Financial expenses

Item Amount incurred in the current period Amount incurred in the prior period

Interest expenses 249,556,749.10 107,768,175.83

Minus interest revenue 18,915,837.41 16,194,871.98

Exchange gain and loss -145,676.43

Bank fee 11,723,188.25 15,016,778.68

Others 8,355.76 9,628.47

Total 242,226,779.27 106,599,711.00

37. Assets impairment loss


period


prior period

Bad debt provision -4,534,923.03 17,154,628.05

Provision for impairment of Long-term equity investment -490,900.00 -869,298.10

Total -5,025,823.03 16,285,329.95

38. Gains on changes in fair value


Change in fair value of Investment property -12,441,214.69 -19,126,271.00

39. Investment income

39.1 Category

Category Amount incurred in the current

period


period

Dividend from Agricultural Development Bank of China 749,766.64 170,811.14

Available-for-sale financial assets 873,123.02 3,054,526.56

Dividend from Chongqing Rural Commercial Bank 234,011.41

F-66

66

Dividend from Bank of Chongqing 246,327.80 617,454.88

Corporate disposal gain 1,088,901.20

Long-term investment by Equity method 2,452,749.27

Total 5,410,867.93 4,076,803.99

39.2Restriction

No major restrictions of investment income repatriation

40. Non-operating income

40.1 Details


period


period

Disposal gain on non Current assets

Incl. fixed asset

Government funding 501,529,650.91 356,261,775.86

Ohers 40,901.60 103,386.00

Total 501,570,552.51 356,365,161.86

40.2 Government funding

Current period

Item Amount incurred in the

current period Category Approval Authority

Period of

validity

Operating allowance 501,529,650.91 Government grant Notice on fiscal

subsidies

Bureau of

finance Year 2015

Prior period



Period of

validity


subsidies

Bureau of

finance Year 2014

41. Non-operating expense


current period


period

Disposal loss on non Current assets 23,197.15

F-67

67


current period


period

Incl. fixed asset 23,197.15

Donation 34,458.75 300,000.00

Overdue fine 11,668.93 142,714.31

Others 20,800.00

Total 46,127.68 486,711.46

42. Income tax expense


Current tax expense 1,822,205.90 3,333,907.52

Deferred tax 4,183,616.31 681,397.80

Total 6,005,822.21 4,015,305.32

43. Consolidated cash flow statement

43.1 Supplementary information to the cash flow statement

Supplementary information Amount incurred in the

current period


prior period

1. Reconciliation of net profit to cash flow from operating activities:

Net profit 317,953,415.75 261,741,420.27

Add: Provision for impairment losses of assets -5,025,823.03 16,285,329.95

Depreciation of fixed assets, depletion of oil and gas assets,

depreciation of bearer biological assets 37,390,378.18

34,964,287.79

Amortization of intangible assets 7,767,690.96 7,742,423.05

Amortization of long-term prepaid expenses

Losses/(gains) on disposal of fixed assets, intangible assets and other

long-term asset 23,197.15

Losses /(gains) on write-off of fixed assets

Losses/(gains) on changes in fair values 12,441,214.69 19,126,271.00

Financial expenses/ (income) 249,556,749.10 107,768,175.83

Losses/(gains) arising from investments -5,410,867.93 -4,076,803.99

Decrease /(increase) in deferred tax assets 122,725.02 217,324.52

Increase/(decrease) in deferred tax liabilities 4,060,891.29 464,073.28

Decrease /(increase) in inventories -953,796,813.57 -735,619,009.13

Decrease /(increase) in receivables from operating activities 241,772,757.33 -1,911,237,849.85

F-68

68


current period


prior period

Increase/(decrease) in payables from operating activities 475,533,400.79 2,055,133,784.65

Others 9,433.97

Net cash flow from operating activities 382,365,718.58 -147,457,941.51

2. Net changes in cash and cash equivalents:

Closing balance of cash 1,894,192,260.50 2,283,055,559.92

Less: Opening balance of cash 2,283,055,559.92 2,803,035,566.96

Add: Closing balance of cash equivalents

Less: Opening balance of cash equivalents

Net increase in cash and cash equivalents -388,863,299.42 -519,980,007.04

43.2 Composition of cash and cash equivalents


1. Cash 1,894,192,260.50 2,283,055,559.92

Including: Cash on hand 252,926.69 214,038.89

Bank deposits with no restrict 1,868,277,102.92 2,013,571,593.23

Other monetary assets with no restrict 25,662,230.89 269,269,927.80

2.Cash equivalents 1,894,192,260.5

Including: Bonds investment matured within three months

3. Closing balance of cash and cash equivalents 1,894,192,260.50 2,283,055,559.92

IX.CONTINGENCIES

There are no significant contingencies need to be disclosed as of 31 December 2015

X. EVENTS AFTER THE BALANCE SHEET DATE

There are no significant subsequent events need to be disclosed as of the date this report is approved.

XI. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

1. Shareholder information

Name of the parent Place of

incorporation Scope of business

shareholding

ratio

proportion of

votes

Chongqing Nan'an Nan'an District, management and appropriation of 93.71% 93.71%

F-69

69

District Finance Bureau Chongqing financial fund

CDB development fund

co., LTD

Beijing xicheng

district

Investment, management and

consultancy in non-security business 6.29% 6.29%

2. Subsidiaries

Please refer toVII.1.

3. Associated corporations

Please refer to VIII. 8.

4. Related parties

4.1 related party transactions

None.

4.2 Related party guarantee

1) On June1st, 2009Chongqing Donggang Comprehensive Agricultural Development Co., Ltd. obtained a

bank loan from business department of Agriculture Development Bank of China Chongqing branch amounted

180,000,000.00. It was secured by Hualian Building owned by Chongqing Hualian Hong Rui Hualian Department

Store Co., Ltd, which is subsidiary to the company. The guarantee contract No. is50040100-2009nian yin 0011

and is valid from June 4, 2009 till December 31, 2016.

2)In June 2011, Chongqing Chayuan Industrial Park Construction Development Co., LTD obtained a bank

loan from business department of Agriculture Development Bank of China Chongqing branch amounted

495,000,000.00. It was secured by land user right owned by Chongqing Guang Yang Island Real Estate

Development Co., Ltd., which is subsidiary to the company. The guarantee contract No. is 50040100-2011nian

ying ben (di) zi0004and is valid from June 28, 2011 till June 27, 2017.

4.3 Accounts receivable and payable by the related parties

Related parties Item Closing balance

Chongqing Nan'an District Finance Bureau

Accounts Receivable 3,858,599,578.77

other receivable 2,479,279,988.25

Account Payable 51,275,031.67

other payable 790,845,548.66

Receipts in advance 93,860,000.00

F-70

70

XII.NOTES TO IMPORTANT ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS

1. Account Receivable

Item


Amount

Bad debt

provision

amount

Amount

Bad debt

provision

amount

Amount Pro. (%) Amount Pro.

(%) Amount

Pro.

(%) Amount

Pro.

(%)

Material accounts to assess

bad debt provision

individually

Accounts to assess bad

debt provision on basis of

portfolio

87,554,688.00 100.00 87,554,688.00 100.00

Total 87,554,688.00 100.00 87,554,688.00 100.00

1.1 On December 31, 2015, the first five accounts amount to 87,554,688.00 which make up100.00% of the

total amount of accounts receivable.


The authorities in Nan’an district of Chongqing city bureau 87,554,688.00 100.00

Total 87,554,688.00 100.00

1.2 No closing balance of related parties.

2. Other receivable

Item


Book Value Bad debt


Bad debt

provision amount

Amount Pro.

(%) Amount Pro. (%) Amount

Pro.

(%) Amount

Pro.

(%)

Material accounts

to set up bad debt

provision

individually

Accounts to set up

bad debt provision 3,207,129,488.74 100.00 2,052,010,709.32 100.00

F-71

71

Item


Book Value Bad debt


Bad debt

provision amount

Amount Pro.

(%) Amount Pro. (%) Amount

Pro.

(%) Amount

Pro.

(%)

in group

Total 3,207,129,488.74 100.00 2,052,010,709.32 100.00


the total amount of other receivable.


Chongqing south appropriate urban and rural construction development co., LTD 1,369,667,094.44 42.71

Chongqing Nan’an District Finance Bureau 1,022,257,880.97 31.87

Chongqing south bank asset management co., LTD 361,790,000.00 11.28

Asset management company of Chongqing jiangnan city construction 102,940,000.00 3.21

Tea plantations in Nan’an district of Chongqing city construction development co., LTD 96,880,000.00 3.02

Total 2,953,534,975.41 92.09

2.2Closing balance of related parties


Chongqing Nan’an District Finance Bureau 1,369,667,094.44 42.71

Chongqing south appropriate urban and rural construction development co., LTD 1,022,257,880.97 31.87


Chongqing jiangnan city construction asset management co., LTD 102,940,000.00 3.21

Chongqing haitang sports industrial company 56,890,000.00 1.77

Chongqing traffic project company 35,550,000.00 1.11

Chongqing guang Yang island real estate development company 24,900,735.79 0.78

Chongqing hualian company's department store co., LTD 375,416.65 0.01

Total 2,974,371,127.85 92.74


3.1 Category

F-72

72


current period

Decrease in the


Investment in subsidiaries 5,183,621,237.00 5,183,621,237.00

Investment in joint venture

Investment in associated corporation

others

Total 5,183,621,237.00 5,183,621,237.00

Minus provision for impairment

Total 5,183,621,237.00 5,183,621,237.00

3.2 Long-term equity investment by cost method

Company name Closing balance Opening balance

Subsidiaries

Chongqing jiangnan city construction asset management co., LTD 191,570,337.00 191,570,337.00

Asset management co., LTD in Nan’an district of Chongqing city 2,018,968,600.00 2,018,968,600.00

Chongqing haitang creek sports industrial co., LTD 573,375,500.00 573,375,500.00

Chongqing south traffic project development co., LTD 380,300,000.00 380,300,000.00

South bank in Chongqing binjiang road development and construction co., LTD 624,384,700.00 624,384,700.00

Chongqing Guang Yang island real estate co., LTD 328,642,100.00 328,642,100.00

Chongqing south appropriate urban and rural construction development co., LTD 1,066,380,000.00 1,066,380,000.00

Total 5,183,621,237.00 5,183,621,237.00

4. Other payable

4.1 Aging analysis


Within 1 year 6,310,768.44 7,288,874.32

1 year above 13,274,427.78 74,904,022.37

Total 19,585,196.22 82,192,896.69

4.2 On December 31, 2015, the first five accounts amount to 13,280,692.38.

Company Closing balance Proportion%

Chongqing Nan’an district education commission 10,000,000.00 51.06

F-73

73


The public security bureau in Nan’an district of Chongqing city 3,274,427.78 16.72

Chongqing LuJianZhu installation engineering co., LTD 6,264.59 0.03

Total 19,585,196.22 100.00

4.3 to deal with other related party funds accounted for the total amount of other payables



Total 6,304,503.85 32.19


5.1Consolidated cash flow statement

Supplementary information Amount incurred in

current period

Amount incurred in

prior period


Net profit 586,209,941.77 456,918,770.16

Add: Provision for impairment losses of assets

Depreciation of fixed assets, depletion of oil and gas assets, depreciation of

bearer biological assets

Amortization of intangible assets


Losses/(gains) on disposal of fixed assets, intangible assets and other

long-term asset


Losses/(gains) on changes in fair values 1,649,000.00 1,517,714.00


Losses/(gains) arising from investments -253,000,000.00 -148,000,000.00

Decrease /(increase) in deferred tax assets

Increase/(decrease) in deferred tax liabilities 62,750.00 95,571.50

Decrease /(increase) in inventories

Decrease /(increase) in receivables from operating activities -235,292,598.83 -1,465,220.85

Increase/(decrease) in payables from operating activities -134,548,757.16 -126,614,182.79

F-74

1

Auditor’s Report

Baker Tilly China [2015] No. 8869-1


We have audited the accompanying financial statements of Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd. (hereinafter referred to as the “Company”), which comprise the balance sheet and consolidated balance sheet as at 31 December 2014, income statement and consolidated income statement, cash flow statement and consolidated cash flow statement for the year then ended, and notes to the financial statements.

Management’s responsibility for the financial statements

Management of the Company is responsible for the preparation and fair presentation of these financial statements. This responsibility includes: (1) Preparing the financial statements in accordance with Accounting Standards for Business Enterprises and Accounting System for Business Enterprises to achieve fair presentation of the financial statements; and (2) Designing, implementing and maintaining internal control which is necessary to enable that the financial statements are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an audit opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards for Chinese Certified Public Accountants. These standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making these assessments, the auditor consider the internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes evaluating the appropriateness of accounting policies applied and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

F-76

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis to「 OU 「

audit opinion

Opinion

In ou「 opinion, the financial statements present fairly, in all material respects, the financial position and the

consolidated financial position of the Company as at 31 Decembe「 2014, and the 「esult of operations and

the consolidated 「esult of ope「ations, the cash flows and the consolidated cash flows to「 the yea「 then

ended in acco「dance with Accounting Standa「ds for Business Ente「prises and Accounting System for

Business Enterprises

China Certified Public

Accountant

Chinese Certified Public

Accountant

勹l

匡

F-77



Current Assets:

Cash and bank balances 2,333,055,559.92 2,803,035,566.96 VIII.1




Notes receivable 600,000.00 VIII.2

Accounts receivable 7,758,366,915.41 8,156,391,743.72 VIII.3

Prepayments 4,172,044,746.45 2,740,293,919.23 VIII.4

Premiums receivable



Interest receivable


Other receivables 3,795,279,242.92 2,824,621,231.52 VIII.5


Inventories 18,551,783,534.75 17,403,502,423.06 VIII.6




Non-current assets:


Available-for-sale financial assets 809,634,982.82 850,135,235.14 VIII.7



Long-term equity investments 200,000.00 VIII.8

Investment properties 1,627,755,383.00 1,646,881,654.00 VIII.9

Fixed assets 1,205,873,541.26 1,236,252,844.79 VIII.10

Construction in progress 766,856,916.80 610,532,564.29 VIII.11




Oil and gas assets

Intangible assets 571,116,623.08 578,801,890.73 VIII.12


Goodwill


Deferred tax assets 5,620,375.95 5,837,700.46 VIII.13

Other non-current assets 6,617,285.29 VIII.14


Total Assets 41,597,587,822.36 38,863,504,059.19



3

F-78




Short-term borrowings 48,500,000.00 20,000,000.00 VIII.16





Notes payable 170,000,000.00 VIII.17

Accounts payable 294,905,132.40 199,396,116.42 VIII.18

Receipts in advance 492,841,506.74 385,673,763.12 VIII.19



Employee benefits payable 52,107.35 35,262.00 VIII.20

Taxes payable 406,377,231.81 452,025,974.71 VIII.21

Interest payable 81,747,500.00 81,747,500.00 VIII.22

Dividends payable

Other payable 7,000,126,768.49 4,936,967,177.14 VIII.23







Total Current Liabilities 8,324,550,246.79 6,245,845,793.39


Long-term borrowings 6,632,130,000.00 6,245,960,000.00 VIII.24

Bonds payable 2,069,345,961.75 2,265,029,220.31 VIII.25

Long-term payables 110,952,552.09 120,053,216.43 VIII.26

Special payables 4,516,590,814.59 4,155,333,717.06 VIII.27

Provisions 7,120,000.00 VIII.28

Deferred tax liabilities 192,873,164.18 190,996,430.50 VIII.13




Owners' equity:

Paid-in capital (share capital) 3,412,241,200.00 3,412,241,200.00 VIII.29

Capital reserves 14,478,397,388.57 14,474,380,254.20 VIII.30


Special reserves

Surplus reserves 82,996,124.43 37,304,247.41 VIII.31


Retained earnings 1,284,300,797.59 1,215,307,085.33 VIII.32




Minority interests 493,209,572.37 493,932,894.56 VIII.33





4

F-79



I. Total operating income 619,719,255.35 1,828,516,849.41

Including: Operating income 619,719,255.35 1,828,516,849.41 VIII.34

Interest income

Premiums earned


II. Total operating costs 694,791,513.15 1,786,483,588.41

Including: Operating costs 484,016,719.55 1,536,876,949.80 VIII.34

Interest expenses


Surrenders





Business taxes and levies 24,739,614.40 36,109,080.04 VIII.35

Selling expenses 31,099.30 140,445.00


Financial expenses 106,599,711.00 176,169,806.48 VIII.36

Impairment losses of assets 16,285,329.95 -10,235,908.68 VIII.37

Add: Gains from changes in fair values (Losses are indicated by "-") -19,126,271.00 21,460,050.60 VIII.38

Investment income (Loss is indicated by "-") 4,076,803.99 568,071.88 VIII.39



III. Operating profit (Loss is indicated by "-") -90,121,724.81 64,061,383.48

Add: Non-operating income 356,365,161.86 186,789,107.67 VIII.40

Less: Non-operating expenses 486,711.46 35,462.80 VIII.41



Less: Income tax expenses 4,015,305.32 63,045,703.43 VIII.42


Net profit attributed to parent company 262,685,589.28 180,586,729.16

Minority interest -944,169.01 7,182,595.76






Total comprehensive income attributed to parent company 262,685,589.28 180,586,729.16

Minority interest -944,169.01 7,182,595.76


Consolidated Income Statement

5

F-80



I. Cash Flows from Operating Activities: VIII.43

Cash receipts from the sale of goods and the rendering of services 359,517,116.02 1,310,196,728.05












Other cash receipts relating to operating activities 3,700,146,845.70 738,063,359.76

Sub-total of cash inflows from operating activities 4,059,663,961.72 2,048,260,087.81

Cash payments for goods purchased and services received 2,687,695,798.25 2,666,844,474.80






Cash payments to and on behalf of employees 11,592,312.18 9,907,064.39


Other cash payments relating to operating activities 1,421,198,398.51 171,398,391.86

Sub-total of cash outflows from operating activities 4,207,121,903.23 2,858,453,106.59

Net Cash Flow from Operating Activities -147,457,941.51 -810,193,018.78


Cash receipts from disposals and recovery of investments 427,005,439.45 1,196,685.00

Cash receipts from investment income 4,076,803.99 568,071.88

Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets 333,896.00


Other cash receipts relating to investing activities 661,383.57

Sub-total of cash inflows from investing activities 431,743,627.01 2,098,652.88

Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets 133,923,596.08 365,711,707.29

Cash payments to acquire investments 380,194,681.41 492,058,483.97



Other cash payments relating to investing activities 12,000,000.00

Sub-total of cash outflows from investing activities 526,118,277.49 857,770,191.26

Net Cash Flow from Investing Activities -94,374,650.48 -855,671,538.38



Including: cash receipts from capital contributions from minority owners of subsidiaries 32,500,000.00

Cash receipts from borrowings 2,714,130,000.00 1,910,000,000.00

Cash receipts from issue of bonds 78,000,000.00

Other cash receipts relating to financing activities 684,324,975.00

Sub-total of cash inflows from financing activities 2,714,130,000.00 3,304,824,975.00

Cash repayments of borrowings 2,299,460,000.00 1,780,000,000.00



Other cash payments relating to financing activities 50,000,000.00 62,394,664.34

Sub-total of cash outflows from financing activities 2,992,277,415.05 2,055,919,850.86

Net Cash Flow from Financing Activities -278,147,415.05 1,248,905,124.14


V. Net Increase in Cash and Cash Equivalents -519,980,007.04 -416,959,433.02

Add: Opening balance of Cash and Cash Equivalents 2,803,035,566.96 3,219,994,999.98

VI. Closing Balance of Cash and Cash Equivalents 2,283,055,559.92 2,803,035,566.96 VIII.43


Consolidated Cash Flow Statement

6

F-81

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital (

shar

e

capi

tal)

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es S

peci

al r

eser

ves

Sur

plus

res

erve

s G

ener

al r

isk

rese

rves

Ret

aine

d ea

rnin

gs M

inor

ity in

tere

st T

otal

ow

ners

' equ

ity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

3,41

2,24

1,20

0.00

14

,474

,380

,254

.20

37,3

04,2

47.4

1

1,21

5,30

7,08

5.33

19

,139

,232

,786

.94

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

14,4

74,3

80,2

54.2

0

-

37

,304

,247

.41

-

1,

215,

307,

085.

33

-

19,1

39,2

32,7

86.9

4

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)-

4,

017,

134.

37

-

45,6

91,8

77.0

2

-

68,9

93,7

12.2

6

-

118,

702,

723.

65

(I)

Net

pro

fit-

-

-

26

2,68

5,58

9.28

-

262,

685,

589.

28

(II)

Oth

er c

ompr

ehen

sive

inco

me

-

Sub

tota

l of (

I) a

nd (

II)-

-

-

-

26

2,68

5,58

9.28

-

262,

685,

589.

28

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l-

4,

017,

134.

37

-

-

-

-

-

4,01

7,13

4.37

1. C

apita

l con

trib

utio

n fr

om o

wne

rs-

-

-

-

-

-

-

-

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

3. O

ther

s-

4,

017,

134.

37

-

-

-

-

-

4,01

7,13

4.37

(IV

) P

rofit

dis

trib

utio

n-

-

-

45

,691

,877

.02

-

-1

93,6

91,8

77.0

2

-

-1

48,0

00,0

00.0

0

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

45,6

91,8

77.0

2

-

-45,

691,

877.

02

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-1

48,0

00,0

00.0

0

-

-1

48,0

00,0

00.0

0

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

14,4

78,3

97,3

88.5

7

82

,996

,124

.43

-

1,

284,

300,

797.

59

-

19,2

57,9

35,5

10.5

9

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

Chi

ef a

ccou

ntan

t：W

ang

Chu

anju

n

Per

son

in c

harg

e of

the

acco

untin

g bo

dy：

Wan

g C

huan

jun

Yea

r 20

14C

hong

qing

Nan

’an

Urb

an C

onst

ruct

ion

& D

evel

opm

ent (

Gro

up)

Co.

, Ltd

.

Co

nso

lidat

ed S

tate

men

t o

f C

han

ges

in O

wn

er's

Eq

uit

y

ITE

M

Am

ount

for

the

curr

ent p

erio

d

7

F-82

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital/

shar

e

capi

tal

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es S

peci

al r

eser

ves

Sur

plus

res

erve

s G

ener

al r

eser

ves

Ret

aine

d ea

rnin

gs M

inor

ity in

tere

st T

otal

ow

ners

' equ

ity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

2,81

2,24

1,20

0.00

13

,134

,050

,743

.75

35

,585

,117

.23

1,

036,

439,

486.

35

398,

071,

875.

02

17

,416

,388

,422

.35

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r2,

812,

241,

200.

00

13,1

34,0

50,7

43.7

5

-

35,5

85,1

17.2

3

-

1,

036,

439,

486.

35

398,

071,

875.

02

17

,416

,388

,422

.35

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)60

0,00

0,00

0.00

1,34

0,32

9,51

0.45

-

1,

719,

130.

18

-

178,

867,

598.

98

95

,861

,019

.54

2,

216,

777,

259.

15

(I)

Net

pro

fit-

-

-

-

18

0,58

6,72

9.16

7,18

2,59

5.76

187,

769,

324.

92

(II)

Oth

er c

ompr

ehen

sive

inco

me

-

Sub

tota

l of (

I) a

nd (

II)-

-

-

-

18

0,58

6,72

9.16

7,18

2,59

5.76

187,

769,

324.

92

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l60

0,00

0,00

0.00

1,34

0,32

9,51

0.45

-

-

-

-

88,6

78,4

23.7

8

2,02

9,00

7,93

4.23

1. C

apita

l con

trib

utio

n fr

om o

wne

rs60

0,00

0,00

0.00

1,50

3,49

4,47

5.00

-

-

-

-

88,6

78,4

23.7

8

2,19

2,17

2,89

8.78

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity

-

-

-

-

-

-

-

3. O

ther

s-

-1

63,1

64,9

64.5

5

-

-

-

-

-

-163

,164

,964

.55

(IV

) P

rofit

dis

trib

utio

n-

-

-

1,

719,

130.

18

-

-1,7

19,1

30.1

8

-

-

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

1,71

9,13

0.18

-

-1

,719

,130

.18

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

14,4

74,3

80,2

54.2

0

-

37,3

04,2

47.4

1

-

1,

215,

307,

085.

33

493,

932,

894.

56

19

,633

,165

,681

.50

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

Chi

ef a

ccou

ntan

t：W

ang

Chu

anju

n

Co

nso

lidat

ed S

tate

men

t o

f C

han

ges

in O

wn

ers'

Eq

uit

y

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

P

erso

n in

cha

rge

of th

e ac

coun

ting

body：

Wan

g C

huan

jun

Am

ount

for

the

sam

e pe

riod

last

yea

r

Yea

r 20

14

ITE

M

8

F-83

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Mon

etar

y U

nit:

RM

B

Rec

orde

d in

cur

rent

yea

rIn

crea

se fr

om

cons

olid

atio

n

Oth

er

incr

ease

Tot

alR

ever

se fr

om

rise

of v

alue

Writ

e of

f

Dec

reas

e

from

cons

olid

atio

n

Oth

er

decr

ease

Tot

al

-1

23

45

67

89

1011

Su

pp

lem

enta

ry in

form

atio

n-

12

1. B

ad d

ebt p

rovi

sion

1

8

1,19

7,56

5.07

16,

285,

329.

95

-

-

16,2

85,3

29.9

5

-

-

97,

482,

895.

021.

Net

ass

et im

pairm

ent t

o be

rea

sign

ed17

2. In

vent

ory

impa

irmen

t pro

visi

on2

-

-

-

-

-

-

-

-

-

-(1

) N

et lo

ss o

n cu

rren

t ass

et18

3. A

vaila

ble-

for-

sale

fina

ncia

l ass

ets

impa

irmen

t pro

visi

on3

23,

350,

801.

81

-

-

-

-

86

9,29

8.10

-

-

-

869,

298.

10

22,

481,

503.

71　

Incl

udin

g: b

ad d

ebt l

oss

19

4. H

eld-

to-m

atur

ity in

vest

men

ts im

pairm

ent p

rovi

sion

4

-

-

-

-

-

-

-

-

-

-

-

　

　

I

nven

tory

loss

20

5. L

ong-

term

equ

ity in

vest

men

ts im

pairm

ent p

rovi

sion

5

-

-

-

-

-

—

-

-

-

-

-

　

　

S

hort

term

inve

stm

ent l

oss

21

6. In

vest

men

t pro

pert

ies

impa

irmen

t pro

visi

on6

-

-

-

-

-—

-

-

-

-

-(2

) N

et lo

ss o

n fix

ed a

sset

22

7. F

ixed

ass

ets

impa

irmen

t pro

visi

on7

-

-

-

-—

-

-

-　

Inc

ludi

ng: l

oss

on fi

xed

asse

t sto

ckta

king

23

8. M

ater

ials

for

cons

truc

tion

impa

irmen

t pro

visi

on8

-

-

-

-

-—

-

-

-

-

-

　　

Dam

age

on fi

xed

asse

t24

9. C

onst

ruct

ion

in p

rogr

ess

impa

irmen

t pro

visi

on9

-

-

-

-

-—

-

-

-

-

-

Gai

n on

fixe

d as

set s

tock

taki

ng25

10. B

eare

r bi

olog

ical

ass

ets

impa

irmen

t pro

visi

on10

-

-

-

-—

-

-

-(3

) N

et lo

ss o

n lo

ng te

rm in

vest

men

t26

11. O

il an

d ga

s as

sets

impa

irmen

t pro

visi

on11

-

-

-

-

-—

-

-

-

-

-(4

) N

et lo

ss o

n in

tang

ible

ass

et27

12. I

ntan

gibl

e as

sets

impa

irmen

t pro

visi

on12

-

-

-

-

-—

-

-

-

-

-(5

) N

et lo

ss o

n co

nstr

uctio

n in

pro

gres

s28

13. G

oodw

ill im

pairm

ent p

rovi

sion

13

-

-

-

-

-

—

-

-

-

-

-

(6)

Net

loss

on

entr

uste

d lo

an29

14. O

ther

impa

irmen

t pro

visi

on14

-

-

-

-

-

-

-

-

-

2. C

arry

ove

r of

prio

r ye

ar30

15

-

-3.

Los

s of

prio

r ye

ar31

To

tal

1610

4,54

8,36

6.88

16,2

85,3

29.9

5

-

-

16

,285

,329

.95

869,

298.

10

-

-

-

869,

298.

10

119,

964,

398.

73

Incl

udin

g: lo

ss o

f prio

r ye

ar r

ecor

ded

in c

urre

nt y

ear

32

Co

nso

lidat

ed S

tate

men

t o

f A

sset

Imp

airm

ent

201

4-12

-31

ITE

MB

egin

ning

bal

ance

Incr

ease

in c

urre

nt y

ear

Dec

reas

e in

cur

rent

yea

r

End

ing

bala

nce

Item

No.

Am

ount

9

F-84



Current Assets:

Cash and bank balances 56,558,130.42 31,150,115.08




Notes receivable

Accounts receivable 87,554,688.00 87,554,688.00 XII. 1

Prepayments

Premiums receivable



Interest receivable


Other receivables 2,052,010,709.32 2,050,545,488.47 XII. 2


Inventories




Non-current assets:


Available-for-sale financial assets



Long-term equity investments 5,183,621,237.00 5,183,621,237.00 XII. 3

Investment properties 160,531,308.00 162,049,022.00

Fixed assets

Construction in progress




Oil and gas assets

Intangible assets


Goodwill


Deferred tax assets

Other non-current assets


Total Assets 7,540,276,072.74 7,514,920,550.55



10

F-85




Short-term borrowings





Notes payable

Accounts payable

Receipts in advance



Employee benefits payable

Taxes payable 25,610,245.42 25,610,245.42

Interest payable 75,023,055.56 75,023,055.56

Dividends payable

Other payable 82,192,896.69 208,807,079.48 XII. 4







Total Current Liabilities 182,826,197.67 309,440,380.46


Long-term borrowings 738,500,000.00 699,200,000.00

Bonds payable 1,990,113,376.08 2,186,458,012.76

Long-term payables 900,000.00 900,000.00

Special payables

Provisions

Deferred tax liabilities 20,001,577.00 19,906,005.50




Owners' equity:

Paid-in capital (share capital) 3,412,241,200.00 3,412,241,200.00

Capital reserves 629,000,037.00 629,000,037.00


Special reserves

Surplus reserves 82,996,124.43 37,304,247.41


Retained earnings 483,697,560.56 220,470,667.42




Minority interests





11

F-86



I. Total operating income - 21,888,672.00

Including: Operating income 21,888,672.00

Interest income

Premiums earned



Including: Operating costs

Interest expenses


Surrenders





Business taxes and levies 1,225,765.63

Selling expenses


Financial expenses 13,280,739.04 160,621,513.93

Impairment losses of assets -75,000.00

Add: Gains from changes in fair values (Losses are indicated by "-") -1,517,714.00 164,052.00

Investment income (Loss is indicated by "-") 148,000,000.00



III. Operating profit (Loss is indicated by "-") 130,154,341.66 -143,612,685.20

Add: Non-operating income 326,860,000.00 161,320,000.00

Less: Non-operating expenses



Less: Income tax expenses 95,571.50 516,013.00


Net profit attributed to parent company

Minority interest






Total comprehensive income attributed to parent company

Minority interest


Income Statement of the Company

12

F-87



I. Cash Flows from Operating Activities: XII. 5

Cash receipts from the sale of goods and the rendering of services












Other cash receipts relating to operating activities 328,996,947.43 378,255,108.76

Sub-total of cash inflows from operating activities 328,996,947.43 378,255,108.76

Cash payments for goods purchased and services received






Cash payments to and on behalf of employees

Payments of various types of taxes 2,108,175.30

Other cash payments relating to operating activities 127,555,191.79 538,656.89

Sub-total of cash outflows from operating activities 129,663,367.09 538,656.89

Net Cash Flow from Operating Activities 199,333,580.34 377,716,451.87


Cash receipts from disposals and recovery of investments

Cash receipts from investment income



Other cash receipts relating to investing activities

Sub-total of cash inflows from investing activities - -

Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets

Cash payments to acquire investments 1,000,000,000.00



Other cash payments relating to investing activities

Sub-total of cash outflows from investing activities - 1,000,000,000.00

Net Cash Flow from Investing Activities - -1,000,000,000.00


Cash receipts from capital contributions - 600,000,000.00

Including: cash receipts from capital contributions from minority owners of subsidiaries

Cash receipts from borrowings 200,000,000.00

Cash receipts from issue of bonds

Other cash receipts relating to financing activities

Sub-total of cash inflows from financing activities 200,000,000.00 600,000,000.00

Cash repayments of borrowings 160,700,000.00 160,700,000.00



Other cash payments relating to financing activities 200,000,000.00

Sub-total of cash outflows from financing activities 373,925,565.00 322,004,920.00

Net Cash Flow from Financing Activities -173,925,565.00 277,995,080.00


V. Net Increase in Cash and Cash Equivalents 25,408,015.34 -344,288,468.13

Add: Opening balance of Cash and Cash Equivalents 31,150,115.08 375,438,583.21

VI. Closing Balance of Cash and Cash Equivalents 56,558,130.42 31,150,115.08 XII. 5


Cash Flow Statement of the Company

13

F-88

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital (

shar

e

capi

tal)

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es S

peci

al r

eser

ves

Sur

plus

res

erve

s G

ener

al r

isk

rese

rves

Ret

aine

d ea

rnin

gs M

inor

ity in

tere

st T

otal

ow

ners

' equ

ity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

3,41

2,24

1,20

0.00

62

9,00

0,03

7.00

37,3

04,2

47.4

1

220,

470,

667.

42

4,

299,

016,

151.

83

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

629,

000,

037.

00

-

37

,304

,247

.41

-

22

0,47

0,66

7.42

-

4,29

9,01

6,15

1.83

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)-

-

-

45

,691

,877

.02

-

26

3,22

6,89

3.14

-

308,

918,

770.

16

(I)

Net

pro

fit-

-

-

45

6,91

8,77

0.16

-

456,

918,

770.

16

(II)

Oth

er c

ompr

ehen

sive

inco

me

-

Sub

tota

l of (

I) a

nd (

II)-

-

-

-

45

6,91

8,77

0.16

-

456,

918,

770.

16

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l-

-

-

-

-

-

-

-

1. C

apita

l con

trib

utio

n fr

om o

wne

rs-

-

-

-

-

-

-

-

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

3. O

ther

s-

-

-

-

-

-

-

(IV

) P

rofit

dis

trib

utio

n-

-

-

45

,691

,877

.02

-

-1

93,6

91,8

77.0

2

-

-1

48,0

00,0

00.0

0

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

45,6

91,8

77.0

2

-

-45,

691,

877.

02

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-1

48,0

00,0

00.0

0

-

-1

48,0

00,0

00.0

0

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

629,

000,

037.

00

82

,996

,124

.43

-

48

3,69

7,56

0.56

-

4,60

7,93

4,92

1.99

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

C

hief

acc

ount

ant：

Wan

g C

huan

jun

Per

son

in c

harg

e of

the

acco

untin

g bo

dy：

Wan

g C

huan

jun

Sta

tem

ent

of

Ch

ang

es in

Ow

ner

's E

qu

ity

of

the

Co

mp

any

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Yea

r 20

14

ITE

M

Am

ount

for

the

curr

ent p

erio

d

14

F-89

Mon

etar

y U

nit:

RM

B

Pai

d-in

cap

ital/

shar

e

capi

tal

Cap

ital r

eser

ves

Les

s: T

reas

ury

shar

es S

peci

al r

eser

ves

Sur

plus

res

erve

s G

ener

al r

eser

ves

Ret

aine

d ea

rnin

gs M

inor

ity in

tere

st T

otal

ow

ners

' equ

ity

I. C

losi

ng b

alan

ce o

f the

pre

cedi

ng y

ear

2,81

2,24

1,20

0.00

62

9,00

0,03

7.00

35,5

85,1

17.2

3

204,

998,

495.

80

3,

681,

824,

850.

03

Add

: Cha

nges

in a

ccou

ntin

g po

licie

s-

-

-

-

-

-

-

Cor

rect

ions

of p

rior

perio

d er

rors

-

-

-

-

-

-

-

-

II. O

peni

ng b

alan

ce o

f the

cur

rent

yea

r2,

812,

241,

200.

00

629,

000,

037.

00

-

35

,585

,117

.23

-

20

4,99

8,49

5.80

-

3,68

1,82

4,85

0.03

III. C

hang

es fo

r th

e ye

ar (

Dec

reas

e is

indi

cate

d by

"-"

)60

0,00

0,00

0.00

-

-

1,71

9,13

0.18

-

15,4

72,1

71.6

2

-

617,

191,

301.

80

(I)

Net

pro

fit-

-

-

-

17

,191

,301

.80

17

,191

,301

.80

(II)

Oth

er c

ompr

ehen

sive

inco

me

-

Sub

tota

l of (

I) a

nd (

II)-

-

-

-

17

,191

,301

.80

-

17

,191

,301

.80

(III)

Ow

ners

’ con

trib

utio

ns a

nd r

educ

tion

in c

apita

l60

0,00

0,00

0.00

-

-

-

-

-

-

600,

000,

000.

00

1. C

apita

l con

trib

utio

n fr

om o

wne

rs60

0,00

0,00

0.00

-

-

-

-

600,

000,

000.

00

2. S

hare

-bas

ed p

aym

ent r

ecog

nise

d in

ow

ners

’ equ

ity

-

-

-

-

-

-

-

3. O

ther

s-

-

-

-

-

-

-

(IV

) P

rofit

dis

trib

utio

n-

-

-

1,

719,

130.

18

-

-1

,719

,130

.18

-

-

1. T

rans

fer

to s

urpl

us r

eser

ves

-

-

-

1,71

9,13

0.18

-

-1,7

19,1

30.1

8

-

-

2. T

rans

fer

to g

ener

al r

eser

ves

-

-

-

-

-

-

-

-

3. D

istr

ibut

ions

to o

wne

rs-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

-

(V)

Tra

nsfe

rs w

ithin

ow

ners

’ equ

ity-

-

-

-

-

-

-

-

1. C

apita

lisat

ion

of c

apita

l res

erve

s-

-

-

-

-

-

-

-

2. C

apita

lisat

ion

of s

urpl

us r

eser

ves

-

-

-

-

-

-

-

-

3. L

oss

offs

et b

y su

rplu

s re

serv

es-

-

-

-

-

-

-

-

4. O

ther

s-

-

-

-

-

-

-

-

(VI)

Spe

cial

res

erve

s-

1. T

rans

fer

to s

peci

al r

eser

ves

in th

e pe

riod

-

2. A

mou

nt u

tilis

ed in

the

perio

d-

(VII)

Oth

ers

IV. C

losi

ng b

alan

ce o

f the

cur

rent

yea

r3,

412,

241,

200.

00

629,

000,

037.

00

-

37

,304

,247

.41

-

22

0,47

0,66

7.42

-

4,29

9,01

6,15

1.83

Lega

l rep

rese

ntat

ive：

John

Ran

dolp

h T

aylo

r

C

hief

acc

ount

ant：

Wan

g C

huan

jun

Sta

tem

ent

of

Ch

ang

es in

Ow

ner

s' E

qu

ity

of

the

Co

mp

any

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Y

ear

2014

ITE

M

Am

ount

for

the

sam

e pe

riod

last

yea

r

Per

son

in c

harg

e of

the

acco

untin

g bo

dy：

Wan

g C

huan

jun

15

F-90

Cho

ngqi

ng N

an’a

n U

rban

Con

stru

ctio

n &

Dev

elop

men

t (G

roup

) C

o., L

td.

Mon

etar

y U

nit:

RM

B

Rec

orde

d in

cur

rent

yea

rIn

crea

se fr

om

cons

olid

atio

n

Oth

er

incr

ease

Tot

alR

ever

se fr

om

rise

of v

alue

Writ

e of

f

Dec

reas

e

from

cons

olid

atio

n

Oth

er

decr

ease

Tot

al

-1

23

45

67

89

1011

Su

pp

lem

enta

ry in

form

atio

n-

12

1. B

ad d

ebt p

rovi

sion

1

75,

000.

00

-

-

75,

000.

00

-

7

5,00

0.00

1. N

et a

sset

impa

irmen

t to

be r

easi

gned

17

2. In

vent

ory

impa

irmen

t pro

visi

on2

-

-

-

-

-

-

-

-

-

-(1

) N

et lo

ss o

n cu

rren

t ass

et18

3. A

vaila

ble-

for-

sale

fina

ncia

l ass

ets

impa

irmen

t pro

visi

on3

-

-

-

-

-

-

-

　

In

clud

ing:

bad

deb

t los

s19

4. H

eld-

to-m

atur

ity in

vest

men

ts im

pairm

ent p

rovi

sion

4

-

-

-

-

-

-

-

-

-

-

-

　

　

I

nven

tory

loss

20

5. L

ong-

term

equ

ity in

vest

men

ts im

pairm

ent p

rovi

sion

5

-

-

-

-

-

—

-

-

-

-

-

　

　

S

hort

term

inve

stm

ent l

oss

21

6. In

vest

men

t pro

pert

ies

impa

irmen

t pro

visi

on6

-

-

-

-

-—

-

-

-

-

-(2

) N

et lo

ss o

n fix

ed a

sset

22

7. F

ixed

ass

ets

impa

irmen

t pro

visi

on7

-

-

-

-—

-

-

-　

Inc

ludi

ng: l

oss

on fi

xed

asse

t sto

ckta

king

23

8. M

ater

ials

for

cons

truc

tion

impa

irmen

t pro

visi

on8

-

-

-

-

-—

-

-

-

-

-

　　

Dam

age

on fi

xed

asse

t24

9. C

onst

ruct

ion

in p

rogr

ess

impa

irmen

t pro

visi

on9

-

-

-

-

-—

-

-

-

-

-

Gai

n on

fixe

d as

set s

tock

taki

ng25

10. B

eare

r bi

olog

ical

ass

ets

impa

irmen

t pro

visi

on10

-

-

-

-—

-

-

-(3

) N

et lo

ss o

n lo

ng te

rm in

vest

men

t26

11. O

il an

d ga

s as

sets

impa

irmen

t pro

visi

on11

-

-

-

-

-—

-

-

-

-

-(4

) N

et lo

ss o

n in

tang

ible

ass

et27

12. I

ntan

gibl

e as

sets

impa

irmen

t pro

visi

on12

-

-

-

-

-—

-

-

-

-

-(5

) N

et lo

ss o

n co

nstr

uctio

n in

pro

gres

s28

13. G

oodw

ill im

pairm

ent p

rovi

sion

13

-

-

-

-

-

—

-

-

-

-

-

(6)

Net

loss

on

entr

uste

d lo

an29

14. O

ther

impa

irmen

t pro

visi

on14

-

-

-

-

-

-

-

-

-

2. C

arry

ove

r of

prio

r ye

ar30

15

-

-3.

Los

s of

prio

r ye

ar31

To

tal

1675

,000

.00

-

-

75,0

00.0

0

-

7

5,00

0.00

In

clud

ing:

loss

of p

rior

year

rec

orde

d in

cur

rent

yea

r32

Sta

tem

ent

of

Ass

et Im

pai

rmen

t o

f th

e C

om

pan

y

201

4-12

-31

ITE

MB

egin

ning

bal

ance

Incr

ease

in c

urre

nt y

ear

Dec

reas

e in

cur

rent

yea

r

End

ing

bala

nce

Item

No.

Am

ount

16

F-91

17

CHONGQING NAN’AN URBAN CONSTRUCTION & DEVELOPMENT (GROUP)

CO., LTD.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

(All amounts in CNY unless otherwise stated)

I. BASIC INFORMATION ABOUT THE COMPANY

Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd. (hereinafter referred to as “the Company”)

was originally Chongqing Nan'an District City Construction Development Co., Ltd. Established at 12 September 2003

under the approval by the Municipal Government of Nan’an District of Chongqing (document of approval “Nan’an Fa

(2003) No.77”), the Company is a state-owned limited-liability company solely invested by the Chongqing Nan'an

District Finance Bureau.

Business license number: 500108000019489

Legal representative: Guangmin Yuan

Registered capital: CNY3,412,241,200.00

Registered office: Floor 15 Zheng Lian Tower, 199 Nan Cheng street, Nan’an District, Chongqing, China.

Investor Invested capital Persentage

Chongqing Nan'an District Finance

Bureau

3,412,241,200.00 100.00%

The Company changed to its current name Chongqing Nan’an Urban Construction and Development (Group) Co., Ltd.

in 2005.

Governance structure: Board of Directors with 11 members appointed by the investor. The legal representative

appointed by the Chongqing Nan'an District Finance Bureau acts as the Chairman of the Board; Board of Supervisors

with 5 members appointed by the investor and by the workers’ congress.

Managerial structure: the general manager is responsible for the management of the Company under the supervision

of the Board. The Company invests or jointly invests in 20 companies, including 13 subsidiaries controlled by the

Company.

Industry: infrastructure and public service investment and management.

Scope of business: infrastructure and public service investment and management. Land development and

F-92

18

management. Operations in various business models under authorization. (Not involved in operations prohibited by

laws and regulations, or operations pending approval.)

II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The preparation of the financial statements is based on the going concern assumption, according to the

transaction actually incurred, in accordance with Accounting Standards for Business Enterprises, and based on

the significant accounting policies and accounting estimates stated below.

III. STATEMENT OF COMPLIANCE WITH THE ASBE

The Company has adopted the Accounting Standards for Business Enterprises ("ASBE") issued by the Ministry of

Finance ("MOF"). The financial statements present truly and completely the Company’s financial position, operation,

cash flow and other information.

IV. THE COMPANY’S SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Accounting period

The Company adopts the calendar year as its accounting year and defines every accounting year as beginning

at January 1 and ending at December 31.

2. Functional currency

The Company’s functional currency is Chinese Yuan (“CNY”).

3. Principle of measurement

The principles of measurement adopted by the Company include historical cost, replacement cost, net realizable

value, present value and fair value.

4. Business combination


Assets and liabilities that are obtained in a business combination shall be measured at their carrying amounts at the

combination date as recorded by the party being absorbed in the consolidated financial statement of ultimate

controlling party. The difference between the carrying amount of the net assets obtained and the carrying amount of

the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be

adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted

against retained earnings.


Where the cost of combination exceeds the investor’s interest in the fair value of the investee’s identifiable net assets,

F-93

19

the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition.

Where the cost of combination is less than the investor’s interest in the fair value of the investee’s identifiable net

assets, the investor firstly reassesses the measurement of the fair values of the investee’s identifiable assets,

liabilities and contingent liabilities and measurement of the cost of combination. If after that reassessment, the cost of

combination is still less than the investor’s interest in the fair value of the investee’s identifiable net assets, the

investor recognizes the remaining difference immediately in profit or loss for the current period.

5. Consolidated financial statements

The consolidated financial statements include the financial statements of the investee of which the Company controls.

The Company prepares consolidated financial statements based on the Accounting Standard for Business Enterprises

No. 33 Consolidated Financial Statements.

6. Cash and cash equivalents

Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the

Company's short-term (usually due within 3 months from the acquisition date), highly liquid investments that are

readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

7. Translation of transactions and financial statements denominated in foreign currencies


Assets and liabilities that are obtained in a business combination shall be measured at their carrying amounts at the

combination date as recorded by the party being absorbed in the consolidated financial statement of ultimate

controlling party. The difference between the carrying amount of the net assets obtained and the carrying amount of

the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be

adjusted to capital reserve. If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted

against retained earnings.


Where the cost of combination exceeds the investor’s interest in the fair value of the investee’s identifiable net assets,

the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition.

Where the cost of combination is less than the investor’s interest in the fair value of the investee’s identifiable net

assets, the investor firstly reassesses the measurement of the fair values of the investee’s identifiable assets,

liabilities and contingent liabilities and measurement of the cost of combination. If after that reassessment, the cost of

combination is still less than the investor’s interest in the fair value of the investee’s identifiable net assets, the

investor recognizes the remaining difference immediately in profit or loss for the current period.

8. Financial instruments

(1) Classification, recognition and measurement of financial instruments

Financial assets shall be classified into the following four categories based on initial purpose when acquisition:

F-94

20

financial assets at fair value through profit or loss, including financial assets held for trading and those designated as

at fair value through profit or loss; held-to-maturity investments; loans and receivables; available-for-sale financial

assets.

Financial liabilities shall be classified into the following two categories based on initial purpose when acquisition:

financial liabilities at fair value through profit or loss, including financial liabilities held for trading and those designated

as at fair value through profit or loss; other financial liabilities.

(2)Recognition and measurement of financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual

provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. For financial

assets and financial liabilities at fair value through profit or loss, transaction costs are immediately recognized in profit

or loss. For other financial assets and financial liabilities, transaction costs are included in their initial recognized

amounts.

Financial assets are subsequently measured affair value. The cost of disposing of financial assets shall not be

recognized, except for, ①Held-to-maturity investments, loans and receivables are subsequently measured at

amortized cost using the effective interest method.②If the financial assets are without quoted prices in an active

market and that fair values cannot be reliably measured, the cost method shall be employed in the measurement.

Financial liabilities are subsequently measured at amortized cost using the effective interest method. Except for,

①Financial liabilities at fair value through profit or loss, transaction costs are immediately recognized in profit or loss.

The cost of disposing of financial liabilities shall not be recognized. ②If the financial liabilities are without quoted

prices in an active market and that fair values cannot be reliably measured, the cost method shall be employed in the

measurement.③Guarantee loans at fair value through profit or loss or the borrowing agreements under market

interest rate at fair value through profit or loss are subsequently measured in the one of the follow situation with the

higher amount: 1) In accordance with the Chapter 13 of Accounting System for Business Enterprises. 2) The result of

initial price subtracts accumulated amortization in accordance with the Chapter 14 of Accounting System for Business

Enterprises.

Any gains or loss from changes in the fair value of financial asset and financial liability shall be treated as follow,

except for hedging instruments. ①Any gains or loss from changes in the fair value of financial asset and financial

liability shall be recognized in profits and losses for the period. The interests or dividends gains from held assets and

recognized in investment gains. When the Company disposes of assets, the difference between the acquisition price

and the book value of account receivables shall be recognized in the current profits and losses.②Any changes in the

fair value of available-for-sale financial assets should be recognized in the capital reserves for the period; Interests

obtained and the dividends declared by the investee during the period in which the available-for-sale financial assets

are held, are recognized in investment gains.; Upon disposal of available-for-sale financial assets, the difference

between the acquisition price and the book value shall be recognized in the gains or losses on investment; Meanwhile,

the accumulate changes of the fair value which is originally recognized in the owners’ equities shall be transferred to

the gains or losses on investment.

F-95

21

The Company derecognizes a financial asset only when the right of the cash flow the contract discharges or the risk

and compensation of the financial asset is transferred; The Company derecognizes a financial liability (or part of it)

only when the underlying present obligation (or part of it) is discharged.

(3) Recognition and measurement of transfer of financial assets

Where the Company has transferred nearly all the risks and rewards of ownership of the financial asset to the

transferee, the financial asset is derecognized. If the Company neither transfers nor retains substantially all the risks

and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognizes the financial

asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated

liability.

If the overall transfer of the financial assets meets the conditions of the de-recognition, the difference between the

following two items shall be recognized in the current profits and losses: ①The carrying amount book value of the

financial assets transferred; ②The sum of the consideration received from the transfer and cumulative gain or loss

that has been recognized in other comprehensive income. If a part of the transferred financial asset satisfies the

conditions of de-recognition, 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 respective fair values of those parts. The

difference of followings shall be recognized in the current profits and losses: ①The carrying amount allocated to the

part derecognized; ②The sum of the consideration received for the part derecognized and any cumulative gain or

loss allocated to the part derecognized which has been previously recognized in other comprehensive income.

(4) 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 the quoted price in the active market to establish its fair value. For a financial instrument which has no 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.

(5) Impairment of financial assets

The Company assesses at each balance sheet date the carrying amounts of financial assets other than those at fair

value through profit or loss. If there is objective evidence that a financial asset is impaired, the Company determines

the amount of any impairment loss.

If financial assets carried at amortized cost are impaired, the carrying amounts of the financial assets are reduced to

the present value of estimated future cash flows (excluding future credit losses that have not been incurred)

discounted at the financial asset's original effective interest rate. The amount of reduction is recognized as an

impairment loss in profit or loss. If, subsequent to the recognition of an impairment loss on financial assets carried at

amortized cost, there is objective evidence of a recovery in value of the financial assets which can be related

objectively to an event occurring after the impairment is recognized, the previously recognized impairment loss is

reversed in the current profits and losses.

F-96

22

If the fair value of the available-for-sale financial assets experienced large falling at the end of a period, and it is

expected that such falling is not temporary, then it is not necessarily to be determined that there is impairment. For the

available-for-sale financial assets with the purpose of strategic cooperation and not be sold by the change of stock

price temperately, the operation of the invested company should be analyzed that: there is impairment when the

revenue of the invested company decreases 30% every year or earnings before Interest, taxes, depreciation and

amortization decreases 30% every year. For the available-for-sale financial assets making profit form the stock price,

those at fair value at each balance sheet date is 50% lower than the original cost of it or is lower than the original price

over 24 months, then there is impairment.

If, subsequent to the recognition of an impairment loss on available-for-sale financial assets, there is objective

evidence of a recovery in value of the financial assets which can be related objectively to an event occurring after the

impairment is recognized, the previously recognized impairment loss is reversed. The amount of reversal of

impairment loss on available-for-sale equity instruments is recognized as other comprehensive income and included

in the capital reserve, while the amount of reversal of impairment loss on available-for-sale debt instruments is

recognized in profit or loss.


(1) Receivables that are individually significant and for which bad debt provision is individually assessed

Method of determining provision for receivables

that are individually significant and for which

bad debt provision is individually assessed

Individually tested for impairment at each balance date, and compare the

expected present value of future cash flows for individual receivable to

carrying value, the less amount is accrued for bad debt.

(2)Accounts receivable for which bad debt allowance is assessed on portfolio basis

Aging analysis

Aging Provision as a proportion of accounts

receivable (%)

Provision as a proportion of other

receivable (%)

Within 1 year (inclusive) 0.00 0.00

1-2 years 10.00 10.00

2-3 years 30.00 30.00

Over 3 years 50.00 50.00

The difference between the present value of future cash flow and the book value of a note receivable, prepayment,

interest receivable, and long-term account receivable is for determining an impairment loss at the balance sheet date.

10. Inventories

(1) Classification of inventories

Inventories include finished goods or merchandizes for sales, work in progress, materials and consumptions for

production or rendering of services etc.

F-97

23

(2) Measurement of inventories upon delivery

① Materials, processed goods, finished goods, stock, consumptive biological assets and semi-finished goods are

accounted for at actual cost and adjusted into weighted average basis upon delivery.

② Constructions are accounted for at actual cost and adjusted into the total actual cost upon completion.

③ Other materials, packing materials, and low cost and short-lived item are accounted for at planning cost and

adjusted into actual cost by amortizing the material differences in the end of each month.

(3)Basis for determining the net realizable value and provision for decline in value of inventories methods

At balance sheet date, inventories are measured at the lower of 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 recognized. For held-for-sale

inventories, the net realizable value is measured at the estimated price deducted by estimated selling expenses and

related tax expenses under normal production and operation process; For inventories need to be processed, the net

realizable value is measured at the estimated price of the finished goods deducted by estimated cost, estimated

selling expenses and related tax expenses under normal production and operation process; at balance sheet date,

part of the same inventory item is with contract price while the rest is not with contract price, the net realizable value is

measured separately by comparing with respective cost and separately determine the amount of provision for decline

in value and reversal.

Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off

method.

(4) Inventory count system

The perpetual inventory system is adopted for inventory verification.

(5) Amortization method for low cost and short-lived item and packing materials

(1) Low cost and short-lived item

Low cost and short-lived item are amortized as lump-sum when issued.

(2) Packing materials

Packing materials are amortized in accordance with the production.


Long-term equity investment acquired through a business combination involving enterprises under common control.

(1) Determination of investment costs

①For a business combination involving enterprises under common control, if the consideration of the combination is

satisfied by paying cash, transfer of non-cash assets, assumption of liabilities or issue of equity securities, the initial

investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the

F-98

24

owners’ equity of the party being absorbed in the consolidation financial statements of the ultimate controlling party at

combination date. The difference between the initial investment cost and the carrying amount of cash paid, non-cash

assets transferred, liabilities assumed and the face value of equity securities issued shall be adjusted to capital

reserve. If the balance of capital reserve is not sufficient, any excess shall be adjusted to retained earnings.

②For a long-term equity investment acquired through business combination not involving enterprises under common

control, the investment cost of the long-term equity investment is the fair value of the cost of acquisition.

④ Long-term equity investments acquired by other methods other than consolidation

The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which

is actually paid.

The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair

value of the equity securities issued.

The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract

or agreement unless the value stipulated in the contract or agreement is unfair.

(2) Subsequent measurement and recognition of profits and losses

Where the Company is able to exercise control over an investee, the long-term equity investment shall be measured

by adopting the cost method, but be adjusted by adopting the equity method for preparation of consolidated financial

statement. A long-term equity investment in an associate or a joint venture shall be accounted for using the equity

method

(3) Basis for determining joint control and significant influence over investee

Joint control is the contractually agreed sharing of control over an economic activity. Significant influence is the power

to participate in the financial and operating policy decisions of the investee but is not control or joint control over those

policies.

(4) Methods of impairment assessment and determining the provision for impairment loss

The Company reviews the long-term equity investments at each balance sheet date to determine whether there is any

indication that they have suffered an impairment loss. If an impairment indication exists, the recoverable amount is

estimated. If such recoverable amount is less than its carrying amount, a provision for impairment losses in respect of

the deficit is recognized in profit or loss for the current period.


Investment properties include leased or holding for sale land use rights, and leased buildings.

Investment properties are recorded at initial cost, and depreciated as fixed assets. At balance sheet day, if there is

any sign of impairment, the difference between book value and net realizable value is recorded as provision of

impairment loss.

F-99

25

13. Fixed assets

(1) Recognition criteria, measurement and depreciation of fixed assets

Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to

others, or for administrative purposes, and have useful lives of more than one accounting year.

Fixed assets are initially measured at cost and depreciated on straight-line basis from the next month of the date on

which fixed assets come to the expected condition for its intended use.

(2) Depreciation of each category of fixed assets

Category Depreciation period (years) Residual value rate (%) Annual depreciation rate

(%)

Land 50 0 2

Building 50-70 5 1.90-1.36

Transportation 7 5 13.57

Machinery 10 5 9.5

Other 5 5 19.00

(3) Methods of impairment assessment and determining the provision for impairment losses of fixed assets

At balance sheet date, if there is any indication of impairment of fixed assets, an impairment loss is recognized at the

recoverable amount of an individual asset less its carrying amount.

(4) Identification basis and valuation methods for fixed assets acquired under finance leases

An asset is identified as a fixed asset acquired under finance lease when one or more conditions below are met: (1)

when the lease term expires, the ownership of the leased asset is transferred to the lessee; (2) the lessee has the

option to purchase the leased asset, and the contractual purchase price is estimated to be far below the fair value of

exercising the option of lease the asset. Thus the option of lease can be reasonably determined at the lease start date;

(3) even if the ownership of the assets is not to be transferred, lease term is the majority of the service life of the

leased asset [generally above 75% (inclusive) of the service life of the lease assets]; (4) the present value of the

minimum lease payment for the lease is almost equivalent to above 90% (inclusive) of the fair value of the lease asset

at the lease start date; (5) the leased asset is special in nature and can be only used by the lessee unless a big reform

been made.

At the commencement of the lease term, the Company records the leased asset at an amount equal to the lower of

the fair value of the leased asset and the present value of the minimum lease payments at the inception of the lease

and depreciate according to its own depreciation policy of fixed assets.


(1) Construction in progress is transferred to a fixed asset at the actual project cost when it is ready for intended use.

If a construction in progress has reached the working condition for its intended use but the final project accounts have

F-100

26

not been completed and approved, the asset should be transferred to fixed assets at an estimated value based on

project budget. After the project accounts have been approved, the estimated values should be adjusted according to

actual costs without adjusting depreciation recognized.

(2) At balance sheet date, if there is any indication of impairment of construction in progress, an impairment loss is

recognized at the recoverable amount less its carrying amount.

15. Borrowing costs

(1) The recognition of the capitalized borrowing costs

The borrowing costs incurred to the Company, which can be directly attributable to the acquisition and construction or

production of assets eligible for capitalization, are capitalized and recorded into the costs of relevant assets. Other

borrowing costs are recognized as expenses on the basis of the actual amount incurred, and are recorded into the

current profits and losses.

(2) The period of capitalization

① The borrowing costs shall be capitalized when they simultaneously meet the following requirements: 1) The asset

expenditures have already incurred, which shall include the cash, transferred non-cash assets or interest bearing

debts paid for the acquisition and construction or production activities for preparing assets eligible for capitalization; 2)

The borrowing costs has already incurred; 3) The acquisition and construction or production activities which are

necessary to prepare the asset for its intended use or sale have already started.

②Capitalization of borrowing costs ceases when the capitalization of borrowing costs is suspended during periods in

which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the

suspension is for a continuous period of more than 3 months. The borrowing cost during the suspension period is

recognized in the current cost until the acquisition, construction or production of a qualifying asset starts again.

③ Where a qualified asset under acquisition and construction or production is for its intended use or sale, the

capitalization of the borrowing costs shall be ceased.

(3) Method for to-be-capitalized amount

The interest of a specific-purpose borrowings (deducting the interest revenue of the borrowings which is deposited in

the bank and or interest from temporary investment) and incurred before a qualified asset under acquisition and

construction or production shall be capitalized; Where funds are borrowed under general-purpose borrowings, the

Company determines the amount of interest to be capitalized on such borrowings by applying a capitalization rate to

the weighted average of the excess of cumulative expenditures on the asset over the amounts of specific-purpose

borrowings. The capitalization rate is the weighted average of the interest rates applicable to the general-purpose

borrowings.


(1) Intangible assets include land use rights, mining right, trademark right, patent technology, non-patented technology,

F-101

27

software, etc., are measured initially at cost.

(2) The depreciation amount of an intangible asset with a finite useful life shall be allocated on a systematic and

rational basis over its useful life. The amortization method selected shall reflect the pattern in which the asset’s

economic benefits are expected to be realized. If that pattern cannot be determined reliably, the straight-line method

shall be used.

(3)If there is any indication that the intangible assets with a finite useful life may be impaired at each balance sheet

date and the recoverable amount of an asset or an asset company is less than its carrying amount, the deficit is

accounted for as an impairment loss and is recognized in profit or loss for the period. Intangible assets with indefinite

useful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether

there is any indication that the assets may be impaired.

(4) Expenditure during the research phase is recognized as an expense in the period in which it is incurred.

Expenditure during the development phase that meets all of the following conditions at the same time is recognized as

intangible asset:(1)It is technically feasible to complete the intangible asset so that it will be available for use or sale;(2)

The Company has the intention to complete the intangible asset and use or sell it;(3) The Company can demonstrate

the ways in which the intangible asset will generate economic benefits, including the evidence of 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;(4) The availability of adequate technical, financial and other resources to complete the

development and the ability to use or sell the intangible asset; and (5) The expenditure attributable to the intangible

asset during its development phase can be reliably measured.

17. Long-term prepaid expenses

Long-term prepaid expenses shall be accounted for according to actual amount and amortized averagely over the

benefit period or specified period. If future benefits are not derived, the whole unamortized residual value of this

project shall be recorded into the profits and losses in the current period.

18. Employee benefits

(1) In an accounting period in which an employee has rendered service to the Company, the Company recognizes the

employee benefits for that service as a liability or compensation for termination of employment relationship with the

employee. Short-term wages payable and termination benefits are included in employee benefits. The benefits for

employees’ spouses, children, dependents, widows and other relatives are included in the employee benefits.

(2) Recognition of employee benefits

The Company records a liability for the employee benefits payable during the time the employee provides service to

the Company.

(3) Accounting methods for employee benefits

The Company recognizes the short-term wages payable for that service as a liability and records it in the current profit

and loss or the cost of related assets during the accounting period. Welfare funds are recorded in the current profit

F-102

28

and loss or the cost of related assets when they actually occur. Non-monetary benefits are measured at the fair value.

Employee benefits attributable to manufacturing of products or providing services shall be recorded in product or

service cost.

Employee benefits attributable to construction in process or intangible assets shall be recorded in fixed asset or

intangible asset.

Employee benefits apart from the above shall be recorded in profit or loss account.

(4) Benefits after employment

The Company receives employees’ service and provides various compensations and benefits when the employees

are retired or terminates the employment contract. These benefits are recognized as benefits after employment except

for short-term wages payable and termination benefits. The Company determines its liability based on the defined

contribution plans and records the liability in the in the current profit and loss or the cost of related assets during the

employee service of the accounting period.

19. Bond payable

Bond payable shall be measured at cost (including related transaction cost) initially and at amortized cost

subsequently based on actual interest rate.

20. Provisions

Provisions are recognized when the Company has a present obligation related to a contingency, such as pending

litigation and products quality assurance, etc. It is probable that an outflow of economic benefits will be required to

settle the obligation, and the amount of the obligation can be measured reliably.

The amount recognized as a provision is the best estimate of the consideration required to settle the present

obligation at the balance sheet date, taking into account factors pertaining to a contingency such as the risks,

uncertainties and time value of money. Where the effect of the time value of money is material, the amount of the

provision is determined by discounting the related future cash outflows. As time goes by, the reverse of the

discounting the related future cash outflows causes arising in the book value of the provision, it shall be recognized as

the interest expense.

The Company makes appropriate adjustments of the provisions to conform to the best present estimate of the

consideration at the balance sheet date.

21. Revenue

(1) Revenue from sale of goods

Revenue from sale of goods is recognized when the Company has transferred to the buyer the significant risks and

rewards of ownership of the goods; the Company retains neither continuing managerial involvement to the degree

usually associated with ownership nor effective control over the goods sold; Revenue can be measured reliably; it is

F-103

29

probable that the associated economic benefits will flow to the Company; the associated revenue and costs incurred

or to be incurred can be measured reliably.

(2) Revenue from rendering of services

If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the

labor services it provides, it shall recognize the revenue from providing services employing the percentage of

completion method.

If the Company cannot, on the date of the balance sheet, measure the result of a transaction concerning the providing

of labor services in a reliable way, it shall be conducted in accordance with the following circumstances, respectively:

①If the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor

services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of

labor services shall be carried forward at the same amount.

②If the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the

current profits and losses, and no revenue from the providing of labor services may be recognized.

(3) Revenue from alienating the right to use assets

The relevant economic benefits are likely to flow into the Company, and the amount of revenues can be measured in

a reliable way, the Company shall ascertain the amount of revenues from the alienating of right to use assets based

on the following circumstances, respectively:

①The amount of interest revenue should be measured and confirmed in accordance with the length of time for which

the Company’s cash is used by others and the actual interest rate.

②The amount of royalty revenue should be measured and confirmed in accordance with the period and method of

charging as stipulated in the relevant contract or agreement.

22. Construction contracts

(1) The revenue and cost of construction contract shall be confirmed according to percentage of completion at the

balance sheet day if the outcome of the contract is reliably recognizable. If the outcome of the contract is not reliably

recognizable and the cost is recoverable, records the revenue as the amount of the recoverable cost and records the

cost as contract expense. If the cost is not recoverable, records the cost as contract expense without recording

revenue.

(2) Fixed price contract can be reliably measured when: contract revenue can be reliably measured, economic benefit

is likely to flow in, actual contract costs can be distinguished and measured, and percentage of completion and future

cost can be reliably measured. Cost plus contract can be reliably measured when: economic benefit is likely to flow in,

actual contract costs can be distinguished and measured.

(3) The stage of completion is determined by reference to the proportion that actual contract costs incurred to date

bear to the estimated total contract costs.

F-104

30

(4) At the balance sheet date, if the estimated total contract costs exceed total contract revenue, the expected loss

shall be recognized as an expense for the current period. For the construction is in the progress, provisions for

inventories are measured according to the difference. Provisions for executory onerous contracts are measured

according to the difference.

23. Government grants

(1) Government grants include asset related grants and income related grants.

(2)If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or

receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value

cannot be reliably determined, it is measured at a nominal amount.

(3) A government grant related to an asset is recognized as deferred revenue, and evenly amortized to profit or loss

over the useful life of the related asset. For a government grant related to income, 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. If the

grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognized

as deferred revenue, and recognized in profit or loss over the periods in which the related costs are recognized.

24. Income taxes

(1) Deferred tax assets and liabilities shall be measured at the temporary differences between the carrying amounts of

certain assets or liabilities and their tax base (or between the carrying amount of those Item that are not recognized as

assets or liabilities and their tax base that can be determined according to tax laws), and the tax rates that are

expected to apply to the period when the asset is realized or the liability is settled according to the requirements of tax

laws.

(2) Deferred tax assets for deductible temporary differences are recognized to the extent that it is probable that

taxable profits will be available against which the deductible temporary differences can be utilized. At balance sheet

date, the carrying amount of deferred tax assets shall be reviewed and if it is probable that sufficient taxable profits will

be available in the future to allow the benefit of deferred tax assets to be utilized, the Company shall recognize

deferred tax assets that not been recognized in previous period.

(3) At the balance sheet date, the carrying amount of a deferred tax asset shall be reviewed. The Company shall

reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable

profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Any such reduction in

amount shall be reversed to the extent that it becomes probable that sufficient taxable profits will be available.

(4) Current and deferred tax of the Company shall be recognized as income or an expense and included in profit or

loss for the current period, except to the extent that the tax arises from: a) a business combination; and b) a

transaction or event which is recognized directly into owner’s equity.

25. Leases

(1) Operating leases

F-105

31

When the Company is a lessee under operating leases, an operating lease are recognized on a straight-line basis

over the lease term. Initial direct costs are charged to profit or loss for the current period. Contingent rents are

charged to profit or loss in the period in which they are actually incurred.

When the Company is a lessor under operating leases, rental income from operating leases are recognized on a

straight-line basis over the lease term. Initial direct costs are charged to profit or loss for the current period, except for

the large amount which is capitalized periodically. Contingent rents are charged to profit or loss in the period in which

they are actually incurred.

(2) Financial leases

In finance leases, lessees should, at inception of the lease, record the fair value of rental assets and the present value

of minimum lease payments as of the date at inception of the lease, whichever is lower, as the value of rental assets.

The amount of minimum lease payments shall be recorded as the value of long-term payables and the difference shall

be recorded as unrecognized financing charges which shall be amortized using the effective-interest method in each

period within the lease term. The initial direct costs are charged to profit or loss for the current period.

In finance leases, lessors shall, at inception of the lease, record the sum of minimum lease payments and initial direct

costs as of the date of inception of lease as the value of finance lease receivables while recording the unguaranteed

residual value. The difference between minimum lease payments and the sum of initial direct costs and unguaranteed

residual value shall be recognized as unrealized financing income. Unrealized financing income shall be calculated

and recognized as current financing income using the effective interest method during the lease term.

26. Assets held for sale

The Company will classify business units (or non-current assets) as assets held for sale once satisfying below

conditions:(1) business unit that can be usually or in practice classified as a unit available to sale at once; (2)

Resolution or approval has been made for the disposal; (3) non-cancellable agreement with other parity of disposal

has been signed; (4) the deal in respect of disposal will be complete within one year.

The assets held for sale of the company should be measured at fair value less estimated cost of disposal (but cannot

exceed the original carrying amount). If the carrying amount exceed the fair value less estimated cost of disposal, the

difference regarded as impairments should be recognized in current profit or loss.

V. ADJUSTMENT ON PRIOR YEAR AUDITED FINANCIAL STATEMENTS

VI. (1) Changes in accounting policies

1.1The Ministry of Finance revised Accounting for Business Enterprises No. 9 Employee Benefit, Accounting for

Business Enterprises No. 30 Financial Statements, Accounting for Business Enterprises No. 33 Consolidated

Financial Statements, Accounting for Business Enterprises No. 39 Fair Value Measurement, Accounting for Business

Enterprises No. 40 Joint Venture, Accounting for Business Enterprises No. 2 Long-term Investment, Accounting for

Business Enterprises No. 41 Disclosure of Interest in Other Entities, Accounting for Business Enterprises No. 37

F-106

32

Financial Instrument in 2014.

According to the above, the Company adopts the ASBEs except Accounting for Business Enterprises No. 37 Financial

Instrument in 1 July 2014, and adopts the Accounting for Business Enterprises No. 37 Financial Instrument when

preparing the financial statements of 2014. The impact of the new ASBEs is as followed:

1.2The adjustments relevant to the changes of accounting policies are as follow:

Item Balance before adjustment

（2013） Adjustment Balance after adjustment

Long-term investment 746,221,813.60 -746,221,813.60

Available-for-sale financial asset 100,000,000.00 750,135,235.14 850,135,235.14

Deferred income tax 189,772,810.76 1,223,619.74 190,996,430.50

Capital reserve 14,470,900,688.32 3,479,565.88 14,474,380,254.20

Other current liabilities 7,120,000.00 -7,120,000.00

Deferred income 7,120,000.00 7,120,000.00

(2) Changes in accounting estimates

None.

(3) Adjustment on prior year audited financial statements

1.1According to caishui [2008] no. 151 and caishui [2009] no. 87 date file regulation, government subsidies income

shall exempt from enterprise income tax under the following three conditions: 1, the enterprise can provide funds

allocation files which formulate the special purpose: 2, financial department or other government departments in

charge of funds appropriation have specific measures for the management of special funds or specific management

requirements: 3, the funds are recorded and accounted independently. According to the policy, the income tax

expense from 2006 to 2013 should be recalculated and relevant ledgers shall be adjusted.

1.2The adjustments relevant to the adjustment on prior year audited financial statements are as follow:


Tax payable 506,132,528.74 -53,832,661.02 452,299,867.72

Retained earnings 1,163,478,571.91 51,828,513.42 1,215,307,085.33

Minority interest 492,212,423.04 1,720,471.52 493,932,894.56

Income tax expense 67,243,266.52 -4,197,563.08 63,045,703.44

VII. TAXATION

F-107

33

Category of tax Basis of tax computation Tax rate (%)

Business tax Taxable income 3%,5%

City maintenance tax Taxable turnover tax 7%

Education surcharge Taxable turnover tax 3%

Corporate income tax Taxable income 25%

VIII. CONSOLIDATED FINANCIAL STATEMENTS

(1) Scope of consolidation

31 December 2014

NO. subsidiaries Reg. Location Scope of business

1 Chongqing south bank asset management co., LTD Chongqing operation and management of assets

etc.

2 Asset management company of Chongqing jiangnan city

construction Chongqing Public facility construction etc.

3 Chongqing south traffic construction co., LTD Chongqing management of road construction

4 Chongqing haitang sports industrial co., LTD Chongqing operation and management of athletic

facility etc.

5 South bank in Chongqing binjiang road development and

construction co., LTD Chongqing Public facility construction etc.

6 Chongqing Guang Yang island real estate development

co., LTD Chongqing Land development etc.

7 Chongqing hualian company's department store co., LTD Chongqing Selling of home supplies and

appliances etc.


construction development co., LTD Chongqing land reserve and operation etc.

9 Chongqing yinglong around industrial co., LTD Chongqing land reserve and comprehensive

renovation etc.

10 In the west of Chongqing nanping district development

construction co., LTD Chongqing land reserve and operation etc

11 Chongqing yinglong song sharp agricultural development

co., LTD Chongqing land development and renovation etc.

12 Chongqing le tour tourism development co., LTD Chongqing tourism development etc.

Information about subsidiaries (continued from previous sheet)

F-108

34

31 December 2014

NO. subsidiaries Reg. capital

(10,000.00)

Invested


1 Chongqing south bank asset management co., LTD 191,896.86 181,896.86 94.79

2 Asset management company of Chongqing jiangnan

city construction 21,157.03 19,157.03 90.55

3 Chongqing south traffic construction co., LTD 39,030.00 38,030.00 97.44

4 Chongqing haitang sports industrial co., LTD 58,337.55 57,337.00 98.29

5 South bank in Chongqing binjiang road development

and construction co., LTD 67,438.47 62.438.47 92.59



7 Chongqing hualian company's department store co.,

LTD 7,700.00 7,700.00 100.00


construction development co., LTD 30,000.00 20,400.00 68.00

9 Chongqing yinglong around industrial co., LTD 15,000.00 14,000.00 93.33


development construction co., LTD 14,000.00 14,000.00 100.00



12 Chongqing le tour tourism development co., LTD 500.00 450.00 90.00

(2) Change of scope of consolidation

Subsidiary which cannot be consolidated in the financial statements

Chongqing Nan’an Xingnong financing guarantee Co., Ltd. is funded by Chongqing Nan’an asset

management Co., Ltd. (hereinafter referred to as the "Asset Management Ltd.")and Chongqing Xingnong

financing guarantee co., LTD（hereinafter referred to as“Xingnong Ltd.”）. Asset management Ltd.

invested 90, 000,000 which holds 90% of the share while Xingnong Ltd. invests 10,000,000 which is 10%；

According to the Shareholding Entrustment Agreement, 41% of the equity owned by Asset Management

Ltd. shall be operated by Xingnong Ltd.; The dividend shall be paid by 10% as to Xingnong Ltd.; Xingnong

Ltd. shall attend the board meeting on behalf of Asset Management Ltd. and excise the voting rights

independently to participate in material decision making and management appointment. Based on the

information above, Asset Management Ltd. cannot implement control upon Chongqing Nan’an Xingnong

financing guarantee Co., Ltd. although it holds 90% of the share. Chongqing Nan’an Xingnong financing

guarantee Co., Ltd. shall not be consolidated in the financial statements.

IX. NOTES TO IMPORTANT ITEMS IN FINANCIAL STATEMENTS

F-109

35

“The opening balance” refers to the balance on 1 January 2014 and “the closing balance” refers to the balance on 31

December 2014. “The prior period” is the year of 2013 and “the current period” is the year of 2014.

1. Cash and bank balances


Cash 214,038.89 382,269.52

Incl. CNY 214,038.89 382,269.52

Bank balances 2,013,571,593.23 2,632,653,297.44

Incl. CNY 2,013,571,593.23 2,632,653,297.44

Other currency 319,269,927.80 170,000,000.00

Incl. CNY 319,269,927.80 170,000,000.00

Total 2,333,055,559.92 2,803,035,566.96

Note: other currency includes 50,000,000.00 as pledge of deposit No. GR14287 (2014) in Xiamen international bank

co., Ltd., Siming branch

2. Notes receivable


bank acceptance 660,000.00

Total 660,000.00


Category


Amount Proport

ion (%)

Bad debt

provision

Proport

ion

(%)

Amount

Prop

ortion

(%)

Bad debt

provision

Propor

tion

(%)

Accounts receivable

that are individually

significant and for

which bad debt

provision has been

assessed individually

7,504,614,804.46 95.82 8,017,510,094.32 97.40

Accounts receivable

with provision for bad

debts made by

combinatorial test

327,134,119.40 4.18 73,382,008.44 22.43 213,780,364.40 2.60 74,898,715.00 35.04

Total 7,831,748,923.86 100.00 73,382,008.44 0.94 8,231,290,458.72 100.00 74,898,715.00 0.91

3.1 Accounts to set up bad debt provision in group

F-110

36


Aging


Amount Proportion(%) Bad debt

provision Amount

Proportion

(%)

Bad debt

provision

Within 1 year 177,183,755.00 54.16 3,982,934.40 1.86

1 to 2

years(inclusive) 3,982,934.40 1.22 398,293.44

2 to 3

years(inclusive) 150,000,000.00 70.17 45,000,000.00

More than 3 years 145,967,430.00 44.62 72,983,715.00 59,797,430.00 27.97 29,898,715.00

Total 327,134,119.40 100.00 73,382,008.44 213,780,364.40 100.00 74,898,715.00

3.2As of December 31, 2014, the top five amounted to 7,112,935,977.66 which made up 90.82% of the total

amount of accounts receivable.


Chongqing Nan'an District Finance Bureau 5,068,508,006.21 64.72

Reserve land regulation in Nan’an district of Chongqing city center 1,108,400,000.00 14.15

The relocation management office administrative center in Na’nan district of

Chongqing city 586,000,000.00 7.48

Authorities in Nan’an district of Chongqing city logistics service center 187,427,971.45 2.39

Donggang industrial park 162,600,000.00 2.08

Total 7,112,935,977.66 90.82


Related parties Amount Proportion%

Chongqing Nan'an District Finance Burea 5,068,508,006.21 64.72

4. Prepayments

4.1Aging analysis


F-111

37

Amount Proportion(%) Bad debt

provision Amount

Proportion

(%)

Bad debt

provision

Within 1 year 2,098,675,879.27 50.30 1,819,032,466.30 66.38

1 to 2

years(inclusive) 1,383,095,706.30 33.15 598,926,300.00 21.86

2 to 3

years(inclusive) 409,184,399.25 9.81 298,457,774.27 10.89

More than 3 years 281,088,761.63 6.74 23,877,378.66 0.87

Total 4,172,044,746.45 100.00 2,740,293,919.23 100.00

4.2As of December 31, 2014, the top five amounted to 3,779,861,600.00which made up 90.61% of the total

amount of prepayments.


Reserve land regulation in Nan’an district of Chongqing city center 2,237,791,600.00 53.64


Land expropriation in Nan’an district of Chongqing city 500,600,000.00 12.00

Municipal gardens bureau in Nan’an district of Chongqing city 140,000,000.00 3.36

Chongqing beautiful heart real estate development co., LTD 125,000,000.00 3.00

Total 3,779,861,600.00 90.61

4.3 No related party accounts in the closing balance.

5. Other receivables

Category


Amount Proport

ion (%)

Bad debt

provision

Propo

rtion

(%)

Amount

Prop

ortion

(%)

Bad debt

provision

Propor

tion

(%)

Other

receivables that

are individually

significant and

for which bad

debt provision

has been

assessed

individually

3,664,271,589.63 95.94 2,706,109,770.90 95.50

Other 155,108,539.87 4.06 24,100,886.58 15.54 127,472,719.14 4.50 8,961,258.52 7.03

F-112

38

Category


Amount Proport

ion (%)

Bad debt

provision

Propo

rtion

(%)

Amount

Prop

ortion

(%)

Bad debt

provision

Propor

tion

(%)

receivables with

provision for bad

debts made by

combinatorial

test

Total 3,819,380,129.50 100.00 24,100,886.58 0.63 2,833,582,490.04 100.00 8,961,258.52 0.32

5.1 Accounts to set up bad debt provision in group


Aging


Amount Proportion

(%)

Bad debt

provision Amount

Proportion

(%)

Bad debt

provision

Within 1 year 27,800,087.63 17.92 91,147,557.30 71.50

1 to 2 years(inclusive) 91,147,557.30 58.76 9,114,755.73 15,635,850.00 12.27 1,563,585.00

2 to 3 years(inclusive) 15,471,583.10 9.97 4,641,474.93 14,734,912.00 11.56 4,420,473.60

More than 3 years 20,689,311.84 13.34 10,344,655.92 5,954,399.84 4.67 2,977,199.92

Total 155,108,539.87 100.00 24,100,886.58 127,472,719.14 100.00 8,961,258.52

5.2.As of December 31, 2014, the top five amounted to 3,483,587,090.94 which made up 91.21% of total

amount of other receivables.




Chayuan construction development co., LTD 122,140,000.00 3.20


Chongqing south coast road binjiangShiFanDai tourism economy

development and construction management committee 92,000,000.00 2.41

Total 3,483,587,090.94 91.21



F-113

39


6. Inventories

6.1Categories of inventories

Item

Book value


Supplies 243,494.00 227,849.50

Development cost 18,551,540,040.75 17,403,274,573.56

Total 18,551,783,534.75 17,403,502,423.06

Development cost includes land reserves amounted to 9,393,387,400.00.

6.2 Important capitalization of interests recorded as of inventory

project Capitalized amount Note

Nan shan tunnel and connection way (Chayuan road) phase of the project 121,648,939.94

Liao Gushan kraal shanty towns transformation projects in the list 80,000,000.00

Liao home was tsui district project 61,799,999.99

"Village in city" project 50,838,296.51

Liao Gushan project 24,532,350.00

The flood control project 17,051,996.20

Big hill club project JiGuanShi Town panlong village 16,900,000.00

Liao Gushan shantytowns project 15,480,000.00

Nan’an district urban forest project (municipal) 7,812,993.79

Nan’an district farming mouth forest engineering projects 5,876,738.33

Guang Yang island project 5,000,000.00

Nanping center transportation hub project 4,463,264.01

Furen road project 967,883.79

Wang Po JiGuanShi Town mountain, big club projects 289,640.00

Total 412,662,102.56

6.3 Provision for diminution in value of inventory

None.

7. Available-for-sale financial assets


F-114

40


Available-for-sale equity instrument 809,634,982.82 850,135,235.14

Incl. items calculated by fair value 18,590,224.55 12,939,582.96

Items calculated by cost method 791,044,758.27 837,195,652.18

Total 809,634,982.82 850,135,235.14

7.1 Available-for-sale equity instrument calculated by fair value

Item Closing balance



2. Bank of Chongqing 5,853,104.00 8,044,099.32 13,897,203.32

total 8,045,104.00 10,545,120.55 18,590,224.55


Item

Opening balance



2 .Bank of Chongqing 5,853,104.00 3,445,616.13 9,298,720.13

total 8,045,104.00 4,894,478.96 12,939,582.96

7.2 Available-for-sale equity instrument calculated by cost method

Item

Closing balance


losses

Net value

1. Wang Po JiGuanShi Town mountain, big club projects 38,498,610.42 22,481,503.71 16,017,106.71

2. Agricultural Development Bank of China 1,438,409.60 1,438,409.60

3. Chongqing south urban construction development co., LTD 10,000,000.00 10,000,000.00

4. Chongqing by the open area investment group co., LTD 650,000,000.00 650,000,000.00

5. Chongqing electronic information of small and


2,600,000.00

6. Chongqing Nan’an district xingnong financing guarantee

co., LTD 90,000,000.00

90,000,000.00

7. Chongqing melting) industrial development co., LTD 18,000,000.00 18,000,000.00


Total 813,526,261.98 22,481,503.71 791,044,758.27


F-115

41

Item

Opening balance


1. Wang Po JiGuanShi Town mountain, big club projects 38,508,044.39 23,350,801.81 15,157,242.58

2. Agricultural bank of China 100,000,000.00 100,000,000.00

3. Agricultural Development Bank of China 1,438,409.60 1,438,409.60

4. Chongqing south urban construction development co.,

LTD 10,000,000.00

10,000,000.00

5. Chongqing by the open area investment group co.,

LTD 600,000,000.00

600,000,000.00

6. Chongqing electronic information of small and


2,600,000.00

7. Chongqing Nan’an district xingnong financing

guarantee co., LTD 90,000,000.00

90,000,000.00

8. Chongqing melting) industrial development co., LTD 18,000,000.00 18,000,000.00

Total 860,546,453.99 23,350,801.81 837,195,652.18


Item Opening balance This year's

increase

This year to

reduce

Closing balance

Chongqing pulse kori agricultural seed breeding

technology co., LTD 200,000.00 200,000.00

Total 200,000.00 200,000.00


Using the fair value pattern to the investment real estate classification details are as follows


一、The cost of a combined 1,016,212,240.20 1,016,212,240.20

Houses and buildings 772,853,640.20 772,853,640.20

land 243,358,600.00 243,358,600.00

二、Combined to changes in fair value 611,543,142.80 630,669,413.80

Houses and buildings 539,550,282.80 558,676,553.80

land 71,992,860.00 71,992,860.00

三、The carrying value of an investment real estate combined 1,627,755,383.00 1,646,881,654.00

Houses and buildings 1,312,403,923.00 1,331,530,194.00

land 315,351,460.00 315,351,460.00

F-116

42

Chongqing Shen Zhou Real Estate Assets Evaluation corporation was engaged by the company to assess the fair value of the

investment property on 31 December 2014 and issued Asset Appraisal Report (2015) 003 , according to which the company

adjusted the current gain/loss in fair value changes.

10. Fixed assets


current period

Decrease in the


1. Total original amount of fixed asset 1,372,560,239.04 4,608,181.41 463,943.00 1,376,704,477.45

Including: Houses and buildings 1,353,376,010.93 4,149,900.51

1,357,525,911.44

Machinery and equipment 592,680.00

592,680.00

Transportation equipment 14,636,542.38 463,943.00 14,172,599.38

Office equipment and others 3,955,005.73 458,280.90

4,413,286.63

2. Total accumulated depreciation 136,307,394.25 34,964,287.79 440,745.85 170,830,936.19

Including: Houses and buildings 124,870,242.31 33,215,305.07

158,085,547.38

Machinery and equipment 553,841.46 38,838.54

592,680.00

Transportation equipment 8,021,119.07 1,351,226.27 440,745.86 8,931,599.48

Office equipment and others 2,862,191.41 358,917.91

3,221,109.32

3. Total provision for impairment losses

4. Total net book value of fixed asset 1,236,252,844.79

1,205,873,541.26

Including: Houses and buildings 1,228,505,768.62

1,199,440,364.06

Machinery and equipment 38,838.54

Transportation equipment 6,615,423.31

5,240,999.90

Office equipment and others 1,092,814.32 1,192,177.31


11.1Book value

Project Opening balance Increase in the

current period

to fixed

assets in the

current

period

Other

decrease in

the current

period

Closing

balance

Xiang Huang road project 2,049,124.77 1,909,652.11 3,958,776.88

Playbridge project 159,437,905.00 1,567,862.00 161,005,767.00

Yinglong interchange project 88,241,658.93 584,670.14 87,656,988.79


All road project 68,562,687.96 2,981,556.20 71,544,244.16

Huang Minglu project 41,267,375.43 41,267,375.43

F-117

43


current period

to fixed

assets in the

current

period

Other

decrease in

the current

period

Closing

balance

Stone cold road project 13,035,193.50 13,035,193.50


Chongqing open a project 12,222,141.00 12,222,141.00

Tells the way white to black

projects 11,987,386.85 11,987,386.85

River project 12,634,280.77 12,634,280.77

Four yellow road project 11,589,366.15 11,589,366.15

Play wide road, causeway gorge

section of white to black projects 11,678,538.50 11,678,538.50

White to black play wide road

project 8,443,420.97 8,443,420.97

Play wide road (dirt - na) white to

black projects 8,672,376.30 8,672,376.30

Kokuno road project 8,526,437.95 8,526,437.95

Nanshan road safety barrier

project 9,799,681.01 9,799,681.01

Play wide road safety barrier

project project 7,271,075.38 7,271,075.38

Yellow dragon road project 6,021,668.20 6,021,668.20

Nanshan botanical garden -

taping village white to black

projects

4,070,850.89 4,070,850.89

Skeleton area highway traffic

safety facilities engineering

projects

3,523,880.56 701,241.76 4,225,122.32

Company's highway port projects

to the bus stop 1,603,998.00 303,589.00 1,907,587.00

Four kilometers transfer hub

connecting pedestrian tunnel

projects in the four kilometers

1,166,704.63 78,130.18 1,244,834.81

Nanshanwintersweet garden road

project 8,946,484.10 6,765,255.93 15,711,740.03


F-118

44


current period

to fixed

assets in the

current

period

Other

decrease in

the current

period

Closing

balance


Haitang road sports company

white to black 543,302.14 214,095.83 757,397.97


Long road south coastal

engineering projects

688,710.00 494,620.00 1,183,330.00

The people's bank vault project 31,104,040.70 128,102,226.46 159,206,267.16

Play wide road traffic ancillary

facilities improvement projects 15,912.00 5,035,025.92 5,050,937.92

Huang Minglu traffic ancillary

facilities improvement projects 3,000.00 716,600.00 719,600.00

Chongwen road port engineering

project to the bus stop 69,465.00 69,465.00

Guang Yang island bridge

reconstruction project 2,531,712.00 2,531,712.00

Our ideas middle school campus

road reconstruction project 890,168.79 890,168.79

By the open area customs project 1,611,846.47 1,611,846.47

Yinglong around the example

room project 3,000.00 3,000.00

Total 610,532,564.29 156,909,022.65 584,670.14 766,856,916.80

11.2 Provision for impairment

None.

11.3 Net value


Amount of

capitalization

in closing

balance

Xiang huangroad project 3,958,776.88 2,049,124.77

Playbridge project 161,005,767.00 159,437,905.00 47,656,961.51

Yinglong interchange project 87,656,988.79 88,241,658.93 3,142,151.23


F-119

45


Amount of

capitalization

in closing

balance

All road project 71,544,244.16 68,562,687.96 10,053,635.25

Huang Minglu project 41,267,375.43 41,267,375.43

Stone cold road project 13,035,193.50 13,035,193.50


Chongqing open a project 12,222,141.00 12,222,141.00

Tells the way white to black projects 11,987,386.85 11,987,386.85

River project 12,634,280.77 12,634,280.77

Four yellow road project 11,589,366.15 11,589,366.15

Play wide road, causeway gorge section of white to black projects 11,678,538.50 11,678,538.50

White to black play wide road project 8,443,420.97 8,443,420.97

Play wide road (dirt - na) white to black projects 8,672,376.30 8,672,376.30

Kokuno road project 8,526,437.95 8,526,437.95

Nanshan road safety barrier project 9,799,681.01 9,799,681.01

Play wide road safety barrier project project 7,271,075.38 7,271,075.38

Yellow dragon road project 6,021,668.20 6,021,668.20

Nanshan botanical garden - taping village white to black projects 4,070,850.89 4,070,850.89

Skeleton area highway traffic safety facilities engineering projects 4,225,122.32 3,523,880.56

Company's highway port projects to the bus stop 1,907,587.00 1,603,998.00

Four kilometers transfer hub connecting pedestrian tunnel projects

in the four kilometers 1,244,834.81 1,166,704.63

Nanshan wintersweet garden road project 15,711,740.03 8,946,484.10



Haitang road sports company white to black 757,397.97 543,302.14


Long road south coastal engineering projects 1,183,330.00 688,710.00

The people's bank vault project 159,206,267.16 31,104,040.70

Play wide road traffic ancillary facilities improvement projects 5,050,937.92 15,912.00

Huang Minglu traffic ancillary facilities improvement projects 719,600.00 3,000.00

Chongwen road port engineering project to the bus stop 69,465.00

Guang Yang island bridge reconstruction project 2,531,712.00

F-120

46


Amount of

capitalization

in closing

balance

Our ideas middle school campus road reconstruction project 890,168.79

By the open area customs project 1,611,846.47

Yinglong around the example room project 3,000.00

Total 766,856,916.80 610,532,564.29 63,778,795.13


Item Beginning balance

Increase in the

current period

Decrease in

the current

period

Closing balance

1.Total book value 608,003,613.66 57,155.4 608,060,769.06

Incl. landuser right 525,933,563.66 525,933,563.66

Toll right 82,000,000.00 82,000,000.00



Incl. land user right 9,632,369.37 1,208,012.96 10,840,382.33

Toll right 19,549,668.96 6,516,556.32 26,066,225.28



4. Total net value 578,801,890.73 571,116,623.08

Incl. land user right 516,301,194.29 515,093,181.33

Toll right 62,450,331.04 55,933,774.72

Financial software 50,365.40 89,667.03

13. Deferred tax assets and deferred tax liabilities

13.1 Details

Item


Deferred tax

assets/liabilities

Deductible /taxable

temporary

differences

Deferred tax

assets/liabilities

Deductible /taxable

temporary

differences

1. Deferred tax assets 5,620,375.96 22,481,503.72 5,837,700.45 23,350,801.81

Provision for impairment of assets:

F-121

47

Item


Deferred tax

assets/liabilities

Deductible /taxable

temporary

differences

Deferred tax

assets/liabilities

Deductible /taxable

temporary

differences

Long-term equity investment - land

reserve center 4,004,276.68 16,017,106.71 4,032,101.20 16,128,404.80

Long-term equity investment-Credit

Assignment 1,616,099.28 6,464,397.01 1,805,599.25 7,222,397.01

2. Deferred tax liabilities 192,873,164.18 771,492,656.73 190,996,430.50 763,985,722.01


Available-for-sale financial assets 2,636,280.14 10,545,120.56 1,223,619.74 4,894,478.96


property （building） 160,021,871.85 640,087,487.41 161,023,814.23 644,095,256.95


property（land user right） 30,215,012.19 120,860,048.76 28,748,996.53 114,995,986.10

* Deferred tax assets include the deductible differences from Changes in fair value of Long-term equity investment as

investment in land reserve center and loan package. The tax rate is estimated to be 25%

* Deferred tax liabilities include the taxable temporary differences from Changes in fair value of investment property, including

land user right and buildings. The tax rate is estimated to be 25%

14. Other non-current assets


Unrealized after-sales leaseback profits and losses 6,617,285.29

Total 6,617,285.29

15. Assets with restricted ownership

Assets with restricted ownership on December 31, 2014

Catego

ry Ownership documents

Measureme

nt (m2) Loan No. Financing institution

book

value/Appraisal

Value(10,000.00)

Note

Buildin

gs


estate2005 no.14637 20,281.99

（2013）yu yin

weituodaizi1213122

China Citic Bank,

Chongqing branch 16,572.73

Zichan

company

property （2013）yu yin dai

zi 1213149

China Citic Bank,

Chongqing branch

Buildin

gs


estate2007no.03469、

no.13482、no.06229

17,873.55 50040100-2009

nian yin 0011

Agricultural

Development Bank of

China (guarantee)

11,399.23

Hualian

company

property

F-122

48

Catego


Measureme


book

value/Appraisal

Value(10,000.00)

Note

Land

user

right


estate2011no.00016、

no.00015、no.00014、

no.00013、no.00012、

no.00011

63,454

50040100-2010

nian (ying ben) zi

0005

Agricultural

Development Bank of

China, Chongqing

branch, sales

department

46,132.00 Nanyi company

property

Land

user

right


estate2011 no.00084、

no.00085、no.00086

497,066

50040100-2010

nian (ying ben) zi

0005/5004200-2011

nian (ying ben) zi

0002

Agricultural

Development Bank of

China, Chongqing

branch, sales

department


property

Land

user

right



no.00341、no.00316

424,952 50040100-2011nian

ying ben (di) zi 0013

Agricultural

Development Bank of

China, Chongqing

branch, sales

department


property

Land

user

right



no.00320、no.00321

445,973 5501042011000010

0

Agriculture Bank

Nan’an sub-branch 87,221.00

Nanyi company

property

Land

user

right



no.00093、no.00094

376,830

bitc2012(or)-1667/bi

tc2012(t)-1666/bitc2

012(or)-1669/bitc20

12(or)-1670

Bohai international

trust co., LTD 174,287.62

Nanyi company

property

Land

user

right


estate2013 no.00078 319,948 Nan 1270（11）004

Construction Bank

Chongqing Nan ping

sub-branch



estate2013 no.00085 133,707.04

Land

user

right


estate2011 no.00008 7,549.00

50040100-2013

nian (ying ben) zi

0035

Agricultural

Development Bank of

China, Chongqing

branch, sales

department

5230.00

Nanyi company


estate2012 no.00569 297,477.00 103881.00

Land

user

right


estate2012 no.11968 8034 50040100-2014

nianying ben (di) zi

0009

Agricultural

Development Bank of

China, Chongqing

branch, sales



estate2012 no.30297 12075 2,212.2

F-123

49

Catego


Measureme


book

value/Appraisal

Value(10,000.00)

Note


estate2012 no.30300 12075

department 798.55



book

value/App

raisal

Value(10,

000.00)

Note

Buildings


estate2013 no.35585 1,869.07

50040100-2013

nian (ying ben) zi

0035

Agricultural

Development Bank of

China

1,776.00

Zichan

company

property


estate2013 no.35586 2,336.71

1,519.00


estate2013 no.35651 2,037.45

1,324.00


estate2013 no.35644 1,403.90

913.00


estate2013 no.35646 5,018.04

3,262.00


estate2013 no.35641 688.63

448.00


estate2013 no.35638 688.63

448.00


estate2013 no.35634 24

23.00


estate2013 no.35591 33

31.00


estate2011 no.56196 1,208.68

2,840.00


estate2011 no.56178 1,208.68

2,840.00


estate2011 no.56174 1,208.68

2,846.00


estate2011 no.56170 1,208.68

2,846.00

106Certificate of real 1,208.68

F-124

50



book

value/App

raisal

Value(10,

000.00)

Note

estate2011 no.56200 2,852.00


estate2010 no.07289 1,488.59

4,109.00


estate2010 no.07282 690.24

4,507.00


estate2010 no.07288 1,139.45

4,398.00


estate2005 no.13008 3,334.66

2,239.00


estate2009 no.43223 1,544.20

1,158.00


estate2005 no.11481 1,041.05

3,028.00


estate2005 no.07133 4,762.91

5,360.00


estate2010 no.07112 249.35

165.00


estate2010 no.07281 249.35

165.00


estate2010 no.07258 249.35

165.00


estate2010 no.07273 249.35

165.00


estate2009 no.43213 1,562.70

938.00


estate2009 no.43221 1,129.19

384.00


estate2009 no.43222 727.71

619.00


estate2009 no.04861 1216.00

644.00


estate2007 no.06045 154.07

186.00

F-125

51



book

value/App

raisal

Value(10,

000.00)

Note


estate2007 no.06046 154.07

186.00


estate2007 no.06044 101.31

123.00


estate2008 no.01318 1,750.34

1,103.00


estate2008 no.01320 299.43

234.00


estate2008 no.01321 94.74

158.00


estate2008 no.01322 379.45

1,002.00


estate2008 no.01323 114.65

80.00


estate2008 no.01324 73.96

53.00


estate2010 no.07091 254.22

257.00


estate2009 no.43225 82.48

62.00


estate2009 no.43226 103.48

78.00


estate2009 no.43224 128.52

96.00


estate2009 no.43203 1,924.83

2,060.00


estate2007 no.02026 1,901.43

1,586.00


estate2005 no.09752 102.51

45.00


estate2005 no.09754 34.17

29.00

111Certificate of real 132.9

F-126

52



book

value/App

raisal

Value(10,

000.00)

Note

estate2008 no.00025 105.00


estate2008 no.00026 132.9

105.00


estate2008 no.00027 132.9

105.00


estate2008 no.01333 501.15

1,844.00


estate2009 no.46581 576.56

392.00


estate2009 no.04860 112

59.00


estate2009 no.22047 698.79

489.00


estate2009 no.22055 40.7

26.00


estate2009 no.22059 45.91

30.00


estate2009 no.22061 54.26

35.00


estate2006 no.15247 175.8

135.00


estate2007 no.06047 2,264.65

1,698.00


estate2007 no.06048 905.86

679.00


estate2006 no.15249 216

162.00


estate2007 no.06123 569

384.00


estate2006 no.15257 551.61

729.00


estate2008 no.01328 192.99

102.00

F-127

53



book

value/App

raisal

Value(10,

000.00)

Note


estate2008 no.01329 2,906.64

2,562.00


estate2008 no.01330 1,090.00

621.00


estate2008 no.01331 89

60.00


estate2008 no.01335 175.68

97.00


estate2008 no.01336 516

232.00


estate2010 no.07301 271.13

249.00


estate2010 no.07087 353.48

467.00


estate2010 no.07083 646.72

847.00


estate2005 no.10646 98.88

131.00


estate2005 no.10644 109.81

367.00


estate2009 no.761 165

172.00


estate2009 no.766 125

193.00


estate2009 no.30557 282

510.00


estate2008 no.00028 2,846.22

2,261.00


estate2007 no.06581 2,346.58

1,854.00

Urban

construction

group company

property


estate2007 no.06584 2,077.12

1,641.00

F-128

54



book

value/App

raisal

Value(10,

000.00)

Note


estate2007 no.06586 2,294.86

803.00


estate2007 no.06585 2,081.49

729.00


estate2007 no.06594 2,329.80

1,841.00

Buildings


estate2007 no.06591 1,899.49 50040100-2013

nian (ying ben) zi

0035

Agricultural

Development Bank of

China


estate2007 no.06593 1,313.13

Land user

right


no.0414752 216,844.00

50040100-2011nia

n ying ben (di) zi

0004

Agricultural

Development Bank of

China Chongqing

branch, sales

department

Guangyangdao

company

property


no.0414753 20,189.00


no.0414755 140,050.00

Assets whose loans have been fully paid back and are in the process of release:

Categor

y Ownership documents

Measureme

nt (m2) Loan No.

Financing

institution

book

value/Apprais

al

Value(10,000.

00)

Note

Buildings 111Certificate of real estate2008

no.00029 1,236.45

China

Construction

Bank

loans have

been fully paid

back and are

in the process

of release

Buildings 106Certificate of real estate2007

no.05914 347.05

Buildings


no.17139、no.17140、no.17690、

no.15250、no.17141、no.15248

10147.54

F-129

55

Categor

y Ownership documents

Measureme

nt (m2) Loan No.

Financing

institution

book

value/Apprais

al

Value(10,000.

00)

Note

Land

user right


estate2011 no.00009、no.00007、

no.00005、no.00003、no.00002

357,986

Chongqing Xin Tuo

[YSZKZR] zi 2013073/

Chongqing Xin

Tuo[DY]2013074

Chongqing

international

trust co., LTD

125,566.52

loans have

been fully paid

back and are

in the process

of release,

Nanyi

company

property

Buildings


no.00029 1,236.45

Construction

Bank

Chongqing Nan

ping

sub-branch

loans have

been fully paid

back and are

in the process

of release,

Zichan

company

property


no.17141 665.66

Nan 1270（11）004 8,015.30


no.05914 347.05


no.17140 401.51


no.15250 2,502.00


no.17690 1,599.65


no.15248 1,937.01


no.17139 3,041.71

16. Short-term borrowings

16.1Category


Credit 20,000,000.00

Mortgage

Pledge 48,500,000.00

Guarantee

Total 48,500,000.00 20,000,000.00

F-130

56

16.2Financing institution


current period

Payback in the

current period

Closing

balance

Xiamen international bank 48,500,000.00 48,500,000.00

Chongqing Nan’an district Xingnong

financing guarantee co., Ltd 20,000,000.00 20,000,000.00

Total 20,000,000.00 48,500,000.00 20,000,000.00 48,500,000.00

16.3Details of closing balance

Financing institution Closing balance Category

Chongqing Nan’an district Xingnong financing guarantee co., Ltd 48,500,000.00 Pledge

Total 48,500,000.00

17.Notes payable

Category Closing carrying amount Opening carrying amount

letter of credit 170,000,000.00

Total 170,000,000.00

18. Accounts payable

18.1Aging analysis

Aging Closing balance 0pening balance

Within 1 year 188,916,712.56 162,722,779.58

1 year above 105,988,419.84 36,673,336.84

Total 294,905,132.40 199,396,116.42

18.2Accounts payable by the related parties

Related party Amount Proportion%

Chongqing Nan'an District Finance Burea 201,343,689.07 68.27

19. Receipts in advance

19.1 Aging analysis


Within 1 year 124,993,324.61 44,848,640.00

1 year above 367,848,182.13 340,825,123.12

Total 492,841,506.74 385,673,763.12

F-131

57

19.2Receipt in advance by related parties

Related parties Amount Proportion %

Chongqing Nan'an District Finance Bureau 199,165,600.00 40.41

20. Employee benefits payable

Category Opening

carrying amount

Addition for the

year

Decrease for the

year

Closing

carrying

amount

I. Wages or salaries, bonuses, allowances and subsidies 8,894,591.49 8,894,591.49

II. Staff welfare 556,813.31 556,813.31

Among them: non-monetary benefits 556,813.31 556,813.31

III. Social security contributions 1,249,497.67 1,205,796.32 43,701.35

Among them: 1. The basic medical treatment insurance

premium 686,785.93 667,466.09 19,319.84

2. Supplementary medical insurance premium 6,923.88 6,923.88

3. The cost of primary endowment insurance 488,433.23 472,358.60 16,074.63

4. The enterprise annuity payment

5. Unemployment insurance premium 40,099.52 34,157.41 5,942.11

6. Endowment insurance 10,899.00 10,899.00

7. Annuity 16,356.11 13,991.34 2,364.77

IV. Housing fund 35,262.00 251,182.00 278,038.00 8,406.00

V. Labor union fund and educational fund 364,378.66 364,378.66

VI. retreated inside, termination benefits and

compensation

Among them: 1. The compensation due to terminate the

labor relationship

2. Personnel is retreated inside expected expenditures

VII. other

Total 35,262.00 11,316,463.13 11,299,617.78 52,107.35

21. Taxes payable

Category Opening balance Payable in the

current period

Paid in the

current period

Closing balance

Sales tax 137,514,193.86 22,095,604.11 59,553,801.32 100,055,996.65

City maintenance and

construction tax 9,587,214.08 1,542,341.35 3,663,932.00 7,465,623.43

F-132

58

Category Opening balance Payable in the

current period

Paid in the

current period

Closing balance

Enterprise income tax 259,797,102.72 3,333,907.51 4,443,766.89 258,687,243.34

Property tax 34,275,083.39 3,688,650.01 3,578,073.57 34,385,659.83

Individual income tax 1,604.30 3,306.41 3,244.06 1,666.65

VAT on land 2,930,333.49 2,930,333.49

education surplus 6,734,845.51 1,101,669.65 2,930,945.50 4,905,569.66

Others (incl. tax withhold) 1,185,597.36 9,224,416.41 9,534,541.52 875,472.25

Total 452,025,974.71 40,989,895.45 86,638,638.35 406,377,231.81

22. Interest payable


Corporation bond interest 81,747,500.00 81,747,500.00

Total 81,747,500.00 81,747,500.00

23. Other payables

23.1 Aging analysis


Within 1 year 2,857,423,852.65 1,625,394,498.30

1 year above 4,142,702,915.84 3,311,572,678.84

Total 7,000,126,768.49 4,936,967,177.14

23.2Related parties



24. Long-term borrowings

24.1 Category


Credit 2,286,860,000.00

Mortgage 5,281,500,000.00 2,828,100,000.00

Pledge

Guarantee 1,350,630,000.00 1,131,000,000.00

Total 6,632,130,000.00 6,245,960,000.00

24.2 Details

F-133

59


current period

Decrease in the

current period

Closing balance

China development bank 699,200,000.00 160,700,000.00 538,500,000.00

Industrial and Commercial Bank of China 55,000,000.00 350,000,000.00 55,000,000.00 350,000,000.00

Agricultural Development Bank of China 1,031,000,000.00 900,000,000.00 378,000,000.00 1,553,000,000.00

China Construction Bank 1,060,000,000.00 80,000,000.00 980,000,000.00

The Agricultural Bank of China 724,000,000.00 354,000,000.00 370,000,000.00

Chongqing Rural Commercial Bank 260,000,000.00 260,000,000.00

Bohai international trust co., LTD 800,000,000.00 800,000,000.00

International trust co., LTD

Hua Xia Bank 179,900,000.00 179,900,000.00

Bank of three gorges 100,000,000.00 300,000,000.00 100,000,000.00 300,000,000.00

Citic trust co., LTD 500,000,000.00 500,000,000.00

Chongqing guosen trust co., LTD 726,860,000.00 126,860,000.00 600,000,000.00

China Citic Bank 110,000,000.00 20,000,000.00 90,000,000.00

Hui tian rich capital management co.,

LTD 401,570,000.00 401,570,000.00

Beijing founder fubon and financial

assets management co., LTD 249,060,000.00 249,060,000.00

Catic trust co., LTD 200,000,000.00 200,000,000.00

Xiamen international bank co., LTD.,

Xiamen Siming sub-branch 200,000,000.00 200,000,000.00

Total 6,245,960,000.00 2,600,630,000.00 2,214,460,000.00 6,632,130,000.00

24.3 Details of closing balance


China development bank 538,500,000.00 mortgage

Industrial and Commercial Bank of China 350,000,000.00 mortgage

Agricultural Development Bank of China 1,553,000,000.00 guarantee、mortgage

China Construction Bank 980,000,000.00 mortgage

The Agricultural Bank of China 370,000,000.00 guarantee、mortgage

Bohai international trust co., LTD 800,000,000.00 guarantee、mortgage

F-134

60


Bank of three gorges 300,000,000.00 guarantee

Chongqing guosen trust co., LTD 600,000,000.00 mortgage

China Citic Bank 90,000,000.00

Hui tian rich capital management co., LTD 401,570,000.00 guarantee

Beijing founder fubon and financial assets

management co., LTD 249,060,000.00 guarantee

Catic trust co., LTD 200,000,000.00 guarantee

Xiamen international bank co., Ltd., Xiamen Siming

branch 200,000,000.00 guarantee

Total 6,632,130,000.00

*Please refer to VIII. 15 as to assets with restricted ownership.

25. Bonds payable


Book value 2,080,000,000.00 2,280,000,000.00

Interest adjustment -10,654,038.25 -14,970,779.69

Total 2,069,345,961.75 2,265,029,220.31

26. Long-term payables


Nan’an district fiscal borrowing funds 95,568,194.31 95,568,194.31

Jingkai District Finance Bureau 13,067,837.28 13,067,837.28

Leasing deposit 1,316,520.5 1,313,520.50

U.S. federal financial co., LTD. Beijing branch (finance lease) 10,103,664.34

Chayuan new town construction company 1,000,000.00

Total 110,952,552.09 120,053,216.43

27. Special payables

Item Closing balance Opening Balance

Budget funding 2,995,963,455.00 2,827,656,360.71

Special financial funding 1,202,041,159.59 1,047,084,449.35

Other funding 295,850,000.00 257,856,707.00

Nan’an district immigration bureau 22,736,200.00 22,736,200.00

Total 4,516,590,814.59 4,155,333,717.06

F-135

61

28.Provisions

29. Paid-in capital

Investor

Opening Balance Increase in the

current period

Decrease in

the current

period

Closing balance

Amount proportion

（%） Amount

Proportion

（%）

Chongqing

Nan’an District

Finance Bureau

3,412,241,200.00 100.00 3,412,241,200.00 100.00

Total 3,412,241,200.00 100.00 3,412,241,200.00 100.00

30. Capital reserves


current period

Decrease in

the current

period

Closing balance

1. Share/Capital premium 37.00 37.00

2. Other capital reserve 14,474,380,217.20 4,017,134.37 14,478,397,351.57

Others 14,474,380,217.20 4,017,134.37 14,478,397,351.57

3. Through original system

Total 14,474,380,254.20 4,017,134.37 14,478,397,388.57

Note: the current increase 4,017,134.37 comes from changes of fair value of available for sale financial assets.

31. Surplus reserves


current period

Decrease in the


Statutory surplus reserve 37,304,247.41 25,691,877.02 62,996,124.43

Total 37,304,247.41 25,691,877.02 62,996,124.43

32. Retained earnings


current period


period

Item Opening Balance Increase in the

current period

Decrease in the

current period

Closing balance

Government interest

subsidies 7,120,000.00 7,120,000.00

合计 7,120,000.00 7,120,000.00

F-136

62


current period


period

Closing balance in prior period 1,215,307,085.33 988,593,181.82

Plus adjustment on prior year audited financial

statements 204.95 47,846,304.53

Others

Opening balance in the current period 1,215,307,290.28 1,036,439,486.35

Increase in the current period 262,685,384.33 180,586,729.16

Incl. net income 262,685,384.33 180,586,729.16

Other adjustment

Decrease in the current period 45,691,877.02 1,719,130.18

Incl. surplus reserve appropriation in the current period 45,691,877.02 1,719,130.18

Risk Provision appropriation in the current period

Cash dividend appropriation in the current period 148,000,000.00

Capital appropriation

Other decrease

Closing balance in the current period 1,284,300,797.59 1,215,307,085.33

33. Minority interests


Minority interests 493,209,572.37 493,932,894.56

34. Operating income and operating costs


Revenue Cost Revenue cost

1．Sales from principal activities 617,904,734.53 484,016,719.55 1,809,866,023.81 1,536,876,949.80

Incl. leasing 72,604,458.45 30,784,751.50 63,491,313.01 26,011,320.94

Fund occupy 132,847,952.59 100,000,000.00 184,051,147.65 69,885,925.54

Toll fee 13,729,600.00 6,516,556.32 13,729,600.00 6,516,556.32

Exportation 398,722,723.49 346,715,411.73 746,084,900.00 631,954,083.85

Project repurchase 802,509,063.15 802,509,063.15

2．Sales from other activities 1,814,520.82 18,650,825.60

Incl. management fee 1,153,137.25 18,600,234.60

Others 661,383.57 50,591.00

Total 619,719,255.35 484,016,719.55 1,828,516,849.41 1,536,876,949.80

35. Business taxes and levies

F-137

63


period


period

Business tax 22,088,985.29 32,247,297.63

City maintenance and construction tax 1,546,201.61 2,252,706.57

Education surplus and local education surplus 1,104,427.50 1,609,075.84

Total 24,739,614.40 36,109,080.04

36. Financial expenses


Interest expenses 107,768,175.83 208,243,163.03

Minus interest revenue 16,194,871.98 32,318,478.88

Exchange gain and loss

Bank fee 15,016,778.68 255,979.43

Others 9,628.47 -10,857.10

Total 106,599,711.00 176,169,806.48

37. Impairment losses of assets


current period


prior period

Bad debt provision 17,154,628.05 -13,916,342.65

Provision for impairment of Long-term equity investment -869,298.10 3,680,433.97

Total 16,285,329.95 -10,235,908.68

38. Gains from changes in fair values


Change in fair value of Investment property -19,126,271.00 21,460,050.60

39. Investment income

39.1 Category

Category Amount incurred in the current

period


period

Dividend from Agricultural Development Bank of China 170,811.14 152,831.02

Available-for-sale financial assets 3,054,526.56

Dividend from Chongqing Rural Commercial Bank 234,011.41 209,378.63

Dividend from Bank of Chongqing 617,454.88 205,862.23

Total 4,076,803.99 568,071.88

39.2Restriction

F-138

64

No major restrictions of investment income repatriation.

40. Non-operating income

40.1 Details


period


period

Disposal gain on non-current assets 52,242.00

Incl. gain or loss from disposal of fixed asset 52,242.00

Government funding 356,261,775.86 186,660,974.67

Ohers 103,386.00 75,891.00

Total 356,365,161.86 186,789,107.67

40.2 Government funding

Current period



Period of

validity


subsidies

Bureau of

finance Year 2014

Prior period



Period of

validity


subsidies

Bureau of

finance Year 2013

41. Non-operating expenses


current period


period

Disposal loss on non Current assets 23,197.15

Incl. fixed asset 23,197.15

Donation 300,000.00

Overdue fine 142,714.31

Others 20,800.00 35,462.80

Total 486,711.46 35,462.80

42. Income tax expenses

F-139

65


current period


period

Current tax expense 3,333,907.52 53,685,067.62

Deferred tax 681,397.80 9,360,635.82

Total 4,015,305.32 63,045,703.44

43. Supplementary information to the cash flow statement

43.1Supplementary information to the cash flow statement


current period


prior period


Net profit 261,741,420.27 187,769,324.91

Add: Provision for impairment losses of assets 16,285,329.95 -10,235,908.68


depreciation of bearer biological assets 34,964,287.79 30,452,217.04

Amortization of intangible assets 7,742,423.05 7,744,253.88


Losses/(gains) on disposal of fixed assets, intangible assets and

other long-term asset 23,197.15 -52,242.00


Losses/(gains) on changes in fair values 19,126,271.00 -21,460,050.60


Losses/(gains) arising from investments -4,076,803.99 -568,071.88

Decrease /(increase) in deferred tax assets 217,324.52 -920,108.49

Increase/(decrease) in deferred tax liabilities 464,073.28 12,020,377.04

Decrease /(increase) in inventories -735,619,009.13 -609,739,451.37

Decrease /(increase) in receivables from operating activities -1,911,237,849.85 -2,503,159,653.83

Increase/(decrease) in payables from operating activities 2,055,133,784.65 1,889,713,132.17

Others 9,433.97

Net cash flow from operating activities -147,457,941.51 -810,193,018.78


Closing balance of cash 2,283,055,559.92 2,803,035,566.96

Less: Opening balance of cash 2,803,035,566.96 3,219,994,999.98



Net increase in cash and cash equivalents -519,980,007.04 -416,959,433.02

F-140

66

43.2 Information of cash and cash equivalents


1. Cash 2,283,055,559.92 2,803,035,566.96

Including: Cash on hand 214,038.89 382,269.52

Bank deposits with no restrict 2,013,571,593.23 2,203,056,346.58

Other monetary assets with no restrict 269,269,927.80 599,596,950.86

2.Cash equivalents

Incl.: Bonds investment matured within three months

3. Closing balance of cash and cash equivalents 2,283,055,559.92 2,803,035,566.96

X. CONTINGENCIES

None.

XI. EVENTS AFTER THE BALANCE SHEET DATE

None.

XII. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

1. Shareholder information

Name of the parent Place of incorporation Scope of business shareholding

ratio

proportion

of votes

Chongqing Nan'an District

Finance Bureau

Nan'an District,

Chongqing

management and appropriation of

financial fund 100.00% 100.00%

2. Subsidiaries

Please refer to VIII. 8 (11).

3. Associated corporations

Please refer to VIII. 8 (11).

4. Related parties

4.1 related party transactions

None.

4.2 Related party guarantee

F-141

67

1)On June1st, 2009 Chongqing Donggang Comprehensive Agricultural Development Co., Ltd. obtained a bank

loan from sales department of Agriculture Development Bank of china Chongqing branch amounted 180,000,000.00.

It was secured by Hualian Building owned by Chongqing Hualian Hong Rui Hualian Department Store Co., Ltd, which

is subsidiary to the company. The guarantee contract No. is50040100-2009nian yin 0011 and is valid from June 4,

2009 till December 31, 2016.

2)In June 2011, Chongqing Chayuan Industrial Park Construction Development Co., Ltd. obtained a bank loan

from sales department of Agriculture Development Bank of china Chongqing branch amounted 495,000,000.00. It was

secured by land user right owned by Chongqing Guang Yang Island Real Estate Development Co., Ltd. which is

subsidiary to the company. The guarantee contract No. is 50040100-2011nian ying ben (di) zi 0004and is valid from

June28, 2011 till June 27, 2017.

4.3 Accounts receivable and payable by the related parties

Related parties Item Closing balance

Chongqing Nan'an District Finance Bureau Accounts Receivable 5,068,508,006.21

Chongqing Nan'an District Finance Bureau other receivable 2,269,533,890.94

Chongqing Nan'an District Finance Bureau Account Payable 201,343,689.07

Chongqing Nan'an District Finance Bureau other payable 3,881,466,532.68

Chongqing Nan'an District Finance Bureau Deferred revenue 199,165,600.00

XII.NOTES TO IMPORTANT ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS

1. Account Receivable

Category


Amount Proportion

(%)

Bad debt

provision

Proportion

(%) Amount

Proportion

(%)

Bad debt

provision

Proportion

(%)

Accounts receivable

that are individually

significant and for

which bad debt

provision has been

assessed individually

87,554,688.00 100.00 87,554,688.00 100.00

Total 87,554,688.00 100.00 87,554,688.00 100.00

1.1On December 31, 2014, the first five amounted to 87,554,688.00 which make up100.00% of the total amount

of accounts receivable.


F-142

68

Government Office Affairs Burea in Nan’an, Chongqign 87,554,688.00 100.00

Total 87,554,688.00 100.00

1.2 No closing balance of related parties.

2. Other receivable

Category


Amount Proportion

(%)

Bad debt

provision

Proport

ion

(%)

Amount Proportion

(%)

Bad debt

provision

Proportio

n (%)

Other

receivables

with provision

for bad debts

made by

combinatorial

test

2,052,010,709.32 100.00 2,050,545,488.47 100.00

Total 2,052,010,709.32 100.00 2,050,545,488.47 100.00

2.1As of December 31, 2014, other accounts receivable amounted to 1,768,970,000.00 yuan, the top five to

86.20% of total other receivables



Chongqing south appropriate urban and rural construction

development co., LTD 627,300,000.00 30.57


Asset management company of Chongqing jiangnan city

construction 163,600,000.00 7.97

Chayuan construction development company 122,140,000.00 5.95

Total 1,768,970,000.00 86.20





development co., LTD 627,300,000.00 30.57


F-143

69



Chongqing haitang sports industrial company 75,830,000.00 3.70

Chongqing traffic project company 47,430,000.00 2.31

Chongqing Guang Yang island real estate development company 30,000,000.00 1.46

合计 1,800,090,000.00 87.72


3.1 Category


current period

Decrease in the


Investment in subsidiaries 5,183,621,237.00 5,183,621,237.00

Investment in joint venture

Investment in associated corporation

others

Total 5,183,621,237.00 5,183,621,237.00

Minus provision for impairment

Total 5,183,621,237.00 5,183,621,237.00

3.2 Long-term equity investment by cost method

Company name Closing balance Opening balance

Subsidiaries

Chongqing jiangnan city construction asset management co., LTD 191,570,337.00 191,570,337.00

Asset management co., LTD in Nan’an district of Chongqing city 2,018,968,600.00 2,018,968,600.00

Chongqing haitang creek sports industrial co., LTD 573,375,500.00 573,375,500.00

Chongqing south traffic project development co., LTD 380,300,000.00 380,300,000.00

South bank in Chongqing binjiang road development and construction

co., LTD 624,384,700.00 624,384,700.00

Chongqing guang Yang island real estate co., LTD 328,642,100.00 328,642,100.00


development co., LTD 1,066,380,000.00 1,066,380,000.00

Total 5,183,621,237.00 5,183,621,237.00

4. Other payable

F-144

70

4.1 Aging analysis


Within 1 year 7,288,874.32 7,043,057.11

1 year above 74,904,022.37 201,764,022.37

Total 82,192,896.69 208,807,079.48

4.2 On December 31, 2014, the first five amounted to 81,406,524.15.

Company Closing balance Proportion%


Chongqing Nan’an district education commission 10,000,000.00 12.17


Nan’an district of Chongqing public security bureau 3,274,427.78 3.98


Total 81,406,524.15 99.04






Chongqing south appropriate urban and rural construction development co., LTD 540,555.56 0.66

Chongqing Guang Yang island real estate co., LTD 95,166.98 0.12

Total 68,767,818.91 83.67


5.1Consolidated cash flow statement


current period

Amount incurred in prior

period


Net profit 456,918,770.16 17,191,301.80

Add: Provision for impairment losses of assets -75,000.00


F-145

71


current period

Amount incurred in prior

period

depreciation of bearer biological assets

Amortization of intangible assets


Losses/(gains) on disposal of fixed assets, intangible assets and

other long-term asset


Losses/(gains) on changes in fair values 1,517,714.00 -164,052.00


Losses/(gains) arising from investments -148,000,000.00

Decrease /(increase) in deferred tax assets

Increase/(decrease) in deferred tax liabilities 95,571.50 516,013.00

Decrease /(increase) in inventories

Decrease /(increase) in receivables from operating activities -1,465,220.85 190,835,802.47

Increase/(decrease) in payables from operating activities -126,614,182.79 4,585,404.88

Others

Net cash flow from operating activities 199,333,580.34 377,716,451.87


Closing balance of cash 56,558,130.42 31,150,115.08

Less: Opening balance of cash 31,150,115.08 375,438,583.21



Net increase in cash and cash equivalents 25,408,015.34 -344,288,468.13

5.2 Composition of cash and cash equivalents


I. Cash 56,558,130.42 31,150,115.08

Including: Cash on hand

Bank deposits with no restrict 56,558,130.42 31,150,115.08

Other monetary assets with no restrict

II. Cash equivalents

F-146

ISSUER

Chongqing Nan’an Urban Construction & Development (Group) Co., Ltd.（重慶市南岸區城市建設發展（集團）有限公司）

West 905, 5 Guanfu AvenueChayuan New District

Nan’an District, ChongqingP.R.C.

TRUSTEE

The Bank of New York Mellon,London Branch

One Canada SquareLondon E14 5ALUnited Kingdom

PRINCIPAL PAYING AGENT

The Bank of New York Mellon,London Branch

One Canada SquareLondon E14 5ALUnited Kingdom

REGISTRAR AND TRANSFER AGENT

The Bank of New York Mellon (Luxembourg) S.A.Vertigo Building – Polaris2-4, rue Eugène RuppertL-2453 Luxembourg

LEGAL ADVISERS

To the Issueras to English law

King & Wood Mallesons13th Floor Gloucester Tower The Landmark

15 Queen’s Road CentralHong Kong

To the Issueras to PRC law

Chongqing Jingsheng Law Firm18th Floor,

InterContinential Hotel Business BuildingNo. 101 National Road, Yuzhong District

Chongqing, P.R.C.

To the Joint Lead Managers and the Trusteeas to English law

Linklaters10th Floor

Alexandra HouseChater RoadHong Kong

To the Joint Lead Managersas to PRC law

Haiwen & Partners20/F, Fortune Financial Center5 Dong San Huan Central Road

Chaoyang District, BeijingP.R.C.

AUDITORS OF THE ISSUER

Baker Tilly China Certified Public Accountants5th Floor, A2, Saturn, No. 90 Xingguang Road

Northern New DistrictChongqingP.R.C.

A.Plus InternationalFINANCIAL PRESS LIMITED160680197