Chengdu Jiaozi Financial Holding Group Co., Ltd. 成都交子金融控股集團有限公司 (Incorporated in the People’S Republic of China with Limited Liability)

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

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

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

This announcement and the listing document referred to herein have been published for information purposes only as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing document) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing document referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571) of Hong Kong.

Notice to Hong Kong investors: The Issuer confirms that the Notes (as defined below) are intended for purchase by Professional Investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) only and have been listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly, the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

PUBLICATION OF THE OFFERING CIRCULAR

Chengdu Jiaozi Financial Holding Group Co., Ltd. 成都交子金融控股集團有限公司 (incorporated in the People’s Republic of China with limited liability)

(the “Issuer”) U.S.$200,000,000 2.6 per cent. Notes due 2026 (the “Notes”) (Stock Code: 40645)

−1− This announcement is issued pursuant to Rule 37.39A of the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”).

Please refer to the offering circular dated 31 March 2021 (the “Offering Circular”) appended herein in relation to the issuance of the Notes. As disclosed in the Offering Circular, the Notes are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and have been listed on the Hong Kong Stock Exchange on that basis.

The Offering Circular does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it circulated to invite offers by the public to subscribe for or purchase any securities.

Chengdu, PRC 13 April 2021

As at the date of this announcement, the directors of the Issuer are Mr. Fang Zhao, Mr. Yang Fan, Mr. Yang Minqing and Mr. Hu Jun.

−2− IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES. THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE ADDRESSEES OUTSIDE OF THE UNITED STATES. IMPORTANT: You must read the following before continuing. The following applies to the offering circular following this page (the “Offering Circular”), and you are therefore advised to read this carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. 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 not be located in the United States. This Offering Circular is being sent at your request and by accepting the e-mail and accessing this Offering Circular, you shall be deemed to have represented to ICBC International Securities Limited, Bank of China Limited, Guotai Junan Securities (Hong Kong) Limited, BOSC International Company Limited, Industrial and Commercial Bank of China (Europe) S.A., Bank of Communications Co., Ltd. Hong Kong Branch, China Minsheng Banking Corp., Ltd., Hong Kong Branch, CLSA Limited, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, Luso International Banking Ltd, Huatai Financial Holdings (Hong Kong) Limited, China CITIC Bank International Limited, Winsome Capital Limited and Haitong International Securities Company Limited (each, a “Joint Lead Manager” and together, the “Joint Lead Managers”) that you and any customers you represent are not, and the electronic mail address that you gave the Joint Lead Managers to which this e-mail has been delivered is not, located in the United States and that you consent to delivery of such Offering Circular and any amendments or supplements thereto by electronic transmission. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. Restrictions: You are reminded that this Offering Circular has been delivered to you on the basis that you are a person into whose possession this Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver this Offering Circular, electronically or otherwise, to any other person. If you have gained access to this transmission contrary to the foregoing restrictions, you are not allowed to purchase any of the securities described in the attached Offering Circular. The Offering Circular is being furnished in connection with an offering in offshore transactions outside the United States in reliance on Regulation S under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities described in the Offering Circular. Nothing in this electronic transmission constitutes an offer or an invitation by or on behalf of any of the Issuer, the Joint Lead Managers, the Trustee or the Agents (each as defined in the attached Offering Circular) to subscribe for or purchase any of the securities described therein, and access has been limited so that it shall not constitute in the United States or elsewhere a general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or directed selling efforts (within the meaning of Regulation S under the Securities Act). If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Joint Lead Managers or any affiliate of them is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the Joint Lead Managers or such affiliate on behalf of the Issuer in such jurisdiction. This Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer, the Joint Lead Managers, the Trustee, the Agents, nor any person who controls any of them, nor their respective directors, officers, employees, representatives nor agents, nor affiliates of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version available to you on request from the Joint Lead Managers. THIS OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON, ELECTRONICALLY OR OTHERWISE, AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Actions that you may not take: If you receive this document by e-mail, you should not reply by e-mail to this document, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate by using the “Reply” function on your e-mail software, will be ignored or rejected. You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. STRICTLY CONFIDENTIAL

CHENGDU JIAOZI FINANCIAL HOLDING GROUP CO., LTD. (成都交子金融控股集團有限公司) (incorporated in the People’s Republic of China with limited liability)

U.S.$200,000,000 2.6 PER CENT. NOTES DUE 2026 ISSUE PRICE: 100.0 PER CENT.

The 2.6 per cent. Notes due 2026 (the “Notes”) will be issued in the aggregate principal amount of U.S.$200,000,000 by Chengdu Jiaozi Financial Holding Group Co., Ltd. (成都交子金融控股集團有限公司) (the “Issuer”) and are in registered form in the denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. The PRC government (including Chengdu SASAC (as defined herein)) is not an obligor and shall under no circumstances have any obligation arising out of or in connection with the Notes in lieu of the Issuer. See “Risk Factors — Risks relating to the Notes — The PRC government has no obligation to pay any amount under the Notes.” The Notes will bear interest on their outstanding principal amount from and including 12 April 2021 the (“Issue Date”) at the rate of 2.6 per cent. per annum. Interest on the Notes is payable semi-annually in arrear on the Interest Payment Dates (as defined in “Terms and Conditions of the Notes”) falling on 12 April and 12 October in each year, commencing on 12 October 2021. The Notes will constitute direct, general and unconditional obligations of the Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsubordinated and unsecured obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application. Payments on the Notes will be made without withholding or deduction for taxes of the PRC (as defined herein) to the extent described in “Terms and Conditions of the Notes — Taxation.” Unless previously redeemed, or purchased and cancelled, the Issuer will redeem the Notes at their principal amount on 12 April 2026 (the “Maturity Date”). The Notes are subject to redemption, in whole but not in part, at their principal amount, together with interest accrued, at the option of the Issuer at any time in the event of certain changes affecting taxes of the PRC. See “Terms and Conditions of the Notes — Redemption and Purchase — Redemption for tax reasons.” Furthermore, at any time following the occurrence of a Change of Control or a Non-Registration Event (as defined in “Terms and Conditions of the Notes”), each Noteholder will have the right, at such Noteholder’s option, to require the Issuer to redeem all but not some only of that Noteholder’s Notes on the Put Settlement Date (as defined in “Terms and Conditions of the Notes”) at 101 per cent. of their principal amount (in the case of a Change of Control) or 100 per cent. of their principal amount (in the case of a Non-Registration Event), together with interest accrued to (but not including) such Put Settlement Date. See “Terms and Conditions of the Notes — Redemption and Purchase — Redemption for a Relevant Event.” Pursuant to 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 of the PRC (“NDRC”) on 14 September 2015 which came into effect on the same day, the Issuer has registered the issuance of the Notes with the NDRC and obtained a certificate from the NDRC on 24 February 2021, evidencing such registration and which remains in full force and effect. The Issuer intends to provide the requisite information and documents on the issuance of the Notes to the NDRC within the prescribed timeframe after the Issue Date in accordance with the NDRC Circular. The Issuer undertakes to file or cause to be filed with the State Administration of Foreign Exchange of the PRC or its local counterparts (“SAFE”) the requisite information and documents in accordance with (i) the Administrative Measures for Foreign Debt Registration《外債登記管理辦法》 ( ) issued by SAFE and which came into effect on 13 May 2013, and (ii) the Circular on Relevant Matters about the Macro-Prudential Management of Cross-Border Financing in Full Aperture《中國人民銀行關於全口徑跨境融資宏觀審慎管理有關事宜 ( 的通知》) issued by the People’s Bank of China of the PRC (“PBOC”) and which came into effect on 12 January 2017 and any implementation rules, reports, certificates, approvals or guidelines as issued by the SAFE or the PBOC, as the case may be, from time to time (the “Foreign Debt Registration”), and to comply with all applicable PRC laws and regulations in relation to the Foreign Debt Registration. The Issuer shall use its best endeavours to complete the Foreign Debt Registration on or before the SAFE Registration Deadline (being 120 PRC Business Days after the Issue Date). Application will be made to The Stock Exchange of Hong Kong Limited (the “HKSE”) for the listing of, and permission to deal in, the Notes by way of debt issues to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) (“Professional Investors”) only. This document is for distribution to Professional Investors only. Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and will be listed on the HKSE on that basis. Accordingly, the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved. The HKSE has not reviewed the contents of this Offering Circular, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this Offering Circular to Professional Investors only have been reproduced in this Offering Circular. Listing of the Notes on the HKSE is not to be taken as an indication of the commercial merits or credit quality of the Notes or the Issuer or quality of disclosure in this Offering Circular. Hong Kong Exchanges and Clearing Limited and the HKSE take no responsibility for the contents of this Offering Circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Offering Circular. Application has been made to Chongwa (Macao) Financial Asset Exchange Co., Ltd. (the “MOX”) for the listing of the Notes. This document is for distribution to professional investors (as defined in Section 11 of the Guideline on Provision and Distribution of Financial Products (Circular 033/B/2010-DSB/AMCM)) in Macau and professional investors from other jurisdictions in accordance with a relevant exemption from public offering regulations in those jurisdictions (the “MOX Professional Investors”) only. Investors should not purchase the Notes in the primary or secondary markets unless they are MOX Professional Investors and understand the risks involved. The Notes are only suitable for MOX Professional Investors. The MOX has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this document to MOX Professional Investors only have been reproduced in this document. Listing of the Notes on MOX is not to be taken as an indication of the commercial merits or credit quality of the Notes, the Issuer or the quality of disclosure in this document. The MOX takes no responsibility for the contents of this document, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. Singapore Securities and Futures Act Product Classification— Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore) (the “SFA”), the Issuer has determined, and hereby notifies all relevant persons (as defined in 309A of the SFA) that the Notes are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products). MiFID II Product Governance / Professional investors and ECPs only target market— Solely for the purposes of the manufacturer’s product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only, each as defined in Directive 2014/65/EU (as amended, “MiFID II”); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a “distributor”) should take into consideration the manufacturer’s target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer’s target market assessment) and determining appropriate distribution channels. Investing in the Notes involves certain risks. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in this Offering Circular and the merits and risks of investing in the Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes. Investors should not purchase the Notes unless they understand and are able to bear risks associated with the Notes. See “Risk Factors” beginning on page 15 for a description of certain factors to be considered in connection with an investment in the Notes. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and, subject to certain exceptions, may not be offered or sold within the United States and are only being offered and sold outside the United States in reliance on Regulation S under the Securities Act (“Regulation S”). For a description of these and certain restrictions on offers and sales of the Notes and the distribution of this Offering Circular, see “Subscription and Sale”. The Notes will be represented by beneficial interests in a global note certificate (the “Global Note Certificate”) in registered form, which will be registered in the name of a nominee of, and deposited on or about the Issue Date with, a common depositary for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). Beneficial interests in the Global Note Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream. The Notes are expected to be rated “BBB+” by Fitch Ratings Limited (“Fitch”). Such rating of the Notes does not constitute a recommendation by Fitch to buy, sell or hold the Notes and may be subject to suspension, reduction, revision or withdrawal at any time by Fitch. Such ratings should be evaluated independently of any other rating of the other securities of the Issuer or of the Issuer. Joint Global Coordinator, Joint Lead Manager and Joint Bookrunner ICBC International Bank of China Guotai Junan International Joint Lead Managers and Joint Bookrunners BOSC ICBC (Europe) S.A. Bank of China Minsheng International Communications Banking Corp., Ltd., Hong Kong Branch CLSA Shanghai Pudong Luso Bank Ltd. Huatai International Development Bank Hong Kong Branch China CITIC Bank International Winsome Haitong International

Offering Circular dated 31 March 2021 IMPORTANT NOTICE

The Issuer, having made all reasonable enquiries, accepts full responsibility for the accuracy of the information contained in this Offering Circular and confirms that to the best of its knowledge and belief that (i) this Offering Circular (including any amendments and supplements thereto) contains all information with respect to the Issuer, its subsidiaries (together with the Issuer, the “Group”), and the Notes which is material in the context of the issue, offering, sale, marketing or distribution of the Notes (including all information which is required by applicable laws, rules and regulations or information which, according to the particular nature of the Issuer, the Group and the Notes, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the Issuer, the Group and of the rights attaching to the Notes), (ii) the statements of fact relating to the Issuer, the Group and the Notes contained in this Offering Circular as at the date of this Offering Circular were in every material respect true and accurate and not misleading and there are no other facts in relation to the Issuer, the Group, the Notes, the omission of which would, in the context of the issue, offering, sale, marketing and distribution of the Notes, make any statement in this Offering Circular misleading in any material respect, (iii) the statements of intention, opinion, belief or expectation contained in this Offering Circular as at the date of this Offering Circular were honestly and reasonably made or held and have been reached after considering all relevant circumstances and based on reasonable assumptions, (iv) all reasonable enquiries have been made and will be made by the Issuer to ascertain such facts and to verify the accuracy of all such information and statements and (v) all statistical, industry and market related date included in this Offering Circular are derived from sources which are accurate and reliable.

The PRC government (including the Chengdu Government) is not an obligor and shall under no circumstances have any obligation arising out of or in connection with the Notes in lieu of the Issuer. Any reference to government support in this Offering Circular should not be read as indication that financial support will be given in respect of the Issuer’s obligations under the Notes. See “Risk Factors — Risks relating to the Notes — The PRC government has no obligation to pay any amount under the Notes.”

This Offering Circular has been prepared by the Issuer solely for use in connection with the proposed offering of the Notes described in this Offering Circular. The distribution of this Offering Circular and the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer, ICBC International Securities Limited, Bank of China Limited, Guotai Junan Securities (Hong Kong) Limited, BOSC International Company Limited, Industrial and Commercial Bank of China (Europe) S.A., Bank of Communications Co., Ltd. Hong Kong Branch, China Minsheng Banking Corp., Ltd., Hong Kong Branch, CLSA Limited, Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch, Luso International Banking Ltd, Huatai Financial Holdings (Hong Kong) Limited, China CITIC Bank International Limited, Winsome Capital Limited and Haitong International Securities Company Limited (each, a “Joint Lead Manager” and together, the “Joint Lead Managers”), the Trustee and the Agents (as defined in “Terms and Conditions of the Notes”) to inform themselves about and to observe any such restrictions. No action is being taken to permit a public offering of the Notes or the possession or distribution of this Offering Circular or any offering or publicity material relating to the Notes in any jurisdiction where action would be required for such purposes. There are restrictions on the offer and sale of the Notes and the circulation of documents relating thereto, in certain jurisdictions and to persons connected therewith. For a description of certain further restrictions on offers, sales and resales of the Notes and the distribution of this Offering Circular, see “Subscription and Sale.” This Offering Circular does not constitute an offer of, or an invitation to purchase, any of the Notes in any jurisdiction in which such offer or invitation would be unlawful. By purchasing the Notes, investors represent and agree to all of those provisions contained in that section of this Offering Circular.

−i− Singapore Securities and Futures Act Product Classification— Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore) (the “SFA”), the Issuer has determined, and hereby notifies all relevant persons (as defined in 309A of the SFA) that the Notes are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

This Offering Circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) for the purpose of giving information with regard to the Issuer and the Group. The Issuer accepts full responsibility for the accuracy 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 no other facts the omission of which would make any statement herein misleading.

No person has been or is authorised in connection with the issue, offer, sale, marketing or distribution of the Notes to give any information or to make any representation concerning the Issuer, the Group, the Notes other than as contained herein and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Issuer, the Group, the Joint Lead Managers, the Trustee or the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers. Neither the delivery of this Offering Circular nor any offering, sale or delivery made in connection with the issue of the Notes shall, under any circumstances, constitute a representation that there has been no change or development reasonably likely to involve a change in the affairs of the Issuer or the Group, or any of them since the date hereof or create any implication that the information contained herein is correct as at any date subsequent to the date hereof. This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer, the Joint Lead Managers the Trustee or the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers to subscribe for or purchase, any of the Notes and may not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or is unlawful.

This Offering Circular is being furnished by the Issuer in connection with the offering of the Notes exempt from registration under the Securities Act solely for the purpose of enabling a prospective investor to consider purchasing the Notes. Investors must not use this Offering Circular for any other purpose, make copies of any part of this Offering Circular or give a copy of it to any other person, or disclose any information in this Offering Circular to any other person. The information contained in this Offering Circular has been provided by the Issuer and other sources identified in this Offering Circular. Any reproduction or distribution of this Offering Circular, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than considering an investment in the Notes offered by this Offering Circular is prohibited. Each offeree of the Notes, by accepting delivery of this Offering Circular, agrees to the foregoing.

No representation or warranty, express or implied, is made or given by the Joint Lead Managers, the Trustee or the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers as to the accuracy, completeness or sufficiency of the information contained in this Offering Circular or any other information supplied in connection with the Notes, and nothing contained in this Offering Circular is, or shall be relied upon as, a promise, representation or warranty by the Joint Lead Managers, the Trustee or the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers. The Joint Lead Managers, the Trustee and the Agents and any person who controls any of them and their respective affiliates, officers, representatives, directors, employees, agents or advisers have not independently verified any of the information contained in this Offering Circular and can give no assurance that this information is accurate, truthful or complete.

−ii− To the fullest extent permitted by law, none of the Joint Lead Managers, the Trustee, the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers accepts any responsibility for the contents of this Offering Circular or any statement made or purported to be made by any such person or on its behalf in connection with the Issuer, the Group, the issue and offering of the Notes. Each of the Joint Lead Managers, the Trustee, the Agents and any person who controls any of them and their respective affiliates, officers, representatives, directors, employees, agents or advisers 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 the Joint Lead Managers, the Trustee, the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers undertakes to review the financial condition or affairs of the Issuer or the Group for so long as the Notes remain outstanding nor to advise any investor or potential investor of the Notes of any information coming to the attention of any of the Joint Lead Managers, the Trustee, the Agents or any person who controls any of them or their respective affiliates, officers, representatives, directors, employees, agents or advisers.

This Offering Circular is not intended to provide the basis of any credit or other evaluation, nor should it be considered as a recommendation by the Issuer, the Joint Lead Managers, the Trustee or the Agents that any recipient of this Offering Circular should purchase the Notes. Each potential purchaser of the Notes should determine for itself the relevance of the information contained in this Offering Circular and its purchase of the Notes should be based upon such investigations with its own tax, legal and business advisers as it deems necessary.

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

Investors are advised to read and understand the contents of this Offering Circular before investing. If in doubt, investors should consult his or her adviser.

IN CONNECTION WITH THE ISSUE OF THE NOTES, ANY OF THE JOINT LEAD MANAGERS APPOINTED AND ACTING IN ITS CAPACITY AS THE STABILISING MANAGER (OR ANY PERSON(S) ACTING ON BEHALF OF SUCH JOINT LEAD MANAGER) (THE “STABILISING MANAGER”) MAY OVER-ALLOT THE NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO OBLIGATION ON SUCH STABILISING MANAGER TO DO THIS. SUCH STABILISING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME, AND MUST BE BROUGHT TO AN END AFTER A LIMITED PERIOD. SUCH STABILISING SHALL BE IN COMPLIANCE WITH ALL APPLICABLE LAWS, REGULATIONS AND RULES.

Listing of the Notes on the HKSE and MOX is not to be taken as an indication of the merits of the Issuer, the Group or the Notes. In making an investment decision, investors must rely on their own examination of the Issuer and the Group and the terms of the offering of the Notes, including the merits and risks involved. See “Risk Factors” for a discussion of certain factors to be considered in connection with an investment in the Notes. The Issuer, the Group, the Joint Lead Managers, the Trustee and the Agents and any person who controls any of them and their respective affiliates, officers, representatives, directors, employees, agents or advisers are not making any representation to any purchaser of the Notes regarding the legality of any investment in the Notes by such purchaser under any legal investment or similar laws or regulations. The contents of this Offering Circular should not be construed as providing legal, business, accounting or investment advice. Each person receiving this Offering Circular acknowledges that such person has not relied on the Joint Lead Managers, the Trustee, the Agents or any person who controls any of them or any of their respective affiliates, officers, representatives, directors, employees, agents or advisers in connection with its investigation of the accuracy of such information or its investment decision.

− iii − Market data and certain industry forecasts and statistics in this Offering Circular have been obtained from both public and private sources, including market research, publicly available information and industry publications. Although the Issuer believes this information to be reliable, such information has not been independently verified by the Issuer, the Joint Lead Managers, the Trustee or the Agents or any person who controls any of them or their respective affiliates, officers, representatives, directors, employees, agents or advisers, and none of the Issuer, the Joint Lead Managers, the Trustee or the Agents or any person who controls any of them or their respective affiliates, officers, representatives, directors, employees, agents or advisers makes any representation as to the accuracy or completeness of that information. In addition, third party information providers may have obtained information from market participants and such information may not have been independently verified. This Offering Circular summarises certain documents and other information, and investors should refer to them for a more complete understanding of what is discussed in those documents.

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

PRESENTATION OF FINANCIAL INFORMATION

The Offering Circular contains the audited consolidated financial information of the Issuer as at and for the years ended 31 December 2017, 2018 and 2019 and for the six months ended 30 June 2019 and 2020, which is derived from its audited consolidated financial statements of the Issuer as at and for the years ended 31 December 2018 and 2019 (the “Audited Financial Statements”) and the unaudited but reviewed consolidated financial statements of the Issuer as at and for the six months ended 30 June 2020 (the “Reviewed Financial Statements”) included elsewhere in this Offering Circular, and have been prepared in accordance with the Accounting Standards for Business Enterprises in China (“PRC GAAP”). Such Audited Financial Statements or, as the case may be, Reviewed Financial Statements, have been audited, or, as the case may be, reviewed by Mazars Certified Public Accountants LLP (“Mazars”). The Reviewed Financial Statements should not be relied upon to provide the same quality of information associated with information that has been subject to an audit and should not be taken as an indication of the expected financial condition and results of operations of the Group for the full financial year ending 31 December 2020. Potential investors must exercise caution when using such data to evaluate the Group’s financial condition, results of operations and results.

The Group publishes, in the PRC, its interim financial information from time to time. Such financial information published by the Group in the PRC is normally derived from its management accounts and is not audited or reviewed by independent auditors. In particular, the published financial information as at and for the nine months ended 30 September 2020 published by the Issuer in the PRC has not been audited or reviewed by independent auditors. As such, financial information published in the PRC by the Group’s should not be relied upon by potential purchasers to provide the same quality of information associated with any audited information. Such financial information is not included in this Offering Circular and should not be relied upon by any investors in making their investment decisions in the Notes.

Unless otherwise stated, all financial information contained herein which is stated as relating to the Issuer refers to the consolidated financial information of the Group.

PRC GAAP differs in certain material respects from the International Financial Reporting Standards (“IFRS”). For a discussion of certain differences between PRC GAAP and IFRS, see “Summary of Significant Differences between PRC GAAP and IFRS”.

−iv− CERTAIN DEFINITIONS AND CONVENTIONS

Unless the context otherwise requires, references in this Offering Circular to “Renminbi”, “CNY” and “RMB” are to the lawful currency of the PRC, “U.S. dollars”, “U.S.$” and “USD” are to the lawful currency of the United States of America (the “United States”), “PRC” and “China” are to the People’s Republic of China which for the purpose of this Offering Circular excludes Hong Kong, Macau and Taiwan, “Hong Kong” are to the Hong Kong Special Administrative Region of the PRC, and “Macau” are to the Macau Special Administrative Region of the PRC.

Solely for convenience, this Offering Circular contains translations of certain Renminbi amounts into U.S. dollars at specified rates. Unless indicated otherwise, the translation of Renminbi into U.S. dollars has been made at the rate of RMB7.0651 to U.S.$1.00, the noon buying rate in effect on 30 June 2020 as set forth in the H.10 weekly statistical release of the Board of Governors of the Federal Reserve System of the United States (the “Federal Reserve Board”). Further information on exchange rates is set forth in “Exchange Rate Information” in this Offering Circular. Investors should not construe these translations as representations that the Renminbi amounts have been, could have been or could actually be converted into any U.S. dollar amounts.

Unless the context otherwise requires, references in this Offering Circular to the “Terms and Conditions of the Notes” are to the terms and conditions governing the Notes, as set out in “Terms and Conditions of the Notes.”

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

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

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

In this Offering Circular, references to:

• “CBRC” are to China Banking Regulatory Commission (中國銀行業監督管理委員會), now known as China Banking and Insurance Regulatory Commission (中國銀行保險監督管理委員會)(“CBIRC”);

• “Chengdu Government” are to the Chengdu Municipal People’s Government (成都市人民政府);

• “Chengdu SASAC” are to the State-owned Assets Supervision and Administration Commission of Chengdu Municipal Government (成都市國有資產監督管理委員會);

• “COVID-19” are to Coronavirus Disease 2019;

• “GDP” are to gross domestic product;

• “GFA” are to gross floor area;

• the “Group” are to the Issuer and its subsidiaries taken as a whole;

−v− • the “Issuer”orthe“Company” are to Chengdu Jiaozi Financial Holding Group Co., Ltd. (成都交子金融控股集團有限公司);

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

• “MOC” are to the Ministry of Commerce of the PRC;

• “MOF” are to the Ministry of Finance of the PRC;

• “MOFCOM” are to the Ministry of Commerce of the PRC or its competent local counterpart;

• “NDRC” are to the National Development and Reform Commission of the PRC or its competent local counterpart;

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

• “PRC government” are to the central government of China and its political subdivisions, including provincial, municipal and other regional or local government entities, and instrumentalities thereof, or where the context requires, any of them;

• “SAFE” are to the State Administration of Foreign Exchange of the PRC or its competent local counterparts;

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

• “sq.m.” are to square metres;

• “State Council” are to the state council of the PRC; and

• “VAT” are to value-added tax.

−vi− FORWARD-LOOKING STATEMENTS

This Offering Circular includes “forward-looking statements”. All statements other than statements of historical fact contained in this Offering Circular, including, without limitation, those regarding the Group’s future financial position and results of operations, strategy, plans, objectives, goals and targets, future developments in the markets where the Group participates or is seeking to participate, and any statements preceded by, followed by or that include the words “believe”, “expect”, “aim”, “intend”, “will”, “may”, “anticipate”, “seek”, “should”, “estimate” or similar expressions or the negative thereof, are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond the Group’s control, which may cause its actual results, performance or achievements, or industry results to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate in the future. Important factors that could cause the Group’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, the following:

• the risks inherent to the industries in which the Group operates;

• the business and operating strategies and the future business development of the Group;

• the general economic, political, social conditions and developments in the PRC;

• changes in competitive conditions and the Group’s ability to compete under these conditions, including the actions and developments of competitors;

• the Group’s operations and business prospects;

• the Group’s capital expenditure and development plans;

• the Group’s expectations with respect to its ability to acquire and maintain regulatory qualifications required to operate its business;

• the availability and charges of bank loans and other forms of financing;

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

• the Group’s dividend distribution plans;

• changes or volatility in currency exchange rates, interest rates, taxes and duties, equity prices or other rates or prices, including those pertaining to the PRC;

• changes in the laws, rules and regulations of the governments in the PRC and the rules, regulations and policies of the relevant governmental authorities relating to all aspects of the Group’s business;

• macroeconomic policies of the PRC government; and

• other factors beyond the Group’s control.

− vii − Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed in “Risk Factors” and elsewhere in this Offering Circular. The Issuer cautions investors not to place undue reliance on these forward-looking statements which reflect its managements’ view only as at the date of this Offering Circular.

The Issuer does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Offering Circular might not occur.

− viii − CONTENTS

Page

SUMMARY ...... 1

THE OFFERING ...... 4

SUMMARY FINANCIAL INFORMATION OF THE GROUP ...... 8

RISK FACTORS ...... 15

TERMS AND CONDITIONS OF THE NOTES ...... 63

SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM ...... 83

USE OF PROCEEDS ...... 85

EXCHANGE RATE INFORMATION ...... 86

CAPITALISATION AND INDEBTEDNESS ...... 88

DESCRIPTION OF THE GROUP ...... 89

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT ...... 124

TAXATION ...... 128

PRC REGULATIONS ...... 132

SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN PRC GAAP AND IFRS ...... 160

SUBSCRIPTION AND SALE ...... 161

GENERAL INFORMATION ...... 166

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

−ix− SUMMARY

The summary below is only intended to provide a limited overview of information described in more detail elsewhere in this Offering Circular. As it is a summary, it does not contain all the information that may be important to investors. Terms defined elsewhere in this Offering Circular shall have the same meanings when used in this summary. Prospective investors should therefore read this Offering Circular in its entirety, including the section entitled “Risk Factors”, before making an investment decision.

Overview

The Group is a state-owned enterprise operating a large comprehensive financial holding platform in Chengdu, Sichuan Province, China. Established in September 2008, the Issuer is directly wholly owned by Chengdu SASAC. It is the only entity utilising state-owned capital that is operating in the finance industry in Chengdu, and has the most financial licences among the local financial holding companies in Sichuan Province and Western China. Since its establishment, the Group has played a strategic and supporting role in modernising Chengdu’s financial landscape by integrating regional financial resources, improving the competitiveness of local financial institutions and supporting the development of financial technology in Chengdu. The Group’s business comprises four principal segments, including:

• Financial services: The Group engages in: (i) financial investment; (ii) real economy services, covering financial leasing, guarantees, SME finance and pawn broking; (iii) asset management; (iv) financial ancillary services, covering security and armed escort services; and (v) property rights trading.

• Financial infrastructure development and operation: The Group engages in primary land development, infrastructure construction, property development and management, and industry cluster development at CBDs in Chengdu under its financial infrastructure development and operation business segment.

• Equity Investment: The Group invests in and manages a number of industrial funds under its equity investment business segment.

• Financial technology (“fintech”): The Group manages and operates several fintech platforms under its fintech business segment to supplement its financial services.

As at 31 December 2017, 2018 and 2019 and 30 June 2020, the Group’s total assets amounted to RMB41.3 billion, RMB50.7 billion, RMB63.1 billion and RMB66.2 billion, respectively. For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the Group recorded operating revenue of RMB3.1 billion, RMB3.4 billion, RMB3.6 billion, RMB1.8 billion and RMB1.8 billion, respectively. For the same periods, the Group had net profits of RMB883.4 million, RMB1,035.7 million, RMB1,283.0 million, RMB572.3 million and RMB910.6 million, respectively.

Recent Developments

2020 Third Quarter Financial Information of the Group

−1− Group’s auditors and there is no assurance such unaudited and unreviewed financial information has or will have the same quality as the information reported in the Group’s historical audited financial statements. The results as at and for the nine months ended 30 September 2020 should not be taken as indicative of the Group’s financial results for the full year of 2020.

As compared with 31 December 2019, the Group’s liabilities as at 30 September 2020 increased because of the increases in the Group’s expenditures in project investments and the continuous expansion of the Group’s business.

As compared with the same period in 2019, certain operating costs of the Group, such as selling expenses, administrative expenses, financial costs and interest expenses increased for the nine months ended 30 September 2020. Such increases were due to the continuous expansion of the Group, including growth in personnel numbers, increased financing activities, establishment of new businesses and acquisitions.

As compared with the same period in 2019, the Group’s net cashflow from investing activities for the nine months ended 30 September 2020 decreased. The decrease was due to the decreases in the cash receipts from investments by Chengdu Yihang, partially offset by the decreases in the cash payment for investments. As compared with the same period in 2019, the Group’s net cashflow from financing activities for the nine months ended 30 September 2020 decreased. The decrease was due to the increases in the cash repayments for debts, partially offset by the increases in cash received from borrowings.

The COVID-19 Outbreak

Since December 2019, the COVID-19 outbreak has caused substantial disruption in the PRC economies and markets and the pandemic has continued to spread on a global scale. The COVID-19 outbreak in the PRC, in particular in the first half of 2020, has resulted in business suspensions, widespread traffic disruptions, travel and other restrictions and quarantines in different places, which led to economic slowdown, labour shortages, supply or delivery chain constraints, price drops and counterparty defaults. Many other countries have implemented drastic measures, including travel bans and closing of borders to help contain the spread of COVID-19. The lockdown with restrictions on travel and movement of people as well as prolonged closures of workplaces imposed by the government in an effort to curb the spread of COVID-19 have caused the delay in resumption of the Group’s business after the Chinese New Year holiday. Since April 2020, China and some other countries gradually lifted stay-at-home orders and began to resume work and school at varying levels and scopes. In compliance with local rules and policies, the Group has made smooth progress in the resumption of work and production in various places. The Group’s financial performance in the first half of 2020 was stable. For the six months ended 30 June 2020, the Group’s total operating revenue was RMB1,835.4 million, representing an increase of 2.1 per cent. as compared with the same period in 2019; its net profit was RMB910.6 million, representing an increase of 59.1 per cent. as compared with the same period in 2019.

However, uncertainties are still present with the evolution of the pandemic. The Group will continue to closely monitor the global development and make assessment of the impacts of COVID-19 and actively respond to its impact on the financial conditions and results of operations of the Group. Please see “Risk Factors — Risks Relating to the Group’s Business in General — The Group’s business is subject to general economic and business cycles, and difficult conditions in the global economy may adversely affect the Group’s business” and “Risk Factors — Risks Relating to the Group’s Business in General — The Group’s operations are subject to force majeure events, natural disasters, catastrophe and outbreaks of contagious diseases, such as COVID-19” for more information.

−2− Transfer of Shares in the Issuer

In December 2020, Chengdu Xiecheng transferred all of the equity interest it held in the Issuer to Chengdu SASAC, as a result of which the Issuer has become directly wholly owned by Chengdu SASAC. For the latest shareholding structure of the Group, please see “— Corporate Structure”.

Competitive Strengths

The Group believes it has the following competitive strengths that have led to its success and are important to its future development:

• Well-positioned to benefit from the geographical and strategic advantages of Chengdu and sound relationship with the Chengdu Government

• Leading position in various industries with strong comprehensive competitiveness

• Synergies achieved through diversified business segments

• Sound financing capability and diversified funding channels

• Prudent and effective risk management systems

• Experienced management team with extensive industry knowledge and demonstrated execution capabilities coupled with sound corporate governance

Business Strategies

The Group is currently committed to pursue the following strategies:

• To develop into an innovation-oriented and integrated financial services conglomerate with nationwide influence

• To diversify financing sources and explore new channels to lower funding costs

• Adhere to prudent risk management with stringent risk control

• Continue to enhance management capability and improve corporate governance

−3− THE OFFERING

The following summary contains some basic information about the Notes and is qualified in its entirety by the remainder of this Offering Circular. Some of the terms described below are subject to important limitations and exceptions. Words and expressions defined in “Terms and Conditions of the Notes” shall have the same meanings in this summary. For a complete description of the terms of the Notes, see “Terms and Conditions of the Notes” in this Offering Circular.

Issuer ...... Chengdu Jiaozi Financial Holding Group Co., Ltd. (成都交子金融控股集團有限公司) (Legal Entity Identifier: 300300RK74LAQD12HA28).

Notes...... U.S.$200,000,000 2.6 per cent. Notes due 2026.

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

Form and Denomination ...... The Notes will be issued in registered form in the denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.

Interest ...... The Notes will bear interest on their outstanding principal amount from and including 12 April 2021 at the rate of 2.6 per cent. per annum, payable semi-annually in arrear on the Interest Payment Dates falling on 12 April and 12 October in each year, commencing on 12 October 2021.

Issue Date ...... 12April 2021.

Maturity Date...... 12April 2026.

Status of the Notes ...... The Notes when issued will constitute direct, general and unconditional obligations of the Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsubordinated and unsecured obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

Negative Pledge ...... TheNotes will contain a negative pledge provision as further described in Condition 3(a) (Negative Pledge) of the Terms and Conditions of the Notes.

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

−4− Where such withholding or deduction is made by the Issuer by or within the PRC up to and including the rate applicable on 31 March 2021 (the “Applicable Rate”), the Issuer will pay such additional amounts as will result in receipt by the Noteholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required.

If the Issuer is required to make a deduction or withholding by or within the PRC, in excess of the Applicable Rate, the Issuer shall pay such additional amounts (the “Additional Tax Amounts”) as will result in receipt by the Noteholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such Additional Tax Amounts shall be payable in respect of any Note in the circumstances set out in Condition 7 (Taxation) of the Terms and Conditions of the Notes.

Redemption for Tax Reasons . . . The Notes 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 to the Noteholders (which notice shall be irrevocable) at their principal amount, together with interest accrued to (but not including) the date fixed for redemption, if, immediately before giving such notice, the Issuer satisfies the Trustee that (i) the Issuer has or will become obliged to pay Additional Tax Amounts as a result of any change in, or amendment to, the laws or regulations of the PRC or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after 31 March 2021 and (ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it, as further described in Condition 5(b) (Redemption for tax reasons) of the Terms and Conditions of the Notes.

Redemption for a Relevant At any time following the occurrence of a Relevant Event, Event ...... each Noteholder will have the right, at such Noteholder’s option, to require the Issuer to redeem all but not some only of that Noteholder’s Notes on the Put Settlement Date at 101 per cent. of their principal amount (in the case of a Change of Control) or 100 per cent. of their principal amount (in the case of a Non-Registration Event), in each case, together with interest accrued to (but not including) such Put Settlement Date, as further described in Condition 5(c) (Redemption for a Relevant Event) of the Terms and Conditions of the Notes.

−5− Events of Default ...... Upon the occurrence of certain events as described in Condition 8 (Events of Default) of the Terms and Conditions of the Notes, the Trustee at its discretion may and, if so requested in writing by Noteholders of at least one quarter of the aggregate principal amount of the outstanding Notes or if so directed by an Extraordinary Resolution, shall (subject to the Trustee having been indemnified and/or provided with security and/or pre-funded to its satisfaction) give written notice to the Issuer declaring the Notes to be immediately due and payable, whereupon the Notes shall become immediately due and payable at their principal amount together with accrued interest (if any) without further action or formality.

Clearing Systems ...... TheNotes will be represented by beneficial interests in the Global Note Certificate in registered form, which will be registered in the name of a nominee of, and deposited on or about the Issue Date with, a common depositary for Euroclear and Clearstream. Beneficial interests in the Global Note Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream.

Common Code ...... 229974254.

ISIN ...... XS2299742549.

Governing Law...... English law.

Trustee ...... China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司)

Principal Paying Agent, China Construction Bank (Asia) Corporation Limited Registrar and Transfer Agent . (中國建設銀行(亞洲)股份有限公司)

Listing...... Application will be made to the HKSE for the listing of, and permission to deal in, the Notes by way of debt issues to Professional Investors only and such permission is expected to become effective on or about 13 April 2021.

Application has been made to the MOX for the listing of the Notes by way of debt issues to MOX Professional Investors only. Admission to the listing of the Notes on the MOX shall not be taken as an indication of the merits of the Issuer or the Notes.

Use of Proceeds ...... See“Use of Proceeds.”

Ratings ...... TheNotes are expected to be rated “BBB+” by Fitch. Such rating of the Notes does not constitute a recommendation to buy, sell or hold the Notes and may be subject to suspension, reduction, revision or withdrawal at any time. Such rating should be evaluated independently of any other rating of the other securities of the Issuer or of the Issuer.

−6− Further Issues ...... TheIssuer may from time to time, without the consent of the Noteholders and in accordance with the Trust Deed, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest and the timing to perform and complete the NDRC Post-issue Filing and the Foreign Debt Registration and the making of consequential notices thereof) so as to form a single series with the Notes, as further described in Condition 14 (Further Issues) of the Terms and Conditions of the Notes.

−7− SUMMARY FINANCIAL INFORMATION OF THE GROUP

The summary consolidated financial information of the Group as at and for the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020 set forth below is derived from and should be read in conjunction with the audited consolidated financial statements of the Group as at and for the years ended 31 December 2018 and 2019 and the unaudited but reviewed consolidated financial statements of the Group as at and for the six months ended 30 June 2020, including the notes thereto and the auditor’s reports in respect of the years ended 31 December 2018 and 2019 and for the six months ended 30 June 2020, each of which are included elsewhere in this Offering Circular. In particular, the unaudited but reviewed consolidated financial information of the Group for the six months ended 30 June 2019 and 2020 should not be relied upon to provide the same quality of information associated with the information that has been subject to an audit and should not be taken as an indication of the expected financial condition and results of operations of the Group for the full financial year ending 31 December 2020. Potential investors must exercise caution when using such data to evaluate the Group’s financial condition, results of operations and results.

The audited consolidated financial statements of the Group as at and for the years ended 31 December 2018 and 2019 and the unaudited but reviewed consolidated financial statements of the Group as at and for the six months ended 30 June 2020 have been prepared in accordance with the PRC GAAP. The audited consolidated financial statements of the Group as at and for the years ended 31 December 2018 and 2019 and the unaudited but reviewed consolidated financial statements of the Group as at and for the six months ended 30 June 2020 have been audited or, as the case may be, reviewed by Mazars. PRC GAAP is substantially in line with IFRS, except for certain modifications which reflect the PRC’s unique circumstances and environment. For a summary of certain differences, see “Summary of Significant Differences between PRC GAAP and IFRS”.

The Issuer publishes, in the PRC, its interim financial information from time to time. Such financial information published by the Group in the PRC is normally derived from its management accounts and is not audited or reviewed by independent auditors. In particular, the published financial information as at and for the nine months ended 30 September 2020 published by the Issuer in the PRC has not been audited or reviewed by independent auditors. As such, financial information published in the PRC by the Issuer should not be relied upon by potential purchasers to provide the same quality of information associated with any audited information. Such financial information is not included in this Offering Circular and should not be relied upon by any investors in making their investment decisions in the Notes.

−8− CONSOLIDATED INCOME STATEMENT

For the six months ended For the year ended 31 December 30 June

2017 2018 2019 2019 2020

(RMB’000) (RMB’000) (Audited) (Unaudited but reviewed)

I. Total operating revenue ...... 3,098,275 3,362,555 3,621,427 1,797,187 1,835,421 Including: Operating revenue...... 3,029,829 3,289,078 3,555,954 1,746,900 1,794,370 Interest income ...... 25,458 48,775 54,809 26,232 25,917 Insurance income ...... 42,501 24,702 10,665 24,056 15,134 Handling and commission income ...... 488 ———— II. Total operating costs ...... 3,485,530 3,604,982 3,706,648 1,776,618 1,648,239 Including: Operating costs ...... 2,087,588 2,436,151 2,268,423 1,162,029 898,984 Handling and commission expenditure ...... 29 21 22 — — Increase of insurance contract provision ...... 282,389 144,227 19,261 2,686 2,217 Taxes and surcharges ...... 44,908 94,483 50,976 27,546 37,318 Selling expenses ...... 57,276 55,066 44,905 19,062 18,623 Administrative expenses .... 319,037 394,300 539,298 206,276 211,075 Financial costs ...... 588,414 444,053 782,264 359,021 479,263 Including: Interest expenses...... 594,233 508,734 890,875 407,752 501,257 Interest income ...... 29,024 73,340 111,062 57,851 58,114 Impairment losses on assets...... 105,888 36,681 (51,970) 7,988 (10,761) Add: Other income ...... 91,273 64,973 93,922 15,984 51,623 Investment income (“-” means loss) . . . 1,217,280 1,281,886 1,516,657 619,094 780,219 Including: income from investment in associates and joint ventures ...... 1,097,771 1,192,803 1,496,679 603,741 768,543 Gains from changes in fair value (“-” means loss) ...... — — (9,540) — 30,990 Gains from disposal of assets (“-” means loss) ...... (1,397) (4) 36 5 — III. Operating profit (“-” means loss) . 919,901 1,104,428 1,463,884 663,639 1,039,252 Add: Non-operating income ...... 27,633 3,394 1,351 1,000 916 Less: Non-operating expenses ...... 2,951 2,439 3,766 1,101 1,937 IV. Total profit (“-” means loss) ..... 944,584 1,105,382 1,461,469 663,538 1,038,231 Less: Income tax expenses...... 61,144 69,727 178,440 91,240 127,654 V. Net profit (“-” means loss) ...... 883,440 1,035,655 1,283,029 572,298 910,576 (I) Classification in accordance with going concern ...... 1. Net profit from continuing operations (“-” means loss)...... 883,440 1,035,655 1,283,029 572,298 910,576 (II) Classification in accordance with attribution ...... 1. Attributable to equity holders of the parent company (“-” means net loss)...... 849,960 895,060 1,006,217 431,711 724,822 2. Minority interest (“-” means net loss)...... 33,481 140,595 276,812 140,587 185,754

−9− For the six months ended For the year ended 31 December 30 June

2017 2018 2019 2019 2020

(RMB’000) (RMB’000) (Audited) (Unaudited but reviewed)

VI. Other comprehensive income after tax ...... (93,171) (66,050) (7,956) 10,026 449 (I) Attributable to equity holders of the parent ...... (92,772) (65,778) (8,200) 10,026 449 (1) Not reclassified subsequently to profit or loss ...... ————— (2) Reclassified subsequently to profit or loss ...... (92,772) (65,778) (8,200) 10,026 449 1. Reclassified subsequently to profit or loss for the invested entity under equity method ...... (64,310) (40,117) (864) — — 2. Gains or losses from changes in fair value of available-for-sale financial assets...... (28,461) (25,661) (7,336) 10,026 449 (II) Attributable to minority shareholders...... (398) (272) 244 — — VII. Total comprehensive income .... 790,270 969,606 1,275,073 582,325 911,025 Attributable to equity holders of the parent company ...... 757,187 829,282 998,017 441,737 725,271 Attributable to minority shareholders. . . 33,082 140,324 277,056 140,587 185,754

−10− CONSOLIDATED BALANCE SHEET

As at 31 December As at 30 June

2017 2018 2019 2020

(RMB’000) (RMB’000) (Unaudited (Audited) but reviewed)

Current assets Cash and cash equivalents ...... 9,535,973 12,588,161 15,908,186 12,078,596 Financial assets measured at fair value and changes are recorded into the current profits and losses ...... — 2,000,000 645,971,176 551,134 Notes receivable and Accounts receivable . . . 410,850 — — — Notes receivable ...... — — — 82,399 Accounts receivable ...... — 555,000 863,937 1,167,473 Prepayment ...... 195,518 53,071 89,468 135,911 Other Receivables ...... 4,807,716 5,256,712 5,860,037 4,857,552 Inventory...... 3,123,855 3,452,964 3,885,462 4,161,297 Non-current assets due within 1 year...... 1,733,707 1,302,761 1,174,180 1,514,374 Other current assets...... 460,935 518,455 6,410 9,176,059 Total current assets ...... 20,268,554 25,727,123 34,837,620 33,724,794 Non-current assets Loans and advances...... 337,841 369,562 399,967 447,477 Available-for-sale financial assets ...... 985,518 999,703 1,559,123 3,338,570 Held-to-maturity investment ...... 256 256 256 256 Long-term receivables ...... 878,828 606,056 884,136 1,854,332 Long-term equity investment ...... 8,592,303 9,914,791 11,456,989 11,899,820 Investment property...... 675,636 723,757 968,521 1,188,488 Fixed assets...... 252,953 1,313,694 1,450,703 1,430,630 Construction in progress ...... 33,804 359,162 159,357 156,125 Intangible assets ...... 27,653 273,172 393,098 382,569 Development expenditure...... 8,895 15,250 16,986 19,880 Goodwill ...... 14,602 14,602 17,615 75,481 Long-term deferred expenses ...... 24,964 56,470 50,318 61,219 Deferred tax assets ...... 151,953 178,036 183,563 184,698 Other non-current assets ...... 9,074,275 10,113,263 10,706,261 11,435,256 Total non-current assets...... 21,059,480 24,937,974 28,246,892 32,474,800 Total assets ...... 41,328,033 50,665,097 63,084,512 66,199,594 Current liabilities Short-term borrowings ...... 315,000 785,000 3,926,516 5,831,516 Financial liabilities at fair value through profit or loss ...... — — 9,540 — Notes payable and Accounts payable ...... 285,831 288,118 311,088 296,226 Advance from customers ...... 215,827 143,617 117,628 96,036 Payroll payable ...... 84,328 97,308 150,435 70,439 Taxes payable ...... 154,951 132,198 166,706 132,276 Other payables ...... 2,996,740 1,617,908 2,206,274 3,109,315 Insurance contract provisions...... 772,123 892,656 847,781 402,784 Non-current liabilities due within 1 year ..... 4,666,963 5,656,600 5,186,607 3,968,202 Other current liabilities ...... 135,626 105,057 35,703 36,338 Total current liabilities ...... 9,627,390 9,718,461 12,958,278 13,943,132

−11− As at 31 December As at 30 June

2017 2018 2019 2020

(RMB’000) (RMB’000) (Unaudited (Audited) but reviewed)

Non-current liabilities Long-term borrowings ...... 9,619,776 9,786,061 10,755,962 12,401,332 Bonds payable ...... 3,110,100 3,694,859 6,816,475 6,811,721 Long-term payables ...... 3,124,169 7,780,155 6,950,610 6,479,609 Accrued liabilities ...... 2,901 — — — Deferred income ...... 1,282 2,021 2,343 2,329 Deferred tax liabilities...... 42,210 32,613 39,350 39,350 Other non-current liabilities...... 1,204 — 500 500 Total non-current liabilities ...... 15,901,642 21,295,709 24,565,240 25,734,841 Total liabilities ...... 25,529,032 31,014,170 37,523,518 39,677,973 Equity Paid-in capital ...... 5,000,000 5,000,000 5,000,000 5,000,000 Capital reserve ...... 3,810,939 4,726,800 6,236,500 6,236,500 Other comprehensive income ...... 293,734 227,956 298,660 299,109 Surplus reserve ...... 385,135 451,939 538,382 538,382 Retained earnings ...... 2,666,661 3,426,702 3,765,255 4,447,504 Total equity attributable to owners of the parent...... 12,156,469 13,833,396 17,379,158 18,061,856 Minority interests ...... 3,642,531 5,817,531 8,181,835 8,459,766 Total equity ...... 15,799,000 19,650,927 25,560,994 26,521,621 Total liabilities and equity...... 41,328,033 50,665,097 63,084,512 66,199,594

−12− CONSOLIDATED CASH FLOW STATEMENT

For the six months ended For the year ended 31 December 30 June

2017 2018 2019 2019 2020

(RMB’000) (RMB’000) (Audited) (Unaudited but reviewed)

I. Cash flows from operating activities ...... Cash received from sales and services . . 3,282,770 3,370,235 2,984,560 1,097,108 1,559,671 Net increase in deposits and placements from financial institutions ...... — — — 2,510 — Cash received from the premiums of the original insurance contract ...... 46,127 17,249 13,847 6,559 5,581 Cash received from interest income and commission income ...... 18,185 38,374 55,587 1,870 28,946 Tax refunds ...... 1,147 106 4,434 17 115 Other cash receipts relating to operating activities ...... 10,854,531 14,972,265 9,465,129 3,869,579 7,401,469 Sub-total cash inflows from operating activities ...... 14,202,759 18,398,230 12,523,557 4,977,642 8,995,782 Cash paid for goods and services ..... 1,313,341 1,688,124 998,557 301,205 443,397 Net increase in customer loans and advances ...... (48,139) 70,360 57,321 82,225 243,864 Payment for claims under original insurance contracts...... 162,515 92,362 161,020 175,800 39,774 Cash paid for interests, fees and commissions...... — — — 21 4 Cash paid to and on behalf of employees ...... 1,321,499 1,710,525 2,069,808 1,045,098 1,039,948 Payment of taxes and surcharges ...... 243,726 357,664 282,627 143,242 254,115 Other cash payment relating to operating activities...... 8,440,969 11,465,916 8,310,352 3,098,815 6,421,284 Sub-total cash outflows from operating activities ...... 11,433,911 15,384,950 11,879,685 4,846,405 8,442,385 Net cash generated from/(used in) operating activities...... 2,768,848 3,013,280 643,873 131,237 553,396 II. Cash flows from investing activities ...... Cash receipts from withdraw of investments ...... 483,814 911,983 3,745,551 3,061,942 259,754 Cash received from investment income . 209,948 219,635 356,014 61,018 38,444 Net cash received from disposal of fixed assets, intangible assets and other long-term assets ...... 79 100,017 167 99 91 Net cash received from disposal of subsidiaries and other business units . 83,184 43,261 595 — — Other cash receipts relating to investing activities ...... 2,430,418 1,168,325 1,311,914 326,941 445,705 Sub-total cash outflows from investing activities ...... 3,207,443 2,443,221 5,414,241 3,450,000 743,994 Cash paid for fixed assets, intangible assets and other long-term assets .... 750,820 2,464,227 1,456,207 1,242,675 2,147,981

−13− For the six months ended For the year ended 31 December 30 June

2017 2018 2019 2019 2020

(RMB’000) (RMB’000) (Audited) (Unaudited but reviewed)

Cash payments for investments ...... 233,930 3,445,165 3,443,920 2,310,100 1,660,916 Other cash payment relating to investing activities ...... 224,000 582,822 6,975,168 3,086,978 3,054,873 Sub-total cash outflows from investing activities ...... 1,208,750 6,492,214 11,875,296 6,639,754 6,884,653 Net cash generated from (used in) investing activities ...... 1,998,693 (4,048,992) (6,461,054) (3,189,754) (6,140,659) III. Cash proceeds from investments by others ...... 1,800,000 3,106,004 3,978,460 — 143,600 Including: Cash received by subsidiaries from minority shareholders’ investments ...... 1,800,000 2,131,760 2,198,460 — 143,600 Cash received from borrowings ...... 4,080,302 8,072,740 15,039,246 4,325,000 7,465,488 Cash received from issuing bonds ..... — — — 1,999,525 1,999,938 Other cash receipts related to financing activities ...... — 700,000 240,000 — — Sub-total cash inflows from financing activities ...... 5,880,302 11,878,744 19,257,706 6,324,525 9,609,025 Cash repayments for debts...... 4,283,116 6,564,673 8,254,749 2,563,389 7,171,191 Cash payments for distribution of dividends, profits and interest expenses ...... 990,585 1,046,065 1,386,381 492,753 664,637 Other cash payments relating to financing activities...... 74,810 12,512 407,080 8,615 14,737 Sub-total cash outflows from financing activities ...... 5,348,510 7,622,890 10,048,210 3,064,757 7,850,565 Net cash generated from financing activities ...... 531,792 4,255,855 9,209,496 3,259,769 1,758,460 IV. Effect of foreign exchange rate changes on cash and cash equivalents ...... ————— V. Net increase in cash and cash equivalents ...... 5,299,333 3,220,142 3,392,314 201,252 (3,828,802) Add: Opening balance of cash and cash equivalents ...... 3,847,168 9,146,501 12,366,643 12,366,643 15,758,957 VI. Closing balance of cash and cash equivalents ...... 9,146,501 12,366,643 15,758,957 12,567,895 11,930,155

−14− RISK FACTORS

An investment in the Notes is subject to a number of risks. Prior to making any investment decision, investors should carefully consider all of the information contained in this Offering Circular, and, in particular, the risks and uncertainties described below. The following describes some of the significant risks relating to the Group, its business, the market in which the Group operates, and the Notes. Some risks may be unknown to the Issuer, and other risks, currently believed to be immaterial, could, in fact, be material. Any of these could materially and adversely affect the business, financial condition, results of operations or prospects of the Group or the value of the Notes. The Issuer believes that the risk factors described below represent the principal risks inherent in investing in the Notes, but the ability of the Issuer to pay interest, principal or other amounts on or in connection with any Notes may be affected by some factors that may not be considered as significant risks by the Issuer based on information currently available to it or which it is currently unable to anticipate. All of these factors are contingencies which may or may not occur, and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. This Offering Circular also contains forward-looking statements that involve risks and uncertainties. The actual results of the Group could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this Offering Circular.

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

RISKS RELATING TO THE GROUP’S BUSINESS IN GENERAL

The Group’s business, financial condition, results of operations and prospects are heavily dependent on the level of economic development in Sichuan Province, in particular, Chengdu.

The Group’s businesses and assets are highly concentrated in Sichuan Province, in particular, Chengdu. Therefore, its business, financial condition, results of operations and prospects have been, and will continue to be, heavily dependent on the social conditions, local government policies and level of economic activity in Sichuan Province, in particular, Chengdu. Sichuan Province and Chengdu have experienced a prolonged period of rapid economic growth.

In recent years, however, there has been a slowdown in the growth of the PRC’s economic development. For additional information, please see “— Risks relating to Conducting Business in the PRC — The Group’s business, financial condition, results of operations and prospects could be adversely affected by slowdown in the PRC economy” below. It is difficult to predict how economic development in Sichuan Province will be affected by such slowdown in the growth of the PRC economy, and there can be no assurance that the policies and measures adopted by the PRC government will be effective in stimulating the recovery of the PRC economy. There can be no assurance that the level of economic development in Sichuan Province will continue to grow at a rate higher than or equal to the past rate of growth, if at all. The Group may not be able to establish or invest in any new businesses outside Sichuan Province in the future, and the Group expects that its future business and operations will continue to be concentrated in Sichuan Province, in particular, Chengdu. If economic growth slows down, adverse changes in social conditions or local government policies arise, or any severe natural disasters or catastrophic events occur in Sichuan Province, in particular Chengdu, the Group’s business, financial condition, results of operations and prospects could be materially and adversely affected.

−15− The Chengdu Government exerts significant influence on the Group, and, as a result, the Group may not be able to always make decisions, take actions or invest, or operate, in businesses or projects that are in the Group’s best interests or that aim to maximise the Group’s profits.

Given the Group’s role as the strategic platform of the Chengdu Government to promote the development of the finance industry in Chengdu and to establish Chengdu as the financial centre of west China, the Group may not make decisions, take actions or invest or operate in businesses or projects that are in the Group’s best interests or that aim to maximise the Group’s profits. In particular, the Issuer is a state-owned enterprise directly wholly-owned by Chengdu SASAC and directly supervised by the Chengdu Government. Accordingly, the Chengdu Government is in a position to exert significant influence on the Group’s major business decisions and strategies, including the scope of its activities, investment decisions and dividend policy. There can be no assurance that the Chengdu Government would always take actions that are in the Group’s best interests or that aim to maximise the Group’s profits. The Chengdu Government may use its ability to influence the Group’s business and strategy in a manner which is beneficial to Chengdu as a whole but which may not necessarily be in the Group’s best interests. The Chengdu Government may also change its policies, intention, preferences, views, expectations, projections, forecasts and opinions, as a result of changes in the economic, political and social environment as well as its projections of population and employment growth in Chengdu, and any such change may have a material effect on the Group’s business and prospects. Any amendment, modification or repeal of existing policies of the Chengdu Government could result in a modification of the existing regulatory regime which, in turn, could have a material adverse effect on the Group’s financial condition and results of operations.

PRC regulations on the administration of fiscal debts of local governments may have a material impact on the Group’s financing model, business model and business scope.

The Group’s results of operations and financial condition may be affected by changes in the regulation of the PRC government concerning local government debts even though the Issuer is no longer on the list of local government financing platforms since June 2011 as composed by CBRC. To strengthen the management of financing platforms and effectively prevent fiscal financial risks, the State Council issued the Notice on Strengthening Management of Financing Platform of Local Government《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, and the General Office of NDRC issued the Notice on Further Regulating Issuance of Bonds by Financing Platform of Local Government《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”) in November 2010. According to Circular 19, local governments at all levels must settle the existing debts of their respective financing platforms. According to Circular 2881, the level of indebtedness of local governments will impact a financing platform’s issuance of enterprise bonds.

In September 2014, the State Council released the Opinion on Enhancing the Administration of Fiscal Debts of Local Governments《關於加強地方政府性債務管理的意見》 ( (國發[2014]43號)) (“Circular 43”), with the aim of controlling the significant increase in local government debts and associated risks in the PRC’s banking system. Circular 43 generally prohibits local governments from incurring “off-balance” indebtedness to finance the development of government projects and other public interest projects with the proceeds of the borrowings incurred by financing platforms that the relevant local governments own or control.

MOF, together with NDRC, PBOC, China Securities Regulatory Commission, CBRC (now known as CBIRC) and the Ministry of Justice of the PRC, released the Notice concerning Further Regulation of Local Government Borrowing and Financing Conduct《關於進一步規範地方政府舉債融資行為的 ( 通知》) to reinforce the principles and policies set out in Circular 43 in April 2017.

−16− The PRC government issued the Circular of the Ministry of Finance on Issues relevant to the Regulation on the Financing Activities Conducted by Financial Institutions for Local Governments and State-owned Enterprises《財政部關於規範金融企業對地方政府和國有企業投融資行為有關問 ( 題的通知》(財金[2018]23號)) (the “MOF Circular 23”), effective on 28 March 2018, which aims to increase the responsibility of the PRC state-owned financial institutions to investigate the financial independence and liquidity level of the state-owned enterprises that they assist in fundraising. On 11 May 2018, the Circular of the National Development and Reform Commission and the Ministry of Finance on Improvement of Market Regulatory Regime and Strict Prevention of Foreign Debt Risks and Local Government Indebtedness Risks (Fa Gai Wai Zi [2018] No. 706) (國家發展改革委財政部關於完善市場約束機制嚴格防範外債風險和地方債務風險的通知(發改外資[2018]706號)) (“Joint Circular 706”)was released, which reiterates the PRC government’s intention to isolate the debt of the state-owned enterprises from the relevant local government and to control the increase of local governments’ debt. In addition, the Joint Circular 706 requires companies that plan to borrow medium- and long-term foreign debt to establish a sound and standardised corporate governance structure, management decision-making mechanism, and financial management system. It further requires that the assets owned by such companies should be of good quality and clear ownership and it forbids the inclusion of public interest assets in corporate assets. See “— Risks relating to the Notes — PRC Government has no obligation to pay any amount under the Notes”.

The PRC government may continue to release new policies or amend existing regulations to control the increase in local government debts in China. There is no assurance that the Group’s financing model and business model will not be materially affected by future changes in the regulatory regime concerning fiscal debts of local governments.

The Group’s business operations require substantial capital, and the Group may not be able to obtain sufficient, or any, funds on commercially acceptable terms to finance its operations or expansion plans.

Due to the capital-intensive nature of the Group’s business operations, a substantial amount of capital, as well as ongoing funding, is required to support the Group’s business growth. The Group’s business growth and working capital requirements are primarily supported by internal funding sources, bank loans and other borrowings and equity. The Chengdu Government has also provided financial support (but not including credit support) to the Group in the form of grants and subsidies, capital injections and tax incentives. The Group’s ability to arrange financing and the cost of such financing are dependent on numerous factors, including global economic and market conditions, interest rates, credit availability from banks or other lenders, success of the Group’s businesses, changes in the monetary policy of the PRC government with respect to bank interest rates and lending policies and the political and economic conditions in the PRC generally. If the Group fails to maintain its existing and future loan arrangements on commercially acceptable terms, there can be no assurance that the Group will be able to continue to obtain adequate, or any, funding in the future on terms favourable to the Group. If sufficient financing is not available to meet the Group’s needs, or cannot be obtained on commercially acceptable terms, or at all, the Group may not be able to refinance its existing loans, fund the operation and/or expansion of its business and the Group’s other liquidity needs, introduce new products and services or compete effectively. As a result, the business, financial condition and results of operations of the Group would be materially and adversely affected.

A reduction or discontinuance of government support could materially and adversely affect the financial condition and results of operations of the Group.

In light of the strategic importance of some of the Group’s businesses to Chengdu, the Group has received supports from Chengdu Government in the form of fiscal subsidies to support its investment in, and operation of, those businesses. As at 30 June 2020, the total amount of such supports that the Group has received since its establishment amounted to approximately RMB19.3 billion. Such supports include capital injection, financial headquarters special construction fund arrangement and special funds for financial industry development and other special supports. In particular, (i) in

−17− addition to the investment of RMB5 billion in registered capital, Chengdu Government has continued to inject capital; (ii) Chengdu Government has allocated special funds from the local retained income to the Group for the construction of the financial business district and (iii) the Group received a number of provincial and municipal financial industry special funds supports and other special subsidies from Chengdu agricultural committee, transport committee, construction committee and other municipal departments.

There can be no assurance that such financial support will not be adjusted or terminated due to changes in government policy or otherwise. Although fiscal subsidies constituted a relatively small portion of the Group’s profit before tax, if the favourable grants and subsidies, capital injections and tax incentives or other incentives which are currently available to the Group are reduced or eliminated in the future, some of the Group’s businesses may no longer be viable, and the financial condition and results of operations of the Group may be materially and adversely affected.

The Group’s business is subject to general economic and business cycles, and difficult conditions in the global economy may adversely affect the Group’s business.

Some of the industries in which the Group operates, such as SME financing and guarantee industries, are cyclical industries. The Group’s activities and results are also substantially affected by general global macro-economic conditions.

The outlook for the world economy and financial markets remains uncertain. In particular, the COVID-19 outbreak at the beginning of 2020 has impacted economic activities worldwide. A number of governments revised GDP growth forecasts downward for 2020 in response to the economic slowdown caused by the spread of COVID-19, and it is possible that the outbreak of COVID-19 may cause a prolonged global economic crisis or recession. See “— Risks relating to the Group’s Business in General — The Group’s operations are subject to force majeure events, natural disasters, catastrophe and outbreaks of contagious diseases, such as COVID-19”. In Asia and other emerging markets, some countries are expecting increasing inflationary pressure as a result of liberal monetary policy or excessive foreign fund inflow, or both. The national referendum results whereby the United Kingdom voted to withdraw from the European Union on 23 June 2016 and the United Kingdom’s formal withdrawal from the European Union on 31 January 2020 (“Brexit”) have resulted in volatility in the global financial market, and are expected to create mid- to long-term economic uncertainty to the economy in the United Kingdom, the European Union and globally. In the United States, the current administration policies have created uncertainty for the global economy and financial markets, in particular the escalation of the US-Sino trade war recently. In addition, economic conditions in the PRC are sensitive to global economic conditions, and it is impossible to predict how the PRC economy will develop in the future and whether it may slow down due to a global crisis, or experience a financial crisis.

Instability in the global economy may materially and adversely affect markets that the Group operates in, which may lead to a decline in the general demand for the Group’s services and products. In addition, a reduction in liquidity in the global financial markets and in the PRC may negatively affect the Group’s liquidity. Therefore, instability in the global economy may materially and adversely affect the Group’s business, financial condition and results of operations.

The Group consists of a number of companies operating in multiple business lines, and is subject to challenges not found in companies operating in a single business line.

The Group has a number of portfolio companies operating in multiple industries and investing in a wide range of businesses and markets. As such, the Group is exposed to risks associated with multiple businesses. The Group is exposed to business, market and regulatory risks relating to different industries and markets, and may from time to time expand its business to new industries and markets in which it has limited operating experience. It needs to devote substantial resources to become familiar with, and monitor changes in, different operating environments so that it can succeed in its businesses.

−18− In addition, as the Group has a number of portfolio companies, successful operation of the Group requires an effective management system. As the Group continues to grow its businesses and expand into various industries, the Group’s operations may become more complex, which could increase the difficulty of implementing its management system.

The Issuer may provide direct funding, guarantees and other support to certain of its subsidiaries from time to time. For example, the Issuer may provide shareholder loans to, or act as an Issuer for the borrowings of, certain subsidiaries. If a subsidiary defaults on any borrowings lent or guaranteed by the Issuer, the Issuer will not receive the repayment as planned, or the relevant lender may exercise its right under the guarantee to demand repayment from the Issuer. The occurrence of either of these types of events may result in a funding shortage at the Issuer level, and may materially and adversely affect the Issuer’s ability to provide financial support to its other subsidiaries. If the Issuer’s financial or non-financial support ceases or diminishes for any reason, the operations of the relevant subsidiaries may be materially and adversely affected, which, in turn, may have a material adverse effect on the Group’s business, financial condition and results of operations.

The Group has made investments in portfolio companies that it does not control.

The Group invests in portfolio companies that it does not control. The Group’s ability to manage and monitor the operations of its portfolio companies derives primarily from its contractual rights under shareholders’ agreements and its shareholders’ rights under the PRC Company Law or other relevant laws and regulations. Typically, the Group manages and monitors these companies through its representation on their board of directors. The Group’s inability to exercise control over these companies exposes it to inherent risks such as daily operational issues and legal non-compliance of its portfolio companies as the Group may not be in a position to resolve issues or address risks in its portfolio companies. Also, its interests may be adversely affected as a result of other shareholders’ failure to perform their contractual obligations, and disagreements among shareholders over the management or future directions of these companies. In addition, when the Group acquires minority equity interests or disposes of a portion of majority equity interests in portfolio companies in a manner that results in the Group retaining a minority investment and not having control, it is subject to risk that the relevant portfolio companies may make business, financial or management decisions with which the Group does not agree, or that the majority shareholders or the management of the companies may take risks or otherwise act in a manner that does not serve the Group’s interests. Also, regardless of whether the Group has control, there can be no assurance that it will not have disputes with other shareholders of its portfolio companies. In the event of such disputes, the operations of such companies may be adversely affected, and the Group may be forced to take actions, including arbitration and litigation, to resolve such disputes. These actions could result in substantial costs, divert the Group’s management resources, and adversely impact its reputation. The outcome of any such arbitration or litigation cannot be guaranteed. If any of the foregoing were to occur, the values of the Group’s equity interests in companies that it does not control could decrease and its financial condition and cash flows could suffer as a result.

In addition, the Group may from time to time cooperate with local and international partners to conduct some of its business activities. The Group generally enters into such cooperation relationships where it believes it is able to benefit from the strong industry insight and experience of its partners. If any of the other equity owners or the Group’s partners fail to perform their respective obligations, or otherwise breach the terms and conditions of the Group’s shareholding arrangements or cooperation agreements, or if the Group has different views or strategies with its partners, it could have a material adverse effect on the Group’s business, financial condition or results of operations.

−19− The Group engages in related party transactions with its associates and joint ventures from time to time which may create potential conflicts of interest.

The Group has engaged in, and may continue to engage in, a variety of transactions with its associates and joint ventures, which may include providing guarantees. There can be no assurance that those transactions would be deemed as arm’s length, or that the Group’s related parties will not take actions that favour their interests over the Group’s. If a borrower defaults on any borrowings guaranteed by the relevant Group’s member, the relevant lender may exercise its right under the guarantee to demand repayment from the Group, which may result in a funding shortage at the Group level. The internal control regarding the management of various related party transactions can be also challenging and demanding for the Group. Failure to adequately control and manage its related party transactions could have an adverse effect on the Group’s business, financial condition or results of operations.

The Group may be unsuccessful in integrating and managing current or future investments and/or acquisitions, and there are risks associated with any material acquisitions by the Group.

The Group, from time to time, considers investment and acquisition opportunities that may complement its core business portfolio and capabilities, and which assist in expanding the market share of its core business operations. The ability of the Group’s operations to grow by investments in, and/or acquisitions of, its target businesses is dependent upon, and may be limited by, the availability of attractive projects, its ability to agree commercial, technical and financing terms to the satisfaction of the Group, and obtaining required approvals from relevant regulatory authorities. Such investments and/or acquisitions may also expose the Group to potential difficulties that could prevent it from achieving the strategic objectives for the investments and/or acquisitions or the anticipated levels of profitability from the investments and/or acquisitions. These difficulties include:

• diversion of management’s attention from the Group’s existing investments and/or businesses;

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

• decreases in its financial resources which may limit or reduce the Group’s ordinary operating activities and increase pressure on its liquidity;

• insufficient expertise to manage its additional risk exposure;

• exposure to new laws and regulations with which the Group is not familiar, or is currently not subject to, and which may lead to increased litigation and regulatory risk;

• difficulty of expanding into markets in different geographic locations and challenges of operating in markets and industries that the Group does not have substantial experience in;

• increases in debt, which may increase the Group’s finance costs as a result of higher interest payments;

• exposure to unanticipated contingent liabilities from acquired businesses; and

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

There is no assurance that the above difficulties would not arise and result in a material and adverse impact on the Group’s business, prospects, financial condition or results of operations.

−20− In addition, where the Group invests in joint ventures where it may not have management control over its investments, there can be no assurance that such joint ventures will operate smoothly or successfully, if at all. There can also be no assurance that joint venture partners will act in a way which is consistent with the interest of the Group, and will be able and willing to fulfil their obligations under the relevant joint venture or other agreements.

Also, during the course of any material acquisition transactions, the Group typically conducts due diligence investigations with respect to the target companies, but the due diligence with respect to any acquisition opportunity may not reveal all relevant facts that are necessary or useful in evaluating such opportunity, which could subject the Group to unknown financial, legal and other risks and liabilities. When determining the consideration for any acquisition, the Group will consider various factors, including, but not limited to, the quality of the target business, estimated costs associated with the acquisition and the management of the target business, prevailing market conditions and intensity of competition. The Group is unable to predict whether there will be any target suitable for acquisition or when any suitable acquisition opportunities could arise. In the event that the Group enters into any letter of intent or agreement for any material acquisition after the issue of the Notes, the market price and the trading volume of the Notes may be adversely affected.

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

There can be no assurance that the Group will be able to identify suitable investments and acquisition targets, complete the investments and acquisitions on satisfactory terms, or if at all, and, if any such investments and acquisitions are consummated, there can be no assurance that the Group will be able to satisfactorily integrate the acquired businesses and investments. Any failure of the Group to implement its expansion plans through investments and acquisitions could have a material adverse effect on the Group’s business, financial position and results of operations, as well as its future prospects.

In addition, the Group’s portfolio companies operating in different industry segments may determine that it is in their shareholders’ interests to pursue new business ventures. There can be no assurance that such business ventures will be successful or generate the synergies expected, if any. The successful completion of this type of transaction will depend on several factors, including satisfactory due diligence findings and the receipt of necessary regulatory approval, among others. If the Group fails to complete such business ventures, or such ventures prove to be unsuccessful, the Group’s operating segments involved may be adversely affected.

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

In addition, the Group conducts some of its business activities through one or more joint venture companies. The Group generally enters into such joint ventures where it believes it is able to benefit from the strong industry insight and experience of its partners. Typically, under such contractual arrangements, if any of the other equity owners or the Group’s partners fail to perform their respective obligations or otherwise breach the terms and conditions of the Group’s shareholding arrangements or joint venture agreements, or if the Group has different views or strategies from its partners, it could have a material adverse effect on the Group’s business, financial condition or results of operations.

−21− Some of the Group’s members do not possess valid land use right certificates, building ownership certificates or leasehold rights to certain properties.

Some of the Group’s members do not possess valid land use rights certificates, building ownership certificates or leasehold rights to certain properties. Some of these members are in the process of applying for, or will apply for, the relevant certificates and permits. In addition, some members lease properties whose owners do not possess valid land use rights certificate or building ownership certificates, or have not obtained internal authorisation to lease properties. There can be no assurance that such certificates and permits will be obtained in a timely manner, or at all, and any delay may result in punishment and/or a disruption to their business operations and may adversely affect their financial performance. In addition, if any leasehold rights are found to be invalid, and the Group is requested to return the leased properties, there can be no assurance that the Group will be able to locate other properties in a timely manner, or at all. This may result in an adverse impact on the Group’s business operations and financial performance.

The Group may face increasing competition from existing and new market participants.

The PRC’s financial services industry has experienced substantial growth in recent years, following the rapid development of the PRC economy. The Group’s major competitors include state-owned or foreign-invested companies which have a strong presence in the regions in which the Group operates. Some of the Group’s competitors may benefit from lower pricing, a larger customer base, a more established business reputation, more solid business relationships with banks and government authorities, a more mature risk control mechanism, or more extensive experience than the Group. As the Group expands its presence in the PRC, the Group expects to compete with competitors from other regions, some of which have better knowledge of the target customers and the local business environment, and may enjoy stronger relationships with local banks than the Group does. If the Group is unable to maintain its current level of profitability and market share as a result of increased competition, the Group’s business, financial condition and results of operations may be materially and adversely affected.

The Group may not be successful in offering new products and services.

As the Group continuously adjusts its business strategies in response to the changing market and evolving customer needs, the Group’s new business initiatives may lead the Group to offer new products and services. However, the Group may not be able to successfully introduce new products or services to address its customers’ needs because the Group does not have the adequate capital resources, or lacks the relevant experience or expertise, or otherwise. In addition, the Group may be unable to obtain regulatory approvals for its new products and services. Furthermore, the Group’s new products and services may involve increased and unperceived risks, and may not be accepted by the market and they may not be as profitable as the Group anticipated, or at all. If the Group is unable to achieve the intended results for the Group’s new products and services, the Group’s business, financial condition, results of operations and prospects may be adversely affected. The Group’s existing risk management procedures, internal controls, information technology system and management expertise may also not be adequate to address the business needs of, and reduce the reputational and legal risks inherent in, these new products and services.

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

The Group currently has a large amount of debt. As at 30 June 2020, the short-term borrowings of the Group amounted to approximately RMB5,831.5 million, the total current liabilities of the Group amounted to approximately RMB13,540.3 million, the long-term borrowings of the Group amounted to approximately RMB12,401.3 million, the total liabilities of the Group amounted to RMB39,678.0 million, while the Group’s cash and cash equivalents amounted to approximately RMB12,078.6 million.

−22− The Group may incur additional indebtedness and continuing liabilities in the future, including the issuance of debt securities or entering into financing or other loan arrangements. The level of existing indebtedness and incurrence of further indebtedness could have important consequences to the Group’s business, including:

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

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

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

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

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

• reducing the Group’s competitiveness compared to its competitors that have less debt; and

• increasing the costs of additional financing.

Creditors of the Issuer’s subsidiaries would have a claim on the Issuer’s subsidiaries’ assets that would be prior to the claims of the Issuer’s creditors. As a result, the payment obligations under the Issuer’s indebtedness and liabilities will be effectively subordinated to all existing and future obligations of the Issuer’s subsidiaries, and all claims of creditors of the Issuer’s subsidiaries will have priority as to the assets of such entities over the Issuer’s claims and those of its creditors.

In addition, the Group continually reviews its current and expected future funding requirements and evaluates and engages in discussions with financial institutions and other market participants, from time to time, on proposals regarding different sources of funding. In incurring indebtedness and liabilities from time to time, members of the Group may create security over their assets, receivables or equity interests in companies or entities held by them (which may include the Issuer’s subsidiaries) in favour of the relevant creditors. Should any of the Group’s secured indebtedness becomes immediately due and payable as a result of any default in payment or the occurrence of other events of default as defined under the relevant secured indebtedness, the relevant secured creditors would be entitled to take enforcement actions against such secured assets, receivables and equity interests. The secured creditors might take over the relevant subsidiaries’ titles to the secured assets, receivables and equity interests, or sell them through auction. In such an event, the value of the Group’s assets portfolio will diminish, and fewer assets and/or equity interests will be available for distribution to unsecured creditors if the relevant subsidiaries are in liquidation. If any member of the Group incurs additional debt, the risks that the Group faces as a result of its already substantial indebtedness and leverage could intensify.

Also, if the Issuer or the relevant subsidiaries are unable to comply with the restrictions (including restrictions on the Group’s future investments) and covenants in its current or future debt obligations and other agreements, a default under the terms of such agreements may occur. In addition, if the default provisions in the Group’s loan agreements are drafted wide enough to cover non-payments by its guarantee business of its guarantee contracts, this may also be viewed as a default under such loan agreements. In the event of a default under such agreements, the holders of the debt could terminate their commitments to the Issuer or its subsidiaries, accelerate the debt and declare all amounts borrowed due and payable, or terminate the agreements, as the case may be. Some of the financing arrangements entered into by the Issuer and its subsidiaries may contain cross-acceleration or cross-default provisions. As a result, a default by the Issuer or any of its subsidiaries under any of such agreements may cause the acceleration of repayment of not only such debt but also other debts,

−23− or result in a default under other debt agreements and potentially the Bonds. If any of these events occurs, there can be no assurance that the assets and cash flows of the Issuer or its subsidiaries would be sufficient to repay in full all of their respective debts as they become due, or that the Issuer or its subsidiaries would be able to find alternative financing. Even if the Issuer and its subsidiaries could obtain alternative financing, there can be no assurance that it would be on terms that are favourable or acceptable to the Issuer or, as the case may be, its subsidiaries.

The Group’s ability to generate cash to service its indebtedness depends on many factors beyond its control.

The Group’s ability to make payments on, and to refinance, its indebtedness, including the Notes, and to fund planned capital expenditures and investments will depend on the Group’s ability to generate cash. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the Group’s control. The Group’s businesses might not generate sufficient cash flow from operations to enable it to repay its indebtedness, including the Notes, or to fund the Group’s other liquidity needs. The Group may need to refinance all or a portion of its indebtedness, including the Notes, on or before maturity. However, the Group might not be able to refinance any of its indebtedness, including the Notes, on commercially reasonable terms or at all. If the Group is unable to service its indebtedness or obtain refinancing on terms acceptable to the Group, it may be forced to adopt an alternative strategy that may include reducing or delaying capital expenditures, selling assets or seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all.

The Issuer has pledged some of its equity interests in certain subsidiaries and affiliates.

The Issuer has pledged some of its equity interests in certain subsidiaries and affiliates as credit support for some of the Group’s loans. For example, the Issuer has pledged its shares in Chengdu Financial Holding Real Estate Co., Ltd. (成都金控置業有限公司) to Hi-Tech Industrial Development Zone Branch of Bank of ChengDu Co Ltd (成都銀行股份有限公司高新支行) to secure certain loans, which are repayable on 23 January 2022. The Group has also pledged its shares in Chengdu Financial City Real Estate Co., Ltd. (成都金融城置業有限公司) to Chengdu Rural Commercial Bank Co., Ltd. (成都農村商業銀行股份有限公司)(“Chengdu Rural Commercial Bank”) to secure certain loans, which are repayable on 28 November 2021. Should there be a default under the terms of the loans for which the Issuer has pledged such equity interests as credit support, the relevant creditors may be entitled to enforce such pledges, and the Issuer could lose such equity interests. In such an event, there could be a material adverse impact on the Group’s business, assets, revenue and financial condition. There can be no assurance that the Issuer will not default on any payments of interest, and ultimately principal, under its loans in the future.

There can be no assurance that the Group can match the maturity profile of its assets and liabilities as it grows. Inability to do so will impact the Group’s liquidity and its ability to repay its borrowings and settle its outstanding liabilities.

The Group depends on its ability to match its asset growth with its fundraising on an ongoing basis. The Group manages its liquidity risk by regularly monitoring the relative maturities between its assets and liabilities and by taking steps to maintain a balance of long-term and short-term funding sources. If the Group fails to match the relative maturities of its assets and liabilities, net liquidity shortfalls may result, and the Group may not be able to meet its financial liabilities as they fall due. In addition, such liquidity shortfalls may also impair the Group’s ability to obtain sufficient additional financing, if at all. As a result, the Group’s liquidity may be impaired, which would have a material adverse effect on the Group’s business, prospects, financial condition and results of operations.

−24− The Group is exposed to interest rate risk.

Interest rate fluctuations may have a significant influence on the financial performance of the Group. The Group’s income and financial condition associated with its real economy services (including the financing leasing business) depend to a large extent on interest income, which is the difference between interest earned from loans the Group provides and interest paid for its bank borrowings. The interest rates the Group charges the borrowers are linked to the Loan Prime Rates (the “LPR”) calculated and promulgated by the National Interbank Funding Center (the “NIFC”), serving as the pricing reference for bank lending, which may fluctuate significantly due to changes in the PRC government’s monetary policy. The Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases《最高人民法院關於審理 ( 民間借貸案件適用法律若干問題的規定》) (the “Provisions on Private Lending”) issued by the Supreme People’s Court of the PRC on 6 August 2015 provide that the interest rates cannot exceed four times of the market rate for one-year loan at the time when the contract is concluded (“market rate for one-year loan” refers to the LPR for one-year loan announced monthly by the NIFC with effect from 20 August 2019 as authorised by the People’s Bank of China). Pursuant to the amendments to the Provisions on Private Lending issued by the Supreme People’s Court of the PRC on 18 August 2020 and 23 December 2020, and the Official Reply of the Supreme People’s Court on the Scope of Application of New Judicial Interpretations on Private Lending (Fa Shi [2020] 27)《最高人民法院 ( 關於新民間借貸司法解釋適用範圍的批復》(法釋[2020]27號)) adopted on 9 November 2020 and effective on 1 January 2021, the above mentioned 2015 judicial interpretations on private lending shall not apply to financial institutions established with the approval of financial regulatory authorities. Although the Group is not subject to the restriction on the interest rates pursuant to the above mentioned 2015 judicial interpretations on private lending, there is no assurance that a claim for interest payment with the interest rates exceeding the stipulated rate will be enforced by the courts. If the Group has to reduce the interest rates it charges the borrowers to reflect the decrease of the LPR, the interest earned from its loans will decline. In addition, the Group may face fierce competition and price wars, and, as a result, it may lower its interest rates, which would adversely affect the Group’s profitability and financial position. In addition, if the Group is not able to control its funding costs or adjust its lending interest rates in a timely manner, the Group will experience a narrowing interest rate spread, which could adversely affect the Group’s profitability and financial position.

The Group’s financial leasing business is also affected by interest rates, including both the interest rates charged to its financial leasing customers and the interest rates it pays on its loans and financing obligations. In order to remain responsive to changing interest rates and to manage the Group’s interest rate exposure, the Group has implemented measures to adjust the structure of its assets and liabilities based on an assessment of the sensitivity of projected net interest income under various interest rate scenarios. However, an increase in interest rates, or the perception that such an increase may occur, could adversely affect the Group’s ability to obtain bank loans at favourable interest rates, its ability to maximise its interest income, its ability to originate new leases, and its ability to grow. In addition, changes in interest rates or in the relationships between short-term and long-term interest rates or between different interest rate indices (i.e. basis risk) could affect the interest rates received on interest-earning assets differently from the interest rates paid on interest-bearing liabilities, which could, in turn, result in an increase in interest expense or a decrease in net interest income (which is the Group’s interest income minus the Group’s interest expense).

In addition, the Group’s net interest income is also impacted by whether it can adjust the interest rates it charges its customers in response to fluctuations in interest rates for the Group’s interest-bearing bank borrowings to maintain its net interest spread and its net interest margin. If the Group fails to appropriately adjust the interest rates of its lease contracts in a timely manner, its net interest spread and its net interest margins may decrease, and, as a result, its profitability and results of operations would be adversely impacted. Any increase in the Group’s interest expense or decrease in its net interest income could have a material adverse effect on its business, results of operations and financial condition.

−25− The Group’s risk management framework, policies and procedures and internal controls may not fully protect the Group against various risks inherent in its business.

The Group has established an internal risk management framework, policies and procedures to manage its risk exposures, primarily operational risk, compliance risk and legal risk, as well as liquidity risk. These risk management policies and procedures are based upon historical behaviours, and the Group’s experience in the relevant industries. They may not be adequate or effective in managing the Group’s future risk exposures, or protecting the Group against unidentified or unanticipated risks, which could be significantly greater than those indicated by the Group’s historical experience. Although the Group is continuously updating these policies and procedures, it may fail to predict future risks due to rapid changes in the market and regulatory conditions, and new markets the Group enters.

Although the Group has established internal controls to ensure its risk management policies and procedures are adhered to by its employees as it conducts its business, its internal controls may not effectively prevent or detect any non-compliance of its policies and procedures, which may have a material adverse effect on the Group’s business, financial condition and results of operations.

While the Group has not identified any deficiency in the implementation of its internal control procedures, there can be no assurance that no internal control deficiencies will be identified in the future. Failure to address the Group’s internal control and other deficiencies in a timely and effective manner may undermine the effectiveness of the Group’s risk management system, may result in inaccuracies in the Group’s financial reporting, and may also increase the potential for financial losses and non-compliance with regulations. As a result, the Group’s asset quality, business, financial condition and results of operations may be materially and adversely affected.

Effective implementation of the Group’s risk management and internal controls also depends on the Group’s employees. There can be no assurance that such implementation will not involve human error or other mistakes, which may significantly undermine the effectiveness and performance of the Group’s risk management and internal controls, resulting in a material adverse effect on the Group’s business, results of operations and financial position.

The Group’s various business segments are subject to extensive regulation and supervision by national, provincial and local government authorities, which may interfere with the way the Group conducts its business, and may negatively impact the Group’s business and results of operations.

The Group’s various business segments are subject to extensive and complex national, provincial and local laws, rules, regulations, policies and measures in relation to, among other things, capital structure, pricing and provisioning policy. For example, under the Group’s financial services business, the Group is required to comply with PRC regulations concerning, inter alia, financial leasing, asset management, establishing and operation of a financing guarantee company and SME finance. Please see “PRC Regulations” for more information.

These laws, rules, regulations, policies and measures are issued by different central government ministries and departments, as well as provincial and local government authorities, and may be enforced by different local authorities in each province in which the Group operates. In addition, the local authorities have broad discretion in implementing and enforcing the applicable rules and regulations. As a result, there may be significant uncertainties in the interpretation and implementation of such laws, rules, regulations, policies and measures, which increase the Group’s compliance burden and may potentially restrain its flexibility in conducting its business, including product innovation. The Group relies on verbal clarifications from local government authorities from time to time which may be inconsistent with the regulations concerned.

−26− Given the complexity, uncertainty and frequent changes in the applicable laws, rules, regulations, policies and measures, including changes in their interpretation and implementation, the Group’s business activities and growth may be adversely affected if the Group does not respond to the changes in a timely manner, or if it fails to fully comply with such laws, rules, regulations, policies and measures, including as a result of ambiguities in them. Non-compliance may subject the Group to sanctions by regulatory authorities, monetary penalties, or restrictions on the Group’s activities, or revocation of the Group’s licences, which could have a material adverse effect on the Group’s business, financial condition and results of operations.

As some of the laws, rules, regulations, policies and measures that the Group is subject to are relatively new, there is uncertainty regarding their interpretation and application. In addition, such laws, rules, regulations, policies and measures may change from time to time. For example, the Group’s PRC operations are affected by the PRC tax laws and regulations. The PRC tax authorities may undertake reforms of the tax system from time to time, which may result in changes to the tax laws and regulations that the Group is currently subject to. Given the magnitude and complexity of the laws and regulations to which the Group is subject, compliance with such laws and regulations, or the establishment of effective monitoring systems may be onerous or require a significant amount of financial and other resources.

In addition, there can be no assurance that new or amended laws, rules, regulations, policies or measures will not be implemented, or that the competent authorities will not change their interpretations of existing laws, rules, regulations, policies or measures in the future to impose more stringent or different requirements on the Group. To the extent the Group will not be in compliance with such laws, rules, regulations, policies or measures, the Group may be subject to rectification measures such as being ordered to change directors, supervisors and senior management, or other penalties which could have a material adverse effect on the Group’s business, financial condition and results of operations.

The Group requires various approvals, permits and licences to operate its businesses, and is required to satisfy applicable regulatory requirements for certain transactions.

Pursuant to the applicable laws and regulations in the PRC, the Group is required to obtain or renew approvals, permits and licences with respect to its relevant operations, including but not limited to financial leasing, guarantees, SME finance, asset management, equity investment and third-party payment business, and satisfy applicable regulatory requirements for certain transactions such as completion of filing, registration or procedure or provision of certain reports. There can be no assurance that the Group will be able to obtain or renew all necessary approvals, permits and licences, or satisfy applicable regulatory requirements on a timely basis or at all. Non-compliance with the relevant laws and regulations, or the failure to obtain the relevant approvals, permits and licences, could expose the Group to sanctions, fines, penalties, revocation of licence or transaction or other punitive actions, including suspension of the Group’s business operations or restriction or prohibition on certain business activities. In particular, the Group may from time to time have certain instances of non-compliance with the constitutive documents of the Group, which may result in fines or sanctions from the relevant PRC authorities. In addition, the relevant government authorities have amended the interpretation of, or enforcement of, existing laws and regulations in recent years, and may continue to amend the interpretation of, or enforcement of, existing laws and regulations or adopt new laws and regulations, or promulgate stricter laws and regulations, all of which may materially and adversely affect the Group’s financial condition and results of operations.

−27− The Group may be subject to legal, litigation and regulatory proceedings.

The Group is involved, from time to time, in legal proceedings arising in the ordinary course of its operations. Please see “Description of the Group — Legal Proceedings” for further information. Litigation arising from any failure, injury or damage from the Group’s operations may result in the relevant member of the Group being named as a defendant in lawsuits asserting large claims against such member of the Group, or may subject such member of the Group to significant regulatory penalties. These risks often may be difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of time. Actions brought against the Group may result in settlements, injunctions, fines, penalties or other results adverse to the Group’s reputation, financial condition and results of operations. Even if the Group is successful in defending against these actions, the costs of such defence may be significant. In market downturns, the number of legal claims and amount of damages sought in litigations and regulatory proceedings may increase. A significant judgment, arbitration award or regulatory action against the Group, or a disruption in the Group’s business arising from adverse adjudications in proceedings against the Group’s directors, senior management or key employees, would materially and adversely affect the Group’s liquidity, business, financial condition, results of operations and prospects.

In addition, the Group may have disagreements with regulatory bodies in the course of its operations, which may subject it to administrative proceedings and unfavourable decrees that result in liabilities. Also, in the event that the Group makes any other investments or acquisitions in the future, there can be no assurance that the Group would not have any exposure to any litigation or arbitration proceedings or other liabilities relating to the acquired businesses or entities.

While the Group believes that it offers its employees competitive compensation and is able to attract and retain qualified personnel, there can be no assurance that the Group can be successful in recruiting or retaining its key managerial personnel and employees.

The success of the Group’s business depends, to a large extent, on the strategic vision of its board of directors, the continued service of key managerial personnel, including directors and key senior executives, and the ability to attract and retain highly skilled personnel. While the Group believes that it offers its employees competitive compensation and is able to attract and retain qualified personnel, there can be no assurance that the Group can be successful in recruiting or retaining its key managerial personnel and employees, in which case the Group’s operations may be adversely affected. In particular, the market for qualified investment professionals is competitive. The Group’s investment professionals possess extensive experience and expertise in investment, are responsible for implementing the Group’s investment strategies, identifying and executing its investments, and have a valuable business network that may lead to investment opportunities. Therefore, the loss of its investment professionals could jeopardise the performance of the Group’s business, which would have a material adverse effect on its business, financial condition and results of operations.

In addition, failure of any of the Group’s key managerial personnel or employees to observe and perform its obligations under its service agreements, or any labour unrest that may cause disruption to the operations of the Group, and any increase in labour costs resulting from such dispute, may have a material adverse effect on the Group’s results of operations and profits. Although the Group has not experienced any major labour disputes, there can be no assurance that the Group will not experience such disputes in the future.

Additionally, the Group relies on third-party contractors to carry out certain business processes, including, but not limited to, certain property development projects. As such, labour shortages or labour disputes of third-party contractors could materially and adversely affect the Group’s business, prospects and results of operations. Industrial action or other labour unrest could directly or indirectly prevent or hinder the progress of the affected construction projects, and, if not resolved in a timely manner, could lead to delays in completing the Group’s projects.

−28− The Group may not be able to detect and prevent fraud or other misconduct committed by its employees, representatives, agents, customers or other third parties.

Following the 18th Chinese Communist Party Congress in 2012, and the wide-reaching anticorruption campaign in the PRC, the Central Leading Group for Inspection Work (the “Inspection Leading Group”), a coordination body set up under the Central Committee of the Chinese Communist Party for the purpose of managing party disciplinary inspections nationwide, has dispatched inspection teams to provinces and central government organs such as ministries and state-owned enterprises, including the Issuer, in the PRC to conduct inspection work on party disciplinary enforcement.

The Group believes that none of the inspection team’s findings in relation to the Issuer has any material adverse effect on the business, financial condition and results of operations of the Group. However, there can be no assurance that there will not be any further investigations or actions against the Group, its officers or employees resulting from the findings of the Inspection Leading Group or other governmental authorities, or that such investigations or actions would not affect the Group as a result.

In addition, 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 by governmental authorities, which in turn affects its reputation. These misconducts could include:

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

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

• improperly using or disclosing confidential information;

• 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 when marketing or selling products;

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

• making or accepting 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 overall compliance. However, such internal control procedures may be unable to identify all incidents of non-compliance or suspicious transactions in a timely manner, or at all. In addition, it is not always possible to detect and prevent fraud and other misconduct, and the precautions undertaken by the Group to prevent and detect such activities may not be effective. There can be no assurance that fraud or other misconduct will not occur in the future. If such fraud or other misconduct does occur, it may cause negative publicity as a result.

−29− The Group may not be able to fully detect money laundering and other illegal or improper activities in the Group’s business operations on a timely basis.

The Group is required to comply with applicable anti-money laundering and anti-terrorism laws as well as other related laws and regulations in the PRC and Hong Kong. These laws and regulations require the Group, among other things, to adopt and enforce “know-your-customer” policies and procedures, and to report suspicious and large transactions to the applicable regulatory authorities. While the Group has adopted policies and procedures aimed at detecting and preventing the use of the Group’s networks for money-laundering activities by terrorists and terrorist-related organisations, and individuals generally, such policies and procedures may not completely eliminate instances where the Group may be used by other parties to engage in money-laundering and other illegal or improper activities due to, in part, the short history of these policies and procedures. If the Group fails to fully comply with applicable laws and regulations, the relevant government agencies have power and authority to impose fines and other penalties on the Group. In addition, the Group’s business and reputation could suffer if customers or clients use the Group’s services for money-laundering or illegal or improper purposes.

The Group’s operations are subject to force majeure events, natural disasters, catastrophe and outbreaks of contagious diseases, such as COVID-19.

Force majeure events, natural disasters, catastrophe, outbreaks of contagious diseases or other events could result in severe personal injury to the Group’s staff, property damage and environmental damage, which may curtail the Group’s operations, cause delays in estimated completion dates for projects, and materially and adversely affect its cash flows and, accordingly, adversely affect its ability to service debt. The Group’s operations are mainly based in Sichuan Province, in particular, Chengdu, which is exposed to potential natural disasters including, but not limited to, earthquakes, flooding, landslides, mudslides and drought. For example, in early June 2020, heavy rains caused by the regional rainy season led to floods severely affecting large areas of southern China. Rains and floods extended to central and eastern China during July 2020 and were described as the worst since 1998. The flooding displaced many people across China and caused direct economic losses. If any of the Group’s developments are damaged by these disasters or severe weather or accidents, catastrophe or other events, the Group’s operations may be significantly interrupted. The occurrence or continuance of any of these, or similar events, could increase the costs associated with the Group’s operations and reduce its ability to operate its businesses effectively, thereby reducing its revenues.

Some of the Group’s contracts with suppliers and other counterparties have force majeure provisions that permit such parties to suspend, terminate or otherwise not perform obligations under their contracts upon the occurrence of certain events including, but not limited to, strikes and other industrial or labour disturbances, terrorism, restraints of government, civil disturbances, or any natural disaster; all being circumstances which are beyond the control of the party claiming force majeure. If one or more of the Group’s suppliers or other counterparties do not perform under their contracts for any extended period of time, due to the declaration of a force majeure event or otherwise, the Group’s results of operations and financial condition could be materially and adversely affected.

Risks of substantial costs and liabilities are inherent in the Group’s principal operations, and there can be no assurance that significant costs and liabilities will not be incurred, including those relating to claims for damages to property or persons. Insurance policies for civil liability and damages taken out by the Group could prove to be significantly inadequate, and there can be no assurance that the Group will always be able to maintain a level of cover at least equal to current cover levels and at the same cost. The frequency and magnitude of natural disasters seen over the past few years could have a significant impact on the capacities of the insurance market and on the costs of civil liability and damages insurance cover for the Group.

−30− The Group’s operations are also subject to outbreaks of contagious diseases. For example, the outbreak of SARS that began in the PRC and Hong Kong in early 2003 had an adverse effect on all levels of business in Hong Kong and the PRC. There have been sporadic outbreaks of the H5N1 virus or “Avian Influenza A” among birds, in particular, poultry, as well as some isolated cases of transmission of the virus to humans. There have also been outbreaks among humans of the influenza A/H1N1 virus globally. On 11 June 2009, the World Health Organisation raised its global pandemic alert to Phase 6 after considering data confirming the outbreak. The outbreak of SARS and the influenza A/ H1N1 virus led to a significant decline in travel volumes and business activities throughout most of the Asian region.

In addition, the outbreak of COVID-19 on a global scale has resulted in restrictions on travel and public transport and prolonged closures of workplaces worldwide, which have adversely affected the economies where such restrictions have been imposed. On March 11, 2020, World Health Organization declared the COVID-19 outbreak a pandemic. As of the date of this Offering Circular, the COVID-19 pandemic has spread to over 200 countries and territories globally with death toll and number of infected cases continuing to rise. The outbreak and spread of COVID-19 has significantly disrupted many aspects of the economy globally, created a negative economic impact and increasing market volatility globally and continued to cause increasing concerns over the prospects of the global capital markets. The COVID-19 pandemic also spread across cities where the Group operates and has resulted in business suspensions, widespread traffic disruptions, travel and other restrictions and quarantines in different places, which led to economic slowdown, labour shortages, supply or delivery chain constraints, price drops and counterparty defaults. These restrictions imposed by the government in an effort to curb the spread of COVID-19 have caused the delay in resumption of the Group’s business after the Chinese New Year holiday. Since April 2020, China and some other countries gradually lifted stay-at-home orders and began to resume work and school at varying levels and scopes. In compliance with local rules and policies, the Group has made smooth progress in the resumption of work and production in various places. The Group’s financial performance in the first half of 2020 has maintained stable. For the six months ended 30 June 2020, the Group’s total operating revenue was RMB1,835.4 million, representing an increase of 2.1 per cent. as compared with the same period in 2019; its net profit was RMB910.6 million, representing an increase of 59.1 per cent. as compared with the same period in 2019.

However, the uncertainties and related risks continue to rise along with the evolution of the pandemic. The Group is continuing to assess the impacts of the ongoing COVID-19 pandemic to its operations and it is difficult to predict how long these conditions will exist and the extent to which the Group may be affected.

The ongoing impact of COVID-19 and occurrence of another outbreak of SARS, the influenza A/H1N1 virus, or of any other highly contagious disease may result in another economic downturn and may have an adverse effect on the overall level of business and travel in the affected areas. It may also disrupt the Group’s business operations, and consequently have an adverse effect on its financial condition and results of operations.

The Group may not be able to adequately protect its intellectual property, which could adversely affect its business operations.

The Group relies on a combination of patents, trademarks and contractual rights to protect its intellectual property. There can be no assurance that these measures will be sufficient to prevent any misappropriation of the Group’s intellectual property. The legal regime governing intellectual property in the PRC is still evolving, and the level of protection of intellectual property rights in the PRC differs from those in other jurisdictions. In the event that the steps that the Group has taken and the protection afforded by law do not adequately safeguard its proprietary technology, the Group could suffer losses due to the sales of competing products that exploit its intellectual property.

−31− The Group may not have adequate insurance to cover all potential liabilities or losses.

Members of the Group maintain insurance which is consistent with market practice in the relevant industries, and in amounts that the Group believes to be adequate. However, the Group faces various risks in connection with its businesses, and may lack adequate insurance coverage, or may have no relevant insurance coverage. There can be no assurance that the insurance maintained by the Group will provide adequate coverage in all circumstances. Although each of the Group’s facilities has a track record of safe operation and none of them has suffered any material hazards over the last three years, there can be no assurance that hazards, accidents or mishaps will not occur in the future. The occurrence of any such incident for which the Group is uninsured or inadequately insured may have a material adverse effect on its business, financial condition and results of operations. In addition, the Group may not always be able to obtain insurance of the type and amount the Group desires at reasonable rates.

Over time, premiums and deductibles for insurance policies may increase substantially, and certain insurance policies could become unavailable or available only for reduced amounts of coverage. If the Group was to incur significant liability for which the Group is not insured or not fully insured, such liability could have a material adverse effect on its financial position and results of operations. In addition, any claims made under any insurance policies maintained by the Group may not be paid in a timely manner, or at all, and may be insufficient if such an event were to occur.

Changes in the organisational structure of the Group may affect the Group’s financial condition and results of operations.

The Group may undergo certain organisational restructuring from time to time, which may involve disposal by the Issuer of certain subsidiaries or affect whether certain subsidiaries of the Issuer will be consolidated in the Issuer’s consolidated financial statements. There can be no assurance that any such organisational restructuring will not have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Members of the Group may become listed and therefore may be subject to regulatory restrictions and listing requirements, and the Issuer’s shareholding or voting interests in such subsidiaries may be diluted.

The shares of one or more members of the Group may become listed on one or more stock exchanges. As a result, the entering into of certain transactions by any such member may be subject to various regulatory restrictions. Intra-group transactions may also be subject to applicable listing requirements, such as the issuance of press notices, the obtaining of independent shareholders’ approval at general meetings and disclosure in annual reports and accounts. In addition, in the event that the shares of one or more subsidiaries of the Issuer become listed on a stock exchange, the Issuer’s shareholding or voting interests in such subsidiaries may be diluted. There can be no assurance that any such dilution in shareholding or voting interests will not have a material adverse effect on the Group’s business, financial condition and results of operations.

The Group’s auditor has received adverse regulatory decisions and warnings issued by relevant PRC authorities in recent years.

Mazars, the Group’s independent auditor, is a registered accounting firm in the PRC supervised by relevant PRC regulatory agencies, including the MOF and China Securities Regulatory Commission (the “CSRC”). In recent years, Mazars received a few administrative penalties and regulatory actions, where the relevant PRC regulatory agencies indicated that there were certain accounting irregularities during the audit processes carried out for its client companies. Mazars has carried out comprehensive, systematic and timely rectification, and reported the rectification to Chinese regulatory authorities in written form.

−32− As confirmed by Mazars, the companies involved in the administrative penalties and regulatory actions above were all unrelated to the Group, the audit work performed for the Group is not affected and the audit reports included elsewhere in this Offering Circular remain valid and effective. Mazars also confirmed that its ability to provide comfort letters and the qualification of the auditors participating in this offering are not affected by such administrative penalties and regulatory actions. However, there can be no assurance that the relevant PRC regulatory agencies would not carry out any review of Mazars’ audit and/or other assurance work conducted in relation to other companies. There is no assurance that there will not be prolonged or broadened investigations conducted by the CSRC or the MOF against Mazars, nor can there be any assurance that further negative news about Mazars would not have a material and adverse effect on the Group.

RISKS RELATING TO THE GROUP’S FINANCIAL SERVICES BUSINESS SEGMENT

As the PRC securities industry is highly competitive, the Group’s securities business may be materially and adversely affected if the Group is unable to compete effectively.

The Group competes with PRC securities firms, commercial banks and other financial institutions in securities business. Commercial banks and other financial institutions are expanding their services to the traditional business of securities firms through continuous product and service innovation, and have been competing with securities firms in certain areas.

The deregulation of the PRC securities industry over foreign ownership in securities companies could also induce more foreign financial institutions to enter into the PRC capital markets. In addition, as the PRC securities industry is gradually evolving, demand for other innovative products and services may emerge, and there is no assurance that the Group will be able to provide such innovative products and services in a timely manner. As a result, if the Group fails to compete effectively against its competitors, its business, results of operations and financial condition may be materially and adversely affected.

The collateral securing the micro and small loans and guarantees provided by the Group may not be sufficient, and the Group may be unable to realise the value of the collateral in a timely manner, or at all.

Although the Group primarily bases its credit decision on the creditworthiness of a customer, depending on the outcome of the Group’s credit evaluation, the Group also require its customers or their counter-guarantors to provide collateral, such as land use rights or building ownership, to secure the Group’s guarantees or loans.

The value of the collateral may decline due to various factors, including those affecting the PRC economy and real estate and financial markets in general. In addition, the procedures for liquidating or otherwise realising the value of collateral of borrowers in the PRC may be protracted or ultimately unsuccessful, and the enforcement process in the PRC may be difficult for legal and practical reasons. Moreover, the Group’s rights over the collateral may be subordinated to other secured creditors with higher priority. If the borrowers providing collateral default, the Group’s security interest in the collateral may not be realised until creditors with higher priority have been paid in full, and the Group may be subject to higher credit risks. There can be no assurance that the Group will be able to realise the value of the collateral as the Group anticipated in a timely manner, or at all.

The Group relies on the creditworthiness of counter-guarantors.

As one of the Group’s risk control measures, the Group normally requires counter-guarantees from the business owners and controlling persons of the borrower as well as their family members. However, the Group may not be able to locate counter-guarantors after a customer defaults, and there can also be no assurance that these persons will have sufficient financial resources to make full payment on the default customer’s behalf, or at all.

−33− Upon a customer default, if the Group is unable to locate the corresponding counter-guarantors, or if the counter-guarantors have limited or no ability to repay, or if the loan is not backed by any counter-guarantor, the Group may have to apply for a court order to attach the assets, such as land, property and machinery, of the default customer and its counter-guarantors, if any, and resort to legal proceedings to enforce its unsecured interests against these assets. In the PRC, the procedures for applying for court orders to attach assets of another person and liquidating or otherwise realising the value of attached assets may be protracted or ultimately unsuccessful, and the enforcement process in the PRC may be difficult for legal and practical reasons. Furthermore, the defaulting customer and its counter-guarantors may have concealed, transferred or disposed of their assets beforehand, making it difficult or impossible for the Group to apply for attachment. Where the assets attached are mortgaged and registered in favour of third parties, such as a bank or another secured creditor, the Group’s interests will be ranked behind these third parties, and the Group’s unsecured rights may not be enforced until secured creditors are paid in full, thereby limiting the amount recovered, or even preventing the Group from benefiting from such assets.

As the Group’s customers are primarily SMEs and microenterprises, the Group’s business is subject to greater credit risks and the Group’s credit risk management may not be adequate to protect against customer defaults.

The business of providing guarantees or loans involves a variety of risks, including the risk that the loans the Group has guaranteed or made will not be repaid on time or at all, and the Group’s risk management procedures may not fully eliminate these risks.

The Group primarily focuses on the SME and microenterprise sector in the PRC. SMEs and microenterprises, as compared with large enterprises that operate in the same industries, may have a lower market share, more limited financing channels and higher financing cost, and may be subject to significant variations in operating results because they often engage in rapidly evolving and volatile businesses and industries, require additional capital to support their operations and expansion or to strengthen their competitive position, and otherwise may have a weaker financial position or be adversely affected by changes in the business cycle. The Group’s SME and microenterprise customers may have weak accounting controls and lack the expertise and resources to prepare accurate audited financial statements on which the Group relies to evaluate their creditworthiness. As a result, they may be unable to meet collateral requirements typically imposed by banks in the PRC when such banks extend loans to corporate borrowers. Various factors may affect an SME’s or a microenterprise’s ability to meet its interest payments to the Group. Such factors include the failure to meet its business plan, a downturn in its industry and negative economic conditions. Accordingly, SMEs and microenterprises may pose increased risks relating to default relative to large enterprises.

The Group may be unable to effectively mitigate its credit risk and maintain its asset quality.

The sustainability of the Group’s business and future growth depends largely on its ability to effectively manage its credit risk and maintain the quality of its receivables portfolio. As such, any deterioration in the Group’s asset quality or impairment in the collectability of the Group’s receivables could materially and adversely affect the Group’s business, prospects, financial condition and results of operations.

In light of the continuation of downturn economic pressure in the PRC, the Group may experience a certain level of decline in the quality of its receivables portfolio due to the short-term liquidity problems of its customers, which in turn are caused by both internal and external factors commonly happening in the general economy and faced by some of the Group’s existing and potential customers, including: (1) the tightened availability of bank financing which may otherwise be available to some of the Group’s customers; (2) some of the Group’s customers’ upstream customers, many of which are state-owned enterprises, may defer settlement with them amidst very stringent internal control requirements; and (3) some of the Group’s customers may voluntarily reduce their operation scales during a prolonged economic downturn.

−34− The Group seeks to manage its credit risk exposure through customer due diligence, credit approvals, establishing credit limits, requiring security measures and portfolio monitoring. While these procedures are designed to provide the Group with the information needed to implement adjustments where necessary, and to take proactive corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk. In addition, the business results in the SME and microenterprise sector may be adversely affected by turmoil in regional financial markets, such as has been widely reported in Wenzhou and Henan in recent years, 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 banks or other financial institutions to SMEs and microenterprises in the PRC, and thus may subject them to heightened liquidity risks. There can be no assurance that the Group’s credit risk management system will be effective in protecting the Group from such unexpected credit risk exposure.

The Group’s business model could be negatively affected by changes and fluctuations in the banking industry.

The Group’s business model is premised on the fact that SMEs and microenterprises are generally underserved by the banking industry because commercial banks in the PRC have been reluctant to lend to SMEs and microenterprises without credit support, such as third-party guarantees, or adequate collateral of tangible assets, and the Group believes that they will remain so in the foreseeable future. This has created opportunities for the Group to develop and expand its business. However, new trends in the banking industry or the applicable regulatory requirements may alleviate the high transaction costs or the lack of collateral and public information generally associated with bank financing to SMEs and microenterprises in the PRC or otherwise make this business more attractive to banks. In the event that commercial banks begin to compete with the Group by making loans to SMEs and microenterprises on an unsecured basis or require a lower level of credit guarantee in return for higher risk-based interest rates, the Group may experience less demand for its guarantee services and greater competition with respect to its business segment of provision of micro and small loans. In addition, direct competition with the Group’s cooperating banks will also undermine the Group’s relationship with them, and adversely affect the Group’s business, results of operations and prospects.

In addition, the Group’s business may also be subject to the factors affecting the banking industry, such as the spike in the interbank rates and the subsequent cash shortage fears as reported in the second and third quarters of 2013, as well as the increasing non-performing loan ratios as reported by the banking industry in 2013. Such factors adversely affecting the banking industry may result in a liquidity crunch and the subsequent reductions in the amount of, or tightened approval requirements for, loans available to the Group’s customers or the Group. As a result, the Group may experience reduced demand for its guarantees and less available funding. Furthermore, if the Group’s customers’ businesses are negatively affected due to the cash shortage or tightened liquidity, the Group’s customer default risk may increase, which may materially and adversely affect the Group’s financial condition or results of operations.

The Group’s provisions for bad debts may not be adequate to cover actual losses, and may have a material adverse impact on the Group’s business, financial condition and results of operations.

For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the Group’s provisions for bad debts for its account receivables amounted to approximately RMB16.1 million, RMB7.1 million, RMB7.6 million, RMB6.6 million and RMB8.3 million, respectively. The amount of allowance is determined on the basis of its internal provisioning procedures and guidelines, taking into account a number of factors, such as the nature and industry-specific characteristics of the Group’s customers, their creditworthiness, financial conditions and trends, write-off experience, repayment ability, delinquencies, historical default rates, the anticipated realisable value of any collateral, regional economic conditions, government policies, interest rates and other factors, and the applicable PRC rules and regulations governing provisions for losses. As the Group’s provisions require significant judgment and estimation, and since many of

−35− these factors are beyond the Group’s control, its provisions for bad debts may not always be adequate to cover actual losses in its business operations. The Group’s provisions may prove to be inadequate if unforeseen or adverse changes occur in the PRC economy or other economies in which the Group operates, or if other events adversely affect specific customers, industries or markets. And if the Group’s judgment and estimation differ from actual events, the Group’s provisions may not be adequate to cover its actual losses, and it may need to set aside additional provisions, which could materially and adversely affect the Group’s profitability.

In addition, the Group’s guarantee business provides credit guarantees to its customers for their loans from banks or other financial institutions in return for a service fee. Under such guarantee contracts, customers are required to provide collateral in favour of the Group, such as land use rights and property ownership, as counter-guarantees to secure the guarantees. When a customer defaults on the underlying loans, the counter-party is entitled to request the Group to assume relevant guarantee responsibilities. When a request is made, it would result in the Group’s obligations under the guarantee contracts becoming due and payable. The Group may sometimes, in line with industry practice, enter into negotiations with the relevant banks or financial institutions regarding the amount and timing of repayment of the outstanding amounts due under the guarantee contracts, however, counter-parties may also adopt other legal remedies to obtain payment, such as adopting litigation to recover any outstanding sums under any guarantees that are due and payable.

The Group also maintains a reserve fund which provides for its guarantee obligations entered into by the Group’s guarantee business. As at 30 June 2020, the amount that is maintained in the reserve fund is approximately RMB0.84 billion, and the amount that is maintained in the reserve fund is in compliance with applicable PRC laws and regulations, as well as in compliance with PRC GAAP. However, there can be no guarantee that the reserve fund will be adequate at all times to cover all outstanding amounts due under the guarantee contracts which the Group’s guarantee business enters into. In the event the reserve fund is not adequate to cover outstanding amounts under the guarantee contracts, the Group’s business, financial condition or results of operations may be adversely affected.

The Group has limited information regarding the SMEs, microenterprises and individuals to which it provides its financial services, and its ability to perform customer due diligence or detect customer fraud may be compromised as a result.

The Group’s credit evaluation depends primarily on customer due diligence. There is limited information publicly available about SMEs and microenterprises. For example, the accounting records or other financial information of the Group’s customers might not have been well-maintained, their business model and procedures might not have been documented and they may not have as effective internal controls as larger corporate entities. The Group relies on its business department to conduct due diligence in respect of its customers and to obtain and verify the information necessary to enable the Group to make credit evaluations. Lack or inadequacy of information may not only result in additional efforts and related costs, but also undermine the effectiveness of the Group’s customer due diligence. There can be no assurance that the Group’s customer due diligence will uncover all material information necessary for the Group to make a fully-informed decision, nor can there be any assurance that the Group’s due diligence efforts will be sufficient to detect fraud committed by the Group’s customers. If the Group fails to perform thorough due diligence or discover customer fraud or intentional deceit, the quality of the Group’s credit evaluation may be compromised. A failure to effectively measure and limit the credit risk associated with the Group’s guarantee and loan portfolio could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

In addition, the Group may be unable to monitor its customers’ actual use of the financing which the Group has guaranteed or provided, or to verify if the Group’s customers have other undisclosed private money or borrowings. The Group may not be able to detect its customers’ suspicious or illegal transactions, such as money laundering activities in the Group’s business, and the Group may suffer financial and/or reputational damage as a result.

−36− The development and implementation of anti-money laundering laws in the PRC may increase some of the Group’s members’ obligations to supervise and report transactions with their customers, expose some of the Group’s members to potential administrative sanctions for non-compliance or potential criminal measures for violation of criminal law, and increase some of the Group’s members’ compliance efforts and costs.

PRC laws and regulations relating to anti-money laundering have evolved significantly in recent years, and may continue to develop. Some members of the Group are required to supervise and report transactions with their customers for anti-money laundering or other purposes, and have implemented procedures required by the relevant laws and regulations. The development and implementation of anti-money laundering laws in the PRC may further increase the Group’s compliance efforts and costs, and may expose some members of the Group to potential administrative sanctions if they fail to comply with their internal anti-money laundering procedures, fail to establish and/or implement the required procedures, or otherwise fail to comply with the relevant laws and regulations, as amended and updated from time to time, or potential criminal measures if they violate the relevant provisions of the PRC criminal law. These may, in turn, materially and adversely affect the Group’s reputation, business, results of operations and financial condition.

The Group’s business, financial condition and results of operations may be materially and adversely affected by any inability to effectively mitigate credit risk and maintain the quality of its assets and lease receivables portfolio.

The sustainability of the Group’s business and future growth depends largely on its ability to effectively manage its credit risk and maintain the quality of its assets and lease receivables portfolio. As such, any deterioration in the quality of its assets or impairment in the collectability of its lease receivables could materially and adversely affect its business and results of operations. The Group may not be able to effectively control the level of its non-performing assets in its current lease receivables portfolio or effectively control the level of new non-performing assets in the future. The amount of the Group’s non-performing assets may increase in the future due to a substantial increase in its lease contract values, a deterioration in the quality of its lease receivables portfolio, or a decline in the quality of future lease receivables.

The quality of the Group’s lease receivables portfolio may deteriorate for a variety of reasons, including factors beyond the Group’s control, such as a slowdown in the economic growth of the PRC or global economies, a recurrence of a global credit crisis, or other adverse macroeconomic conditions, which may result in operational, financial and liquidity problems for the Group’s customers thereby affecting their ability to make timely lease payments. If the level of the Group’s non-performing assets and/or impaired lease receivables increases, the Group’s business, financial condition and results of operations may be materially and adversely affected.

Fluctuations in equipment prices may adversely affect the Group’s operations and business.

The Group currently operates its financial leasing business by targeting industries which it believes have sustainable growth potential, such as public utilities, engineering construction and industrial equipment. However, there can be no assurance that the demand for financial leasing services in such target industries will remain sustainable. In particular, rapid increases in equipment prices may reduce overall demand and, accordingly, reduce the Group’s ability to generate new contracts. Moreover, reductions in equipment prices may also affect the Group’s ability to recover the related lease receivables due to the increasing likelihood of default by its customers. In particular, the price at which the Group is able to sell any asset underlying its leases may be lower than the price at which it acquired such asset, which could result in a material adverse effect on the Group’s business, results of operations and financial condition.

−37− The Group has mortgaged certain lease receivables to secure its borrowings.

The Group has mortgaged certain of its lease receivables to secure some of its bank loans. If the Group defaults on such bank loans, the lenders may foreclose such lease receivables the Group has mortgaged, and claims of such lenders may have priority over the claims of other unsecured creditors. Any such defaults may therefore have an adverse effect on the Group’s assets, financial condition, reputation and relationship with its customers. Although the terms of the Group’s indebtedness limit the Group’s ability to incur certain liens, there can be no assurance that the Group will not mortgage its lease receivables to secure its borrowings in the future. There can also be no assurance that the Group will not default on any of its borrowings in the future.

The value of guarantees securing the Group’s leases, and the assets underlying its leases which are disposed of upon repossession, may be inadequate to cover related lease receivables.

A significant portion of the Group’s leases to its customers are secured by guarantees. To mitigate the risk of default on lease payments, the Group usually requests the lessees to provide guarantees for the leases. However, such guarantees are negotiated on a case-by-case basis, depending on the nature of the business of the particular lessee. In the event of any material default on the lease payment terms, the Group is contractually entitled to enforce its security rights over any guarantee, and/or to repossess and dispose of the assets underlying its leases to realise their value. However, the value of such assets underlying such leases to be disposed of may decline and may be materially and adversely affected by a number of factors, such as damage, loss, oversupply, devaluation or reduced market demand. Similarly, a significant deterioration in the financial condition of guarantors under the Group’s guaranteed leases could significantly decrease any amounts which the Group may recover under such guarantees.

The Group’s policies require periodic internal re-evaluation of assets underlying its leases for impairment testing purposes. If the value of such assets underlying the Group’s leases proves to be inadequate to cover the related lease receivables, the Group may need to obtain additional security from its customers or other sources, and there can be no assurance that it will be able to do so.

Any decline in the value of such guarantees or assets underlying the Group’s leases, or the Group’s inability to obtain additional security, may result in impairment losses and require the Group to make additional impairment provisions against its lease receivables, which may, in turn, materially and adversely affect its business, financial condition and results of operations.

The Group may not be able to successfully enforce its rights to the underlying guarantees to its leases, or enforce its rights to repossess leased assets.

In the PRC, the procedures for enforcing the Group’s rights to a guarantee or to repossess and dispose of the assets underlying its leases could be time-consuming (the whole process may take several months) and, in practice, it may be difficult to enforce the guarantee or repossess and dispose of assets underlying the Group’s leases. Although the Group could apply to a PRC court in accordance with the PRC Civil Procedure Law (《中華人民共和國民事訴訟法》) for the enforcement of a guarantee or the repossession of the assets underlying the Group’s leases upon default, it is uncertain whether any judgment made by local courts would be enforceable due to uncertainties of the PRC legal system governing such enforcement. Therefore, upon any default of any lessee or any guarantor under the Group’s lease, if the Group is unable to successfully enforce its right in respect of any guarantee related to any assets underlying its leases, or to repossess and dispose of leased assets on a timely basis, it may have a material adverse effect on its asset quality, financial condition or results of operations.

−38− The limitations of the Group’s due diligence procedures and analytical approaches, as well as other factors beyond its control, may affect the Group’s judgments and valuation regarding the acquisition-and-disposal of distressed debt assets.

Before acquiring any distressed debt asset, the Group conducts due diligence that it considers reasonable and appropriate, based on the facts applicable to each distressed debt asset acquisition. The due diligence that the Group has conducted, or will conduct, with respect to any opportunity to acquire distressed debt assets may not reveal all relevant facts that are necessary or useful in evaluating such opportunity, which could cause the Group to make erroneous judgment about the risks of such assets. In particular, when the Group acquires distressed debt assets, the Group may be unable to fully identify defects in the pre-existing creditor rights, potential claims by other relevant parties in connection with such distressed debt assets, or defects in the procedures creating a guarantee, which could materially and adversely affect the Group’s ability to enforce its rights and realise the value of collateral, and even subject it to litigation risks.

There are no readily ascertainable market prices for most of the distressed debt assets that the Group acquires. When determining the acquisition price of distressed debt assets, the Group’s in-house valuation team and/or qualified independent valuers will consider various factors, including: (i) its due diligence on the quality of distressed debt assets; (ii) estimated costs associated with the management or disposal of such debt assets; and (iii) market conditions and competitive dynamics. The Group’s due diligence strategy and selection process for acquiring distressed debt assets may not be successfully implemented, which may result in unsatisfactory returns or losses from its investment.

The valuation methods adopted by the Group’s in-house valuation team and/or qualified independent valuers to appraise the value of distressed debt assets involve subjective judgments, assumptions and opinions, which may not be accurate or correct. Given the complexity of its investment strategies, the Group typically utilises some analytical approaches with reference to the information and data provided by the sellers of distressed debt assets or third parties in pricing. In the event that these analytical approaches, data and information prove to be incorrect, inaccurate, misleading or incomplete, any decisions made in reliance thereon may expose the Group to potential risks. The Group may make unsound acquisition decisions, including acquiring distressed debt assets at prices higher than the reasonable market level, due to its failure to accurately determine reasonable market prices for distressed debt assets.

The success of future development of the business of distressed debt assets is subject to the Group’s ability to accumulate business experience, and to change in laws, regulations and policies.

The Group’s experience or knowledge in handling the acquisition of distressed debt assets may be insufficient, which may affect its ability to assess the quality of distressed debt assets, and its ability to prevent legal disputes with its transaction counterparties. In addition, the Group may not be able to make appropriate judgments in respect of the quality of its distressed assets and future income, due to the lack of sufficient historical data, or inappropriate appraisal approaches to such assets.

Furthermore, the laws, rules and policies related to the acquisition of distressed debt assets from non-financial enterprises may change from time to time, subject to the macroeconomic policies of the PRC Government and the development of the distressed asset management industry. If the Group fails to manage these risks and challenges effectively, the Group’s non-financial enterprise distressed debt assets business could be materially and adversely affected.

−39− Due to competition in the acquisition of distressed debt assets, the Group may need to purchase distressed debt assets at higher costs.

In respect of the acquisition of distressed debt assets, the Group faces competitive pressure from the four asset management companies (“AMC”) in the PRC. Meanwhile, as relevant PRC regulatory authorities enhance their regulations on the minimum capital requirements of AMCs, the adequacy of capital becomes one of the main factors determining the AMCs’ capacity for acquisition of distressed debt assets. The four AMCs in the PRC may have more sufficient capital and lower cost of capital than the Group, providing them with stronger capacity for acquisition of distressed debt assets.

As various provinces and cities continue to establish local asset management companies, the number of the Group’s competitors acquiring distressed debt assets may continue to increase. The CBIRC has approved local asset management companies to conduct business of bulk acquisition of distressed debt assets, which involves a number of provinces and cities. Such local asset management companies can participate in the acquisition of distressed assets of financial institutions in batches within their respective provinces, autonomous regions and municipalities. Financial institutions, such as banks, trusts, finance companies, and financial leasing companies can transfer distressed debt assets in batches to those local asset management companies in accordance with the relevant laws, administrative regulations and requirements.

Given the competitive pressures from the four AMCs and local asset management companies in respect of the acquisition of distressed debt assets, it is possible that the Group may need to purchase distressed debt assets at higher costs.

The Group may not be able to realise the value of its distressed debt assets as expected, and its ability to dispose of distressed debt assets is subject to the limited methods of disposal of distressed debt assets in the PRC.

The amount of income the Group generates from its distressed debt assets depends on various factors, many of which are beyond the Group’s control, including the economic conditions and market conditions in the PRC and global markets, and changes in the relevant PRC policies, laws and regulations. Adverse changes in these factors could lead to deterioration in the financial condition and the repayment capability of the companies in which the Group holds distressed debt assets, or make it difficult for the Group to realise the expected value of the distressed debt assets. Income from fair value changes on distressed debt assets includes (i) realised income from fair value changes on distressed debt assets at fair value through profit or loss, and (ii) unrealised income from fair value changes of such distressed debt assets. There is no assurance that the value of distressed debt assets the Group acquired will not decrease, or that the Group will achieve the returns from disposing of its distressed debt assets as expected, in part, or at all. In addition, the Group may seek to realise the value of distressed debt assets through litigation or arbitration. However, there is no assurance that the Group can achieve the outcome as expected.

The Group realises the value of distressed debt assets primarily through debt collection and litigation, debt restructuring, assets for debt repayment, negotiated transfer and asset exchange. Given that the distressed debt asset management industry in the PRC is expected to further evolve, certain innovative financing and disposal methods to hedge against the loss arising from, and to preserve the value in, distressed debt assets may not be available for the Group. In addition, the Group’s distressed debt asset management is subject to existing rules, regulations and policies, which may change from time to time, based on the development of the industry. Newly introduced disposal methods may need further improvement before they are proven effective, and there are legal uncertainties with respect to new methods prior to the promulgation of rules, regulations and policies governing such new methods.

−40− Although the Group believes its disposal methods are in compliance with applicable rules, regulations and policies, the regulatory authorities may take different views, which could restrict or prevent the Group from using specific methods of distressed debt asset disposal, and/or result in fines and other penalties.

RISKS RELATING TO THE GROUP’S FINANCIAL INFRASTRUCTURE DEVELOPMENT AND OPERATION BUSINESS SEGMENT

Any failure of the Group’s key contractors may have an adverse effect on the Group’s business.

The Group engages contractors for the provision of various services, including, but not limited to, property development projects. There can be no assurance that the services rendered by the contractors will always be satisfactory and up to the standard specified in the relevant contracts. In addition, the Group is also exposed to the risk that its contractors may require additional capital to complete an engagement in excess of the price originally tendered, and the Group may have to bear additional costs as a result. If any of the key contractors fails to perform its contractual obligations, the Group’s operations, business and financial condition may be materially and adversely affected.

In addition, there is a risk that the Group may not be able to find suitable alternative contractors at commercially reasonable contract terms, if at all, if the contracts with its current contractors terminate, or its current contractors do not renew their expired contracts. This may result in delays in the completion of the Group’s projects, or incurrence of additional costs, which could materially and adversely affect the Group’s business, financial condition and results of operations.

The Group is subject to project development risks and cost overruns, and delays may adversely affect its results of operations.

There are a number of construction, financing, operating and other risks associated with real estate development in the PRC. Construction projects that the Group undertakes typically require substantial capital expenditure during the construction phase. Please also see “— Risks relating to the Group’s financial infrastructure development and operation business segment — The relocation of indigenous residents and businesses on the sites where the Group’s projects are located may result in delays in its project development and/or increases in its project development costs” for further information. Any of these instances could give rise to delays in the completion of the Group’s real estate development projects, which in turn could lead to cost overruns. The Group’s real estate development projects have also been delayed by the prolonged closures of workplaces and construction sites due to the outbreak of COVID-19 in the first half of 2020. Although the Group has taken measures to resume construction work, construction delays can result in loss of operating revenue. In addition, as construction costs for new projects have generally increased due to factors that are generally beyond the Group’s control, construction delays may further increase such costs. Although the majority of the Group’s real estate development projects have been completed on schedule, there can be no assurance that this will remain the case or that future construction projects will be completed on time, or at all, and generate satisfactory returns.

The PRC government may impose fines or penalties on the Group or revoke the land use rights with respect to certain idle land held by the Group.

Under applicable PRC laws and regulations, the PRC government may impose an idle land fee equal to 20 per cent. of the land premium or allocation fees if (i) the Group does not commence development on the land held by the Group for more than one year after the date specified in the relevant land use rights grant contract, (ii) the Group commences development on an area which is less than one-third of the area granted, (iii) the capital invested in the development is less than one-fourth of the total investment approved for the development, or (iv) the development is suspended for more than one year without governmental approval. The PRC government may revoke the land use rights certificate without compensation if the Group does not commence development for more than two years after the date specified in the relevant land use rights grant contract without compelling causes.

−41− 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 and Resources and other authorities are required to research and commence the drafting of implementation rules concerning the levy of land appreciation fees on idle land. In addition, in August 2009, the Ministry of Land and Resources (now knowns the Ministry of Natural Resources) issued the Notice on Restricting the Administration of Construction Land and Promoting the Use of Approved Land ( 《關於嚴格建設用地管理促進批而未用土地利用的通知》) which reiterated its policy on idle land.

As at the date of this Offering Circular, the Group does not hold any land that has not commenced development within the time stipulated in the relevant land use rights grant contracts. However, the Group may have idle land in the future, and the imposition of fines and penalties in relation to any idle land could have a material and adverse effect on the Group’s business, financial condition and results of operations.

The relocation of indigenous residents and businesses on the sites where the Group’s projects are located may result in delays in its project development and/or increases in its project development costs.

Some of the projects developed by the Group in the past involved relocation of indigenous residents and businesses, and the Issuer believes that similar situations may recur when the Group develops its future projects. If any indigenous resident or business is dissatisfied with the relocation compensation and refuses to move, such indigenous resident or business shall apply to the relevant government authority for its mediation or determination on the relevant relocation compensation matters. The relevant government authority will then make a decision as to the proper relocation compensation and timetable. There can be no assurance that the relocation of indigenous residents or businesses will proceed smoothly, or that they will agree to the compensation. In addition, the amount of compensation to be paid is subject to PRC governmental regulation, and can be changed at any time. Any delays affecting such relocations of these indigenous residents or businesses may result in delays in the Group’s project development schedules and/or increases in its project development costs, any of which could have a material adverse effect on its business, financial condition and results of operations.

Non-compliance with environmental regulations, including those to be implemented in the future, may result in material adverse effects on the Group’s results of operations.

A variety of general and industry-specific environmental laws and regulations apply to the Group’s operations, such as damage caused by air emissions, noise emissions, waste water discharges, waste pollution and solid and hazardous waste handling and disposal. Costs and liabilities relating to compliance with applicable environmental laws and regulations are an inherent part of the Group’s real estate development business. These laws can impose liability for non-compliance or clean-up liability on the generation of hazardous waste and other substances from the Group’s business operations that are disposed of either on- or off-site, regardless of fault or the legality of the disposal activities. The Group may also be required to investigate and remedy contamination at its properties, or where the Group conducts operations, including contamination that was caused in whole, or in part, by previous owners of properties.

In addition, environmental laws and regulations are becoming increasingly stringent, and may, in the future, impose onerous obligations on the Group or significant penalties for non-compliance. While the Group intends to comply with applicable environmental legislation and regulatory requirements, it is possible that such compliance may materially restrict the operation of its business and/or result in significant costs for the Group.

In addition to potential clean-up liability, the Group may become subject to monetary fines and penalties for violation of applicable environmental laws, regulations or administrative orders. This may result in closure or temporary suspension or the imposition of restrictions on the Group’s operations. The Group may become involved in legal proceedings that may require it to pay fines and

−42− comply with more rigorous standards, or it may incur capital and operating expenses for environmental compliance. Third parties may sue the Group for damages and costs resulting from environmental contamination from its properties and/or production facilities. There can be no assurance that changes in laws or regulations, in particular environmental laws and regulations, will not result in the Group having to incur substantial capital expenditure to upgrade or supplement its existing facilities, or becoming subject to any fines or penalties. If the Group were to incur significant fines or penalties, or become involved in protracted litigation, or if any of its facilities were closed down or required to be temporarily suspended, or if any upgrade were required to comply with the applicable laws and regulations, then the Group’s financial condition and results of operations may be adversely affected.

RISKS RELATING TO THE GROUP’S FINTECH BUSINESS SEGMENT

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

The Group’s business depends on the integrity and performance of its business, accounting and other data processing systems. The Group relies heavily on the capacity and reliability of its communications, information and technology systems to support its operations, store and analyse a large amount of information, and to accurately process a vast number of transactions across various markets, and to offer services and products in a timely manner. The Group is also reliant on third-party service providers to provide such information technology services that it requires in order to operate its business from time to time. Operational risks, such as human processing errors or interruption of its financial, accounting, trading, compliance or other data processing systems, whether caused by fire, other natural disaster or pandemic, power or telecommunications failure, act of terrorism or war or otherwise, could result in a disruption of the Group’s business, liability to clients, regulatory intervention, or reputational damage, and thus materially and adversely affect the Group’s business.

In particular, in the ordinary course of the Group’s business, it collects and stores sensitive data and personally identifiable information of its clients and employees in the Group’s data centres and on its networks. The secure maintenance and transmission of this information is critical to its operations. In spite of the Group’s security measures, its information technology and infrastructure may be vulnerable to attacks by hackers, or may be breached due to employee error, natural disasters, power failures, computer viruses, unauthorised access, malfeasance or other disruptions. Any such breach could compromise its networks, and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, or regulatory penalties; or it could disrupt the Group’s operations, damage its reputation, and cause a loss of confidence in its products and services, which could adversely affect the Group’s business.

If the Group’s systems cannot cope with increased demand, or otherwise fail to perform, the Group could experience unanticipated disruptions in business, slower response times and limitation on its ability to monitor and manage data and risk exposures, to control financial and operation conditions, and to keep accurate records. These consequences could result in operating outages, poor operating performance, financial losses, and intervention of regulatory authorities.

Although the Group has also not experienced major system failures and delays in the past three years, there can be no assurance that the Group’s systems will not experience future system failures and delays, or that the measures taken by the Group to reduce the risk of system disruptions are effective or adequate. If internet traffic and communication volume increase unexpectedly, or other unanticipated events occur, the Group may need to expand and upgrade the Group’s technology, systems and network infrastructure. There can be no assurance that the Group will be able to accurately project the rate, timing or cost of any increases, or expand and upgrade the Group’s systems and infrastructure to accommodate any increases in a timely manner.

−43− RISKS RELATING TO THE GROUP’S EQUITY INVESTMENT BUSINESS SEGMENT

A decline in the pace of investments in the funds the Group manages would result in the Group receiving less carried interest.

The carried interest that the Group earns is driven in part by the pace at which the funds the Group manages make investments. Any decline in that pace would reduce the Group’s carried interest, and could make it more difficult for the Group to raise capital. Many factors could cause such a decline in the pace of investments, including the inability of the Group’s investment professionals to identify attractive investment opportunities, competition for such opportunities among other potential acquirers, decreased availability of capital on attractive terms, and the Group’s failure to consummate identified investment opportunities because of business, regulatory or legal complexities, and adverse developments in the PRC or the global economy or financial markets.

Third-party investors in the Group’s funds with commitment-based structures may not satisfy their contractual obligation to fund capital calls when requested by the Group, which could adversely affect a fund’s operations and performance.

The Group depends on investors fulfilling their commitments when the Group calls capital from them in order for those funds to consummate investments, and to otherwise pay their obligations. Any investor that does not fund a capital call would be subject to several possible penalties, including having a significant amount of its existing investment forfeited in that fund. However, the impact of the penalty is directly correlated to the amount of capital previously invested by the investor in the fund, and if an investor has invested little or no capital, for instance, early in the life of the fund, then the forfeiture penalty may not be as meaningful. If investors were to fail to satisfy a significant amount of capital calls for any particular fund or funds, the operation and performance of those funds could be materially and adversely affected.

Disputes with the limited partners of the funds that the Group manages may adversely affect its business, financial condition and results of operations.

The Group acts as the general partner of some of the funds it manages, and may obtain carried interest in addition to management fees the Group typically charges. Disagreements with any of the limited partners in connection with the scope or performance of the Group’s respective obligations under a fund partnership or cooperation arrangement could adversely affect the Group’s ability to implement its business strategies and achieve its investment goals. The limited partners may interpret the obligations of the parties under the partnership or cooperation arrangement differently than the Group does. The Group may have disputes over the carried interest the Group may be entitled to. In addition, the Group may fail to identify appropriate investment opportunities and realise returns for the limited partners. The limited partners may have economic or business interests or goals that are inconsistent with the Group, take actions contrary to the Group’s instructions or requests, or contrary to the Group’s policies or objectives, or be unable or unwilling to fulfil their obligations under the relevant partnership or cooperation agreements. Should any of these difficulties arise, the Group may be unable to derive the benefits it anticipates from such partnerships, and the Group’s business, financial condition and results of operations could be adversely affected.

Difficult market conditions can adversely affect the Group’s business in various ways, including reducing the value or performance of the investments, which could negatively impact the Group’s operating income and cash flow, and adversely affect its financial condition.

The Group’s investment business is materially affected by conditions in the financial markets and economic conditions or events in the PRC and in the world, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls and national and international political circumstances (including wars, terrorist acts or security operations). The Group’s business and value of its investments are also affected by the performance of the companies in which the Group

−44− invests and the market conditions of the industries these companies operate in or are affected by. These factors are outside the Group’s control, and may affect the level and volatility of securities prices and the liquidity and value of its investments. The Group may not be able to manage its exposure to these conditions and/or events.

The Group may be affected by (i) reduced opportunities to exit and realise value from its investments, since a lack of financing makes it more difficult for potential buyers to raise sufficient capital to purchase assets in the Group’s portfolios, (ii) lower than expected returns on investments, which could cause the Group to realise diminished or no profit, and (iii) the fact that the Group may not be able to find suitable investments for it to effectively deploy capital, which could adversely affect the Group’s ability to make new investments because it can generally only raise capital for a new investment following the substantial deployment of capital from the existing investment.

During periods of difficult market or economic conditions or slowdowns (which may be across one or more industries, sectors or geographies), the Group’s portfolio companies may experience decreased operating income, financial losses, credit rating downgrades, difficulty in obtaining access to financing and increased funding costs. These companies may also have difficulties in expanding their businesses and operations or be unable to meet their debt service obligations or other expenses as they become due, including expenses payable to the Group. Negative financial results in the Group’s portfolio companies may result in lower investment returns for its investment, which could materially and adversely affect its operating results and cash flow. To the extent the operating performance of such portfolio companies (as well as valuation multiples) deteriorates or does not improve, the Group may sell those assets at values that are less than it projected, or even at a loss, thereby significantly affecting the Group’s performance, and, consequently, its operating results and cash flow.

The Group may fail to realise any profits from its investment activities, or may be unable to sell its investments for a considerable period of time or to recover its investment costs.

The Group invests in publicly-traded securities from time to time. Its ability to dispose of these investments is heavily dependent on the performance of the securities market, apart from other factors that may affect a publicly-traded company’s financial performance. Market prices of publicly-traded securities tend to be volatile, and subject to significant fluctuations. If the market price of the securities the Group holds declines significantly, the Group may be unable to sell any such securities at a favourable price, if at all, and may lose all or a portion of its investment amount. In addition, holdings of a large number of securities can often only be disposed of over a substantial length of time, exposing the Group’s investment returns to risks of downward movement in market prices during the intended disposition period. Accordingly, the Group may be forced to either sell the securities at lower prices or hold the securities for a considerable period of time, which could have a material adverse effect on the Group’s business, results of operations and financial condition.

RISKS RELATING TO FINANCIAL AND OTHER INFORMATION

The Group’s net profit is mainly contributed by its investment income, which may expose the Group to concentration risk.

For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the Group’s investment income was RMB1,217.3 million, RMB1,281.9 million, RMB1,516.7 million, RMB619.1 million and RMB780.2 million, respectively, representing 137.8 per cent., 124.7 per cent., 118.2 per cent., 108.2 per cent. and 85.7 per cent. of its net profit, respectively, during the same period. The investment income was mainly contributed by Bank of ChengDu Co Ltd (成都銀行股份有限公司)(“Bank of ChengDu”) and Chengdu Rural Commercial Bank, in which the Group has equity participation. There can be no assurance that such joint ventures will operate smoothly or successfully, if at all. If these joint ventures are unable to maintain their current level of profitability, the Group’s profitability, business, financial condition and results of operations may be materially and adversely affected.

−45− The Group’s net cash flow from operating activities are susceptible to significant fluctuations, which could affect its results of operations.

For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the Group’s net cash flows from operating activities were RMB2,768.8 million, RMB3,013.3 million, RMB643.9 million, RMB131.2 million and RMB553.4 million, respectively. The fluctuation in the Group’s net cash flow was due to a number of factors, including the fluctuations in receipt and payment of the costs in relation to construction land indicators collected and paid by Chengdu Agriculture Equity Exchange Co., Ltd. (成都農村產權交易所有限責任公司)(“Agriculture Equity Exchange”). The decrease of the Group’s net cash flows from operating activities in 2019 was due to the decrease of the fund collected and paid on behalf of others and deposit received by the Group in 2019. The closing balance of cash and cash equivalents of the Group decreased from RMB12,567.9 million as at 31 December 2019 to RMB11,930.2 million as at 30 June 2020. The decrease was due to the increase in investment cash outflow.

Although the relevant industries that the Group engages in are expected to provide relatively stable cash inflows, there can be no assurance that the Group will not experience more fluctuation in net cash flows from its operating activities in its property development business and other businesses in the future, which could have a material adverse impact on the Group’s business, financial condition and results of operations.

The Group has significant accounts receivables, and is exposed to credit risks in respect of receivables.

As at 31 December 2017, 2018 and 2019 and 30 June 2020, the Group’s other receivables amounted to RMB4.8 billion, RMB5.3 billion, RMB5.9 billion and RMB4.9 billion, respectively, representing 11.57 per cent., 10.38 per cent., 9.3 per cent. and 7.3 per cent. of its total assets in the same periods, respectively. The Group’s other receivables were mainly comprised of the accounts receivables from Chengdu Xiecheng Asset Management Co., Ltd. (成都市協成資產管理有限責任公司)(“Chengdu Xiecheng”) and Chengdu Xintianyi Investment Co., Ltd. (成都欣天頤投資有限責任公司), two wholly-owned subsidiaries of Chengdu SASAC primarily engaged in the investment in the equity interests in Bank of ChengDu and Chengdu Rural Commercial Bank in which the Group has equity participation, and in publicly listed companies. There are inherent risks associated with the Group’s customers’ ability to make timely payments, and such failure by its customers to make timely payments could materially and adversely affect the Group’s liquidity and, in turn, affect its business, financial condition and results of operations.

The Group’s consolidated financial statements have been prepared and presented in accordance with PRC GAAP, which is different from IFRS in certain respects.

The Group’s consolidated financial statements included in this Offering Circular have been prepared and presented in accordance with PRC GAAP. PRC GAAP is substantially in line with IFRS, except for certain modifications which reflect the PRC’s unique circumstances and environment. Please see “Summary of Certain Differences between PRC GAAP and IFRS” for details. Each investor should consult its own professional advisers for an understanding of the differences between PRC GAAP and IFRS and/or between PRC GAAP and other generally accepted accounting principles, and how those differences might affect the financial information contained herein.

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

The historical financial information is not intended to represent or predict the Group’s results of operations for any future periods. The Group’s future results of operations may change materially if its future growth deviates from the historical trends for various reasons, including factors beyond its control, such as changes in economic environment, PRC environmental rules and regulations, and the

−46− competitive landscape of the industries in which the Group operates its businesses. The Group may also acquire businesses or companies, or dispose of its subsidiaries or assets from time to time in accordance with the Group’s business objectives. Period-to-period comparisons of the Group’s historical operating results must be evaluated in light of the impact of any such transactions.

Certain facts and statistics in this Offering Circular are derived from publications not independently verified by the Issuer, the Joint Global Coordinators, the Joint Lead Managers, the Trustee, the Agents or their respective advisers.

This Offering Circular contains facts and statistics relating to the economy of the PRC and Chengdu, and the industries in which the Group operates. While the Issuer has taken reasonable care to select reputable and reliable information sources, and to ensure that the facts and statistics relating to the PRC and Chengdu economy and the industries in which the Group operates are presented accurately and extracted faithfully from such sources, such facts and statistics have not been independently verified by the Issuer, the Joint Lead Managers, the Trustee, the Agents or their respective advisers and, therefore, none of them makes any representation as to the accuracy of such facts and statistics, which may not be consistent with other information compiled within or outside the PRC.

Due to ineffective calculation and collection methods and other problems, the facts and statistics herein may be inaccurate, or may not be comparable to facts and statistics produced for other economies, and should not be unduly relied upon.

Public corporate disclosure about the Issuer may be limited.

As the Issuer is an unlisted company, there may be less publicly available information about the Issuer than is regularly made available by public companies in certain other countries.

The Group has published and may continue to publish periodic financial information in the PRC pursuant to applicable PRC regulatory rules. Investors should be cautious and not place any reliance on financial information other than that disclosed in this Offering Circular.

From time to time, the Group issues corporate bonds and short-term financing bonds in the PRC. According to applicable PRC securities regulations, the Group is required to publish its periodic financial information to satisfy its continuing disclosure obligations relating to its corporate bonds and short-term financing bonds. The interim financial information published by the Group in the PRC is normally derived from its management accounts and is not audited or reviewed by independent auditors. Certain historical financials that are not included in this Offering Circular may not be directly comparable to the financials contained herein. In particular, the published financial information as at and for the nine months ended 30 September 2020 published by the Issuer in the PRC has not been audited or reviewed by independent auditors. As such, financial information published in the PRC by the Group should not be relied upon by potential purchasers to provide the same quality of information associated with any audited information.

RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

The Group’s business, financial condition, results of operations and prospects could be adversely affected by slowdown in the PRC economy.

Substantially all of the Group’s assets are located in the PRC, and substantially all of the Group’s revenue is derived from its operating activities in the PRC. Therefore, the performance of the PRC economy affects, to a significant degree, the Group’s business, prospects, financial condition and results of operations.

−47− In 2015, the PRC government adopted intensive reforms, with the primary aim of restructuring and rebalancing the PRC economy towards a more sustainable model by focusing more on domestic consumption and away from investment and export-fuelled growth. At the NPC in Beijing in March 2016, Premier Li Keqiang, in his annual policy report, announced the lowering of China’s growth target for the year of 2016 to a growth rate between 6.5 per cent. to 7.0 per cent., from 7.0 per cent. in 2015, and at the NPC in Beijing in March 2017, Premier Li further announced the lowering of China’s growth target for the year of 2017 to a growth rate of 6.5 per cent., from 6.5 per cent. to 7.0 per cent. in 2016, acknowledging that the PRC had entered a new stage of economic development as the country simultaneously deals with an economic slowdown and reforms its economic growth model. At the NPC in Beijing in March 2018, Premier Li announced that the target economic growth rate for the year of 2018 was of 6.5 per cent., and at the NPC in Beijing in March 2019, Premier Li announced the lowering of China’s growth target for the year of 2019 to a growth rate between 6.0 per cent. to 6.5 per cent., from 6.5per cent. in 2018. Premier Li advocated a proactive fiscal policy, and placed an emphasis on wide-ranging reforms continuing the goals set out in the November 2013 reform document. As the PRC government has stated that its top priority is to pursue a range of reforms, the leadership is expected to implement new economic and social policies which may have a material impact on the Group’s businesses and the industries in which the Group operates.

In recent years, as a result of recurring liquidity-tightening in the banking system, alternative lending and borrowing outside of traditional banking practices, generally known as “shadow banking”, has grown to become an integral and significant aspect of the PRC economy. Such alternative lending is loosely regulated and has led to an increase in China’s debt levels, leading to concerns over rising bad debts and financial problems. As some of the funds obtained from shadow banking are being used for investments in speculative and risky products, should a widespread default on such investments occur, this could harm the growth prospects of the PRC economy. In 2014, there were reports of a number of shadow banking defaults in the PRC, resulting in increased scrutiny and oversight by regulators who have proposed draft rules to control the industry. Even if the PRC government increases regulation over such alternative lending and borrowing, there can be no assurance that such regulations will be successful, or that they would not have an adverse impact on the overall loan markets and liquidity in the PRC, which will negatively impact the PRC economy.

According to the statistics released by the National Bureau of Statistics of the PRC, the PRC’s GDP year-on-year growth rate was 6.1 per cent. in 2019, which was a record-low figure since 1990. Although the PRC government has recently taken several measures with the intention of increasing investor confidence in the PRC economy, there can be no assurance that such measures will be effective. There can be no assurance that the PRC government will continue to implement reforms which may conflict with such targeted growth. The Group’s business, financial conditions and results of operations could be adversely affected by the PRC government’s inability to effect timely economic reforms.

On 24 May 2017, Moody’s downgraded China’s sovereign credit rating to A1 from Aa3, and changed its outlook from negative to stable, citing concerns on the country’s rising levels of debt, and expectations of slower economic growth. In addition, on 21 September 2017, S&P Global Ratings (“S&P”) also downgraded China’s sovereign credit rating from AA- to A+, citing concerns on the increasing economic and financial risks in China after a “prolonged period of strong credit growth”.

In addition, the future performance of China’s economy is affected not only by the economic and monetary policies of the PRC government, but also material changes in global economic and political environments as well as the performance of certain major developed economies in the world, such as the United States and the European Union. The United States and China have recently been involved in disputes over trade barriers which have led to what is known as a trade war between the countries. Both countries have implemented or proposed to implement tariffs on certain imported products from the other. Although the United States and China have reached a phase one trade deal on 13 December 2019, there are still unresolved issues and any prolonged tension between the two countries over trade policies could significantly undermine the stability of the global and China’s economy. Moreover, on

−48− 23 June 2016, the United Kingdom voted in a national referendum to withdraw from the European Union, and on 31 January 2020, the United Kingdom formally withdrew from the European Union with the transition period for Brexit ending on 31 December 2020. In December 2020, the United Kingdom, the European Union and the European Atomic Energy Community concluded the EU-UK Trade and Cooperation Agreement, which is provisionally applicable since 1 January 2021 and awaits ratification by the European Parliament and the Council of the European Union and legal revision before it formally comes into effect. Given the lack of precedent, there are substantial uncertainties relating to the implementation of the United Kingdom’s exit and its impact on the economic conditions of other part of the world, such as China’s, including but not limited to further decreases in global stock exchange indices, increased foreign exchange volatility (in particular a further weakening of the pound sterling and euro against other leading currencies) and a possible economic recession involving more countries and areas. Therefore, there exists continued uncertainty for the overall prospects for the global and the PRC economies this year and beyond.

Any slowdown in the PRC economy may increase the Group’s exposure to material losses from its investments, decrease the opportunities for developing the Group’s businesses, create a credit-tightening environment, increase the Group’s financing costs, or reduce government subsidies to the Group, any of which may result in a material adverse effect on the Group’s business, results of operations and financial condition.

Economic, political and social conditions in the PRC and government policies could affect the Group’s business and prospects.

The PRC economy differs from the economies of developed countries in many respects, including, among other things, level of government involvement, level of economic development, growth rate, foreign exchange controls and resource allocation.

The PRC economy is in the process of transitioning from a centrally-planned economy to a more market-oriented economy. For more than three decades, the PRC government has implemented various economic reform measures to utilise market forces in the development of the PRC economy. In addition, the PRC government continues to play a significant role in regulating certain industries and the economy through numerous policy measures. The Group cannot predict whether changes in the nation’s economic, political or social conditions, or in any laws, regulations and policies, will adversely affect its business, financial condition or results of operations.

In addition, many of the economic reforms carried out by the PRC government are unprecedented or experimental, and are expected to be refined and improved over time. Other political, economic and social factors may also lead to further adjustments of its reform measures. This refining and adjustment process may not necessarily have a positive effect on the Group’s operations and business development.

The Group’s business, financial condition and results of operations may be adversely affected by:

• changes in PRC’s political, economic and social conditions;

• changes in policies of the PRC government, including changes in policies in relation to the Group’s business segments;

• changes in laws and regulations or the interpretation of laws and regulations;

• measures that may be introduced to control inflation or deflation;

• changes in the rate or method of taxation;

−49− • the imposition of additional restrictions on currency conversion and remittances abroad; and

• a reduction in tariff protection and other import restrictions.

If the PRC’s economic growth slows down, or if the PRC economy experiences a recession, the Group’s business, results of operations and financial condition could be materially and adversely affected.

The operations of the Group may be affected by inflation and deflation within the PRC.

Economic growth in the PRC has historically been accompanied by periods of high inflation. Increasing inflation rates were caused by many factors beyond the Group’s control, such as rising production and labour costs, high lending levels, changes in national and foreign governmental policies and regulations as well as movements in exchange rates and interest rates. It is impossible to accurately predict future inflationary trends. If inflation rates rise beyond the Group’s expectations, the Group may be unable to increase the price of its services and products in amounts that are sufficient to cover its increasing operating costs. Further inflationary pressures within the PRC may have a material adverse effect on the Group’s business, financial condition or results of operations.

Recently, concerns have arisen over deflationary pressures in the PRC as a result of weak domestic demand and a slowing economy. Inflation rates within the PRC have been on a downward trend in recent years. A prolonged period of deflation may result in falling profits, closure of plants and shrinking employment and incomes by companies and individuals, any of which could adversely affect the Group’s business, financial condition or results of operations.

The PRC legal system is evolving and may cause uncertainty which could limit the legal protection available to, or against, the Group.

The Group is generally subject to laws and regulations of the PRC. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference, but they have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to market participants in the PRC. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the enforcement of these laws, regulations and rules may be uncertain and their interpretation may not be as consistent or predictable as compared to other more developed jurisdictions. Such uncertainty may impede the Group’s ability to enforce contracts that the Group has entered into with its investors, creditors, customers, suppliers and business partners. The Group cannot predict the effect of future developments in the PRC legal system or the integration of such developments under the legal systems of other jurisdictions, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, the pre-emption of local regulations by national laws, or the overturn of local government’s decisions by itself or by provincial or national governments. This uncertainty may limit legal protections available to, or against, the Group.

In addition, any litigation in the PRC may be protracted, and could result in substantial costs, and may divert the Group’s resources or management’s attention, all of which could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations.

Certain PRC regulations governing PRC companies are less developed than those applicable to companies incorporated in more developed countries.

Substantially all members of the Group are established in the PRC, and are subject to PRC regulations governing PRC companies. These regulations contain certain provisions that are required to be included in the joint venture contracts, articles of association and all other major operational agreements of these PRC companies, and are intended to regulate the internal affairs of these

−50− companies. These regulations, in general, and the provisions for protection of shareholders’ rights and access to information in particular, are less developed than those applicable to companies incorporated in Hong Kong, the United States, the United Kingdom and other developed countries or regions.

It may be difficult to effect service of process upon, or to enforce against, the Issuer or its directors or members of the Issuer’s senior management who reside in the PRC in connection with judgments obtained in non-PRC courts.

Substantially all of the Group’s assets and the Group’s members are located in the PRC. In addition, substantially all of the assets of the Issuer’s directors and the members of its senior management may be located within the PRC. The PRC has not entered into treaties or arrangements providing for the recognition of judgments made by courts of most other jurisdictions. Therefore, it may not be possible for investors to effect service of process upon the Issuer or its directors or members of its senior management inside the PRC.

On 14 July 2006, Hong Kong and the PRC entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgment in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements Between Parties Concerned (《最高人民法院關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排》) (the “Reciprocal Arrangement”), pursuant to which a party with a final court judgment rendered by a Hong Kong court requiring payment of money in a civil and commercial case according to a “choice of court” agreement in writing may apply for recognition and enforcement of the judgment in the PRC. Similarly, a party with a final court judgment rendered by a PRC court requiring payment of money in a civil and commercial case pursuant to a “choice of court” agreement in writing may apply for recognition and enforcement of such judgment in Hong Kong. A “choice of court” agreement in writing is defined as any agreement in writing entered into between parties after the effective date of the Reciprocal Arrangement in which a Hong Kong court or a PRC court is expressly designated as the court having sole jurisdiction for the dispute. Therefore, it is not possible to enforce a judgment rendered by a Hong Kong court in the PRC if the parties in dispute do not enter into a “choice of court” agreement in writing. As a result, it may be difficult, or impossible, for investors to effect service of process against the Issuer’s assets or directors in the PRC in order to seek recognition and enforcement for foreign judgments in the PRC.

On 18 January 2019, the Supreme People’s Court and the Department of Justice of the Hong Kong Special Administrative Region jointly promulgated the Arrangement for Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Cases by the Courts of the Mainland and of the Hong Kong Special Administrative Region《關於內地與香港特別行政區法院相互認可和執行民商 ( 事案件判決的安排》) (the “New Reciprocal Arrangement”), which will become effective when both parties announce a commencement date after the Supreme People’s Court promulgates a judicial interpretation and relevant procedures are completed in the HKSAR. According to the New Reciprocal Arrangement, the Reciprocal Arrangement shall be repealed when the New Reciprocal Arrangement becomes effective; however, parties concerned who have signed a “choice of court” agreement in writing specified in the Reciprocal Arrangement before the New Reciprocal Arrangement becomes effective shall remain governed by the Reciprocal Arrangement.

Furthermore, the PRC does not have treaties or agreements providing for the reciprocal recognition and enforcement of judgments awarded by courts of the United States, the United Kingdom, or most other European countries or Japan. Hence, the recognition and enforcement in the PRC of judgment of a court in any of these jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or even impossible.

−51− The Group is subject to restrictions on the remittance of Renminbi into and out of the PRC, and governmental controls on currency conversion, and may be affected by the risks relating to fluctuations in exchange rates in the future.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies, and the remittance of currency out of PRC. A substantial part of the Group’s revenues is denominated in Renminbi, a portion of which may need to be converted into other currencies in order to meet the Group’s foreign currency obligations, such as payments of principal and interests under the Notes or other foreign currency denominated debt, if any.

Under the existing PRC laws and regulations on foreign exchange, payments of current account items, including profit distributions, interest payments and trade- and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE, provided that certain procedural requirements are complied with. Approval from, or registration with, competent government authorities is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses, such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, take measures to restrict access to foreign currencies for current account and capital account transactions under certain circumstances. If the foreign exchange control system prevents the Group from obtaining sufficient foreign currencies to satisfy the Group’s foreign currency demands, the Group may not be able to pay interests and/or principal to holders of the Notes or other foreign currency denominated debt, if any. In addition, there can be no assurance that new laws or regulations will not be promulgated in the future that would have the effect of further restricting the remittance of Renminbi into or out of the PRC.

The proceeds from the offering of the Notes will be received in U.S. dollars. As a result, any appreciation of Renminbi against U.S. dollars or any other foreign currencies may result in the decrease in the value of the Group’s foreign currency-denominated assets, and the Group’s proceeds from the offering of the Notes. Conversely, any depreciation of Renminbi may adversely affect the Group’s ability to service the Notes.

The value of Renminbi against U.S. dollars and other foreign currencies is subject to changes in the PRC’s policies, as well as international economic and political developments. On 21 July 2005, the PRC government adopted a more flexible managed floating exchange rate system to allow the value of Renminbi to fluctuate within a regulated band that is based on market supply and demand with reference to a basket of currencies. From 21 July 2005 to 17 March 2014, the floating band of interbank spot foreign exchange market trading price of Renminbi against U.S. dollars was gradually widened from 0.3 per cent. to 2 per cent. On 11 August 2015, PBOC adjusted the mechanism for market makers to form the central parity rate by requiring them to consider the closing exchange rate of the last trading date, the supply and demand of foreign exchange, and the rate change at primary international currencies. On 11 December 2015, the China Foreign Exchange Trade System, a sub-institutional organisation of PBOC, published the CFETS Renminbi exchange rate index for the first time, which weighs the Renminbi based on 13 currencies, to guide the market in order to measure the Renminbi exchange rate from a new perspective. In 2016, Renminbi experienced significant depreciation in value against the U.S. dollar but in 2017, and 2018 rebounded and appreciated. Since April 2019, Renminbi has depreciated in value against the U.S. dollar amidst an uncertain trade and global economic climate. On August 5, 2019, the PBOC set the Renminbi’s daily reference rate at above 7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic climate. There is no assurance that the Renminbi will not experience significant fluctuations against the U.S. dollar in the future. It is possible that the PRC Government could adopt a more flexible currency policy in the future, which could result in further and more significant revaluations of the Renminbi against any foreign currency. Any future exchange rate volatility relating to Renminbi or any significant revaluation of Renminbi may materially and adversely affect the earnings and financial position of the Group.

−52− The proceeds from the offering of the Notes will be received in U.S. dollars. As a result, any appreciation of Renminbi against U.S. dollars or any other foreign currencies may result in the decrease in the value of the Group’s foreign currency-denominated assets, and the Group’s proceeds from the offering of the Notes. Conversely, any depreciation of Renminbi may adversely affect the Group’s ability to service the Notes.

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

As at the date of this Offering Circular, the Group has approximately 37,000 employees in total. Some of the Group’s employees are currently represented by labour unions. In addition, employees of some of the Group’s suppliers, contractors or companies in which the Group has investments are, or may become, unionised in the future, or may experience labour instability. Although the Group enjoys good labour relations with its employees, the Group is unable to predict the outcome of any future labour negotiations. Any conflicts with the Group’s employees or contractors and/or their respective unions could have a material adverse effect on its financial condition and results of operations.

On 28 December 2012, the PRC government enacted the Labour Contract Law, which became effective on 1 July 2013. The Labour Contract Law establishes additional restrictions and increases the cost to employers upon termination of employees, including specific provisions related to fixed-term employment contracts, temporary employment, probation, consultation with labour unions, and employee general assembly, employment without a contract, dismissal of employees, compensation upon termination, overtime work, and collective bargaining. According to the Labour Contract Law, an employer is obligated to sign an unlimited term labour contract with an employee if the employer continues to employ the employee after two consecutive fixed-term labour contracts. The employer must also pay compensation to employees if the employer terminates an unlimited term labour contract unless an employee refuses to extend the labour contract with the employee under the same terms or better terms than those in the original contract. Further, under the Regulations on Paid Annual Leave for Employees, which became effective on 1 January 2008, employees who have served more than one year with an employer are entitled to a paid vacation ranging from five to 15 days, depending on their length of service. Employees who waive such vacation time at the request of employers shall be compensated at three times their normal salaries for each waived vacation day. As a result of these protective labour measures or any additional future measures, the Group’s labour costs may increase. There can be no assurance that any disputes, work stoppages or strikes will not arise in the future.

RISKS RELATING TO THE NOTES

The PRC government has no obligation to pay any amount under the Notes.

The PRC government (including Chengdu Government and Chengdu SASAC) is not an obligor and shall under no circumstances have any obligation arising out of or in connection with the Notes. This position has been reinforced by the MOF Circular 23 promulgated on 28 March 2018, which took effect on the same day, and the Joint Circular 706 promulgated on 11 May 2018, which took effect on the same day.

On 6 June 2019, the NDRC promulgated the Circular on Relevant Requirements for the Record-filing and Registration of Foreign Debts Issued by Local State-owned Enterprises ((關於對地方國有企業發行外債申請備案登記有關要求的通知》)(發改辦外資[2019]666號)(“Circular 666”), which emphasizes once again that (i) a local state-owned enterprise shall fulfil responsibilities for repayment for foreign debts in the capacity of independent legal person and shall intensify information disclosure; (ii) a local government or its departments shall not directly repay or undertake to repay foreign debts of a local state-owned enterprise with financial capital, or provide guarantee for the issuance of foreign debts by a local state-owned enterprise; and (iii) it is forbidden to mingle any misleading publicity information probably linked to government credit in documents such as this Offering Circular.

−53− The PRC government (including Chengdu SASAC), as the ultimate shareholder of the Issuer, only has limited liability in the form of its equity contribution in the Issuer. As such, the PRC government does not have any payment obligations under the Notes or the Trust Deed if the Issuer fails to meet its obligations. The Notes are solely to be repaid by the Issuer as an obligor under the relevant transaction documents and as an independent legal person. Investments in the Notes are reliant solely on the credit risk of the Issuer. In the event the Issuer does not fulfil its obligations under the Notes, investors will only be able to claim as unsecured creditors against the Issuer and its assets, and not any other person including the PRC government, Chengdu Government, Chengdu SASAC or any other local or municipal government. As the MOF Circular 23 and the Joint Circular 706 are relatively new, and given the limited volume of published decisions related to these circulars, the interpretation and enforcement of these laws and regulations involve uncertainties.

The ownership and control of the Issuer by the Chengdu SASAC does not provide any assurance on the financial condition of the Issuer. Therefore, investors should base their investment decision only on the financial condition of the Issuer and the Group and base any perceived credit risk associated with an investment in the Notes only on the Group’s own financial information reflected in its financial statements. The Notes are solely to be repaid by the Issuer as an obligor under the relevant transaction documents and as an independent legal person.

The Notes are unsecured obligations.

As the Notes are unsecured obligations of the Issuer, the repayment of the Notes may be compromised if:

• 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 unsecured indebtedness; 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 such assets may not be sufficient to pay amounts due on the Notes.

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

The Notes are complex financial instruments and may be purchased as a way to reduce risk or enhance yield with a measured appropriate addition of risk to the investor’s overall portfolios. A potential investor should not invest in the Notes unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential investor’s overall investment portfolio.

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

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

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

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

−54− • understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and financial markets; and

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

An active trading market for the Notes may not develop.

The Notes are a new issue of securities for which there is currently no trading market. Although an application will be made to the HKSE for the listing of, and permission to deal in, the Notes by way of debt issues to Professional Investors only and an application has been made to the MOX for the listing of the Notes by way of debt issues to MOX Professional Investors only, no assurance can be given that such application will be approved, or even if the Notes become so listed, an active trading market for the Notes will develop or be sustained. No assurance can be given as to the ability of holders to sell their Notes or the price at which holders will be able to sell their Notes or that a liquid market will develop. The liquidity of the Notes will be adversely affected if the Notes are held or allocated to a limited number of investors. None of the Joint Lead Managers are obligated to make a market in the Notes, and if the Joint Lead Managers do so, they may discontinue such market making activity at any time at their sole discretion. In addition, the Notes are being offered pursuant to exemptions from registration under the Securities Act and, as a result, holders will only be able to resell their Notes in transactions that have been registered under the Securities Act or in transactions not subject to, or exempt from, registration under the Securities Act.

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

The price and trading volume of the Notes may be highly volatile. Factors such as variations in the Group’s turnover, earnings and cash flows, proposals for new investments, strategic alliances and/or acquisitions, changes in interest rates, fluctuations in price for comparable companies, changes in government regulations and changes in general economic conditions nationally or internationally could cause the price of the Notes to change. Any such developments may result in large and sudden changes in the trading volume and price of the Notes. There is no assurance that these developments will not occur in the future.

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

The market price of the Notes may be adversely affected by declines in the international financial markets and world economic conditions. The market for the Notes is, to varying degrees, influenced by economic and market conditions in other markets, especially those in Asia. Although economic conditions are different in each country, investors’ reactions to developments in one country can affect the securities markets and the securities of issues in other countries, including the PRC. Since the global financial crisis in 2008 and 2009, the international financial markets have experienced significant volatility. If similar developments occur in the international financial markets in the future, the market price of the Notes could be adversely affected.

Investment in the Notes is subject to exchange rate risks.

Investment in the Notes is subject to exchange rate risks. The value of the U.S. dollar against the Renminbi and other foreign currencies fluctuates and is affected by changes in the United States and international political and economic conditions and by many other factors. The Issuer will make all payments of interest and principal with respect to the Notes in U.S. dollars. As a result, the value of these U.S. dollar payments may vary with the prevailing exchange rates in the marketplace. If the value of the U.S. dollar depreciates against the Renminbi or other foreign currencies, the value of a Noteholder’s investment in Renminbi or other applicable foreign currency terms will decline.

−55− Changes in interest rates may have an adverse effect on the price of the Notes.

The Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in the prices of the Notes, resulting in a capital loss for the Noteholders. However, the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, the prices of the Notes may rise. The Noteholders may enjoy a capital gain, but interest payments received may be reinvested at lower prevailing interest rates. As the Notes will carry a fixed interest rate, the trading price of the Notes will consequently vary with the fluctuations in interest rates. If the Noteholders propose to sell their Notes before their maturity, they may receive an offer lower than the amount they have invested.

The Issuer may be unable to redeem the Notes.

On certain dates, including, but not limited to, the occurrence of a Change of Control or a Non-Registration Event and at maturity of the Notes, the Issuer may, and at maturity will be required to, redeem all of the Notes. If such an event were to occur, the Issuer may not have sufficient cash in hand and may not be able to arrange financing to redeem the Notes in time, or on acceptable terms, or at all. The ability to redeem the Notes in such an event may also be limited by the terms of other debt instruments. Failure to redeem the Notes by the Issuer, in such circumstances, would constitute an Event of Default under the Notes, which may also constitute a default under the terms of other indebtedness of the Issuer or its subsidiaries.

Any failure to complete the relevant filing under the NDRC Circular and the relevant filings with SAFE within the prescribed timeframe following the issue of the Notes may have adverse consequences for the Issuer and/or investors of the Notes.

NDRC issued the Circular of the National Development and Reform Commission on Promoting the Administrative Reform of the Record-filing and Registration System for the Issuance of Foreign Debts by Enterprises《國家發展改革委關於推進企業發行外債備案登記制管理改革的通知》 ( ) (the “NDRC 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 shall procure the registration of debt securities with a maturity of one year or above issued outside the PRC with the NDRC prior to the issue of the securities and notify the particulars of the relevant issues within 10 working days after the completion of the issue of the securities. The NDRC Circular is silent on the legal consequences of non-compliance with the pre-issue registration requirement. On 12 June 2017, the NDRC issued the Risk Warning of the Issuance of Foreign Debts by Enterprises《企業境外發行 ( 債券的風險提示》), which indicated that the relevant enterprises issuing foreign debts but failing to procure the registration of debt securities with the NDRC will be considered to be included in the negative credit records in the national credit information platform and the joint punishment mechanisms. The Issuer has obtained the NDRC pre-issuance registration on 24 February 2021. Similarly, the legal consequences of non-compliance with the post-issue notification requirement under the NDRC Circular are unclear. In the worst-case scenario, such non-compliance with the post-issue notification requirement under the NDRC Circular may result in it being unlawful for the Issuer to perform or comply with any of its obligations under the Notes. The Issuer undertakes to file or cause to be filed with the NDRC the requisite information and documents within the prescribed time period after the Issue Date in accordance with the NDRC Circular.

SAFE issued the Administrative Measures for Foreign Debt Registration《外債登記管理辦法》 ( ) (the “Foreign Debt Registration Measures”) on 28 April 2013, which came into effect on 13 May 2013. According to the Foreign Debt Registration Measures, the debtor shall submit foreign debt registration when borrowing foreign debts in accordance with laws and regulations. For the domestic debtors besides financial institutions and banks (“Non-Bank Debtors”), they shall submit filing or registration procedures of foreign debts with the local counterparts of the SAFE. According to the Operation Guidelines for Administration of Foreign Debt Registration《外債登記管理操作指引》 ( ) promulgated together with Foreign Debt Registration Measures, Non-Bank Debtors shall complete the foreign debt registration procedure within 15 working days after execution of related deeds of foreign

−56− debts. In addition, the PBOC issued the Circular on Relevant Matters about the Macro-Prudential Management of Cross-Border Financing in Full Aperture《中國人民銀行關於全口徑跨境融資宏觀審 ( 慎管理有關事宜的通知》), which came into effect on 12 January 2017. On 13 November 2020, SAFE issued the Guidelines for the Operation of Foreign Exchange Operations on Capital Projects (2020 edition)《國家外匯管理局綜合司關於印發 ( <資本項目外匯業務指引(2020)年版>的通知》). Pursuant to article 40 of Interim Measures on the Management of Foreign Debts (外債管理暫行辦法) promulgated by MOF, the NDRC and SAFE, a failure by a domestic entity to register a foreign debt contract will render the contract not legally binding and unenforceable. Thus, before such registration of the Notes is completed, it is uncertain whether the Notes are enforceable as a matter of PRC law and it may be difficult for Noteholders to recover amounts due from the Issuer, and the Issuer may not be able to remit the proceeds of the issue of the Notes into the PRC or remit money out of the PRC in order to meet its payment obligations under the Notes. In the unlikely event that the Issuer is unable to complete such registration within the relevant time period, Noteholders will have the right to require the Issue to redeem their holding of Notes. However, notwithstanding such right, if the Issuer fails to complete the registration with the local branch of SAFE, the Issuer may have difficulty in remitting funds offshore to service payments in respect of the Notes and investors may encounter difficulties in enforcing judgments obtained in the Hong Kong courts with respect to the Notes and the Trust Deed in the PRC. In such circumstances, the value and secondary market price of the Notes may be materially and adversely affected.

The Notes will be structurally subordinated to the existing and future indebtedness and other liabilities of the Issuer’s existing and future subsidiaries, and effectively subordinated to the Issuer’s secured debt to the extent of the value of the collateral securing such indebtedness.

The Notes will be structurally subordinated to any debt and other liabilities and commitments, including trade payables and lease obligations, of the Issuer’s existing and future subsidiaries, other than the Issuer, whether or not secured. The Notes will not be guaranteed by any of the Issuer’s subsidiaries, and the Issuer may not have direct access to the assets of such subsidiaries unless these assets are transferred by dividend or otherwise to the Issuer. The ability of such subsidiaries to pay dividends or otherwise transfer assets to the Issuer is subject to various restrictions under applicable laws. The Issuer’s subsidiaries are separate legal entities that have no obligation to pay any amounts due under the Notes or make any funds available therefor, whether by dividends, loans or other payments. The Issuer’s right to receive assets of any of the Issuer’s subsidiaries, respectively, upon that subsidiary’s liquidation or reorganisation will be effectively subordinated to the claim of that subsidiary’s creditors (except to the extent that the Issuer is a creditor of that subsidiary). Consequently, the Notes will be effectively subordinated to all liabilities, including trade payables and lease obligations, of any of the Issuer’s subsidiaries, and any subsidiaries that the Issuer may in the future acquire or establish.

The Notes are the Issuer’s unsecured obligations and will: (i) rank equally in right of payment with all the Issuer’s other present and future unsubordinated and unsecured indebtedness; (ii) be effectively subordinated to all of the Issuer’s present and future secured indebtedness to the extent of the value of the collateral securing such obligations; and (iii) be senior to all of the Issuer’s present and future subordinated obligations. As a result, claims of secured lenders, whether senior or junior, with respect to assets 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 the Notes, these assets will be available to pay obligations on the Notes only after all other debt secured by these assets has been repaid in full. If there are not sufficient assets remaining to pay all these creditors, then all or a portion of the Notes then outstanding would remain unpaid.

The insolvency laws of the PRC and other local insolvency laws may differ from those of another jurisdiction with which the holders of the Notes are familiar.

Since the Issuer is incorporated under the laws of the PRC, any insolvency proceedings relating to the Issuer, even if brought in other jurisdictions, would likely involve the PRC insolvency laws, the procedural and substantive provisions of which may differ from comparable provisions of the local insolvency laws of jurisdictions with which the holders of the Notes are familiar.

−57− The Issuer’s subsidiaries, jointly controlled entities and associated companies may be subject to restrictions on the payment of dividends and the repayment of intercompany loans or advances to the Issuer, its jointly controlled entities and associated companies.

As a holding company, the Issuer will depend on the receipt of dividends and the interest and principal payments on intercompany loans or advances from its subsidiaries, jointly controlled entities and associated companies to satisfy its obligations under the Notes. The ability of the Issuer’s subsidiaries, jointly controlled entities and associated companies to pay dividends and make payments on intercompany loans or advances to their shareholders is subject to, among other things, distributable earnings, cash flow conditions, restrictions contained in the articles of association of these companies, applicable laws and restrictions contained in the debt instruments of such companies. There can be no assurance that the Issuer’s subsidiaries, jointly controlled entities and associated companies will have distributable earnings or will be permitted to distribute their distributable earnings to it as it anticipates, or at all. In addition, dividends payable to it by these companies are limited by the percentage of its equity ownership in these companies. In particular, the Issuer does not maintain complete control over its jointly controlled entities or associates in which it might hold a minority interest. Further, if any of these companies raises capital by issuing equity securities to third parties, dividends declared and paid with respect to such shares would not be available to the Issuer to make payments under the Notes. These factors could reduce the payments that the Issuer receives from its subsidiaries, jointly controlled entities and associated companies, which would restrict its ability to meet its payment obligations under the Notes.

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

If the Issuer is unable to comply with its current or future debt obligations and other agreements (if any), there could be a default under the terms of these agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to the Issuer, accelerate repayment of the debt and declare all outstanding amounts due and payable or terminate the agreements, as the case may be. Furthermore, some debt agreements of the Issuer may contain cross-acceleration or cross-default provisions. As a result, default under one debt agreement of the Issuer may cause the acceleration of repayment of not only such debt but also other debt, including the Notes, or result in a default under other debt agreements of the Issuer. If any of these events occur, the Issuer cannot assure holders that its assets and cash flows would be sufficient to repay in full all of its indebtedness, or that it would be able to find alternative financing. Even if the Issuer could obtain alternative financing, there is no assurance that it would be on terms that are favourable or acceptable to it.

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

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

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

The Terms and Conditions of the Notes and the transaction documents are governed by English law, whereas parties to these documents have submitted to the exclusive jurisdiction of the Hong Kong courts. In order to hear English law governed matters or disputes, Hong Kong courts may require

−58− certain additional procedures to be taken. Under the Reciprocal Arrangement, judgments of Hong Kong courts are likely to be recognised and enforced by the PRC courts where the contracting parties to the transactions pertaining to such judgments have agreed to submit to the exclusive jurisdiction of Hong Kong courts.

However, recognition and enforcement of a Hong Kong court judgment could be refused if the PRC courts consider that the enforcement of such judgment is contrary to the social and public interest of the PRC or meets other circumstances specified by the Reciprocal Arrangement. While it is expected that the PRC courts will recognise and enforce a judgment given by Hong Kong courts in respect of a dispute governed by English law, there can be no assurance that 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 the relevant holders of the debt securities would not typically be required to submit to an exclusive jurisdiction, the holders of the Notes will be deemed to have submitted to the exclusive jurisdiction of the Hong Kong courts, and thus the holder’s ability to initiate a claim outside Hong Kong will be limited.

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

Where the Trustee is, under the provisions of the Trust Deed, bound to act at the request or direction of the Noteholders, the Trustee shall nevertheless not be so bound unless first indemnified and/or provided with security and/or pre-funded to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all costs, charges, damages, expenses and liabilities which it may incur by so doing. Negotiating and agreeing to an indemnity and/or security and/or pre-funding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions, notwithstanding the provision of an indemnity or security or pre-funding, in breach of the terms of the Trust Deed or the Terms and Conditions of the Notes and in circumstances where there is uncertainty or dispute as to the applicable laws or regulations and, to the extent permitted by the agreements and the applicable law, it will be for the holders of the Notes to take such actions directly.

Modifications and waivers may be made in respect of the Terms and Conditions of the Notes and the Trust Deed by the Trustee or fewer than all of the holders of the Notes, and decisions may be made on behalf of all holders of the Notes that may be adverse to the interests of the individual holders of the Notes.

The Terms and Conditions of the Notes contain provisions for calling meetings of the holders of the Notes to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders, including those Noteholders who did not attend and vote at the relevant meeting and those Noteholders who voted in a manner contrary to the majority. There is a risk that the decision of the majority of holders of the Notes may be adverse to the interests of the individual holders of the Notes. The Terms and Conditions of the Notes also provide that the Trustee may (but shall not be obliged to), without the consent of the holders of the Notes, agree to any modification of the Terms and Conditions of the Notes or the Trust Deed (other than in respect of certain reserved matters) or the Agency Agreement which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of the holders of the Notes and to any modification of the Notes, the Trust Deed or the Agency Agreement which is of a formal, minor or technical nature or is to correct a manifest error.

In addition, the Trustee may, without the consent of the holders of the Notes, authorise or waive any proposed breach or breach of the Notes or the Trust Deed or the Agency Agreement (other than a proposed breach or breach relating to the subject of certain reserved matters) if, in the opinion of the Trustee, the interests of the holders of the Notes will not be materially prejudiced thereby.

−59− The Notes will initially be represented by a Global Note Certificate and holders of a beneficial interest in the Global Note Certificate must rely on the procedures of the relevant Clearing System.

The Notes will initially be represented by a Global Note Certificate. Such Global Note Certificate will be deposited with a common depositary for Euroclear and Clearstream (each of Euroclear and Clearstream, a “Clearing System”). Except in the circumstances described in the Global Note Certificate, investors will not be entitled to receive definitive Notes. The relevant Clearing System will maintain records of the beneficial interests in the Global Note Certificate. While the Notes are represented by the Global Note Certificate, investors will be able to trade their beneficial interests only through the Clearing Systems.

While the Notes are represented by the Global Note Certificate, the Issuer will discharge its payment obligations under the Notes by making payments to the common depositary for Euroclear and Clearstream for distribution to their account holders. A holder of a beneficial interest in a Global Note Certificate must rely on the procedures of the relevant Clearing System to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Note Certificate.

Holders of beneficial interests in a Global Note Certificate will not have a direct right to vote in respect of the Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant Clearing System to appoint appropriate proxies.

Gains on the transfer of the Notes and interest payable by the Issuer to overseas Noteholders may be subject to tax under PRC tax laws.

Under the Enterprise Income Tax Law of the PRC (the “EIT Law”)《中華人民共和國企業所得稅 ( 法》), which took effect on 1 January 2008 and was last revised on 29 December 2018, and its implementation rules, any gains realised on the transfer of the Notes by holders who are deemed under the EIT Law as non-resident enterprises may be subject to PRC enterprise income tax if such 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 PRC and whose actual administrative organisation is not in the PRC, which has established offices or premises in the PRC, or which has not established any offices or premises in the PRC but has obtained income derived from sources within the PRC. There remains uncertainty as to whether the gains realised on the transfer of the Notes by non-resident enterprise Noteholders would be treated as income derived from sources within the PRC and be subject to PRC enterprise income tax. In addition, there is uncertainty as to whether gains realised on the transfer of the Notes by individual Noteholders who are not PRC citizens or residents will be subject 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, unless there is an applicable tax treaty or arrangement that reduces or exempts such income tax. The taxable income will be the balance of the total income obtained from the transfer of the Notes minus 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 Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income《內地和香港特別行政區關於對所得 ( 避免雙重徵稅和防止偷漏稅的安排》) (the “Taxation Arrangement”) which was promulgated on 21 August 2006, Noteholders who are Hong Kong residents, including both enterprise holders and individual holders, will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Notes, if such capital gains are not connected with an office or establishment that the Noteholders have in the PRC and all the other relevant conditions are satisfied.

−60− Pursuant to the EIT Law, the PRC Individual Income Tax Law (the “IIT Law”)《中華人民共和國個 ( 人所得稅法》), which took effect on 30 June 2011 and was last revised on 31 August 2018, and the implementation regulations in relation to both the EIT Law and the IIT Law, PRC income tax at a rate of 10 per cent. or 20 per cent. is normally applicable to PRC-source income derived by non-resident enterprises or individuals, respectively, subject to adjustment by applicable treaty. As the Issuer is a PRC resident enterprise for tax purposes, interest paid to non-resident Noteholders would be regarded as PRC-sourced, and therefore be subject to PRC income tax at a rate of 10 per cent. for non-resident enterprise Noteholders and at a rate of 20 per cent. for non-resident individual Noteholders (or a lower treaty rate, if any).

On 23 March 2016, the Ministry of Finance and the State Administration of Taxation of the PRC issued the Circular of Full Implementation of Business Tax to Value Added Tax Reform《財政部國 ( 家稅務總局關於全面推開營業稅改徵增值稅試點的通知》)(“Circular 36”) which introduced a new value-added tax (“VAT”) from 1 May 2016. VAT is applicable where the entities or individuals provide services within the PRC. Based on the definition of “loans” under Circular 36, the issuance of Notes is likely to be treated as the holders of the Notes providing loans to the Issuer, which thus shall be regarded as financial services subject to VAT. Further, given that the Issuer is located in the PRC, the holders of the Notes would be regarded as providing the financial services within China and, consequently, the holders of the Notes shall be subject to VAT at the rate of 6 per cent. and certain surcharges on payments of interest and certain other amounts on the Notes paid by the Issuer to Noteholders that are non-resident enterprises or individuals.

VAT is unlikely to be applicable to any transfer of Notes between entities or individuals located outside the PRC and therefore unlikely to be applicable to gains realised upon such transfers of Notes, but there is uncertainty as to the applicability of VAT if either the seller or the buyer of Notes is located inside the PRC. As Circular 36, together with other laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties.

If a Noteholder, being a non-resident enterprise or non-resident individual, is required to pay any PRC income tax on gains on the transfer of the Notes, the value of the relevant Noteholder’s investment in the Notes may be materially and adversely affected.

The Notes are redeemable in the event of certain withholding taxes being applicable.

There can be no assurance as to whether or not payments on the Notes may be made without withholding taxes or deductions applying from the Issue Date on account of any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the PRC or any subdivision or authority therein or thereof having power to tax. Although, pursuant to the Terms and Conditions of the Notes, the Issuer is required to gross up payments on account of any such withholding taxes or deductions (whether by way of enterprise income tax (“EIT”), business tax, VAT or otherwise), the Issuer also has the right to redeem the Notes at any time in the event that (i) it has paid, or will become obliged to pay, additional tax amounts on account of any existing or future withholding or deduction for any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the PRC in excess of the applicable rate on 31 March 2021 (the “Applicable Rate Date”), or any political subdivision or any authority therein or thereof having power to tax as a result of any change in, or amendment to, the laws or regulations of the PRC or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the Applicable Rate Date, and (ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it.

−61− On 23 March 2016, the Ministry of Finance and the State Administration of Taxation issued Circular 36 which introduces VAT from 1 May 2016. VAT is applicable where the entities or individuals provide services within the PRC. However, Circular 36 and laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties but if the withholding tax applicable increases from that applicable on the Applicable Rate Date as a result of Circular 36, the Issuer is entitled to redeem the Notes under the Terms and Conditions of the Notes. For more details, see “Taxation — PRC — Value-added Tax”.

If the Issuer redeems the Notes prior to their maturity dates, investors may not receive the same economic benefits they would have received had they held the Notes to maturity, and they may not be able to reinvest the proceeds they receive in a redemption in similar securities. In addition, the Issuer’s ability to redeem the Notes may reduce the market price of the Notes.

The Issuer may issue additional Notes in the future.

The Issuer may, from time to time, and without prior consultation of the Noteholders, create and issue further Notes (see “Terms and Conditions of the Notes — Further Issues”) or otherwise raise additional capital through such means and in such manner as it may consider necessary. There can be no assurance that such future issuance or capital raising activity will not adversely affect the market price of the Notes.

The rating assigned to the Notes may be downgraded or withdrawn at any time.

The Notes are expected to be rated “BBB+” by Fitch. The rating represents the opinions of the relevant rating agency and its assessment of the ability of the Issuer to perform its obligations under the Notes and credit risks in determining the likelihood that payments will be made when due under the Notes. A rating is not a recommendation to buy, sell or hold the Notes. A rating can be lowered or withdrawn at any time. The Issuer is not obligated to inform Noteholders if the ratings are lowered or withdrawn. A reduction or withdrawal of the ratings may adversely affect the market price of the Notes and the Issuer’s ability to access the debt capital markets.

−62− TERMS AND CONDITIONS OF THE NOTES

The following is the text of the Terms and Conditions of the Notes which (subject to modification and except for the paragraphs in italics) will be endorsed on the Note Certificates (as defined below) issued in respect of the Notes.

The U.S.$200,000,000 2.6 per cent. Notes due 2026 (the “Notes”, which expression includes any further notes issued pursuant to Condition 14 (Further Issues) and forming a single series therewith) of Chengdu Jiaozi Financial Holding Group Co., Ltd. (成都交子金融控股集團有限公司) (the “Issuer”) was authorised by a resolution of the board of directors of the Issuer passed on 17 August 2020. The Notes are constituted by, are subject to, and have the benefit of, a trust deed dated 12 April 2021 (as amended, restated, replaced or supplemented from time to time, the “Trust Deed”) between the Issuer and China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司) as trustee (the “Trustee”, which expression includes all persons for the time being trustee or trustees appointed under the Trust Deed) and are the subject of an agency agreement dated 12 April 2021 (as amended, restated, replaced or supplemented from time to time, the “Agency Agreement”) between the Issuer, China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司) as registrar (the “Registrar”, which expression includes any successor registrar appointed from time to time in connection with the Notes), China Construction Bank (Asia) Corporation Limited (中國建設銀行(亞洲)股份有限公司) as principal paying agent (the “Principal Paying Agent”, which expression includes any successor principal paying agent appointed from time to time in connection with the Notes), the transfer agents named therein (the “Transfer Agents”, which expression includes any successor or additional transfer agents appointed from time to time in connection with the Notes), the paying agents named therein (together with the Principal Paying Agent, the “Paying Agents”, which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes) and the Trustee. References herein to the “Agents” are to the Registrar, the Principal Paying Agent, the Transfer Agents and the Paying Agents and any reference to an “Agent” is to any one of them.

Certain provisions of these terms and conditions (these “Conditions”) are summaries of the Trust Deed and the Agency Agreement and are subject to their detailed provisions. The Noteholders (as defined below) are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them. Copies of the Trust Deed and the Agency Agreement are available for inspection by Noteholders during normal business hours (being between 9:00 a.m. to 3:00 p.m.(Hong Kong time) from Monday to Friday (other than public holidays)) upon prior written request and satisfactory proof of holding at the specified office for the time being of the Trustee, being at the date hereof 20/F, CCB Tower, 3 Connaught Road Central, Central, Hong Kong and at the Specified Offices (as defined in the Agency Agreement) of each of the Agents, the initial Specified Offices of which are set out below. All capitalised terms that are not defined in these Conditions have the same meanings given to them in the Trust Deed.

1. Form, Denomination and Status

(a) Form and denomination: The Notes are in registered form in the denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof (each, an “Authorised Denomination”).

(b) Status of the Notes: The Notes constitute direct, general and unconditional obligations of the Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsubordinated and unsecured obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

−63− Upon issue, the Notes will be evidenced by a global note certificate (the “Global Note Certificate”) substantially in the form scheduled to the Trust Deed. The Global Note Certificate will be registered in the name of a nominee for, and deposited with, a common depositary for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”), and will be exchangeable for individual Note Certificates (as defined below) only in the circumstances set out therein. These Conditions are modified by certain provisions contained in the Global Note Certificate. See the section titled “Summary of Provisions relating to the Notes in Global Form”.

Except in the limited circumstances described in the Global Note Certificate, owners of interests in Notes represented by the Global Note Certificate will not be entitled to receive individual Note Certificates in respect of their individual holdings of Notes. The Notes are not issuable in bearer form.

2. Register, Title and Transfers

(a) Register: The Registrar will maintain a register (the “Register”) in respect of the Notes in accordance with the provisions of the Agency Agreement. In these Conditions, the “Holder” of a Note means the person in whose name such Note is for the time being registered in the Register (or, in the case of a joint holding, the first named thereof) and “Noteholder” shall be construed accordingly. A certificate (each, a “Note Certificate”) will be issued to each Noteholder in respect of its registered holding. Each Note Certificate will be numbered serially with an identifying number which will be recorded in the Register.

(b) Title: The Holder of each Note shall (except as ordered by a court of competent jurisdiction or otherwise required by law) be deemed to be and shall be treated as the absolute owner of such Note for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing on the Note Certificate relating thereto (other than the endorsed form of transfer duly completed) or any notice of any previous loss or theft of such Note Certificate) and no person shall be liable for so treating such Holder. No person shall have any right to enforce any term or condition of the Notes or the Trust Deed under the Contracts (Rights of Third Parties) Act 1999 except otherwise provided for in the Trust Deed.

(c) Transfers: Subject to paragraphs (f) (Closed periods) and (g) (Regulations concerning transfers and registration) below, a Note may be transferred upon surrender of the relevant Note Certificate, with the endorsed form of transfer duly completed, at the Specified Office of the Registrar or any Transfer Agent, together with such evidence as the Registrar or (as the case may be) such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer; provided, however, that a Note may not be transferred unless the principal amount of Notes transferred and (where not all of the Notes held by a Holder are being transferred) the principal amount of the balance of Notes not transferred are Authorised Denominations. Where not all the Notes represented by the surrendered Note Certificate are the subject of the transfer, a new Note Certificate in respect of the balance of the Notes will be issued to the transferor.

Transfers of interests in the Notes evidenced by the Global Note Certificate will be effected in accordance with the rules of the relevant clearing systems.

−64− (d) Registration and delivery of Note Certificates: Within seven business days of receipt by the Registrar or (as the case may be) any Transfer Agent of a duly completed form of transfer and surrender of the relevant Note Certificate in accordance with paragraph (c) (Transfers) above, the Registrar will register the transfer in question and deliver a new Note Certificate of a like principal amount to the Notes transferred to each relevant Holder at its Specified Office or (as the case may be) the Specified Office of any Transfer Agent or (at the request and risk of any such relevant Holder) by uninsured post to the address specified for the purpose by such relevant Holder. In this paragraph (d), “business day” means a day on which commercial banks are open for general business (including dealings in foreign currencies) in the city where the Registrar or (as the case may be) the relevant Transfer Agent has its Specified Office.

(e) No charge: The transfer of a Note will be effected without charge by or on behalf of the Issuer, the Registrar or any Transfer Agent but against payment or such indemnity as the Registrar or (as the case may be) such Transfer Agent may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer.

(f) Closed periods: Noteholders may not require transfers to be registered (i) during the period of 15 days ending on the due date for any payment of principal or interest in respect of the Notes, (ii) during the period of 15 days ending on any date on which Notes may be called for redemption by the Issuer at its option pursuant to Condition 5(b) (Redemption for tax reasons); and (iii) after a Put Exercise Notice (as defined in Condition 5(c) (Redemption for a Relevant Event)) has been delivered in respect of the relevant Notes in accordance with Condition 5(c) (Redemption for a Relevant Event).

(g) Regulations concerning transfers and registration: All transfers of Notes and entries on the Register are subject to the detailed regulations concerning the transfer of Notes, the initial form of which is scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Trustee and the Registrar. A copy of the current regulations will be made available (free of charge to the Noteholders and at the Issuer’s expense) by the Registrar to any Noteholder upon prior written request and satisfactory proof of holding.

3. Covenants

(a) Negative pledge: So long as any Note remains outstanding (as defined in the Trust Deed), the Issuer shall not, and the Issuer shall procure that none of its Subsidiaries (other than any Listed Subsidiaries and their respective Subsidiaries) will, create or permit to subsist any Security Interest upon the whole or any part of its present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness or guarantee of Relevant Indebtedness without at the same time or prior thereto (i) securing the Notes equally and rateably therewith to the satisfaction of the Trustee or (ii) providing such other security for the Notes as may be approved by an Extraordinary Resolution (as defined in the Trust Deed) of Noteholders.

(b) Financial Statements etc.: So long as any Note remains outstanding, the Issuer shall provide to the Trustee:

(i) (A) a copy of the Issuer Audited Financial Reports within 150 days of the end of each Relevant Period, prepared in accordance with PRC GAAP (audited by a nationally recognised firm of independent accountants of good repute); and (B) a copy of the Issuer Semi-Annual Unaudited Management Accounts within 90 days of the end of each Relevant Period, prepared on a basis consistent with the Issuer Audited Financial Reports; provided that, if at any time the capital stock of the Issuer is listed for trading on a recognised stock exchange, the Issuer may make available to the Trustee,

−65− as soon as they are available but in any event not more than 14 days after any financial or other reports of the Issuer are filed with the exchange on which the Issuer’s capital stock is at such time listed for trading, true and correct copies of any financial or other report filed with such exchange in lieu of the reports identified in sub-paragraphs (A) and (B) above and, if the Issuer Audited Financial Reports and/or the Issuer Semi-Annual Unaudited Management Accounts, as the case may be, shall be in the Chinese language, such Issuer Audited Financial Reports or the Issuer Semi-Annual Unaudited Management Accounts shall be furnished together with an English translation of the same translated by (x) a nationally recognised firm of independent accountants of good repute or (y) a professional translation service provider and checked by a nationally recognised firm of independent accountants of good repute, together with a certificate in English signed by an Authorised Signatory certifying that such translation is complete and accurate; and

(ii) a Compliance Certificate (on which the Trustee may rely conclusively as to such compliance) within fourteen days of a request by the Trustee and at the time of provision of the Issuer Audited Financial Reports.

(c) Notification to NDRC: The Issuer undertakes to file or cause to be filed with the NDRC the requisite information and documents within the prescribed time period after the Issue Date 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)) issued by the NDRC and which came into effect on 14 September 2015, and any implementation rules, reports, certificates, approvals or guidelines as issued by the NDRC from time to time (the “NDRC Post-issue Filing”).

The Issuer shall comply with all applicable PRC laws and regulations in connection with the issuance of the Notes and shall, within five PRC Business Days after submission of such NDRC Post-issue Filing, (i) provide the Trustee with a certificate (substantially in the form scheduled to the Trust Deed) signed by an Authorised Signatory confirming the submission of the NDRC Post-issue Filing (together with the document(s) filed with the NDRC) and (ii) give notice to the Noteholders in accordance with Condition 15 (Notices) of the same.

(d) Registration with SAFE: The Issuer undertakes to file or cause to be filed with SAFE the requisite information and documents in accordance with (i) the Administrative Measures for Foreign Debt Registration《外債登記管理辦法》 ( ) issued by SAFE and which came into effect on 13 May 2013, and (ii) the Circular on Relevant Matters about the Macro-Prudential Management of Cross-Border Financing in Full Aperture《中國人民銀 ( 行關於全口徑跨境融資宏觀審慎管理有關事宜的通知》) issued by the PBOC and which came into effect on 12 January 2017 and any implementation rules, reports, certificates, approvals or guidelines as issued by the SAFE or the PBOC, as the case may be, from time to time (the “Foreign Debt Registration”), and to comply with all applicable PRC laws and regulations in relation to the Foreign Debt Registration.

The Issuer shall use its best endeavours to complete the Foreign Debt Registration on or before the SAFE Registration Deadline and shall within five PRC Business Days after SAFE has notified it of the completion of the Foreign Debt Registration, (i) provide the Trustee with a certificate (substantially in the form scheduled to the Trust Deed) signed by an Authorised Signatory confirming the completion of the Foreign Debt Registration (together with the document(s) (x) filed with SAFE and (y) issued by SAFE evidencing the completion of the filing) (collectively, the “Registration Documents”) and (ii) give notice to the Noteholders in accordance with Condition 15 (Notices) of the same.

−66− The Trustee may rely on the Registration Documents conclusively and shall have no obligation or duty to monitor, assist with or ensure the completion of the NDRC Post-issue Filing within the prescribed time period or the Foreign Debt Registration on or before the SAFE Registration Deadline or to verify the accuracy, validity and/or genuineness of any certificates, confirmation or other documents in relation to or in connection with the NDRC Post-issue Filing and the Foreign Debt Registration and/or the Registration Documents or to give notice to the Noteholders confirming the completion of the Foreign Debt Registration, and shall not be liable to Noteholders or any other person for not doing so.

(e) Rating Maintenance: So long as any Note remains outstanding, save with the approval of an Extraordinary Resolution of Noteholders, the Issuer shall maintain a rating on the Notes by a Rating Agency.

In these Conditions:

“Authorised Signatory” means any authorised person notified to the Trustee by a director of the Issuer as being an authorised signatory pursuant to the Trust Deed;

“Compliance Certificate” means a certificate in English of the Issuer signed by an Authorised Signatory that, having made all reasonable enquiries, to the best of the knowledge, information and belief of the Issuer as at a date (the “Certification Date”) not more than five days before the date of the certificate:

(i) no Event of Default, or an event or circumstance which could, with the giving of notice, lapse of time, the issuing of a certificate and/or fulfilment of any other requirement provided for in Condition 8 (Events of Default), become an Event of Default (a “Potential Event of Default”), or a Change of Control had occurred since the Certification Date of the last such certificate or (if none) the date of the Trust Deed or, if such an event had occurred and is continuing, giving details of it; and

(ii) the Issuer has complied with all its obligations under the Trust Deed, the Agency Agreement and the Notes or, if the Issuer has not complied with all such obligations, giving details of that non-compliance;

“Hong Kong” means the Hong Kong Special Administrative Region of the People Republic of China;

“Issuer Audited Financial Reports” means the annual audited consolidated statement of financial position, statement of profit or loss, statement of changes in equity and statement of cash flows of the Issuer and its consolidated Subsidiaries together with any statements, reports (including any directors’ and auditors’ reports) and notes attached to or intended to be read with any of them;

“Issuer Semi-Annual Unaudited Management Accounts” means the semi-annual unaudited and reviewed or unreviewed consolidated statement of financial position, statement of profit or loss, statement of changes in equity and statement of cash flows of the Issuer and its consolidated Subsidiaries together with any statements, reports (including any directors’ and auditors’ reports) and notes attached to or intended to be read with any of them, if any;

“Listed Subsidiary” means any Subsidiary of the Issuer which is listed on a recognised stock exchange;

“NDRC” means the National Development and Reform Commission of the PRC or its local counterparts;

“PBOC” means the People’s Bank of China;

−67− “Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

“PRC” means the People’s Republic of China, which, for the purposes of these Conditions, shall not include Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan;

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

“PRC GAAP” means the Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC and all applicable guidance, bulletins and other relevant accounting regulations issued thereafter, as amended from time to time;

“Rating Agency” means any of Fitch Ratings Limited, Moody’s Investors Service Hong Kong Limited or S&P Global Ratings, or any of their respective successors;

“Relevant Indebtedness” means any present or future indebtedness incurred outside the PRC which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other instrument which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market) (which, for the avoidance of doubt, does not include bank loans, loans from other financial institutions, bilateral loans, syndicated loans or club deal loans);

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

“SAFE” means the State Administration of Foreign Exchange or its local counterparts;

“SAFE Registration Deadline” means the day falling 120 PRC Business Days after the Issue Date;

“Security Interest” means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction; and

“Subsidiary” means, in relation to any Person (the “first Person”) at any particular time, any other Person (the “second Person”):

(i) whose affairs and policies the first Person controls or has the power to control, whether by ownership of more than 50 per cent. of share capital, contract, the power to appoint or remove not less than a majority of members of the governing body of the second Person or otherwise; or

(ii) whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person.

−68− 4. Interest

The Notes bear interest from 12 April 2021 (the “Issue Date”) at the rate of 2.6 per cent. per annum, (the “Rate of Interest”) payable semi-annually in arrear on 12 April and 12 October in each year (each, an “Interest Payment Date”), subject as provided in Condition 6 (Payments).

Each Note will cease to bear interest from the due date for redemption unless, upon due presentation, payment of principal is improperly withheld or refused, in which case it will continue to bear interest at such rate (both before and after judgment) until whichever is the earlier of (a) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (b) the day which is seven days after the Principal Paying Agent or the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

The amount of interest payable on each Interest Payment Date shall be U.S.$13.0 in respect of each Note of U.S.$1,000 denomination. If interest is required to be paid in respect of a Note on any other date, it shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest cent (half a cent being rounded upwards) and multiplying such rounded figure by a fraction equal to the Authorised Denomination of such Note divided by the Calculation Amount, where:

“Calculation Amount” means U.S.$1,000;

“Calculation Period” means the relevant period for which interest is to be calculated from (and including) the first day in such period to (but excluding) the last day in such period; and

“Day Count Fraction” means, in respect of any period, the number of days in the relevant period divided by 360 calculated on a formula basis as follows:

[360 x (Y2-Y1)] + [30 x (M2-M1)]+(D2-D1) Day Count Fraction = 360

where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M2” is the calendar month, expressed as number, in which the day immediately following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such

number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day included in

the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case

D2 will be 30”.

−69− 5. Redemption and Purchase

(a) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their principal amount on 12 April 2026, subject as provided in Condition 6 (Payments).

(b) Redemption for tax reasons: The Notes 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 to the Noteholders (which notice shall be irrevocable) in accordance with Condition 15 (Notices) at their principal amount, together with interest accrued to (but not including) the date fixed for redemption, if, immediately before giving such notice, the Issuer satisfies the Trustee that:

(i) the Issuer has or will become obliged to pay Additional Tax Amounts as provided or referred to in Condition 7 (Taxation) as a result of any change in, or amendment to, the laws or regulations of the PRC or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after 31 March 2021; and

(ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it;

provided, however, that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such Additional Tax Amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph (b), the Issuer shall deliver to the Trustee:

(A) a certificate in English signed by an Authorised Signatory stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred; and

(B) an opinion of independent legal or tax advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such Additional Tax Amounts as a result of such change or amendment.

The Trustee shall be entitled (but shall not be obliged) to accept and rely upon (without further investigation or enquiry) such certificate and opinion as sufficient evidence of the satisfaction of the circumstances set out in sub-paragraphs (i) and (ii) above, in which event they shall be conclusive and binding on the Noteholders and the Trustee shall be protected and shall have no liability to any Noteholder or any other person for so accepting and relying on such certificate or opinion.

Upon the expiry of any such notice period as is referred to in this Condition 5(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 5(b).

(c) Redemption for a Relevant Event: At any time following the occurrence of a Relevant Event, the Holder of any Note will have the right, at such Holder’s option, to require the Issuer to redeem all but not some only of that Holder’s Notes on the Put Settlement Date at 101 per cent. of their principal amount (in the case of a Change of Control) or 100 per cent. of their principal amount (in the case of a Non-Registration Event), in each case, together with interest accrued to (but not including) such Put Settlement Date. To exercise such right, the Holder of the relevant Note must deposit at the Specified Office of any Paying Agent a duly completed and signed notice of redemption, in the form for the time

−70− being current, obtainable from the Specified Office of any Paying Agent (a “Put Exercise Notice”), together with the Note Certificates evidencing the Notes to be redeemed by not later than 30 days following a Relevant Event, or, if later, 30 days following the date upon which notice thereof is given to Noteholders by the Issuer in accordance with Condition 15 (Notices). The “Put Settlement Date” shall be the 14th day after the expiry of such period of 30 days as referred to above.

A Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Notes subject to the Put Exercise Notices delivered as aforesaid.

The Issuer shall give notice to Noteholders and the Trustee in accordance with Condition 15 (Notices) by not later than 14 days following the first day on which it becomes aware of the occurrence of a Relevant Event, which notice shall specify the procedure for exercise by Holders of their rights to require redemption of the Notes pursuant to this Condition 5(c).

Neither the Agents nor the Trustee shall be required to monitor or to take any steps to ascertain whether a Relevant Event or any event which could lead to a Relevant Event has occurred or may occur and none of them shall be liable to Holders, the Issuer or any other person for not doing so. Neither the Agents nor the Trustee shall have any obligation or duty to verify the accuracy, validity and/or genuineness of any documents in relation to or in connection with any Relevant Event or the Registration Conditions and may rely conclusively on any such document and shall not be liable to Holders, the Issuer or any other person for not doing so.

So long as the Notes are represented by the Global Note Certificate, a right of a Noteholder to redemption of the Notes following the occurrence of a Relevant Event will be effected in accordance with the rules of the relevant clearing systems.

In these Conditions: a“Change of Control” occurs when:

(a) Chengdu SASAC and any other person or entity (directly or indirectly) Controlled by the government of the PRC (such person or entity and Chengdu SASAC, each a “PRC Government Person”), together, ceases to Control the Issuer; or

(b) the Issuer consolidates with or merges into or sells or transfers all or substantially all of its assets to any other person or persons, acting together, except where such person(s) is/are Controlled, directly or indirectly by a PRC Government Person;

“Chengdu SASAC” means the State-owned Assets Supervision and Administration Commission of Chengdu City (成都市國有資產監督管理委員會);

“Control” means with respect to a Person (where applicable): (i) the ownership or control of 100 per cent. of the issued share capital of such Person; or (ii) the possession, directly or indirectly, of the power to nominate or designate all members then in office of such Person’s board of directors or other governing body, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise. For the avoidance of doubt, a Person is deemed to Control another Person so long as it fulfils one of the two foregoing requirements and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing; a“Non-Registration Event” occurs when the Registration Condition has not been satisfied on or prior to the SAFE Registration Deadline;

−71− a“Registration Condition” means the receipt of the certificate referred to in Condition 3(d) (Registration with SAFE) and a copy of the Registration Documents by the Trustee and the publication of the notice to Noteholders of completion of the Foreign Debt Registration by the Issuer in accordance with Condition 3(d) (Registration with SAFE);

“Relevant Event” means a Change of Control or a Non-Registration Event; and

(d) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) (Scheduled redemption)to(c)(Redemption for a Relevant Event) above.

(e) Purchase: The Issuer or any of its Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price.

(f) Cancellation: All Notes so redeemed or purchased by the Issuer or any of its Subsidiaries shall be cancelled and may not be reissued or resold.

(g) No duty to monitor: Neither the Trustee nor any of the Agents shall be obliged to take any steps to ascertain whether a Relevant Event, Potential Event of Default or Event of Default has occurred or to monitor the occurrence of any Relevant Event, Potential Event of Default or Event of Default, and shall not be liable to the Noteholders or any other person for not doing so.

(h) Calculations: Neither the Trustee nor any of the Agents shall be responsible for calculating or verifying the calculations of any amount payable under any notice of redemption and shall not be liable to the Noteholders or any other person for not doing so.

6. Payments

(a) Principal: Payments of principal and premium (if any) shall be made by wire transfer to a U.S. dollar registered account maintained by the payee with, a bank and (in the case of redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.

(b) Interest: Payments of interest shall be made by wire transfer to a U.S. dollar registered account maintained by the payee with, a bank and (in the case of interest payable on redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.

For the purposes of this Condition 6 (Payments), a Noteholder’s “registered account” means the U.S. dollar account maintained by or on behalf of it with a bank, details of which appear on the Register at the close of business on the Record Date (as defined below).

Notwithstanding the foregoing, so long as the Global Note Certificate is held on behalf of Euroclear, Clearstream or any other clearing system, each payment in respect of the Global Note Certificate will be made to the person shown as the Holder in the Register at the close of business of the relevant clearing system on the Clearing System Business Day before the due date for such payments, where “Clearing System Business Day” means a weekday (Monday to Friday, inclusive) except 25 December and 1 January.

(c) Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to (i) any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 7 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections

−72− 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 7 (Taxation)) any law implementing an intergovernmental approach thereto. No commissions or expenses shall be charged to the Noteholders in respect of such payments.

(d) Payments on business days: Where payment is to be made by wire transfer to a U.S. dollar account, payment instructions (for value the due date, or, if the due date is not a business day, for value the next succeeding business day) will be initiated and, (i) (in the case of payments of principal and premium (if any) and interest payable on redemption) on the later of the due date for payment and the day on which the relevant Note Certificate is surrendered (or, in the case of part payment only, endorsed) at the Specified Office of a Paying Agent and (ii) (in the case of payments of interest payable other than on redemption) on the due date for payment. A Holder of a Note shall not be entitled to any interest or other payment in respect of any delay in payment resulting from the due date for a payment not being a business day. In this paragraph (d), “business day” means any day (other than a Saturday, Sunday or public holiday) on which banks are open for general business (including dealings in foreign currencies) in New York City and Hong Kong, and, in the case of surrender (or, in the case of part payment only, endorsement) of a Note Certificate, in the place in which the Note Certificate is surrendered (or, as the case may be, endorsed).

(e) Partial payments: If a Paying Agent makes a partial payment in respect of any Note, the Issuer shall procure that the amount and date of such payment are noted on the Register and, in the case of partial payment upon presentation of a Note Certificate, that a statement indicating the amount and the date of such payment is endorsed on the relevant Note Certificate.

(f) Record date: Each payment in respect of a Note will be made to the person shown as the Holder in the Register at the close of business in the place of the Registrar’s Specified Office on the fifteenth day before the due date for such payment (the “Record Date”).

7. Taxation

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

Where such withholding or deduction is made by the Issuer by or within the PRC up to and including the rate applicable on 31 March 2021 (the “Applicable Rate”), the Issuer will pay such additional amounts as will result in receipt by the Noteholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required.

(a) held by a Holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Note by reason of its having some connection with the PRC other than the mere holding of the Note; or

−73− (b) where (in the case of a payment of principal or interest on redemption) the relevant Note Certificate is surrendered for payment more than 30 days after the Relevant Date except to the extent that the relevant Holder would have been entitled to such Additional Tax Amounts if it had surrendered the relevant Note Certificate on the last day of such period of 30 days.

In these Conditions, “Relevant Date” means whichever is the later of (1) the date on which the payment in question first becomes due and (2) if the full amount payable has not been received by the Principal Paying Agent or the Trustee on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders.

Any reference in these Conditions to principal, premium (if any) or interest shall be deemed to include any additional amounts in respect of principal or interest (as the case may be) which may be payable under this Condition 7 (Taxation) or any undertaking given in addition to or in substitution of this Condition 7 pursuant to the Trust Deed.

If the Issuer becomes subject at any time to any taxing jurisdiction other than the PRC, references in these Conditions to the PRC shall be construed as references to the PRC and/or such other jurisdiction.

Neither the Trustee nor the Agents shall be responsible for paying any tax, duty, charge, withholding or other payment referred to in this Condition 7 or for determining whether such amounts are payable or the amount thereof, and shall not be responsible or liable for any failure by the Issuer, the Noteholders or any other person to pay such tax, duty, charge, withholding or other payment in any jurisdiction or to provide any notice or information to the Trustee or any Agent that would permit, enable or facilitate the payment of any principal, premium (if any), interest or other amount under or in respect of the Notes without deduction or withholding for or on account of any tax, duty, charge, withholding or other payment imposed by or in any jurisdiction.

8. Events of Default

If any of the following events occurs (each, an “Event of Default”), then the Trustee at its discretion may and, if so requested in writing by Holders of at least one quarter of the aggregate principal amount of the outstanding Notes or if so directed by an Extraordinary Resolution, shall (subject to the Trustee having been indemnified and/or provided with security and/or pre-funded to its satisfaction) give written notice to the Issuer declaring the Notes to be immediately due and payable, whereupon the Notes shall become immediately due and payable at their principal amount together with accrued interest (if any) without further action or formality:

(a) Non-payment: the Issuer fails to pay any amount of principal in respect of the Notes on the due date for payment thereof or fails to pay any amount of interest in respect of the Notes on the due date for payment thereof, and in the case of interest, such failure continues for a period of 7 days; or

(b) Breach of other obligations: the Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Notes or the Trust Deed (other than those the breach of which would give rise to a redemption pursuant to Condition 5(c) (Redemption for a Relevant Event)) and such default (i) is incapable of remedy or (ii) being a default which is capable of remedy remains unremedied for 45 days after the Trustee has given written notice thereof to the Issuer; or

−74− (c) Cross-default of the Issuer or Subsidiary:

(i) any indebtedness in respect of moneys borrowed or raised by the Issuer or any of its Subsidiaries is not paid when due or (as the case may be) within any originally applicable grace period;

(ii) any such indebtedness becomes (or becomes capable of being declared) due and payable prior to its stated maturity otherwise than at the option of the Issuer or (as the case may be) the relevant Subsidiary or (provided that no event of default, howsoever described, has occurred) any person entitled to such indebtedness; or

(iii) the Issuer or any of its Subsidiaries fails to pay when due or (as the case may be) within any originally applicable grace period, any amount payable by it under any guarantee of any such indebtedness;

provided that the amount of indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above and/or the amount payable under any guarantee referred to in sub-paragraph (iii) above, individually or in the aggregate, exceeds U.S.$40,000,000 (or its equivalent in any other currency or currencies); or

(d) Unsatisfied judgment: one or more final, non-appealable judgment(s) or order(s) for the payment of an amount, individually or in the aggregate, in excess of U.S.$30,000,000 (or its equivalent in any other currency or currencies) is rendered against the Issuer or any of its Principal Subsidiaries and continue(s) unsatisfied and unstayed for a period of 45 days after the date(s) thereof or, if later, the date therein specified for payment; or

(e) Security enforced: a secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a material part of the undertaking, assets and revenues of the Issuer or any of its Principal Subsidiaries and is not discharged or stayed within 45 days; or

(f) Insolvency, etc.: (i) the Issuer or any of its Principal Subsidiaries becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator is appointed (or application for any such appointment is made) in respect of the Issuer or any of its Principal Subsidiaries or the whole or a material part of the undertaking, assets and revenues of the Issuer or any of its Principal Subsidiaries, (iii) the Issuer or any of its Principal Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of the whole or any material part of its indebtedness or any guarantee of any indebtedness given by it and such action is not discharged or stayed within 45 days or (iv) the Issuer or any of its Principal Subsidiaries ceases or threatens to cease to carry on all or substantially all of its business (otherwise than, in the case of a Principal Subsidiary, (A) for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent, (B) whereby the undertaking, assets and revenues of a Principal Subsidiary is transferred to or otherwise vested in the Issuer or another Subsidiary of the Issuer or (C) a disposal of a Principal Subsidiary or such Principal Subsidiary’s business and assets on an arm’s length basis where the proceeds or other considerations resulting from such disposal are vested in the Issuer or another Subsidiary of the Issuer); or

(g) Winding up, etc.: an order is made or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer or any of its Principal Subsidiaries (otherwise than, in the case of a Principal Subsidiary of the Issuer, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

−75− (h) Analogous event: any event occurs which under the laws of the PRC has an analogous effect to any of the events referred to in paragraphs (d) (Unsatisfied judgment) to (g) (Winding up, etc.) above; or

(i) Failure to take action, etc.: any action, condition or thing at any time required to be taken, fulfilled or done in order (i) to enable the Issuer lawfully to enter into, exercise its rights and perform and comply with its obligations under and in respect of the Notes or the Trust Deed, (ii) to ensure that those obligations are legal, valid, binding and enforceable and (iii) to make the Note Certificates and the Trust Deed admissible in evidence in the courts of the PRC and Hong Kong is not taken, fulfilled or done; or

(j) Unlawfulness: it is or will become unlawful for the Issuer to perform or comply with any of its obligations under or in respect of the Notes or the Trust Deed; or

(k) Government intervention: (i) all or any substantial part of the undertaking, assets and revenues of the Issuer or any of its Principal Subsidiaries is condemned, seized or otherwise appropriated by any person acting under the authority of any national, regional or local government without being on arm’s length basis or (ii) the Issuer or any of its Principal Subsidiaries is prevented by any such person from exercising normal control over all or any substantial part of its undertaking, assets and revenues.

In these Conditions, “Principal Subsidiary” means any Subsidiary of the Issuer:

(i) whose revenue or consolidated revenue (consolidated in the case of a Subsidiary which itself has Subsidiaries), as shown by its latest audited income statement, is at least five per cent. of the total revenue as shown by the latest published audited consolidated income statement of the Issuer and its Subsidiaries including, for the avoidance of doubt the Issuer and its consolidated Subsidiaries’ share of revenue of each direct or indirect investees of the Issuer not consolidated with the audited consolidated accounts of the Issuer and its Subsidiaries and of jointly controlled entities and after adjustments for minority interests;

(ii) whose net profit or consolidated net profit (in each case before taxation and exceptional items) (consolidated in the case of a Subsidiary which itself has Subsidiaries), as shown by its latest audited income statement, is at least five per cent. of the sum of (x) total consolidated net profit, as shown by the latest published audited consolidated income statement of the Issuer and its Subsidiaries and (y) the Issuer and its consolidated Subsidiaries’ share of profits of each direct or indirect investees of the Issuer not consolidated with the audited consolidated accounts of the Issuer and its Subsidiaries and of jointly controlled entities and after adjustments for minority interests;

(iii) whose total assets or consolidated total assets (consolidated in the case of a Subsidiary which itself has Subsidiaries), as shown by its latest audited balance sheet, are at least five per cent. of the sum of (x) the total assets of the Issuer and its Subsidiaries as shown by the latest published audited consolidated balance sheet of the Issuer and its Subsidiaries, and (y) the Issuer and its consolidated Subsidiaries’ share of the assets of each direct or indirect investee of the Issuer whose accounts are not consolidated with the audited consolidated accounts of the Issuer and its Subsidiaries and of jointly controlled entities and after adjustments for minority interests, provided that, in relation to sub-paragraphs (i), (ii) and (iii) above of this definition;

(a) in the case of a corporation or other business entity becoming a Subsidiary of the Issuer after the end of the financial period to which the latest consolidated audited accounts of the Issuer relate, the reference to the then latest consolidated audited accounts of the Issuer for the purposes of the calculation above shall, until consolidated audited accounts of the Issuer for the financial period in which the

−76− relevant corporation or other business entity becomes a Subsidiary of the Issuer are published, be deemed to be a reference to the then latest consolidated audited accounts of the Issuer adjusted to consolidate the latest audited accounts (consolidated in the case of a Subsidiary of the Issuer which itself has Subsidiaries) of such Subsidiary in such accounts;

(b) if the accounts of any Subsidiary of the Issuer (not being a Subsidiary of the Issuer referred to in paragraph (a) above of this definition) are not consolidated with those of the Issuer, then the determination of whether or not such Subsidiary is a Principal Subsidiary shall be based on a pro forma consolidation of its accounts (consolidated, if available) with the pro forma consolidated accounts (determined on the basis of the foregoing) of the Issuer; and

(c) in relation to any Subsidiary of the Issuer, each reference in paragraph (a) or (b) above to all or any of the accounts (consolidated or otherwise) of such Subsidiary shall be deemed to be a reference to the relevant audited accounts of such Subsidiary if it customarily prepares accounts which are audited and, if not, to the relevant unaudited accounts of such Subsidiary which shall be certified by any director of such Subsidiary as having been properly prepared in accordance with generally accepted accounting principles applicable to such Subsidiary; or

(iv) to which is transferred the whole or substantially the whole of the assets of a Subsidiary of the Issuer which immediately prior to such transfer was a Principal Subsidiary, provided that (xx) the Principal Subsidiary which so transfers its assets shall forthwith upon such transfer cease to be a Principal Subsidiary and the Subsidiary to which the assets are so transferred shall forthwith become a Principal Subsidiary and (yy) on or after the date on which the first published audited accounts (consolidated, if appropriate) of the Issuer prepared as of a date later than such transfer are issued, whether such transferor Subsidiary or such transferee Subsidiary is or is not a Principal Subsidiary shall be determined on the basis of such accounts by virtue of the provisions of sub-paragraph (i), (ii) or (iii) above of this definition.

A certificate of the auditors of the Issuer certifying that in their opinion (making such adjustments (if any) as they shall deem appropriate) a Subsidiary is or is not or was or was not at any particular time or during any particular period a Principal Subsidiary shall, in the absence of manifest error, be conclusive and binding on the Issuer, the Trustee, the Agents and the Noteholders.

9. Prescription

Claims for principal and interest on redemption shall become void unless the relevant Note Certificates are surrendered for payment within ten years of the appropriate Relevant Date.

10. Replacement of Note Certificates

If any Note Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Registrar, subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Note Certificates must be surrendered before replacements will be issued.

−77− 11. Trustee and Agents

Under the Trust Deed, the Trustee is entitled to be indemnified and/or provided with security and/or pre-funded to its satisfaction and relieved from responsibility in certain circumstances and to be paid its fees, costs, expenses or indemnity payments and for any liabilities incurred by it in priority to the claims of the Noteholders. In addition, the Trustee (and its affiliates) and Agents are entitled (i) to enter into business transactions with the Issuer and/or any entity relating (directly or indirectly) to the Issuer without accounting for any profit, and to act as trustee for the Holders of any other securities issued by or relating to, the Issuer and any entity related to the Issuer, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer and any other person appointed by the Issuer in relation to the Notes of the duties and obligations on their part expressed in respect of the same and, unless it has written notice from the Issuer to the contrary, the Trustee and each Agent shall assume that the same are being duly performed. None of the Trustee or any Agent shall be liable to any Noteholder or any other person for any action taken by the Trustee or such Agent in accordance with the instructions of the Noteholders. The Trustee shall be entitled to rely on any direction, request or resolution of Noteholders given by Holders of the requisite principal amount of Notes outstanding or passed at a meeting of Noteholders convened and held in accordance with the Trust Deed. Neither the Trustee nor any of the Agents shall be under any obligation to monitor or ascertain whether any Relevant Event, Event of Default or Potential Event of Default has occurred or monitor compliance by the Issuer with the provisions of the Trust Deed, the Agency Agreement or these Conditions.

Each Noteholder shall be solely responsible for making and continuing to make its own independent appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer, and the Trustee shall not at any time have any responsibility.

In the exercise of its functions, rights, authorities, powers and discretions under these Conditions and the Trust Deed, the Trustee will have regard to the interests of the Noteholders as a class and shall not have regard to the interest and will not be responsible for any consequence for individual Holders of Notes as a result of any circumstances particular to individual Holders of Notes, including but not limited to, such Holders being connected in any way with a particular territory or taxing jurisdiction.

The Trustee shall not be entitled to require on behalf of any Noteholders, nor shall any Noteholder be entitled to claim, from the Issuer or the Trustee any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders except to the extent already provided in Condition 7 (Taxation) and/or any undertaking given in addition to, or in substitution for, Condition 7 (Taxation) pursuant to the Trust Deed.

In acting under the Agency Agreement and in connection with the Notes, the Agents act solely as agents of the Issuer and (to the extent provided therein) the Trustee and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders.

The initial Agents and their initial Specified Offices are listed below. The Issuer reserves the right (with the prior approval of the Trustee) at any time to vary or terminate the appointment of any Agent and to appoint a successor registrar or principal paying agent and additional or successor paying agents and transfer agents; provided, however, that the Issuer shall at all times maintain a principal paying agent and a registrar.

−78− Notice of any change in any of the Agents or in their Specified Offices shall promptly be given by the Issuer to the Noteholders.

12. Meetings of Noteholders; Modification and Waiver

(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions or the Trust Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer or by the Trustee and shall be convened by the Trustee upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes and subject to the Trustee being indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more persons holding or representing one more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that certain proposals (including any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to effect the exchange, conversion or substitution of the Notes for other obligations or securities, to amend Condition 3 (Covenants), to change the currency of payments under the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution (each, a “Reserved Matter”)) may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more persons holding or representing not less than three-quarters or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders, whether present or not.

In addition, a resolution in writing signed by or on behalf of Noteholders, who for the time being are entitled to receive notice of a meeting of Noteholders under the Trust Deed, holding not less than 75 per cent. in nominal amount of the Notes outstanding, will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

(b) Modification and waiver: The Trustee may (but shall not be obliged to), without the consent of the Noteholders, agree to any modification of these Conditions or the Trust Deed (other than in respect of a Reserved Matter) or the Agency Agreement which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of Noteholders and to any modification of the Notes or the Trust Deed or the Agency Agreement, which is of a formal, minor or technical nature or is to correct a manifest error. In addition, the Trustee may, without the consent of the Noteholders, authorise or waive any proposed breach or breach of the Notes or the Trust Deed or the Agency Agreement (other than a proposed breach or breach relating to the subject of a Reserved Matter) if, in the opinion of the Trustee, the interests of the Noteholders will not be materially prejudiced thereby.

Unless the Trustee agrees otherwise, any such authorisation, waiver or modification shall be binding on the Noteholders and shall be notified by the Issuer to the Noteholders as soon as practicable thereafter.

−79− (c) Directions from Noteholders: Notwithstanding anything to the contrary in the Notes, the Trust Deed and/or the Agency Agreement, whenever the Trustee is required or entitled by the terms or conditions in the Notes, the Trust Deed and/or the Agency Agreement to exercise any discretion or power, take any action, make any decision or give any direction or certification, the Trustee is entitled, prior to exercising any such discretion or power, taking or refraining from any such action, making any such decision, or giving any such direction or certification, to seek directions from the Noteholders by way of an Extraordinary Resolution or seek clarifications of such directions and shall have been indemnified and/or secured and/or pre-funded to its satisfaction against all action, proceedings, claims and demands to which it may be or become liable and all costs, charges, damages, expenses (including legal expenses) and liabilities which may be incurred by it in connection therewith, and the Trustee is not responsible for any loss or liability incurred by any person as a result of any delay in it exercising such discretion or power, taking or refraining from such action, making such decision, or giving such direction or certification where the Trustee is seeking such directions or clarifications.

(d) Certificates and Reports: The Trustee and the Agents may rely conclusively without liability to Noteholders on a report, advice, opinion, confirmation or certificate or any advice of any lawyers, valuers, accountants (including auditors and surveyors), financial advisers, financial institution or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely conclusively on any such report, confirmation, opinion or certificate or advice and such report, confirmation or certificate or advice shall be binding on the Issuer, the Trustee and the Noteholders. The Trustee and the Agents shall not be responsible or liable to the Issuer, the Noteholders or any other person for any loss occasioned by acting on or refraining from acting on any such report, information, confirmation, certificate, opinion or advice.

13. Enforcement

The Trustee may at any time, at its discretion and without notice, institute such actions, steps or proceedings as it thinks fit to enforce its rights under the Trust Deed in respect of the Notes, but it shall not be bound to do so unless:

(a) it has been so requested in writing by the Holders of at least one-quarter of the aggregate principal amount of the outstanding Notes or has been so directed by an Extraordinary Resolution; and

(b) it has been indemnified and/or provided with security and/or pre-funded to its satisfaction.

No Noteholder may proceed directly against the Issuer unless the Trustee, having become bound to do so, fails to do so within a reasonable time and such failure is continuing.

14. Further Issues

The Issuer may from time to time, without the consent of the Noteholders and in accordance with the Trust Deed, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest and the timing to perform and complete the NDRC Post-issue Filing and the Foreign Debt Registration and the making of consequential notices thereof) so as to form a single series with the Notes. However, such further notes may only be issued if (i) the Rating Agency which has provided credit ratings in respect of the Notes has been informed of such issue; and (ii) such issue will not result in any adverse change in the then credit rating of the Notes. The Issuer may from time to time create and issue other series of notes having the benefit of the Trust Deed, provided that such supplemental documents are executed and further opinions are obtained as the Trustee may require, as further set out in the Trust Deed.

−80− 15. Notices

Notices to the Noteholders will be sent to them by uninsured mail at their respective addresses on the Register. Any such notice shall be deemed to have been given on the fourth day after the date of mailing. The Issuer shall also ensure that notices are duly published in a manner that complies with the rules and regulations of any stock exchange or other relevant authority on which the Notes are for the time being listed. Any notice shall be deemed to have been given, on the date of such publication or, if published more than once, on the first date on which publication is made.

Until such time as any individual Note Certificates are issued and so long as the Global Note Certificate is held in its entirety on behalf of Euroclear and Clearstream any notice to the Noteholders shall be validly given by the delivery of the relevant notice to Euroclear and Clearstream for communication by the relevant clearing system to entitled accountholders in substitution for notification as required by these Conditions and shall be deemed to have been given on the date of delivery to such clearing system.

16. Currency Indemnity

If any sum due from the Issuer in respect of the Notes or any order or judgment given or made in relation thereto has to be converted from the currency (the “first currency”) in which the same is payable under these Conditions or such order or judgment into another currency (the “second currency”) for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer shall indemnify the Trustee and each Noteholder, on the written demand of the Trustee or such Noteholder addressed to the Issuer and delivered to the Issuer, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which the Trustee or such Noteholder may in the ordinary course of business and at the relevant time purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a separate and independent cause of action.

17. Governing Law and Jurisdiction

(a) Governing law: The Notes, the Trust Deed and the Agency Agreement and any non-contractual obligations arising out of or in connection with the Notes, the Trust Deed and the Agency Agreement are governed by English law.

(b) Jurisdiction: The Issuer has in the Trust Deed and the Agency Agreement (i) agreed for the benefit of the Trustee and the Noteholders that the courts of Hong Kong shall have exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with the Notes (including any non-contractual obligation arising out of or in connection with the Notes); (ii) agreed that those courts are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue that any other courts are more appropriate or convenient.

−81− (c) Service of Process: The Issuer agrees that the documents which start any proceedings relating to a Dispute (“Proceedings”) and any other documents required to be served in relation to those Proceedings may be served on it by being delivered to The Law Debenture Corporation (H.K.) Limited (currently at Suite 1301, Ruttonjee House, Ruttonjee Centre, 11 Duddell Street, Central, Hong Kong), or to such other person with an address in Hong Kong and/or at such other address in Hong Kong as the Issuer may specify by notice in writing to the Noteholders in accordance with Condition 15 (Notices). If for any reason the Issuer ceases to have such an agent in Hong Kong, the Issuer shall promptly appoint a new agent in Hong Kong to accept service of process and shall deliver to the Trustee a copy of the agent’s acceptance of that appointment within 30 days of such cessation. Nothing in this paragraph shall affect the right of any Noteholder to serve process in any other manner permitted by law.

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

−82− SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM

The Global Note Certificate contains provisions which apply to the Notes while they are in global form, some of which modify the effect of the Terms and Conditions of the Notes set out in this Offering Circular. The following is a summary of certain of those provisions.

The Notes will be in registered form in the denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. The Notes will be represented by beneficial interests in a Global Note Certificate in registered form, which will be registered in the name of a nominee of, and deposited on or about the Issue Date with, a common depositary for Euroclear and Clearstream. Beneficial interests in the Global Note Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream.

Under the Global Note Certificate, the Issuer, for value received, will promise to pay such principal, interest and premium (if any) on the Notes to the holder of the Notes on such date or dates as the same may become payable in accordance with the Terms and Conditions of the Notes.

Subject as provided in the Trust Deed, each person who is for the time being shown in the records of Euroclear and/or Clearstream as entitled to a particular principal amount of the Notes represented by this Global Certificate (in which regard any certificate or other document issued by Euroclear or Clearstream as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be deemed to be the holder of such principal amount of such Notes for all purposes other than with respect to payments of principal, premium (if any) and distribution on the Notes for which purpose the registered holder of this Global Certificate shall be deemed to be the holder of such principal amount of the Notes in accordance with and subject to the terms of this Global Certificate and the Trust Deed. For so long as all of the Notes are represented by this Global Certificate and this Global Certificate is held on behalf of Euroclear and/or Clearstream notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream (as the case may be) for communication to the relative accountholders. Any such notice shall be deemed validly given to the Noteholders on the day on which such notice is delivered to Euroclear and/or Clearstream (as the case may be) as aforesaid.

The Global Note Certificate will become exchangeable in whole, but not in part, for Individual Note Certificates if (a) Euroclear or Clearstream is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or (b) any of the circumstances described in Condition 8 (Events of Default) occurs.

Whenever the Global Note Certificate is to be exchanged for Individual Note Certificates, such Individual Note Certificates will be issued in an aggregate principal amount equal to the principal amount of the Global Note Certificate within five business days of the delivery, by or on behalf of the registered holder of the Global Note Certificate, Euroclear and/or Clearstream to the Registrar of such information as is required to complete and deliver such Individual Note Certificates (including, without limitation, the names and addresses of the persons in whose names such Individual Note Certificates are to be registered and the principal amount of each such person’s holding) against the surrender of the Global Note Certificate at the Specified Office (as defined in the Terms and Conditions of the Notes) of the Registrar. Such exchange will be effected in accordance with the provisions of the Agency Agreement and the regulations concerning the transfer and registration of Notes scheduled thereto and, in particular, shall be effected without charge to any Noteholder or the Trustee, but against such indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such exchange.

In addition, the Global Note Certificate will contain provisions that modify the Terms and Conditions of the Notes as they apply to the Notes evidenced by the Global Note Certificate. The following is a summary of certain of those provisions:

−83− Payments on business days: In the case of all payments made in respect of the Global Note Certificate “business day” means any day which is a day on which commercial banks are open for business (including dealings in foreign currencies) in the city in which the Register has its specified office.

Payment Record Date: Each payment made in respect of the Global Note Certificate will be made to the person shown as the registered holder of the Global Note Certificate in the Register at the close of business (in the relevant clearing system) on the Clearing System Business Day before the due date for such payment (the “Record Date”) where “Clearing System Business Day” means a day on which each clearing system for which this Global Note Certificate is being held is open for business.

Exercise of put option: In order to exercise the option contained in Condition 5(c) (Redemption for a Relevant Event) (the “Put Option”), the registered holder of the Global Note Certificate must, within the period specified in the Terms and Conditions of the Notes for the deposit of the relevant Note Certificate and put exercise notice, give written notice of such exercise to the Principal Paying Agent, in accordance with the rules and procedures of Euroclear, Clearstream, and/or any other relevant clearing system, specifying the principal amount of Notes in respect of which the Put Option is being exercised. Any such notice shall be irrevocable and may not be withdrawn.

−84− USE OF PROCEEDS

The gross proceeds from the offering of the Notes is U.S.$200,000,000. After deducting the underwriting commissions and other estimated expenses payable in connection with the offering of the Notes, the net proceeds will be used for the construction of projects in the PRC and general corporate purposes.

−85− EXCHANGE RATE INFORMATION

The PBOC sets and publishes daily a central parity rate with reference primarily to the supply and demand of Renminbi against a basket of currencies in the market during the prior day. The PBOC also takes into account other factors, such as the general conditions existing in the international foreign exchange markets. From 1994 to 20 July 2005, the conversion of Renminbi into foreign currencies was based on rates set daily by the PBOC on the basis of the previous day’s inter-bank foreign exchange market rates and then current exchange rates in the world financial markets. During this period, the official exchange rate for the conversion of Renminbi to U.S. dollars remained generally stable. Although the PRC government introduced policies in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currencies for current account items, conversion of Renminbi into foreign currencies for capital items, such as foreign direct investment, loan principals and securities trading, still requires the approval of SAFE and other relevant authorities. On 21 July 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. The PBOC has enlarged the floating band several times since then. On 17 March 2014, the floating band for the trading prices in the inter-bank foreign exchange market of the Renminbi against the U.S. dollar was expanded to 2% around the central parity rate. This allows the Renminbi to fluctuate against the U.S. dollar by up to 2% above or below the central parity rate published by PBOC. From 21 July 2005 to 30 June 2015, the value of the Renminbi appreciated by approximately 33.5% against the U.S. dollar. Subsequently, the Renminbi depreciated 4.3% from 30 June 2015 to 31 December 2015. Since 2016, the exchange rate of Renminbi against the U.S. dollar experienced further fluctuation. Following the gradual appreciation against U.S. dollar in 2017, Renminbi experienced a recent depreciation in value against U.S. dollar followed by a fluctuation in 2018 and early 2019. On August 5, 2019, the PBOC set the Renminbi’s daily reference rate at above 7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic climate. The PBOC authorised the China Foreign Exchange Trading Centre, effective since 4 January 2006, to announce the central parity exchange rate of certain foreign currencies against the Renminbi on each business day. This rate is set as the central parity for the trading against the Renminbi in the inter-bank foreign exchange spot market and the over-the-counter exchange rate for the business day.

−86− The following table sets forth the noon buying rate for U.S. dollars in New York City for cable transfer in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York for the periods indicated as set forth in the H.10 statistical release of the Federal Reserve Board:

Noon buying rate

Period Period end Average(1) High Low

(RMB per U.S.$1.00)

2015 ...... 6.4778 6.2869 6.4896 6.1870 2016 ...... 6.9430 6.6549 6.9580 6.4480 2017 ...... 6.5063 6.7350 6.9575 6.4773 2018 ...... 6.8755 6.6292 6.9737 6.2649 2019 ...... 6.9618 6.9014 7.1786 6.6822 2020 ...... 6.5250 6.8878 7.1681 6.5208 January ...... 6.9161 6.9184 6.9749 6.8589 February ...... 6.9906 6.9967 7.0286 6.9650 March ...... 7.0808 7.0205 7.1099 6.9244 April ...... 7.0622 7.0708 7.0989 7.0341 May...... 7.1348 7.1016 7.1681 7.0622 June ...... 7.0651 7.0816 7.1263 7.0575 July ...... 6.9744 7.0041 7.0703 6.9744 August ...... 6.8474 6.9301 6.9799 6.8474 September ...... 6.7896 6.8106 6.8474 6.7529 October ...... 6.6919 6.7254 6.7898 6.6503 November ...... 6.5760 6.6029 6.6899 6.5556 December...... 6.5250 6.5393 6.5705 6.5208 2021 January ...... 6.4282 6.4672 6.4822 6.4282 February ...... 6.4730 6.4601 6.4869 6.4344

Note: (1) Determined by averaging the rates on the last business day of each month during the relevant year, except for monthly averages rates, which are determined by averaging the daily rates during the respective months.

−87− CAPITALISATION AND INDEBTEDNESS

The following table sets forth the consolidated capitalisation and indebtedness of the Group as at 30 June 2020 and as adjusted to give effect to the issue of the Notes, before the payment of fees, expenses and commission in connection with the offering. The following table should be read in conjunction with the Group’s financial statements and related notes included in this Offering Circular.

As at 30 June 2020

Actual Adjusted

(RMB’000) (U.S.$’000)(1) (RMB’000) (U.S.$’000)(1) Unaudited

Current borrowings Short-term borrowings(4) ...... 5,831,516 825,398 5,831,516 825,398 Notes payables ...... ———— Non-current liabilities due within 1 year ..... 3,968,202 561,663 3,968,202 561,663 Non-current borrowings Long-term borrowings (4) ...... 12,401,332 1,755,295 12,401,332 1,755,295 Bonds payable (5) ...... 6,811,721 964,137 6,811,721 964,137 Notes to be issued ...... — — 1,413,020 200,000 Total borrowings (2) ...... 29,012,771 4,106,491 30,425,791 4,306,493 Total equity ...... 26,521,621 3,753,892 26,521,621 3,753,892 Total capitalisation (3) ...... 55,534,392 7,860,383 56,947,412 8,060,385

Notes: (1) For convenience only, all translation from Renminbi into U.S. dollars are made at the rate of RMB7.0651 to U.S.$1.00 based on the noon buying rate as set forth in the H.10 statistical release of the Federal Reserve Bank of New York on 30 June 2020. (2) Total borrowings comprise the sum of current borrowings and non-current borrowings. (3) Total capitalisation represents the sum of total borrowings and total equity. (4) Members of the Group enter into various financing arrangements in the ordinary course of their business. As at 28 February 2021, the Group experienced increases in its short-term borrowings of approximately 10 per cent. and increases in its long-term borrowings of approximately 20 per cent. respectively, as compared to their respective balances as at 30 June 2020. (5) On 20 January 2021, the Issuer issued RMB800 million 3.10 per cent. super & short-term commercial paper due on 18 October 2021 in the PRC. The proceeds were used to repay indebtedness. On 8 February 2021, the Issuer issued RMB600 million 4.05 per cent. medium-term green notes due on 8 February 2026 in the PRC. The proceeds were used to repay indebtedness and finance certain green projects.

Except as otherwise disclosed above, there has been no material adverse change in the total capitalisation and indebtedness of the Group since 30 June 2020.

−88− DESCRIPTION OF THE GROUP

OVERVIEW

• Equity Investment: The Group invests in and manages a number of industrial funds under its equity investment business segment.

• Financial technology (“fintech”): The Group manages and operates several fintech platforms under its fintech business segment to supplement its financial services.

−89− CORPORATE STRUCTURE

As at 30 June 2020, the Group had 58 wholly-owned and majority-owned subsidiaries and 65 subsidiaries in which the Group had equity participation. The following chart sets out the corporate structure of the Group, showing the shareholder of the Group as at 30 June 2020:

Chengdu SASAC

100%

Chengdu Jiaozi Financial Holding Group Co., Ltd. (the “Issuer”)

HISTORICAL MILESTONES

The table below sets forth selected key milestones in the Group’s development history:

Time Milestone

2008 Chengdu Investment Holding Group Co., Ltd. (成都投資控股集團有限公司 ), the predecessor of the Issuer, was established in September 2008 with a registered capital of RMB100 million, of which RMB50 million was paid in.

The Issuer’s registered capital was increased to approximately RMB3.0 billion, of which RMB600 million was paid in. In this capital injection, RMB500 million was transferred from the Issuer’s capital reserve and RMB50 million was contributed by Chengdu SASAC.

Chengdu SASAC transferred the 100 per cent. of equity interest it held in Chengdu Ding Li Assets Management Co., Ltd. (成都鼎立資產經營管理有限公司)(“Ding Li Assets”) and the 100 per cent. of equity interest it held in Chengdu Rongxing Venture Capital Investment Co., Ltd. (成都蓉興創業投資有限公司) (“Chengdu Rongxing”) to the Group at free allocation.

2009 The Issuer increased its paid-in capital by RMB2.26 billion which was transferred from its capital reserve.

The Issuer’s registered capital was increased to approximately RMB5.0 billion. The Issuer’s paid-in capital was also increased to RMB4.86 billion which was contributed by Chengdu Communications Investment Group Corporation Ltd. (成都交通投資集團有限公司)(“Chengdu Communications”).

−90− Time Milestone

The Group’s subsidiaries, Chengdu Financial Holding Guarantee Co., Ltd. (成都金控融資擔保有限公司)(“Chengdu Guarantee”), Chengdu Financial Holding Real Estate Co., Ltd. (成都金控置業有限公司)(“Chengdu Real Estate”) and Chengdu Financial City Investment & Development Co., Ltd. (成都金融城投資發展有限責任公司)(“Financial City Investment”), were established. In December 2020, Financial City Investment was renamed as Chengdu Jiaozi Park Financial and Business Zone Investment & Development Co., Ltd. (成都交子公園金融商務區投資開發有限責任公司)(“Jiaozi Park Financial and Business Zone Investment & Development”).

2010 The Issuer received a contribution of RMB140 million from Chengdu SASAC. Its paid-in capital was increased to RMB5 billion.

Chengdu SASAC transferred the equity interests in Bank of ChengDu held by different companies to the Group through free allocation. The Group became the largest shareholder of Bank of ChengDu.

The Group’s subsidiary Chengdu Financial Holding Financial Services Co., Ltd. (成都金控金融服務有限公司) was established.

The Group’s subsidiary, Chengdu Tianfu Tong Financial Services Co., Ltd. (成都天府通金融服務股份有限公司)(“Tianfu Tong”), was established.

The Group’s subsidiaries, Chengdu Jinkong Financial Leasing Co., Ltd. (成都金控融資租賃有限公司)(“Chengdu Financial Leasing”) and Chengdu Financial Holding Micro Credit Corp. Ltd. (成都市金控小額貸款股份有限公司) (“Chengdu Micro Credit”), were established.

2011 Chengdu SASAC transferred the equity interest in the value of RMB2.0 billion in the Issuer held by Chengdu Communications to Chengdu Xiecheng.

Chengdu SASAC transferred the equity interest in the value of RMB3.0 billion it held in the Issuer to Chengdu Municipal Financial Service Office (成都市金融工作辦公室)(“Financial Service Office”), currently known as Chengdu Municipal Financial Regulatory Bureau (成都市地方金融監督管理局). The registration procedures for the change of shareholder were completed in 2012.

The Group established JinTai Property & Casualty Insurance Co., Ltd. (錦泰財產保險股份有限公司)(“JinTai Insurance”), the only local insurance company in Chengdu.

2012 The Group’s subsidiary, Chengdu JIAOZI Emerging Financial Investment Group Co., Ltd. (成都交子新興金融投資集團股份有限公司)(“JIAOZI Emerging”) was established.

2014 The Issuer’s shareholder was changed from Financial Service Office to Chengdu SASAC. The registration procedures for the change of shareholder were completed in 2015.

2015 The Issuer changed its name from Chengdu Investment Holding Group Co., Ltd. (成都投資控股集團有限公司) to Chengdu Financial Holding Group Co., Ltd. (成都金融控股集團有限公司)(“Chengdu Financial Holding Group”).

−91− Time Milestone

2016 The Group’s subsidiary, Chengdu Financial Dreamworks Investment Management Co., Ltd. (成都金融夢工場投資管理有限公司)(“Chengdu Fintech Dreamworks”), was established.

The Company’s onshore corporate rating was upgraded from “AA” to “AAA” by China Chengxin International Credit Rating Co., Ltd. (中誠信國際信用評級有限公司)(“China Chengxin”).

2017 The Group was designated by the Chengdu Government to launch Chengdu Industry Investment Leading Fund (成都市產業投資引導基金).

Chengdu SASAC transferred the 46.76 per cent. of equity interest it held in Financial City Investment (currently known as Jiaozi Park Financial and Business Zone Investment & Development) and the 100.0 per cent. of equity interest it held in Chengdu Security Services Company (成都市保安服務總公司) (currently known as Zhongrong Security Group Co., Ltd. (中融安保集團有限責任公司 )(“Zhongrong Security”) to the Issuer. After the transfer, the Issuer held 62.86 per cent. of equity interest in Financial City Investment (currently known as Jiaozi Park Financial and Business Zone Investment & Development) and 100.0 per cent. of equity interest in Zhongrong Security.

2018 Bank of ChengDu was listed on Shanghai Stock Exchange on 31 December.

The Group’s subsidiary, Chengdu Yihang Asset Management Co., Ltd. (成都益航資產管理有限公司)(“Chengdu Yihang”), was established with a registered capital of RMB10 billion, being the second local licensed asset management company in Sichuan Province and the first in Chengdu.

2019 The Issuer changed its name from Chengdu Financial Holding Group to Chengdu Jiaozi Financial Holding Group Co., Ltd. (成都交子金融控股集團有限公司).

Chengdu Smart Car City Development Co., Ltd. (成都智慧車城發展有限公司) and Chengdu Jiaozi Commercial Factoring Co., Ltd. (成都交子商業保理有限公司) were established as subsidiaries of the Group.

The Group’s subsidiary Chengdu Jiaozi Supply Chain Financial Services Co., Ltd. (成都交子供應鏈金融服務有限公司) was established with the aim of developing a supply chain financing business.

2020 The Issuer’s registered capital was increased to RMB10.0 billion, RMB8.0 billion of which was contributed by Chengdu SASAC and RMB2.0 billion of which was contributed by Chengdu Xiecheng.

Chengdu Financial City Investment & Development Co., Ltd. (成都金融城投資發展有限責任公司) changed its name to Chengdu Jiaozi Park Financial Business District Investment Development Co., Ltd.（成都交子公園金融商務區投資開發有限責任公司）.

In December 2020, Chengdu Xiecheng transferred all of the equity interest it held in the Issuer to Chengdu SASAC. The Issuer has become directly wholly owned by Chengdu SASAC.

−92− RECENT DEVELOPMENTS

2020 Third Quarter Financial Information of the Group

The Group published its unaudited and unreviewed consolidated financial statements as at and for the nine months ended 30 September 2020 in accordance with the information disclosure rules of the PRC interbank market. None of the Group’s unaudited and unreviewed consolidated financial statements are incorporated into this Offering Circular. Investors are cautioned against placing undue reliance on any information to be disclosed in the Group’s unaudited and unreviewed consolidated financial statements since none of such information has been or will be subject to any audit or review by the Group’s auditors and there is no assurance such unaudited and unreviewed financial information has or will have the same quality as the information reported in the Group’s historical audited financial statements. The results as at and for the nine months ended 30 September 2020 should not be taken as indicative of the Group’s financial results for the full year of 2020.

The COVID-19 Outbreak

−93− However, uncertainties are still present with the evolution of the pandemic. The Group will continue to closely monitor the global development and make assessment of the impacts of COVID-19 and actively respond to its impact on the financial conditions and results of operations of the Group. Please see “Risk Factors — Risks Relating to the Group’s Business in General — The Group’s business is subject to general economic and business cycles, and difficult conditions in the global economy may adversely affect the Group’s business” and “Risk Factors — Risks Relating to the Group’s Business in General — The Group’s operations are subject to force majeure events, natural disasters, catastrophe and outbreaks of contagious diseases, such as COVID-19” for more information.

Transfer of Shares in the Issuer

AWARDS AND HONOURS

• One of China’s top 10 enterprises in support of SME development by the National Service Industry Public Satisfaction Research Committee in 2012;

• One of the 2016 top 10 enterprises in the finance industry in Chengdu Hi-Tech Industrial Development Zone;

• One of Sichuan’s top 100 service enterprises by Sichuan Enterprise Confederation in 2018;

• One of China’s top 10 financial leasing enterprises for customer satisfaction;

• Outstanding Security Service Enterprise of Sichuan Province by Sichuan Security Guard Association in 2018;

• Second prize in the Science and Technology Progress Awards in Sichuan Province awarded by Sichuan Provincial People’s Government in 2019;

• One of China’s top 10 security service companies by the Public Security Department of Sichuan Province in 2020;

• The Group won the award of the 2019 top 10 Service Cases for People’s Livelihood;

• Jiaozi Fintech Dreamworks (交子金融夢工場) received the 2018-2019 Sichuan Youth Model Unit Award;

• Jiaozi Fintech Dreamworks (交子金融夢工場) was named in the 2020 Provincial Technology Business Incubator Filing List; and

• Chengdu Industry Guiding Fund (成都產業引導基金) was in the list of the top 20 Best Private Equity Investment Guidance Fund in China in 2020.

−94− COMPETITIVE STRENGTHS

The Group believes it has the following competitive strengths that have led to its success and are important to its future development:

Well-positioned to benefit from the geographical and strategic advantages of Chengdu and sound relationship with the Chengdu Government

The Group believes that its business success and growth potential are largely attributable to the economic strength and the growing competitiveness of Chengdu as the capital city of Sichuan Province and the nationwide economic centre, where the Group undertakes important projects and conducts its business.

As the capital city of Sichuan Province and located in Southwest China, Chengdu enjoys a geographical advantage and occupies a strategic position. In 2016, Chengdu was announced as one of the nine National Central Cities by the Ministry of Housing and Urban-Rural Development of the PRC. In the same year, the NDRC and the Ministry of Housing and Urban-Rural Development co-issued the Development Plan for Chengdu-Chongqing Urban Agglomeration (成渝城市群發展規劃), which sets forth the goal of developing Chengdu into a National Central City by strengthening its position as the central city of economy, finance, technology, culture, transportation and communications in Western China. Since then, Chengdu has seized the opportunity to share more national strategic resources and shoulder more national strategic roles.

Chengdu’s competitiveness is also evidenced by its strong economic growth. In 2018, Chengdu’s gross domestic product (“GDP”) amounted to RMB1,534.3 billion, ranking first in Sichuan Province, second among the cities in Western China and seventh in China. Its GDP accounted for over one third of the GDP in Sichuan Province and was six times larger than that of Mianyang, the second largest economy in Sichuan Province in 2018. During the same period, Chengdu’s GDP growth rate reached 8.0 per cent., the highest among the top 10 cities in China with the largest GDP. Attributable to its economic growth, Chengdu has developed into the economic centre of Sichuan Province and Southwest China.

Chengdu’s finance industry is also exerting a great influence. According to the 29th Global Financial Centres Index released by Z/Yen in March 2021, Chengdu ranked 35th globally, up 8 places compared to the prior period.

Chengdu’s growth is also boosted by various policies. In the PRC government’s Belt and Road Initiative, Chengdu has been positioned as the gateway for China to open up internationally. The Chengdu Government has also placed a great emphasis on the development of Chengdu, as evidenced by its issuance of the Opinions on Promoting the Development of National Financial Centre in Western China (關於進一步加快建設國家西部金融中心的若干意見), which maps out the plan to develop Chengdu into a national financial centre with a firm foothold in Sichuan Province, a widespread service network in Western China and a global impact.

To facilitate the implementation of the comprehensive construction of a modern financial industry system and enhancement of the function of the western financial centre, the Chengdu Government has developed and approved the Construction of the Western Financial Centre Action Plan (2017-2022) (建設西部金融中心行動計畫) (the “Western Financial Centre Action Plan”). The Western Financial Centre Action Plan contains descriptions of various key projects that includes the financial carrier optimization construction project, financial technology innovation project, green financial development project and inclusive financial promotion projects. As a key state-owned enterprise in Chengdu, the Group sets its strategic aim to support government plans and has various businesses that are likely to play important roles in the implementation of the strategy of building a western financial centre.

−95− Leveraging its strategic position as the only entity utilising state-owned capital that is operating in the finance industry in Chengdu, the Group is well-positioned to benefit from current favourable trends. It has maintained a close relationship with, and obtained support from, the Chengdu Government to carry out the development strategies of the Chengdu Government. For example, through the Chengdu Government’s free allocation, the Group has acquired shares of a number of subsidiaries, such as Bank of ChengDu, Zhongrong Security, Jiaozi Park Financial and Business Zone Investment & Development, Tianfu Tong, Ding Li Assets and a number of other companies, which allows it to consolidate financial resources in Chengdu and diversify its businesses. It has set up the only local property insurance company, JinTai Insurance, and the second local licensed asset management company, Chengdu Yihang, in Sichuan Province. In line with the development strategy of the Chengdu Government, the Group has been designated by the Chengdu Government to operate several fintech applications, such as Tianfu Tong Card (a public transport e-payment system), Tianfu Citizen Cloud (a mobile civil service platform) and Chengdu Nongdaitong (an integrated rural financial service platform) and to undertake various public landmark projects to innovate Chengdu’s finance industry and modernise Chengdu’s financial landscape. In addition, the Group has been entrusted by the municipal government to manage its investment funds, acting as the shareholder and carrying out such duties for many companies that are funded by the municipal government; the Group is a key builder of property rights trading platforms in Western China; and, through the Jiaozi Fintech Dreamworks (交子金融夢工場), the Group also provides a makerspace for local start-up businesses. For details, please see “Description of the Group — Description of the Group’s business”. To back its development, the Group has also gained financial support from the Chengdu Government through capital injections, tax incentives, refund of land cost, grants and subsidies. All these have contributed to the Group’s overall development.

Leading position in various industries with strong comprehensive competitiveness

As the only entity utilising state-owned capital that is operating in the finance industry in Chengdu, the Group occupies a leading position in various industries. It ranked first among SASAC’s assessment of annual operational performance of state-owned enterprises in Chengdu in 2017. Set forth below is a summary of the highlights of each of the Group’s business segments:

Financial services

The Group has rich financial resources by a holding controlling equity interest or an equity participation in a number of financial institutions. It is the largest shareholder of six local financial institutions, including Bank of ChengDu, the first publicly listed local bank in Sichuan Province, and JinTai Insurance, the first insurance company from central and western region of the PRC and the third insurance company in the PRC to be listed on the National Equities Exchange and Quotations (“NEEQ”). It is also the second largest shareholder of other four local financial institutions, including Southwest United Equity Exchange (西南聯合產權交易所).

Its asset management business also occupies a dominant position in Chengdu, which is mainly conducted through Ding Li Assets and Chengdu Yihang. Ding Li Assets is the only asset management company specialised in disposing of distressed state-owned assets in Chengdu; Chengdu Yihang is a large-scale AMC in the PRC and the second AMC established in Sichuan Province.

The Group is a national leading security service provider and the only enterprise in Chengdu providing armed escort services and management services for property involved in criminal and administrative cases.

Financial infrastructure development and operation

The Group aims to facilitate the development of the financial centre of Western China. It is the major entity responsible for the planning, construction and operation of the Financial Headquarters Business District in Chengdu (成都金融總部商務區(金融城)) (“Chengdu Financial City”), which is

−96− positioned as a key element in developing Chengdu into the financial centre of Western China and a model for the modern service industry in Sichuan Province. As at 31 December 2019, over 2,700 enterprises had settled in Chengdu Financial City, among which there were over 2,100 financial and ancillary services institutions.

Fintech

The Group is a pioneer to integrate advanced information technologies with the finance industry in Chengdu. It has launched and created several people-oriented one-stop online financial service platforms, bringing convenience to people’s daily lives and achieving the overall upgrade of the whole finance industry in Chengdu. Its key fintech projects are listed below:

• Chengdu Nongdaitong: the first integrated rural financial service platform in China, which combines the rural credit reporting system with online financial services;

• Tianfu Tong Card: the only mobile payment platform for public transport in Chengdu and the only public transport e-payment platform in Western China that covers bus, subway and tram;

• Tianfu Citizen Cloud: the first and only citizen-oriented civil service platform in Chengdu, which provides one-stop and all-round civil services to citizens, covering information communications, transportation, healthcare, utility bill payment and others; and

• Jiao Zi Fintech Dreamworks: the first fintech hackerspace in China, which serves as an incubator for the development of fintech enterprises in Chengdu.

Equities investment

The Group invests in, and manages, a number of government-invested industry-leading funds and sets up new funds in line with the development strategies of Chengdu, which ensures its strategic position in optimising the local industrial structure by upgrading traditional industries and cultivating emerging industries in Chengdu.

Synergies achieved through diversified business segments

As a large comprehensive financial holding platform in Chengdu, the Group has established a presence in various industries and accumulated a wealth of portfolio companies operating in various business segments covering financial investment, real economy services, asset management, security and escort services, property development and management, equity investment and fintech.

The Group is committed to providing its clients with various forms of financing solutions through the integrated design and development of multiple products, at the same time enhancing the value of the Group’s asset portfolios. The sharing of the Group’s extensive business network, broad client base, sound management and leadership among the diversified business segments allows the Group to achieve synergies among its investments and businesses across industries and products, and improve its operational efficiency. In addition, the Group believes that its ability to offer a diversified range of products and services through cross-selling and cross-marketing enhances its competitiveness and places the Group in a strong position to achieve greater economies of scale and further enhance its market share in the industries in which it operates.

The Group is able to achieve synergies among its four business segments, examples of which are set for the below:

• Financial services

With diversified financial services, the Group is well-positioned to pool financial capitals and resources, from which it selects suitable investment opportunities to expand its equity

−97− investment business. The Group’s wide financial service network facilitates the development of the cluster of financial institutions in Chengdu Financial City, hence boosting the business at the CBDs developed and operated by the Group. The financial database built upon its service network and customer base lays a solid foundation for the Group to build up its fintech platforms through data analysis.

• Financial infrastructure development and operation

By engaging in financial infrastructure development and operations, the Group has physically created a customised platform that enables its financial services to reach a wider range of customers. A platform with a large customer base serves as a business incubator attracting more enterprises and star-ups to settle in, hence bringing more financial and customer resources, which, in turn, will potentially scale up the Group’s equity investment and strengthen its fintech development backed by data.

• Equity investment

By investing in portfolio companies under its equity investment business, the Group seeks to secure more financial licenses so as to enlarge the scope of its financial services. The Group also selectively identifies premium investment opportunities in the real estate industry to supplement its property development business. It intends to further set up fintech funds to invest in the fintech industry and cultivate a fintech start-up space in an attempt to boost its fintech business.

• Fintech

The fintech developed by the Group has provided technical and data support to the Group in rendering its financial services, enhanced its operational efficiency and brought innovation to its traditional business model. The fintech start-up space will also attract more fintech star-ups to settle in the Jiaozi Fintech Centre, hence creating more business opportunities for the CBDs developed and operated by the Group. The Group believes that the advancement of fintech will ultimately bring returns on its investment in fintech enterprises.

Sound financing capability and diversified funding channels

The Group has access to various sources of funding to support its business development and investment activities. Its financing channels include bank loans and debt issuance in the capital market, directly or indirectly. As at 30 June 2020, the Group’s total indebtedness consisted of approximately 67.21 per cent. of bank loans, 2.41 per cent. of enterprise bonds, 16.11 per cent. of corporate bonds, 5.19 per cent. of mid-term notes, 3.46 per cent. of short-term notes and 5.61 per cent. of other forms of financing.

The Group has a sound credit position and balanced indebtedness. As at 30 June 2020, the Issuer maintained an onshore corporate rating of “AAA” from China Chengxin. As at 30 June 2020, the outstanding balance of the Group’s interest-bearing indebtedness amounted to approximately RMB28.9 billion, of which RMB3.8 billion is due within one year, RMB7.2 billion is due within two years, RMB3.8 billion is due within three years and RMB14.0 billion is due in more than three years.

The Group cooperates closely with different types of banks with an adequate credit line, including China Development Bank, China Construction Bank, Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, Bank of Communications and China Everbright Bank. As at 30 June 2020, the Group had credit facilities in a total amount of approximately RMB55.4 billion, of which RMB34.6 billion had not been utilised.

The Group’s ability to access diversified funding sources and its strong financing capability have enabled it to fulfil the capital needs of its businesses and capitalise on various business opportunities.

−98− Prudent and effective risk management systems

The Group has adopted a prudent risk management strategy and developed a comprehensive risk management system to enhance its overall internal control and risk management capabilities. The Issuer believes that risk management is fundamental to the Group’s business development and operations. The systematic approach adopted by the Group has helped it to manage its businesses in a disciplined manner. Please see “Description of the Group — Risk Management” for more information. The Issuer believes that the Group’s comprehensive and sound risk management system allows the Group to identify, manage and mitigate various risks emerging from its operations in a timely and effective manner.

Experienced management team with extensive industry knowledge and demonstrated execution capabilities coupled with sound corporate governance

The Group has a sound management team with a strong academic background, extensive knowledge and rich experience in the finance industry, including banking, insurance and asset management. The Issuer’s directors and senior management members are appointed directly by the Chengdu Government and Chengdu SASAC. A number of the Group’s directors and senior management members have previously held key positions in the Chengdu Government and major commercial banks. Therefore, they are familiar with governmental policies, regulations and procedures and have significant experience in the finance industry and risk management. Please see “Directors and Senior Management” for further information.

The Group has also established a sound and effective corporate governance structure, which is in line with modern corporate practice. Its corporate governance system includes the establishment and maintenance of overall financial policies and different departments to oversee its daily operations, including, among others, strategy development department, investment management department, business management department, finance department, audit and compliance department, and bidding and procurement department. The Group has also established an independent risk management department. In addition, the Group’s business performance, financial conditions and major operational decisions are subject to the assessment, review and approval of the Chengdu Government and Chengdu SASAC.

The Group believes that its highly-experienced management team and sound corporate governance structure have contributed to achieving steady growth and will continue to position it strategically to capture the significant opportunities in the finance industry.

BUSINESS STRATEGIES

The Group is currently committed to pursuing the below strategies.

To develop into an innovation-oriented and integrated financial services conglomerate with nationwide influence

The Group aims to work with international financial talents, facilitate the development of the financial centre of Western China, and to become an innovative comprehensive financial holding group with national influences.

It adopts a three-dimensional overall development model featuring “industry-finance integration, internal synergic development and external expansion”, which aims to create a coordinated industrial ecosystem. In terms of industry-finance integration, the Group seeks to widen and deepen its service scope to further integrate with different industries through equity investment. It aims to provide comprehensive financial services in line with the industrial development strategy of Chengdu, thereby creating an industry and people-oriented value chain. In terms of internal synergic development, the

−99− Group strives to consolidate resources among its second-tier subsidiaries to achieve synergic development and integration of different businesses of its subsidiaries. In terms of external expansion, the Group plans to expand its business through strategic acquisition so as to reach more prosperous industries and achieve better industry-finance integration.

Guided by the philosophy of “maintaining traditional strength and pursuing innovation, facilitating integration of industry and finance, achieving internal coordination and external expansion, and promoting development both at home and abroad”, the Group adopts four dimensional development strategies to specify its development direction and strengthen its growth momentum in each business segment, details of which are set forth below:

• to strengthen its financial services business: The Group seeks to obtain different financial licences, improve its financial service system, strengthen its operational capabilities and improve the comprehensive strength of its financial-related subsidiaries to create a diversified, synergetic and quality financial services platform;

• to optimise its financial infrastructure development and operation business: Capitalising on its experience gained from the financial infrastructure development and operation and industry cluster development at Chengdu Financial City, the Group will focus on the development of first-class landmark buildings and emerging finance industry business models. It aims to build up its brand image and become a leading comprehensive operating entity of financial industrial parks in the PRC;

• to innovate its fintech business: The Group will take full advantage of the talent pool and its fintech technologies to foster a fintech industry cluster and ecosystem, hence driving the innovative growth of the fintech industry in Central and Western China; and

• to diversify its equity investment business: The Group aims to attract more social capitals to invest in industry leading funds, thereby integrating financial assets and optimising the structure of the local finance industry.

To diversify financing sources and explore new channels to lower funding costs

The Group has traditionally funded its business operation and working capital through bank loans and issuance of enterprise bonds, corporate bonds and mid-term notes in the domestic market. It has maintained long-term relationships with several commercial and other financial institutions in the PRC. The Group intends to continue to diversify its financing sources to secure stable funding for its business operations and development, investment activities and working capital. To this end, the Group is actively seeking opportunities to utilise the capital markets with a view to reducing capital costs and maintaining an optimised financing structure, including the issuance of offshore bonds. The Group will also build and reinforce close relationships with banks and financial institutions to secure funding on more favourable terms and with lower interest rates. The Issuer believes that these will better fulfil the Group’s financing needs for development and operations and maintain a balanced financial structure.

Adhere to prudent risk management with stringent risk control

The Group believes that a prudent risk management system can reduce operational and financial risks and help achieve long-term sustainable growth. As such, the Group will continue to enhance its risk management system by implementing a stringent risk reporting and control system to comply with legal and regulatory requirements. The Group will also maintain prudent investment policies that aim to achieve a balance between assets and liabilities, between investment returns and risk taking, and between its financial service business and its other businesses. The Group strives to prudently manage its risk profile while fulfilling investment and development needs to drive its profitability.

− 100 − Continue to enhance management capability and improve corporate governance

The Group will continue to improve and streamline its management structure, so as to strengthen its capabilities in terms of corporate management and internal control. The Group considers that effective management at all organisational levels and among members of the Group is critical to optimise its overall operational efficiency. To this end, the Group may also improve its corporate governance structure by further adjusting its organisational structure and re-allocating the functions among departments. The Group will continue to build its professional management and investment teams with well-qualified and experienced personnel, carry out training for its teams from time to time so as to enable the Group to improve the efficiency of its operations and achieve its strategic goals through the expertise and continuity of the Group’s management and investment teams.

DESCRIPTION OF THE GROUP’S BUSINESS

Overview

The Group’s businesses can be divided into four segments, namely: (i) financial services; (ii) financial infrastructure development and operation; (iii) equity investment; and (iv) fintech.

The table below sets out a breakdown of the Group’s total operating revenue by business segment for the periods indicated:

For the year ended 31 December Fir the six months ended 30 June 2017 2018 2019 2019 2020 Operating Percentage Operating Percentage Operating Percentage Operating Percentage Operating Percentage income (%) income (%) income (%) income (%) income (%) Audited Unaudited (RMB in millions, except percentages)

Main Business Financial services . . . 2,238.8 72.26 2,357.0 70.09 3,073.5 84.87 1,400.2 77.91 1,726.1 94.04 Financial infrastructure development and operation ...... 673.1 21.73 891.5 26.51 429.1 11.85 371.4 20.66 37.2 2.03 Equity investment . . . 106.7 3.44 18.2 0.54 26.2 0.72 11.1 0.62 22.6 1.23 Fintech ...... 79.6 2.57 95.9 2.85 92.7 2.56 14.5 0.81 49.6 2.70 Total operating revenue ...... 3,098.3 100.00 3,362.6 100.00 3,621.4 100.00 1,797.2 100.00 1,835.4 100.00

The following table sets forth a breakdown of the Group’s total net profit by business segment for the periods indicated:

For the year ended 31 December Fir the six months ended 30 June 2017 2018 2019 2019 2020 Percentage Percentage Percentage Percentage Percentage Net profit (%) Net profit (%) Net profit (%) Net profit (%) Net profit (%) Audited Unaudited (RMB in millions, except percentages)

Main Business Financial services . . . 660.0 74.72 927.2 89.53 1,232.0 96.03 494.2 86.36 888.1 97.53 Financial infrastructure development and operation ...... 113.4 12.84 90.3 8.72 58.1 4.53 74.3 12.98 2.4 0.26 Equity investment . . . 115.2 13.04 22.5 2.17 5.7 0.44 11.1 1.95 11.0 1.20 Fintech ...... (5.2) (0.59) (4.4) (0.42) (12.8) (1.00) (7.4) (1.29) 9.1 1.00 Total net profit..... 883.4 100.00 1,035.7 100.00 1,283.0 100.00 572.3 100.00 910.6 100.00

− 101 − The following table sets forth a breakdown of the Group’s total gross profit by business segment for the periods indicated:

For the year ended 31 December Fir the six months ended 30 June 2017 2018 2019 2019 2020 Gross Percentage Gross Percentage Gross Percentage Gross Percentage Gross Percentage profit (%) profit (%) profit (%) profit (%) profit (%) Audited Unaudited (RMB in millions, except percentages)

Main Business Financial services . . . 694.2 68.68 610.4 65.89 1,163.1 85.96 509.0 80.14 864.8 92.35 Financial infrastructure development and operation ...... 152.6 15.10 235.1 25.38 130.6 9.65 110.7 17.42 41.1 4.38 Equity investment . . . 106.7 10.56 17.7 1.91 26.2 1.93 11.1 1.74 22.6 2.41 Fintech ...... 57.2 5.66 63.2 6.82 33.2 2.46 4.4 0.69 8.1 0.86 Total gross profit.... 1,010.7 100.00 926.4 100.00 1,353.0 100.00 635.2 100.00 936.4 100.00

Financial services

Financial services are the Group’s core business and main source of income and profit. As a large comprehensive financial holding platform in Chengdu, the Group engages in diversified financial services, including: (i) financial investment; (ii) real economy services, covering financial leasing, guarantees, SME finance and pawn broking; (iii) asset management; (iv) financial ancillary services, covering security and armed escort services; and (v) equity exchange.

For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the operating revenue generated from the Group’s financial services business was RMB2,238.8 million, RMB2,357.0 million RMB3,073.5 million, RMB1,400.2 million and RMB1,726.1 million, respectively, representing 72.26 per cent., 70.09 per cent, 84.87 per cent., 77.91 per cent. and 94.04 per cent., respectively, of its total operating revenue during the same periods.

Financial investment

The Group engages in various financial investments, covering banking, securities, insurance and asset management, hence creating synergies among its different businesses. For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the Group’s investment income was RMB1,217.3 million, RMB1,281.9 million, RMB1,516.7 million, RMB619.1 million and RMB780.2 million, respectively, representing 137.8 per cent., 124.7 per cent., 118.2 per cent., 108.2 per cent. and 85.7 per cent. of its total net profit, respectively, during the same periods. Set forth below is a summary of the information on some of the key subsidiaries in which the Group has equity participation.

Bank of ChengDu

Bank of ChengDu was established in 1996 as the first city commercial bank in Sichuan Province. It was listed on Shanghai Stock Exchange (stock code: 601838. SH) on 31 January 2018, becoming the first publicly traded bank in Sichuan Province and the eighth publicly listed city commercial bank in China. As at 30 June 2020, the Group held 18.43 per cent. of equity interest in Bank of ChengDu, being the largest shareholder.

As at 30 June 2020, Bank of ChengDu had total assets of approximately RMB614.7 billion; its deposits reached approximately RMB437.5 billion. For the six months ended 30 June 2020, its net profit was approximately RMB2.8 billion. As at 30 June 2020, Bank of ChengDu’s non-performing loan ratio was 1.42 per cent., as compared with 1.43 per cent. as at 30 June 2019. The Group believes that Bank of ChengDu’s asset quality continues to improve.

− 102 − Chengdu Rural Commercial Bank

Chengdu Rural Commercial Bank was incorporated in 2009 with a registered capital of RMB10 billion. As at 30 June 2020, the Group held 9.81 per cent. of equity interest in Chengdu Rural Commercial Bank.

With a decade of development, Chengdu Rural Commercial Bank has maintained a sound track record, establishing itself as a leading rural commercial bank in China. It was the fifth largest rural commercial bank in China in terms of assets in 2019 and it ranked 215th among the “Top 1000 World Banks” in 2018. As at 30 June 2020, Chengdu Rural Commercial Bank had 649 branch offices at all levels, including one head office, eight branches, 174 sub-branches and 466 offices.

JinTai Insurance

JinTai Insurance was established in 2011 with a registered capital of RMB1.1 billion. It is China’s first property and casualty insurance shareholding company headquartered in Chengdu. In December 2016, JinTai Insurance was listed on NEEQ, representing the first insurance company in central-western China listed on NEEQ. As at 30 June 2020, the Group held 20 per cent. of equity interest in JinTai Insurance, being the largest shareholder.

JinTai Insurance has been for years rated as an A-level enterprise by CBIRC in the quarterly comprehensive risk assessment on insurance companies. In 2019, JinTai Insurance ranked 40th among the 88 property and casualty insurance companies in the PRC in terms of premium income, seventh among the 48 property and casualty insurance companies in Sichuan Province and fifth among the 48 property and casualty insurance companies in Chengdu. As at 30 June 2020, JinTai Insurance had total assets of approximately RMB3,147.2 million and total owner’s equity of approximately RMB973.1 million. For the six months ended 30 June 2020, its net profit was approximately RMB3.0 million.

Vanho Securities Co., Ltd.

Established in 2002, Vanho Securities Co., Ltd. (萬和證券股份有限公司)(“Vanho Securities”) is an integrated securities company with diversified business qualifications. Vanho Securities ranked 71st among the securities companies in the PRC in terms of total assets as at 31 December 2019 according to the Securities Association of China. As at 30 June 2020, the Group held 3.22 per cent. of equity interest in Vanho Securities, being the sixth largest shareholder.

As at 30 June 2020, Vanho Securities had 74 branches across China, recording total assets of approximately RMB14,835.5 million and total owner’s equity of approximately RMB5,365.1 million. For the six months ended 30 June 2020, its net profit was approximately RMB63.2 million.

Real economy services

The Group’s real economy services consist of financial leasing, guarantees, SME finance and business factoring businesses. Targeting the local market, the Group provides capital support and integrated financial services for SMEs. This business is carried out by JIAOZI Emerging, a wholly-owned subsidiary of the Group. JIAOZI Emerging was established in 2012 with a registered capital of RMB2.25 billion. For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the total operating revenue of JIAOZI Emerging amounted to approximately RMB71.0 million, RMB211.0 million, RMB277.0 million, RMB137.0 million and RMB147.0 million, respectively. JIAOZI Emerging carries out the business through Chengdu Financial Leasing, Chengdu Guarantee, Chengdu Micro Credit, Chengdu Jinkong Pawn Co., Ltd. (成都金控典當有限公司) (“Chengdu Pawn”) and Chengdu Jiaozi Business Factoring Co., Ltd. (成都交子商業保理有限公司).

− 103 − Financial leasing business

The Group provides financial leasing services primarily through Chengdu Financial Leasing. Established in 2010, Chengdu Financial Leasing is a subsidiary of the Group, in which the Group directly and indirectly held 63.31 per cent. of equity interest as at 30 June 2020. Chengdu Financial Leasing is a leading financial leasing company in Sichuan Province, occupying a large market share.

Products and services

Chengdu Financial Leasing mainly engages in financial leasing, leasing, purchase and sale as well as disposal of assets in the course of conducting its leasing business and provision of consulting and guarantor services in relation to leasing. Its leasing business covers the fields of urban construction, engineering and industrial equipment.

As at 31 December 2017, 2018 and 2019 and 30 June 2020, the balance of Chengdu Financial Leasing’s outstanding financial leasing receivables amounted to RMB2,599.0 million, RMB2,033.4 million, RMB2,169.1 million and RMB3,464.5 million, respectively. The following table sets forth a breakdown of Chengdu Financial Leasing’s financial leasing receivables by asset value as at 30 June 2020:

As at 30 June 2020

Asset value Amount % of total

(RMB millions)

Below RMB10 million ...... 124.5 3.59 Between RMB10 million and RMB30 million ...... 240.7 6.95 Between RMB30 million and RMB100 million ...... 1,041.7 30.07 Above RMB100 million ...... 2,057.5 59.39 Total ...... 3,464.5 100.00

Business model

Chengdu Financial Leasing’s financial leasing business mainly includes direct leasing and sale and leaseback.

In the direct leasing model, Chengdu Financial Leasing, as the lessor, enters into a leasing contract with the lessee in respect of an asset or equipment for a term of three to five years. Rent is paid in accordance with the lease contract. The direct financial leasing contract is typically irrevocable during the term of the lease without Chengdu Financial Leasing’s consent. Upon the expiry of the term of the contract, the lessee is usually given an option to purchase the leased asset at a nominal value and the ownership of the leased asset is transferred to the lessee accordingly.

In the sale and leaseback model, Chengdu Financial Leasing, as the lessor, purchases the asset or equipment initially owned by the lessee and subsequently leases the asset or equipment to the lessee for a term of three to five years. The sale and leaseback contract is typically irrevocable during the term of the lease. Upon the expiry of the term of the contract, the lessee is usually given an option to purchase the leased asset at a nominal value and the ownership of the leased asset is transferred to the lessee accordingly.

− 104 − Before determining to enter into a lease contract with the lessee, Chengdu Financial Leasing takes into consideration factors such as the asset or equipment to be leased, service site and place of delivery, transfer of ownership, lease cost, lease term, rent calculation method, rent payment interval and prepayment. In both business models, Chengdu Financial Leasing calculates the lease interest rate by adopting a fixed rate or a floating rate. The floating rate is pegged to and adjusted according to the effective benchmark interest rate determined by the PBOC.

Risk management

Chengdu Financial Leasing assesses the risk of each financial leasing application received. When an application is received, a project manager carries out a preliminary screening of the applicant and the performance and price of the equipment or asset to be leased and produces a due diligence report. Subsequently, the risk management department of Chengdu Financial Leasing reviews the due diligence report and issues an opinion on the risk profile of the prospective leasing transaction. For leasing contracts with a value of less than RMB10 million, approval from at least two internal reviewers is required. For leasing contracts with a value between RMB10 million and RMB20 million, inclusive, approval from at least five internal reviewers is required. For leasing transactions with a value of more than RMB20 million, approval from at least two external expert reviewers and seven internal reviewers is required.

Chengdu Financial Leasing also carries out an ongoing assessment of the recoverability of each financial lease contract on a five-category scale: (i) normal; (ii) concerned; (iii) precaution; (iv) caution; and (v) loss, the criteria for which are set out below:

• Normal: The lessee has a sound track record and management performance and is able to fulfil its obligations in the lease contract with sound repayment capability.

• Concerned: The lessee’s repayment capability is weakened by factors such as less sound business performance, increase in indebtedness and change of organisational structure.

• Precaution: The lessee has poor business performance and is under pressure to repay its indebtedness and has defaulted in rent payment.

• Caution: The lessee has very poor business performance and is unable to repay the defaulted rent; or the lessee has maliciously defaulted in rent payment without willingness to repay the defaulted rent, the loss arising from which cannot be avoided by disposal of the leased asset or execution of mortgage.

• Loss: The lessee has no capability or willingness to repay the indebtedness or the defaulted rent, and the outstanding balance of the rent and the commission cannot be recovered by disposal of the leased asset and execution of mortgage.

The following table sets forth a breakdown of Chengdu Financial Leasing’s net financial leasing receivables by category as at 30 June 2020:

As at 30 June 2020

Amount % of total

(RMB millions)

Normal ...... 2,840.9 84.33 Concerned ...... 318.2 9.45 Precaution ...... / / Caution ...... 209.6 6.22 Loss ...... / / Total ...... 3,368.7 100.00

− 105 − Guarantees business

The Group provides its guarantee services primarily through Chengdu Guarantee, which was a wholly-owned subsidiary of the Group as at 30 June 2020.

Chengdu Guarantee mainly conducts its business in Chengdu and has established branches in cities such as Leshan, Panzhihua, Xichang and Chongqing, being the first state-owned guarantee company approved by Sichuan Provincial Financial Service Office (四川省金融工作辦公室) (currently known as Sichuan Provincial Financial Regulatory Bureau (四川省地方金融監督管理局)) to set up branches outside Sichuan Province. Since its establishment in 2009, Chengdu Guarantee has provided RMB34.8 billion worth of guarantees in support of 4,072 SMEs.

Product and service

Chengdu Guarantee offers a wide spectrum of products and services, including, among others, loan guarantees, guarantees for acceptance of bill, trade financial guarantees, project financial guarantees, guarantee for letter of credit, litigation preservation guarantees, performance, as well as consulting services in relation to financial guarantees, targeting SMEs engaging in fields of architectural decoration, trading and manufacturing.

Chengdu Guarantee mainly focuses on providing short-term financial guarantees. As at 31 December 2017, 2018 and 2019 and 30 June 2020, the outstanding balance of financial and non-financial guarantees provided by Chengdu Guarantee was RMB2,854.9 million, RMB1,240.2 million, RMB759.1 million and RMB713.8 million, respectively, among which the outstanding balance of the financial guarantees was RMB2,798.9 million, RMB1,235.6 million, RMB747.9 million and RMB689.3 million, respectively. The following table sets forth the outstanding balance of financial guarantees provided by Chengdu Guarantee by maturity profile as at 30 June 2020:

As at 30 June 2020

Amount % of total

(RMB millions)

Due in no more than (and including) three months ...... / / Due in over three months and up to (and including) six months ...... 122.5 17.77 Due in over six months and up to (and including) one year ...... 300.5 43.60 Due in over one year and up to (and including) two years...... 71.8 10.42 Due in over two years ...... 194.5 28.22 Total ...... 689.3 100.0

− 106 − The value of the financial guarantees provided by Chengdu Guarantee ranges from RMB5 million to RMB100 million. The following table sets forth the outstanding balance of the financing guarantees provided by Chengdu Guarantee by asset value as at 30 June 2020:

As at 30 June 2020

Asset value Amount % of total

(RMB millions)

Less than RMB5 million ...... 56.1 8.14 Between RMB5 million and RMB10 million ...... 92.3 13.39 Between RMB10 million and RMB20 million ...... 109.9 15.59 Between RMB20 million and RMB50 million ...... 360.9 52.36 Between RMB50 million and RMB100 million ...... 70.0 10.16 Total ...... 689.3 100.00

Business model

In terms of financial guarantees, the Group provides credit guarantees to its customers for their loans from banks or other financial institutions and charges a service fee. It requires its customers to provide collateral, such as land use rights, building ownership, equipment ownership and equity ownership, as counter-guarantees to secure the guarantees.

In terms of non-financial guarantees, the Group provides guarantees for acceptance of bills, trade financial guarantees and guarantees for letters of credit. It generally obtains a credit limit from banks and uses the credit limit to guarantee trade financing or letter of credit for borrowers.

Risk management

Chengdu Guarantee adopts a standard set of measures in approving guarantees. Upon receipt of a guarantee application from clients, the project manager conducts a preliminary review of the application and, subsequently, on-site due diligence, based on which a report is produced and submitted to the risk control department. The advisory committee of the risk control department reviews the report and approves the project through voting. Upon approval, Chengdu Guarantee enters into an agreement with clients for the guarantee. It has also set up internal assessment and risk control mechanisms for post-guarantee management. As one of its risk control measures, Chengdu Guarantee normally requires clients to provide collateral, such as land use rights, building ownership, equipment ownership and equity ownership, as counter-guarantees to secure the guarantees.

SME finance business

The Group conducts its SME finance business primarily through its subsidiary, Chengdu Micro Credit, in which the Group held 83.60 per cent. of equity interest as at 30 June 2020. Established in 2010, Chengdu Micro Credit mainly engages in providing small and micro loans to SMEs, micro and individual businesses and other individuals as well as ancillary consulting services.

Since its establishment, Chengdu Micro Credit has provided loans in a total amount of more than RMB6.6 billion to 2,863SMEs and individuals. As at 31 December 2017, 2018 and 2019 and 30 June 2020, the outstanding balance of the loans provided by Chengdu Micro Credit amounted to approximately RMB340.6 million, RMB403.4 million, RMB446.3 million and RMB494.4 million, respectively.

− 107 − Pawn broking business

The Group’s pawn broking business is primarily carried out through Chengdu Pawn, which is a wholly-owned subsidiary of the Group as at 30 June 2020. Established in 2012, Chengdu Pawn provides short-term loans to clients with clients’ collateral pawned as pledges. Since its establishment, Chengdu Pawn has rendered pawn broking services covering the fields of real estate development, landscaping, architectural decoration, hotels, catering, school education, nursing home, trade and logistics, and leather processing, establishing itself as a leading pawn broking services company in Sichuan Province.

As at 31 December 2017, 2018 and 2019 and 30 June 2020, the outstanding balance of the loans provided by Chengdu Pawn amounted to approximately RMB76.3 million, RMB56.9 million, RMB37.5 million and RMB42.7 million, respectively.

Business Factoring Business

The business factoring business is mainly carried out by Chengdu Jiaozi Business Factoring Co., Ltd. (成都交子商業保理有限公司), which was established in 2019 and become operational in 2020.

Asset management

The Group conducts its asset management business mainly through its subsidiaries Ding Li Assets and Chengdu Yihang.

Ding Li Assets (鼎立資管)

Ding Li Assets was established on 4 February 2005 and was a wholly-owned subsidiary of the Group with a registered capital of RMB1,335 million as at 30 June 2020. It engages in asset management, project financing and investment and merger and acquisition. As the only asset management enterprise in Chengdu specialised in disposing of distressed state-owned assets, it acts as a platform for the restructuring of state-owned enterprises and distressed assets in Chengdu. The assets under its management falls into debt, equity and real assets such as real estate for investment purposes. As at 30 June 2020, the assets under its management amounted to RMB2,635.3 million. For the six months ended 30 June 2020, the total operating revenue of Ding Li Assets was RMB80.1 million.

Business model

Ding Li Assets’ asset management business can be divided into two categories, namely, the traditional business of disposing of policy-related distressed assets and the innovative AMC-related business.

Under the traditional business model, Ding Li Assets focuses on the acquisition, management, clearing, restructuring and disposal of distressed assets of the municipal financial institutions in Chengdu. As at 30 June 2020, the assets acquired by Ding Li Assets under its traditional asset management business amounted to RMB625.9 million and the amount recovered through asset disposal reached approximately RMB27.4 million.

Under the innovative business model, Ding Li Assets engages in entrusted acquisition, structured acquisition, special situation investments and investment banking services. Throughout the years, Ding Li Assets has cooperated with a number of state-owned banks, asset management companies, such as China Huarong Asset Management Co., Ltd. (中國華融資產管理股份有限公司), China Cinda Asset Management Co., Ltd. (中國信達資產管理股份有限公司), China Great Wall Asset Management Co., Ltd. (中國長城資產管理股份有限公司) and Sichuan Development of Asset Management Co., Ltd. (四川發展資產管理有限公司), and local state-owned enterprises.

− 108 − Asset Portfolio

Since its establishment, Ding Li Assets has successively acquired and disposed of 57 productive asset portfolios transferred by Government Office Administration of Chengdu (成都市機關事務管理局), 10 productive asset portfolios transferred by the Leading Group on Disposal of State-owned Assets in Chengdu, and 17 equity asset portfolios.

Chengdu Yihang (益航資管)

Chengdu Yihang was established on 26 July 2018 with a registered capital of RMB10 billion and has been filed with the China Banking and Insurance Regulatory Commission in December 2019. As at 30 June 2020, the Group held 51.03 per cent. of equity interest in Chengdu Yihang, being the largest and controlling shareholder. It is a large-scale local AMC in the PRC and the second licensed AMC in Sichuan Province.

Business model

In line with the Chengdu Government’s strategy of developing Chengdu into the financial centre of Western China, Chengdu Yihang engages in consolidating and optimising local distressed assets to promote industrial transformation and supporting the economic development of Chengdu. Its business mainly falls into two categories, namely, asset management and investment banking. The asset management business covers the acquisition and disposal of distressed debt assets, and debt, asset and corporate restructuring. The investment banking business covers financial services, investment, funds and securities.

As at 30 June 2020, the asset of Chengdu Yihang amounted to RMB12.3 billion; the assets under management of Chengdu Yihang amounted to RMB9.5 billion. For the six months ended 30 June 2020, the investment income of Chengdu Yihang was approximately RMB21.2 million.

Risk management

Chengdu Yihang adheres to the twofold risk control principle featured by top-down and bottom-up lines in establishing its risk management mechanism. Based on its practice and with reference to the risk control systems adopted by the four major AMCs in the PRC, Chengdu Yihang has set up a three-layer risk management structure consisting of the board of shareholders, board of directors and board of supervisors, and triple risk management lines covering business, risk control and auditing, to monitor its business operations and limit risks to a reasonable level.

The Group has a set of standards in place to guide the risk management in its overall business, covering pre-investment due diligence, risk assessment, decision-making, internal approval, risk tracking and post-investment management. It pays close attention to strategy risks, credit risks, market risks, liquidity risks, connected transaction risks, concentration risks, operational risks, compliance risks and reputation risks, and has tailor-made policies to guard against these risks.

Security and armed escort services

The Group conducts its security and armed escort services business mainly through its subsidiary Zhongrong Security. Zhongrong Security was established in 1987 and acquired by the Group in 2017 through free allocation by Chengdu SASAC, and has been a wholly-owned subsidiary of the Group since then.

With over three decades of development, Zhongrong Security has expanded its security services covering physical security guard, technical defence and armed escort, playing an important role in maintaining social stability and creating employment opportunities in Chengdu. As a local professional security service company, Zhongrong Security occupies a dominant position in Chengdu.

− 109 − This business segment constitutes a major source of income for the Group and serves as a complement to other businesses, such as financial infrastructure development and operation and fintech, by ensuring security on site. The Group is a first-class comprehensive security service provider within the PRC.

Security services

Zhongrong Security is the only enterprise in Chengdu that provides services for management of property involved in criminal and administrative cases. In security services, security guards are assigned by Zhongrong Security to station on site where security services are required, such as companies, financial institutions, schools, entertainment venues and private clubs. The revenue mainly consists of the management fee charged by Zhongrong Security in rendering security services. As at 30 June 2020, Zhongrong Security had approximately 34,740 staff (including staff members in its district and county branches) and 4,200 clients. For the six months ended 30 June 2020, Zhongrong Security had a total operating income of RMB1,078.5 million, representing an increase of 3.06 per cent. compared to the same period in 2019.

The Group is actively facilitating the transformation of its traditional security services to an intelligent security service model. It is developing the Smart Engineering project to provide intelligent security guard services at school, neighbouring and in the fields of transportation and fire protection.

Armed escort services

In terms of escort services, Zhongrong Security is the only enterprise in Chengdu providing armed escort services. Its services cover all the financial institutions as well as key enterprises in need of armed escort services, including escort of cash, gold and valuables, vault guard, ATM security and custody of valuables. As at 30 June 2020, Zhongrong Security had 777 armored cars, 4,878 security guards, 1,511 riot guns and 326 clients.

Equity exchange

The Group’s equity exchange business is mainly carried out through its subsidiaries Chengdu Exchange Investment Group Co., Ltd. (成都交易所投資集團有限公司)(“Exchange Investment”) and Agriculture Equity Exchange, which was established on 7 July 2010.

Exchange Investment invests in domestic exchanges with businesses covering transaction of intellectual property, equity, property, financial assets, environmental resource and asset restructuring. As at 30 June 2020, the Group held 100 per cent. of equity interest in Exchange Investment. Set forth below is a list of the exchanges that the Group had invested in as at 30 June 2020:

• Chengdu Intellectual Property Exchange (成都智慧財產權交易中心), in which Exchange Investment had 50.0 per cent. of equity interest;

• Chengdu Financial Assets Exchange (成都金融資產交易中心), in which Exchange Investment had 15.0 per cent. of equity interest;

• Tianfu (Sichuan) United Equity Exchange (天府(四川)聯合股權交易中心), in which Exchange Investment had 35.0 per cent. of equity interest;

• Sichuan United Environment Exchange (四川聯合環境交易所), in which Exchange Investment had 30.0 per cent. of equity interest;

• Sichuan Financial Assets Exchange (四川金融資產交易所), in which Exchange Investment had 25.0 per cent. of equity interest;

−110− • Southwest United Equity Exchange (西南聯合產權交易所), in which Exchange Investment had 27.4 per cent. of equity interest; and

• Chengdu Trust (成都託管中心), in which Exchange Investment had 40.0 per cent. of equity interest.

Agriculture Equity Exchange is one of the first licensed rural land property right transfer service platforms in the PRC incorporated by the Chengdu Government in 2008. As at 30 June 2020, the Group held 60 per cent. of equity interest in Agriculture Equity Exchange.

Agriculture Equity Exchange engages in property right transfer services, such as transfers of rural land property rights, forest property rights, collectively-owned land use rights for construction purposes, contracted rural land use rights, agricultural intellectual property, agricultural products and integrated rural land consolidation projects. It also offers asset disposal services such as the transfer of housing and industrial property rights, and market information consulting services, such as attestation, bidding and transaction settlement.

As at 30 June 2020, Agriculture Equity Exchange had completed approximately 20,700 rural land transactions, covering a total area of approximately 2.8 million mu (a unit to measure areas used in China) of rural land, with a total transaction amount of approximately RMB118.2 billion.

Financial infrastructure development and operation

The Group engages in primary land development, infrastructure construction, property development and management, and industry cluster development at CBDs in Chengdu. Such development is mainly intended to serve the financial industry and financial industry participants in Chengdu. The Group carries out this business mainly through its subsidiaries Chengdu Real Estate and Jiaozi Park Financial and Business Zone Investment & Development.

The Group’s income from this business mainly consists of sales of property, property management fee, parking space rental, house rental and management fee for land development and infrastructure construction. For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the total operating revenue generated from the Group’s financial infrastructure development and operation business was RMB673.1 million, RMB891.5 million, RMB429.1 million, RMB371.4 million and RMB37.2 million, respectively, representing 21.73 per cent., 26.51 per cent., 11.85 per cent, 20.66 per cent and 2.03 per cent of its total operating revenue during the same periods, respectively.

Jiaozi Park Financial and Business Zone Investment & Development

Jiaozi Park Financial and Business Zone Investment & Development was established in 2009. As the operating entity of Chengdu Financial City, Jiaozi Park Financial and Business Zone Investment & Development is responsible for the planning, financing, construction, operation, industry cluster development and brand building, and marketing of Chengdu Financial City. As at 30 June 2020, the Group had 46.24 per cent. of equity interest in Jiaozi Park Financial and Business Zone Investment & Development.

For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, Jiaozi Park Financial and Business Zone Investment & Development’s operating revenue was approximately RMB268.8 million, RMB221.5 million, RMB78.0 million, RMB89.8 million and RMB35.7 million, respectively. The revenue in 2019 decreased mainly because the properties in Rongjin City have been sold out and no new properties have been developed.

− 111 − CBD development

Jiaozi Park Financial and Business Zone Investment & Development is designated by the Chengdu Government to take charge of the integrated development and operation of Chengdu Financial City and ancillary industries, including primary land development, CBD planning, and construction of CBD infrastructure and ancillary facilities.

It receives grants in various forms from the Chengdu Government to cover the costs incurred in the projects developed at Chengdu Financial City, including, among others, cost of land acquisition, planning and management, expenditures spent on obtaining relevant certificates and approvals, as well as and in relevant registration procedures, taxation, cost of demolition, and investment in the construction of infrastructure and ancillary facilities. The grant is allocated in instalments in accordance with the progress of the projects. As at 30 June 2020, Jiaozi Park Financial and Business Zone Investment & Development has received government grants in a total amount of RMB6.0 billion. In addition, it charges 5 per cent. of its actual costs as its management fee, which constitutes its operating revenue. The Group also generates revenue from sale of residential properties and lease of commercial properties.

Located in the junction of Chengdu Hi-tech Industrial Development Zone and Jinjiang District with an area of 5,600,000 sq.m., Chengdu Financial City is a strategic area to be developed in line with the Chengdu Government’s strategy of establishing Chengdu as a financial centre of Western China. The development of Chengdu Financial City falls into three phases. As at 30 June 2020, the Phase I and Phase II had been completed. Phase III is under development.

Phase I includes Tianfu International CBD with area total GFA of 500,000 sq.m. A number of financial regulatory and service institutions have settled in, such as China Banking Regulatory Commission Sichuan Bureau, China Insurance Regulatory Commission Sichuan Bureau, Anbang Insurance Group, China Life Insurance, and China Minsheng Bank.

Phase II consists of 24 plots in the peripheries of Tianfu International CBD, where governmental departments and large enterprises, such as the Export—Import Bank of China, China CITIC Bank, State Grid Corporation of China, China Huadian Corporation and China Netcom, have settled.

Phase III includes the area around the Jin River to be developed as a key area of Chengdu Financial City. It covers an area of 3,670,000 sq.m.

In addition to creating a cluster for financial institutions, Jiaozi Park Financial and Business Zone Investment & Development also intends to develop a series of integrated ancillary facilities, including office buildings, hotels, and commercial and residential properties, aiming to develop Chengdu Financial City into an industry-leading multifunctional CBD in Chengdu pillared by financial institutions.

Key completed projects

The table below sets forth certain information on the key projects completed by Jiaozi Park Financial and Business Zone Investment & Development as at 30 June 2020, all of which are located in Chengdu:

Construction Contracted sales Project name period Designated use Total investment Total GFA as at 30 June 2020 (RMB in million) (s. m.) (RMB in million)

Rongjin City June 2012 - Commercial and 1,197.3 241,400.0 137.0 (融錦城).... December 2013 residential

−112− Key projects under construction

The projects that Jiaozi Park Financial and Business Zone Investment & Development develops are industrial-oriented and tailor-made to accommodate the development of Chengdu Financial City. Set forth below is a list of the key projects under construction by Jiaozi Park Financial and Business Zone Investment & Development as at 30 June 2020:

Estimated construction Total planned Investment as at Project name period Designated use investment 30 June 2020 (RMB in million) (RMB in million)

Tianfu International CBD · Twin March 2012 - For sale or lease 2,072.0 1,705.7 Towers Project March 2021 (天府國際金融中心雙塔)...... Plot B - Financial City Cultural November 2018 - For sale or lease 1,750.0 362.7 Centre (B08地塊 - 金融城文化中心) December 2021

Key projects to be developed

The following table sets forth a list of the key projects to be developed Jiaozi Park Financial and Business Zone Investment & Development as at 30 June 2020:

Project name Total planned investment

(RMB in million)

International Extreme Sports Park (國際極限運動公園)...... 72.0 Financial City primary school and kindergarten (Hedong District) (金融城小學與幼稚園（河東）) ...... 500.0

Industry cluster development and CBD operation

In addition to property development, Jiaozi Park Financial and Business Zone Investment & Development also engages in the industry cluster development and operation of CBD at Chengdu Financial City.

By inviting financial institutions to settle their regional headquarters, operational centres, settlement centres, back offices and asset management centres in Chengdu Financial City and investing in their businesses, Jiaozi Park Financial and Business Zone Investment & Development strives to create a financial ecosystem represented by a cluster of financial institutions, such as GuoBao Life Insurance, China Taiping Insurance, China Orient Asset Management, Bank of China, Bank of Communications, CITIC Bank, Taikang Life Insurance and China UnionPay. As at 31 December 2019, over 2,700 enterprises had settled in Chengdu Financial City, among which there were over 2,100 financial and ancillary services institutions.

To complement the development of the industrial cluster, Jiaozi Park Financial and Business Zone Investment & Development provides asset management and ancillary services in Chengdu Financial City, such as to promote the cooperation between academic institutions and financial institutions, to set up training institutions and to facilitate the implementation and application of industrial research projects. It also organises various activities, including high-end industrial conferences, forums, sharing sessions and press conferences to facilitate exchanges within the finance industry in Chengdu.

−113− Chengdu Real Estate (金控置業)

Chengdu Real Estate was established on 9 April 2009 and was a wholly-owned subsidiary of the Group as at 30 June 2020. It mainly engages in land consolidation and development of the CBD in Chengdu. For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, Chengdu Real Estate’s operating revenue was approximately RMB461.0 million, RMB702.0 million, RMB385.2 million, RMB314.1 million and RMB17.4 million, respectively.

Development process

Chengdu Real Estate has designed development procedures to enable real-time monitoring and supervision of each stage of its property development process throughout the project’s lifecycle, details of which are set out below:

• Feasibility study: Prior to a project’s inception, Chengdu Real Estate conducts market research and evaluates the feasibility of the project as part of its decision-making process.

• Land acquisition: Once the project has been approved, Chengdu Real Estate begins communication with the relevant government departments to obtain the land through public auction or acquisition.

• Planning and design: At the initial stage of the project, a series of development plans are formulated and implemented to prepare the project for construction, including project planning, design, supply and procurement management in terms of contracting and construction preparation.

• Construction: During the construction phase, project managers are designated on site to supervise the construction work, resolve technical issues (if any) and evaluate completed work.

• Marketing and sales: Towards the completion of the project, Chengdu Real Estate develops marketing programmes and promotional materials for the completed project, and subsequently prepares for delivery.

• Comprehensive evaluation: Upon completion of the project, Chengdu Real Estate conducts a comprehensive evaluation on the construction, marketing and sale of the property, based on which the Group further refines its development process.

Key projects completed

The table below sets forth certain information on Chengdu Real Estate’s key projects completed as at 30 June 2020, all of which are located in Chengdu:

Contracted Construction Total sales as at Project name period Designated use investment Total GFA 30 June 2020 (RMB in (RMB in million) (s. m.) million)

Jinkong Times Square December 2011 - Office building, 600.0 116,200.0 702.1 (金控時代廣場), renamed as November 2014 residential and Caizhifang (財智坊)...... commercial Jinkong Financial Back-end February 2012 - Office building 1,650.0 240,761.4 1,249.7 Services Centre (金控金融後 April 2018 臺服務中心), renamed as Caizhi Centre (財智中心)... Jintang Financial Central Phase August 2013 - Commercial 230.0 71,476.0 200.0 II Batch I (Building 9-11) December 2015 residence (金堂金融中心二期一批次 9-11#樓)...... Xinjin Financial Centre December 2010 - Commercial 331.1 65,000.0 276.4 (新津金融中心)...... October 2012 residence

−114− Key projects under construction

Set forth below is certain information on Chengdu Real Estate’s key projects under construction in Chengdu as at 30 June 2020:

Estimated Investment as construction Total planned at 30 June Project name period Designated use Total GFA investment 2020 (RMB in (RMB in (s.m.) million) million)

Chengdu Exchange Mansion August 2019 - Commercial 107,045.9 1,217.5 537.8 (成都交易所大廈) ...... December 2021

Key projects to be developed

Set forth below is certain information on Chengdu Real Estate’s key projects to be developed:

Estimated Investment as construction Total planned at 30 June Project name period Designated use Total GFA investment 2020 (RMB in (RMB in (s.m.) million) million)

Jintang Financial Centre - May 2021 - Complex 320,000.0 1,267.0 203.0 Jinyuefu May 2025 (金堂金融中心金悅府).....

Sales model

Chengdu Real Estate markets and sells its property directly by itself and indirectly through sales agencies, depending on the actual circumstances of the project.

In the direct sales business model, Chengdu Real Estate sets up a marketing management department to map out the marketing strategy and form a sales team to carry out marketing and sales by leveraging the resources in its subsidiaries.

In the indirect sales business model, Chengdu Real Estate employs external professional agencies to carry out marketing and sales for its property to enhance its competitiveness by capitalising on the agencies’ wide customer base, marketing strategies and professionalism.

Equity investment

The equity investment business is positioned as a platform for the Group to facilitate financial capital accumulation, broaden the scope of capital investments and optimise the local industrial structure. The Group aims to make strategic investments in the pillar industries, emerging industries and industries of competitiveness and growth momentum in Chengdu. By investing in equity and funds and introducing the modern management system, the Group is able to accumulate social capital, scale up state-owned asset investments, obtain premium investment resources and improve its post-investment management, hence upgrading traditional industries and cultivating emerging industries in Chengdu.

−115− The Group’s equity investment business is still at the initial stage of development, the income of which only contributes a small portion. For the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2019 and 2020, the operating revenue generated from the Group’s equity investment business amounted to RMB106.7 million, RMB18.2 million, RMB26.2 million, RMB11.1 million and RMB22.6 million, respectively, representing 3.44 per cent., 0.54 per cent., 0.72 per cent. 0.62 per cent. and 1.23 per cent. of its total operating revenue, respectively.

The funds under the Group’s management fall into two categories, namely, government-invested funds and self-invested funds, details of which are set forth below:

After more than three years of development, the Group has established a fund system covering six major investment fields: a high quality modern industrial system which focuses on “5+5+1”, 66 industrial function zones, supporting SME private enterprises, policies involving state-owned enterprises （兩降兩提）,regional construction and organic urban development and technological innovation and transformation of results.

Investment fund that is led by the Group has set up 13 sub funds and has mobilized social capital through capital amplification. Such fund has made investments in a number of listed companies, including ZWSOFT Co., Ltd. (stock code: 688083, Sci-Tech innovation board (“STAR Market”)), Amethystum Storage Technology Co., Ltd. (stock code: 688086, STAR Market), Jinxiandai Information Industry Co., Ltd. (stock code: 688086, ChiNext), Capitalonline Data Service Co., Ltd (stock code: 300830, ChiNext), GRIMP Advanced Materials Co., Ltd. (stock code: 688456, STAR Market), Road Environment Technology Co., Ltd. (stock code: 688156, STAR Market), and also other companies which are in preparation for listing on the STAR Market and ChiNext.

Chengdu Government-invested funds

Chengdu Government-invested funds refer to the funds initiated and approved by the Chengdu Government, and funded by government’s financial capital or a combination of government’s financial capital and social capital, with the aim to pool social capital to fields that are underdeveloped while key to the economic and social development of Chengdu. The Group is designated by the Chengdu Government as the trustee of some government-invested funds, including:

• Chengdu Development Fund (成都發展基金): a fund mainly investing in urban construction, industry development and innovative entrepreneurship. The Phase I of the fund was established in August 2017 with a fund raising size of RMB30.0 billion;

• Jiaozi Industry Fund (交子產業基金): a fund established in September 2019 with a fund raising size of RMB6.0 billion. The fund is involved in management of equity investment enterprises, venture capital, equity investment, investment management, asset management, corporate management consulting and investment consulting, in support of the development of a modernised industry cluster and the improvement of the high-end manufacturing industry in Chengdu; and

• Chengdu Industry Guiding Fund (成都產業引導基金): a fund established in January 2017 with a fund raising size of RMB2.0 billion. Chengdu Industry Guiding Fund is a policy fund funded by the Chengdu Government and operated in accordance with the market practice. By investing in the existing funds or setting up new funds, Chengdu Industry Guiding Fund aims to pool social capital to invest in fields key to the social and economic development, such as advanced manufacturing, modern services and new economy, hence consolidating social resources, upgrading traditional industries and nurturing emerging industries. The Group manages the fund by adhering to the principles of “government guided, market-oriented, scientific decision-making and risk prevention”. The fund is involved in management of equity investment enterprises, investment management and consulting services.

−116− • New Economy Industrial Fund (新經濟產業基金): a fund established in April 2020 with a fund raising size of RMB1.0 billion. The fund targets government-invested funds and industrial investment funds in new economy to further support the development of new economy. The fund adheres to the philosophy of innovation-driven and digital economic development. Leveraging technologies, it adopts a Fund of Funds (FoF) plus co-investment business model, and mainly invests in enterprises in the new economy industry that engage in development of big data, artificial intelligence, 5G supply chain, clean energy and blockchain. It also focuses on investing in the research and development and market application led by the research institutions in Chengdu, such as Chengdu Institution of New Economic Development.

The Group has set up stringent and standardised investment decision-making procedures, a prudent risk control mechanism and a sound finance management system. It also invests in the funds proportionally. To ensure the sound management of the funds, a board of directors and supervisors is in place to manage and supervise the operation of the funds. In addition, the investment department and the risk control department are also in place to conduct investment and risk control analysis independently in the course of managing and operating the funds.

Self-invested funds

In addition to government-invested funds, the Group also has self-invested funds, including:

• Financial Fund (金融基金): a fund company established in December 2011 with a registered capital of RMB750.0 million. The fund is involved in equity investment and consulting services, capital management, venture capital, and asset management, investment and consulting services. It mainly invests in financial institutions with growth prospects and the development of Chengdu Financial City;

• Tourism Development Fund (旅遊發展基金): a fund company established in October 2011 with a registered capital of RMB750.0 million. The fund is involved in equity investment and consulting services, capital management, venture capital, and asset management, investment and consulting services. It mainly invests in the key tourism projects, tourism properties, tourism infrastructure, and merger and acquisitions of tourism enterprises;

• Chengdu Rongxing (成都蓉興創投): Chengdu Rongxing was a fund company established in 2007 with a registered capital of RMB500.0 million. It became a wholly-owned subsidiary of the Group through asset allocation by Chengdu SASAC in 2008. As at 30 June 2020, the Group held 100 per cent. of equity interest in Chengdu Rongxing. Chengdu Rongxing is positioned as Chengdu’s state-owned venture capital enterprise under the direct supervision of Chengdu SASAC. It mainly engages in direct equity investment in start-ups and equity investment fund businesses, aiming to facilitate the establishment of the venture capital system, promote the development of venture capital enterprises and support the independent innovation of SMEs and hi-tech enterprises in Chengdu. As at 30 June 2020, Chengdu Rongxing had invested in eight project companies with a total investment amount of RMB433.3 million.

• Dongjin Fund (東進基金): a fund established in January 2020 with a fund raising size of RMB1.5 billion. The fund is mainly involved in project investment, equity investment in non-listed companies and non-publicly issued equity of listed companies, as well as related consulting services.

Fintech

The Group engages in fintech and big data technology applications to supplement its financial services and drive the fintech innovation in Chengdu. This business includes operations of a public transport e-payment system, a civil service platform, a rural financial service platform and development of fintech platform. For the years ended 31 December 2017, 2018 and 2019 and the six

−117− months ended 30 June 2019 and 2020, the Group’s operating revenue generated from its fintech business amounted to RMB79.6 million, RMB95.9 million, RMB92.7 million, RMB14.5 million and RMB49.6 million, respectively, representing 2.57 per cent., 2.85 per cent., 2.56 per cent., 0.81 per cent. and 2.70 per cent. of its total operating revenue, respectively.

Public transport e-payment system

The Group’s public transport e-payment business is mainly carried out through Tianfu Tong, a subsidiary of the Group established in 2011. In 2018, Shanghai UnionPay, Chengdu Rail Transit Group and Chengdu Public Transportation Group jointly increased their capital into Tianfu Tong. As at 30 June 2020, the Group held 39.0 per cent of equity interest in Tianfu Tong.

Tianfu Tong primarily engages in sales of, and top-up services for, stored value smart cards (“Tianfu Tong Card”) (天府通) used to make e-payments for public transport in Chengdu. It is also involved in developing the Tianfu Tong Card multi-application platform, as well as the development, operation and management of a public payment management service platform in Chengdu. It has obtained the Payment Business Permit issued by PBOC and is qualified to issue and process pre-paid cards in Sichuan Province.

Tianfu Tong Card can be purchased at the designated sales outlets and topped up by cash or bank transfer. Sales of the pre-paid Tianfu Tong Card constitute the major source of income of this business segment. In addition to the application in public transport, Tianfu Tong Card can also be used to make payments at business outlets of the merchants that provide Tianfu Tong Card services, applicable to the fields of culture and education, healthcare, utility bill payment, tourism and commercial consumption. By providing settlement services, Tianfu Tong charges a percentage of commission, which constitutes another source of income of this business segment.

To complement the physical Tianfu Tong Card, Tianfu Tong also engages in the operation of the Tianfu Tong APP, a mobile payment platform open to all public transport users in Chengdu. As at 30 June 2020, Tianfu Tong was the only company in Chengdu that has a mobile payment platform for public transport.

Furthermore, Tianfu Tong has cooperated with some local banks in issuing the Lotus City Card (蓉城卡), a debit card that possesses certain functions of the Tianfu Tong Card. It charges a service fee for providing maintenance services for the card and generates a portion of income therefrom.

As at 30 June 2020, the total number of registered users of the Tianfu Tong APP was over 10.2 million, among which 0.8 million were average daily active users. For the six months ended 30 June 2020, Tianfu Tong had completed point of sale (POS) terminal transformation for approximately 15,903 buses, and the hardware and software upgrade for approximately 4,705 turnstiles at subway stations.

Tianfu Citizen Cloud application

In line with the “internet + city” initiative promoted by the Chengdu Government in creating an intelligent city, the Group promotes “Tianfu Citizen Cloud” (天府市民雲) services, a mobile application developed by technologies of cloud computing, big data, mobile internet and the Internet of Things. The Group owns 60 per cent. of Chengdu Tianfu Citizen Cloud Services Co., Ltd. through Chengdu Jinkong Data Services Co., Ltd. (成都金控數據服務有限公司)(“Chengdu Data Service”). As at 30 June 2020, Chengdu Data Service is a wholly-owned subsidiary of the Group.

By keeping abreast of the changing needs of the citizens in Chengdu, the application offers a mobile internet platform able to provide all-round civil services to citizens, covering almost every aspect of life, including information communication, transportation, healthcare, utility billing payment and others. Citizens are able to access the application after completing simple procedures in registration, the user-friendliness of which allows citizens to enjoy civil services across different governmental levels, departments and businesses. It is also an authentic data base that provides reliable data in real

−118− time. All the data in the application is collected with governmental approval and authorisation, hence the credibility of the information source is assured. As at 30 June 2020, citizens were able to access 203 services provided by 57 governmental departments and enterprises through the application, and the number of the registered users of the application was approximately 5.8 million.

Rural financial services

The Group conducts its rural financial services through its subsidiary Chengdu JinKong Credit Co., Ltd. (成都金控征信有限公司)(“JinKong Credit”). JinKong Credit was established in 2016 and was a wholly-owned subsidiary of the Group as at 30 June 2020.

JinKong Credit has obtained the licence issued by PBOC to carry out consumer credit reporting business. It mainly engages in the operation of “Chengdu Nongdaitong” (農貸通), an integrated rural financial service platform which combines rural credit and online financial services proposed by the Chengdu Government to improve rural financial services. JinKong Credit adopts big data, cloud computing and blockchain technologies to create the online- and offline-integrated service platform in which authentic data and agriculture-related credit information are available to the public, contributing to the improvement of rural financial services and the development of local credit reporting systems. The service platform has two portals, including a customer portal, from which customers can access policy information, apply for loans and keep up with their applications online, and a management portal, in which financial institutions can advertise their products and services, manage their product portfolios, and process loan applications. Chengdu Nongdaitong uses modern information technology with the idea of “Internet+” to build a “policy-banking-enterprise” (政銀企) integrated financing servicing platform for seeking credit, integration of beneficial agricultural policies, release of agricultural industry information and agricultural financial products, matching of supply and demand of capital, matching of supply and demand of agricultural products, agricultural products crowdfunding and collection of credit information, providing financing through integration of online and offline channels.

As at 30 June 2020, Chengdu Nongdaitong had 30,685 registered users and 343 financial institutions have established their online presence on the platform, including Chengdu Rural Commercial Bank, Bank of ChengDu, Agricultural Bank of China, Harbin Bank, Industrial Bank, Sichuan Xinwang Bank and Jianyang Rural Commercial Bank. As at 30 June 2020, 17,388 loans in an aggregate amount of approximately RMB25.8 billion had been issued via the platform.

Jiao Zi Fintech Dreamworks

Jiao Zi Fintech Dreamworks (交子金融夢工場)(“Dreamworks”) is the first fintech platform in China created by Chengdu Fintech Dreamworks, a wholly-owned subsidiary of the Group as at 30 June 2020. Dreamworks serves as a catalyst and incubator for the development of fintech enterprises in Chengdu, playing a vital role in supervising and coordinating the fintech enterprises, attracting capitals, business and talent, facilitating brand building and big data services.

There are mainly three incubators in Dreamworks, including:

• Tianfu International Financial Centre (天府國際金融中心), which has been put into operation;

• Jiaozi Fintech Centre (交子金融科技中心), an industrial-academic-research cooperation base in Chengdu which has been put into operation; and

• Financial Wheat Field (金融麥田), which has been put into operation.

−119− For the six months ended 30 June 2020, the Group had attracted 31 entrepreneurial teams consisting of 939 people to settle in Dreamworks, such as Academy of Internet Finance of Zhejiang University, Cass Business School, and Fintech Innovation Centre of Southwestern University of Finance and Economics. As at 30 June 2020, there were 232 fintech entrepreneurial teams consisting of approximately 6,000 people settled in Dreamworks.

RISK MANAGEMENT

Apart from the direct supervision and management from Chengdu SASAC, the Group has developed a three-layer internal risk control system consisting of: (i) risk information collection; (ii) risk identification, risk alert and risk prevention; and (iii) risk mitigation and emergency risk management. This risk control system applies to the Issuer and its subsidiaries as a whole, and covers the areas of administration, safety production, asset management, investment, financial management, audit and other aspects. In addition, the Group designs risk control measures for its subsidiaries in line with their business needs. For example, the Group has tailor-made risk control and project assessment mechanisms for its real economy services business to cater for the specific business model. It also conducts comprehensive assessments of the financial condition of its subsidiaries, including annual budget, investment and financing plans, as well as major investments and financing. It adopts stringent procedures in investment project approval and post-investment management, and has specifically set up an independent risk management department to take charge of risk control, internal control, as well as the management of compliance and legal affairs.

The Group’s risk management policies have been adapted to market conditions to achieve efficiencies in risk management, ensuring that value is created for the business from efficient risk management. Different levels and departments of the Group are responsible for overseeing and managing different aspects of the Group’s operations and implementing the Group’s risk management policies. The systematic approach adopted by the Group has helped it manage its business in a disciplined manner. The risk management system also helps the Group identify, manage and control risks in a timely and effective manner to facilitate smooth and stable operation of the Group’s business.

The Group’s risk management strategy can also be broken down into its external and internal risk management strategies which are both set out below.

External risk management

Municipal government— supervision by Chengdu SASAC

Chengdu SASAC provides regulatory and supervisory oversight of the Group by way of the following: approval of the Group’s annual investment and financing plan; approval and supervision of major projects; reviewing regular financial and operational status reports; debt risk prevention, approval and supervision of investment projects; safety of production and environment protection.

Industry supervision — supervision by the Municipal Financial Office

The financial supervisory authority stipulates business indicators that the Group must monitor and provides the scope for the Group’s real economy services business. The financial supervisory authority also requires supervised companies to regularly submit business statistics to monitor any financial risks and to take timely precautions.

− 120 − External Audit

The Group undergoes a number of routine audits, fund audits, and special audits by the National Audit Office and the Municipal State-owned Assets Supervision and Administration Commission each year. The strict audit procedures are conducted to monitor the Group’s business operations, use of financial funds, debt risk and other indicators.

Information disclosure

Since the issuance of corporate bonds in 2012, the Group has disclosed information to the public in accordance with its regulatory requirements. As at the date of this Offering Circular, it has issued bond products on exchanges and inter-bank dealer associations. The Group strictly discloses bond information in accordance with the requirements of such exchanges. The Group is required to disclose its annual report as well as to publish semi-annual and quarterly reports, and any other material important issues. The Group is also the subject of supervision and scrutiny by external investors and the public.

Internal risk management

Sound corporate governance structure and internal risk control system

The Group strictly constitutes its companies with articles of association that are in accordance with laws and regulations such as the Constitution of the CPC, the company law and the law on state-owned enterprises. The articles of association used in the Group’s subsidiaries are binding on the company, investors, directors, supervisors and senior managers. The Group has a sound internal system management, and it has established standardised systems and procedures. Each subsidiary formulates its own management system based on its business characteristics and then submits it to the Group for examination and approval in accordance with the framework of the Group’s various risk management systems.

Risk management of subsidiaries

The senior management and the financial manager of each subsidiary are appointed by the Group. Important issues such as the annual budget of the subsidiary, the annual investment and financing plan, major investment and financing issues, and large-value fund payments are strictly monitored and managed by the Group. The Group implements centralised and integrated management of the financial affairs of the subsidiaries, and the subsidiaries submit financial statements, business analysis reports and investment execution statements on a monthly basis.

Independent audit of internal audit institutions

The Group has a dedicated Audit and Compliance Department which is responsible for group auditing, legal affairs and risk management. The Audit and Compliance Department implement and carry out various audits and accountability exercises.

Risk management of external investment

The Group has established a strict and standardized investment approval system to manage and supervise investment plans, investment projects and post-investment issues. The Group strictly requires the investment scale to be compatible with the Group’s asset size, asset-liability level and actual fund-raising capacity, to ensure that the asset-liability ratio is maintained at a reasonable level.

− 121 − Risk management of special business segments

The Group has set up a comprehensive review committee to centrally approve and formulate a risk control model and a project review mechanism that is suitable and specific for the business characteristics and development needs of the Group’s real economy services business. In doing so, the Group has enhanced the professional nature of the business approval process and has improved its non-performing asset portfolio.

COMPETITION

The Group’s major competitors include state-owned enterprises and other companies that have a strong presence in regions and industries where the Group operates. Some of the Group’s competitors may benefit from lower pricing, a larger customer base, a more established business reputation, more solid business relationships with banks and government authorities, a more mature risk control mechanism or more extensive experience than the Group. The Group will continue to leverage its state-owned background, consolidate and capitalise on financial resources among its subsidiaries, enlarge its customer base by maintaining relationships with existing clients and tapping into potential clients, and innovate its business model to maintain its competitive edge and stand out in future competition.

INSURANCE

The Group believes that its properties are covered with adequate insurance provided by reputable independent insurance companies in the PRC and with commercially reasonable deductibles and limits on coverage, which are normal for the type and location of the properties to which they relate.

Notwithstanding such insurance coverage, damage to the buildings, facilities, equipment or other properties as a result of occurrences such as fire, flood, water damage, explosion, power loss, typhoons and other natural disasters or terrorism, or any decline in the Group’s business as a result of any threat of war, outbreak of disease, epidemic or pandemic, such as COVID-19, may potentially have a material adverse effect on the Group’s financial condition and results of operations.

EMPLOYEES

As at 30 June 2020, the Group had approximately 37,000 employees in total. The Group’s ability to attract, retain and motivate qualified personnel is critical to its success. The Group believes that it offers employees competitive compensation and is able to attract and retain qualified personnel. Remuneration of employees is based on their respective performance, working experience, duties and the prevailing market rates. As required by applicable laws and regulations, the Group participates in various retirement plans administered by municipal and provincial governments for its employees, including making contributions to social insurance and housing funds in the PRC.

Training is provided to new employees and existing employees in order to develop their technical and industry knowledge, an awareness of workplace safety standards and knowledge of the Group’s corporate standards and culture.

The Group’s management and key executives, and substantially all of the Group’s other employees, have entered into employment agreements with the Group, which contain confidentiality and non-competition provisions.

The Group maintains a good working relationship with its employees, and, as at the date of this Offering Circular, the Group has not experienced any labour disputes that could have a material adverse effect on the operation and performance of the Group.

− 122 − LEGAL PROCEEDINGS

The Group may, from time to time, become involved in legal proceedings arising in the ordinary course of its operations. See “Risk Factors — Risks relating to the Group’s business in general — The Group may be subject to legal, litigation and regulatory proceedings”.

As at the date of this Offering Circular, except as disclosed in this Offering Circular, to the best of the knowledge of the Issuer, there are no litigation or arbitration proceedings against the Group or any of its senior management team members that could have a material adverse effect on its business, financial condition and results of operations.

− 123 − DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Directors

Pursuant to its articles of association, the Issuer is required to appoint seven directors, of which one must be a staff director. As at the date of this Offering Circular, the Issuer’s Board of Directors consists of four members.

According to the Company Law of the PRC and the Issuer’s articles of associations, board meetings require the presence of more than half of all the directors; and any of the resolutions made by the board shall be subject to the adoption by more than half of all the directors. Although the current composition of the Issuer’s Board of Directors does not fully meet the requirements under the Issuer’s articles of association, given the Issuer has appointed more than two third of the number of directors required by its articles of association, the Issuer believes that the lack of directors does not affect the convening of board meetings or the passing of board resolutions, and would not have a material adverse impact on its business operations. The Issuer is in discussions with Chengdu SASAC on the appointment of the remaining two directors required pursuant to its articles of association.

The following table sets forth the information on the directors as at the date of this Offering Circular.

Director Position

Mr. FANG Zhao (方兆)...... Chairman Mr. YANG Fan (楊釩)...... Director and General Manager Mr. YANG Minqing (楊岷清)...... Full-time External Director Mr. HU Jun (胡軍) ...... Full-time External Director

Certain biographical information of each of the Issuer’s Directors as at the date of this Offering Circular is set forth below.

Mr. FANG Zhao (方兆), Chairman and Secretary of the Communist Party Committee of the Issuer. Previously, Mr. Fang served as the secretary of the Administrative Office, member, deputy secretary and secretary of the Communist Youth League Committee, deputy director of the Sales Division and deputy director of the Operation and Planning Division of Chengdu 719 Factory (成都七一九廠); the project manager of Chengdu Brilliant Industry Co., Ltd. (成都倍特實業公司); the deputy director and director of the General Office of Administration Committee of Chengdu Hi-Tech Industrial Development Zone (成都高新區管理委員會)(“Hi-Tech Zone Administration Committee”); the director of Investment Management Department of Chengdu Brilliant Development Group, Inc. (成都倍特發展集團股份有限公司)(“Chengdu Brilliant Development”); the assistant president of Chengdu Brilliant Development and the general manager of Chengdu Brilliant Pharmaceutical Co. Ltd. (成都倍特藥業公司)(“Chengdu Brilliant Pharmaceutical”); the vice president of Chengdu Brilliant Development and the general manager of Chengdu Brilliant Pharmaceutical; the president of Chengdu Brilliant Development; the chairman and president of Chengdu Brilliant Development; the chairman and president of Chengdu Hi-tech Development Co., Ltd. (成都高新發展股份有限公司); the deputy general manager of Chengdu Hi-Tech Investment Group Corporation Limited (成都高新投資集團有限公司); the deputy general manager of Financial City Investment (currently known as Jiaozi Park Financial and Business Zone Investment & Development); the chairman and general manager of Financial City Investment (currently known as Jiaozi Park Financial and Business Zone Investment & Development); the chairman, general manager and secretary of the branch of the Communist Party Committee of Financial City Investment (currently known as Jiaozi Park Financial and Business Zone Investment & Development); and the chairman and secretary of the branch of the Communist Party Committee of Financial City Investment (currently known as Jiaozi Park Financial and Business Zone

− 124 − Investment & Development); chairman and secretary of the Communist Party Committee of the Issuer and the chairman and secretary of the branch of the Communist Party Committee of Financial City Investment (currently known as Jiaozi Park Financial and Business Zone Investment & Development). Mr. Fang holds a master’s degree.

Mr. YANG Fan (楊釩), Director, General Manager and Deputy Secretary of the Communist Party Committee of the Issuer. Previously, Mr. Yang served as the chief of the internal control and compliance department in Industrial and Commercial Bank of China Limited (中國工商銀行). He was also the senior staff member, principal staff member and deputy division director of the employment and income distribution department of the National Development and Reform Commission (中華人民共和國國家發展和改革委員會); member of the Standing Committee, director of the organizational department and principal of party school of the Sichuan Provincial Qionglai Municipal Party Committee (四川省邛崍市委常委); deputy director and party group member of the Chengdu Development and Reform Commission (成都市發展和改革委員會); and member of the Standing Committee, deputy secretary and deputy mayor of the Sichuan Provincial Qionglai Municipal Party Committee (四川省邛崍市委常委). Mr. Yang holds a postgraduate degree.

Mr. Yang Minqing (楊岷清), Full-time External Director of the Issuer. Previously, Mr. Yang served as the deputy section chief of the Finance and Accounting Division and the deputy section chief of the Planning Business Division of Chengdu branch of the Sichuan Petroleum Co., Ltd. (四川石油公司成都分公司); the principal staff member and the director of Policy Investigation & Research Division of Hi-Tech Zone Administration Committee; the president of the Hi-Tech Industrial Development Zone Branch of Bank of ChengDu (成都銀行高新支行)(“Hi-Tech Zone Branch”); the assistant president of Bank of ChengDu and president of the Hi-Tech Zone Branch; the vice president of Bank of ChengDu and chairman of Sichuan Jincheng Consumer Finance Limited Company (四川錦程消費金融有限責任公司)(“Jincheng Consumer Finance”); the deputy general manager and deputy director of the Investment Advisory Committee of Issuer; the deputy chairman and member of the Communist Party Committee of the Issuer; and the deputy chairman and member of the Communist Party Committee of Chengdu Financial Holding Group. Mr. Yang holds a bachelor’s degree.

Mr.HuJun(胡軍), External Director of the Issuer. Previously, Mr. Hu served as the staff member, the senior staff member, the deputy section chief of the third secretariat, the section chief of the third secretariat and the section chief of the General Affairs Division of the General Office of Chengdu Jinjiang District Government ( 成都市錦江區人民政府); the deputy director of the Liuli Street Branch Office of Chengdu Jinjiang District Government (成都市錦江區人民政府琉璃街道辦事處) and the deputy mayor of Liuli County Government ( 琉璃鄉人民政府); the mayor, deputy secretary and secretary of the Communist Party Committee, director and deputy secretary and secretary of the Party Working Committee of Gaodianzi Street Branch Office (高店子街道辦事處) of Sansheng County Government; the director of the General Office of Jinjiang Administration Committee of Chengdu Education Industrial Zone (四川成都教育產業園區錦江區管委會); the deputy director and deputy secretary of the Deputy Committee of Jinjiang Urban Centre Construction (成都市錦江區城市副中心建設委員會); the deputy director-general and secretary of the Party Leadership Group of Bureau of Finance of Jinjiang District (中共成都市錦江區財政局); the director-general and secretary of the Party Leadership Group of Bureau of Finance of Jinjiang District; the director-general and secretary of the Party Leadership Group of General Office and director-general of the Emergency Office of Chengdu Jinjiang District Government (成都市錦江區政府辦公室); and the deputy general manager and member of the Communist Party Committee of Chengdu Industrial Investment Group Co. Ltd. (成都工業投資集團有限公司)(“Chengdu Industrial Investment”). Mr. Hu holds a bachelor’s degree.

− 125 − Supervisors

Pursuant to the Issuer’s articles of association, the Issuer is required to appoint five supervisors, of which two must be staff supervisors. As at the date of this Offering Circular, the Issuer has not appointed any supervisor due to the reform of state-owned enterprises in accordance with the arrangement of the Chengdu Government. The Issuer has established a sound governance system for the management and supervision of its daily operations, and confirms that the lack of appointment of any supervisor would not have any material adverse impact on its business operations. The Issuer is also currently in discussions with Chengdu SASAC on the appointment of supervisors pursuant to its articles of association.

Senior Management

The Issuer’s senior management consists of nine members. The following table sets forth the information on the senior management members as at the date of this Offering Circular.

Senior Management Position

Mr. FANG Zhao (方兆) ...... Chairman Mr. YANG Fan (楊釩) ...... General Manager Ms. HE Yaling (何婭玲) ...... Chairman of the Labour Union Mr. WANG Xiaohua (王小華) ...... Secretary of the Commission for Discipline Inspection Mr. YANG Minqing (楊岷清)...... Full-time External Director Mr. HU Jun (胡軍) ...... Full-time External Director Mr. MA Honglin (馬紅林) ...... Deputy General Manager Ms. ZOU Jin (鄒進) ...... Deputy General Manager Mr. WU Kui (吳奎) ...... Deputy General Manager

Certain biographical information on each of the Issuer’s senior management members as at the date of this Offering Circular is set forth below.

Mr. FANG Zhao (方兆), see “— Directors”.

Mr. YANG Fan (楊釩), see “— Directors”.

Ms. HE Yaling (何婭玲), Deputy Secretary of the Communist Party Committee and Chairman of the Labour Union of the Issuer. Previously, Ms. He worked in the Chengdu Research Base of Giant Panda Breeding (成都大熊貓繁育研究基地). She successively served as the staff member of the Publicity and Education Division, principal staff member and secretary of the Communist Youth League Committee of Chengdu Landscaping Bureau (成都園林局); the assistant researcher of the Cadre Education Division, the deputy director of the Research Office, the deputy director of the Fourth Division, and the director of the Cadre Education Division of the Organisation Department of the Municipal Party Committee of the Chengdu Government (成都市委組織部); the deputy secretary of the Communist Party Committee, secretary of the Commission for Discipline Inspection, director and chairman of the Labour Union of Chengdu Metro Co., Ltd. (成都地鐵有限責任公司 ); and the deputy secretary of the Communist Party Committee, secretary of the Commission for Discipline Inspection, director and chairman of the Labour Union of Chengdu Rail Transit Group Company Limited (成都軌道交通集團有限公司). Ms. He holds a bachelor’s degree.

− 126 − Mr. WANG Xiaohua (王小華), Deputy Secretary of the Communist Party Committee and Secretary of the Commission for Discipline Inspection of the Issuer. Previously, Mr. Wang served as the assistant engineer of Chengdu Science Instrument Factory (成都科學儀器廠); the staff member, principal staff member, deputy director and director of the General Office and member of the Chengdu Work Committee of Departments under the Central Committee of the Communist Party (中共成都市直屬機關工作委員會); the staff member, senior staff member and principal staff member of the Chengdu Work Committee of Departments under the Communist Youth League (共青團成都市直屬機關工委); and the deputy secretary of the Communist Party Committee and secretary of the Commission for Discipline Inspection of Chengdu City Investment Group (成都城投集團)(“Chengdu City Investment”). Mr. Wang holds a bachelor’s degree.

Mr. YANG Minqing (楊岷清), see “— Directors”.

Mr.HUJun(胡軍), see “— Directors”.

Mr. MA Honglin (馬紅林), Deputy General Manager of the Issuer. He concurrently serves as the chairman and director of JIAOZI Emerging and director of JinTai Insurance. Previously, Mr. Ma was the deputy director of the General Office of the Jiefanglu Branch of Bank of ChengDu (成都銀行解放路支行); the staff member, section chief of General Affairs Division and assistant director of General Office of Board of Directors of Bank of ChengDu, and director and deputy general manager of Jincheng Consumer Finance; the secretary and director of General Office of Board of Directors, director of the Party Work Office and manager of the Meishan Branch of JinTai Insurance; and the secretary and director of the General Office of the Board of Directors of JinTai Insurance. Mr. Ma holds a master’s degree.

Ms. ZOU Jin (鄒進), Deputy General Manager of the Issuer. Previously, Ms. Zou served as the staff member, senior staff member, deputy section chief and section chief of Budget Section, and section chief of the Tax Section of Finance Bureau of Jinjiang District, Chengdu (成都市錦江區財政局); the deputy director of the Audit Bureau of Jinjiang District, Chengdu (成都市錦江區審計局); the deputy director of the Ombudsman Division of Financial Service Office; the deputy director of the General Affairs Division of Financial Service Office; the director of the General Affairs Division and director of the Capital Market Division of Financial Service Office; and the director of the General Affairs Division and director of the Capital Market Division of Chengdu Municipal Financial Regulatory Bureau. Ms. Zou holds a bachelor’s degree.

Mr. WU Kui (吳奎), Deputy General Manager of the Issuer. Previously, Mr. Wu has held positions as the principal staff member of the Regional Economic Department of Chendgu Development and Reform Commission (成都市發展和改革委員會); party committee member, deputy secretary and mayor of Shengping in Pengzhou City; and member of the Party Committee, deputy secretary and director of the Management Committee of the Pengzhou Industrial Development Zone (彭州工業開發區). Mr. Wu holds a Doctor of Philosophy degree.

− 127 − TAXATION

The following summary of certain tax consequences of the purchase, ownership and disposition of the Notes is based upon applicable laws, regulations, rulings and decisions in effect as at the date of this Offering Circular, all of which are subject to change (possibly with retroactive effect). This summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Notes and does not purport to deal with consequences applicable to all categories of investors, some of which may be subject to special rules. Neither these statements nor any other statements in this Offering Circular are to be regarded as advice on the tax position of any holder of the Notes or any person acquiring, selling or otherwise dealing in the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. Persons considering the purchase of the Notes should consult their own tax advisers concerning the tax consequences of the purchase, ownership and disposition of the Notes.

PRC The following summary describes the principal PRC tax consequences of ownership of the Notes by beneficial owners who, or which, are not residents of the PRC for PRC tax purposes. These beneficial owners are referred to as non-PRC Noteholders in this section. In considering whether to invest in the Notes, investors should consult their individual tax advisers with regard to the application of PRC tax laws to their particular situations as well as any tax consequences arising under the laws of any other tax jurisdiction. Reference is made to PRC taxes from the taxable year beginning on or after 1 January 2008.

EIT AND IIT

Pursuant to the EIT Law, the IIT Law and the implementation regulations in relation to both the EIT Law and the IIT Law, PRC income tax at a rate of 10 per cent. or 20 per cent. is normally applicable to PRC-source income derived by non-resident enterprises or individuals, respectively, subject to adjustment by applicable treaty. As the Issuer is a PRC resident enterprise for tax purposes, interest paid to non-resident Noteholders would be regarded as PRC-sourced, and therefore be subject to PRC income tax at a rate of 10 per cent. for non-resident enterprise Noteholders and at a rate of 20 per cent. for non-resident individual Noteholders (or a lower treaty rate, if any).

Such income tax shall be withheld by the Issuer that is acting as the obligatory withholder and such PRC enterprise shall withhold the tax amount from each payment or payment due. To the extent that the PRC 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 qualified non-PRC resident enterprise Noteholders.

Under the EIT Law and its implementation rules, any gains realised on the transfer of the Notes by holders who are deemed under the EIT Law as non-resident enterprises may be subject to PRC enterprise income tax if such 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 PRC and whose actual administrative organisation is not in the PRC, which has established offices or premises in the PRC, or which has not established any offices or premises in the PRC but has obtained income derived from sources within the PRC. There remains uncertainty as to whether the gains realised on the transfer of the Notes by non-resident enterprise holders would be treated as incomes 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 PRC or who has no domicile but has lived within the territory of China for less than one year shall pay individual income tax for any income obtained within the PRC. There is uncertainty as to whether gains realised on the transfer of the Notes by individual holders who are not PRC citizens or residents will be subject 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 unless there is an applicable tax treaty or arrangement that

− 128 − reduces or exempts such income tax. The taxable income will be the balance of the total income obtained from the transfer of the Notes minus all costs and expenses that are permitted under PRC tax laws to be deducted from the income. According to the Arrangement, Noteholders who are Hong Kong residents, including both enterprise holders and individual holders, will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Notes if such capital gains are not connected with an office or establishment that the Noteholders have in the PRC and all the other relevant conditions are satisfied.

VAT

On 23 March 2016, the Ministry of Finance and the State Administration of Taxation (“SAT”) issued Circular 36 which confirms that business tax will be completely replaced by VAT from 1 May 2016. Since then, the income derived from the provision of financial services which attracted business tax will be entirely replaced by, and subject to, VAT.

According to Circular 36, the entities and individuals providing the services within China shall be subject to VAT. The services are treated as being provided within China where either the service provider or the service recipient is located in China. The services subject to VAT include the provision of financial services such as the provision of loans. It is further clarified under Circular 36 that the “loans” refers to the activity of lending capital for another’s use and receiving the interest income thereon. Based on the definition of “loans” under Circular 36, the issuance of Notes is likely to be treated as the holders of the Notes providing loans to the Issuer, which thus shall be regarded as financial services subject to VAT. Further, given that the Issuer is located in the PRC, the holders of the Notes would be regarded as providing the financial services within China and consequently, the holders of the Notes shall be subject to VAT at the rate of 6 per cent. when receiving the interest payments under the Notes. In addition, the holders of the Notes shall be subject to the local levies at approximately 12 per cent. of the VAT payment and consequently, the combined rate of VAT and local levies would be around 6.72 per cent. Given that the Issuer pays interest income to Noteholders who are located outside of the PRC, the Issuer, acting as the obligatory withholder in accordance with applicable law, shall withhold VAT and local levies from the payment of interest income to Noteholders who are located outside of the PRC.

Where a holder of the Notes who is an entity or individual located outside of the PRC resells the Notes to an entity or individual located outside of the PRC and derives any gain, since neither the service provider nor the service recipient is located in the PRC, theoretically Circular 36 does not apply and the Issuer does not have the obligation to withhold the VAT or the local levies. However, there is uncertainty as to the applicability of VAT if either the seller or buyer of Notes is located inside the PRC.

Circular 36 has been issued quite recently, the above statement may be subject to further change upon the issuance of further clarification rules and/or different interpretation by the competent tax authority. There is uncertainty as to the application of Circular 36.

Pursuant to the EIT Law, the Business Tax Laws and the VAT reform detailed above, the Issuer shall withhold EIT, (should such tax apply) from the payments of interest in respect of the Notes for any non-PRC-resident Noteholder and the Issuer shall withhold VAT (should such tax apply) from the payments of interest in respect of the Notes for any Noteholders located outside of the PRC. However, in the event that the Issuer is required to make such a deduction or withholding (whether by way of EIT or VAT otherwise), the Issuer has agreed to pay such additional amounts as will result in receipt by the Noteholders of such amounts after such withholding or deduction as would have been received by them had no such withholding or deduction been required. For more information, see “Terms and Conditions of the Notes — Condition 7 (Taxation).”

No PRC stamp duty will be imposed on non-PRC Noteholders either upon issuance of the Notes or upon a subsequent transfer of Notes to the extent that the register of holders of the Notes is maintained outside the PRC and the issuance and the sale of the Notes is made outside of the PRC.

− 129 − HONG KONG

Withholding tax

No withholding tax is payable in Hong Kong in respect of payments of principal (including any premium payable on redemption of the Notes) or interest on the Notes or in respect of any capital gains arising from the sale of the Notes.

Profits tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business (excluding profits arising from the sale or disposal of capital assets).

Under the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) (the “Inland Revenue Ordinance”) as it is currently applied by the Inland Revenue Department, interest on the Notes may be deemed to be profits arising in or derived from Hong Kong from a trade, profession or business carried out in Hong Kong in the following circumstances:

(a) interest on the Notes is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or

(b) interest on the Notes is received by or accrues to a corporation, other than a financial institution, and arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the Inland Revenue Ordinance).

(c) interest on the Notes is derived from Hong Kong and is received by or accrues to a corporation (other than a financial institution) carrying on a trade, profession or business in Hong Kong; or

(d) interest on the Notes is derived from Hong Kong and is received by or accrues to a person (other than a corporation) carrying on a trade, profession or business in Hong Kong and is in respect of the funds of the trade, profession or business.

Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale, disposal and redemption of Notes will be subject to Hong Kong profits tax. Sums received by or accrued to a corporation, other than a financial institution, by way of gains or profits arising through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO) from the sale, disposal or other redemption of Notes will be subject to Hong Kong profits tax.

Sums derived from the sale, disposal or redemption of Notes will be subject to Hong Kong profits tax where received by or accrued to a person, other than a financial institution, who carries on a trade, profession or business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. The source of such sums will generally be determined by having regard to the manner in which the Notes are acquired and disposed of.

In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may be available. Investors are advised to consult their own tax advisors to ascertain the applicability of any exemptions to their individual position.

Stamp duty

No Hong Kong stamp duty will be chargeable for the issue and transfer of the Notes.

− 130 − THE PROPOSED FINANCIAL TRANSACTIONS TAX (“FTT”)

On 14 February 2013, the European Commission published a proposal (the “Commission’s Proposal”) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”). However, Estonia has since stated that it will not participate.

The Commission’s Proposal has very broad scope and could, if introduced in its current form, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of Notes should, however, be exempt. Under the Commission’s Proposal, the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.

The FTT proposal remains subject to negotiation between the participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate.

Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

FOREIGN ACCOUNT TAX COMPLIANCE ACT

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 (“foreign passthru payments”) to persons that fail to meet certain certification, reporting, or related requirements. The Issuer may be a foreign financial institution for these purposes. A number of jurisdictions have entered into, or have agreed in substance to, intergovernmental agreements with the United States to implement FATCA (“IGAs”), which modify the way in which FATCA applies in their jurisdictions. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes, such withholding would not apply prior to the date that is two years after the publication of the final regulations defining “foreign passthru payment” and Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or prior to the date that is six months after the date on which final regulations defining “foreign passthru payments” are filed with the U.S. Federal Register generally would be “grandfathered” for purposes of FATCA withholding unless materially modified after such date.

Holders should consult their own tax advisers regarding how these rules may apply to their investment in the Notes.

− 131 − PRC REGULATIONS

This section summarises the principal PRC laws and regulations which are relevant to the Group’s business and operations. As this is a summary, it does not contain a detailed analysis of the PRC laws and regulations which are relevant to the Group’s business and operations.

NDRC REGISTRATION

On 14 September 2015, the NDRC issued the NDRC Notice《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), which became effective on the same day. In order to encourage the use of low-cost capital from the international capital markets in promoting investment and steadying growth and to facilitate cross-border financing, the NDRC Notice abolishes the case-by-case quota review and approval system for the issuance of foreign debts by PRC enterprises and sets forth the following measures to promote the administrative reform of the issuance of foreign debts by PRC enterprises or overseas enterprises and branches controlled by PRC enterprises:

• steadily promote the administrative reform of the filing and registration system for the issuance of foreign debts by enterprises;

• increase the size of foreign debts issued by enterprises, and support the transformation and upgrading of key sectors and industries;

• simplify the filing and registration of the issuance of foreign debts by enterprises; and

• strengthen the supervision during and after the process to prevent risks.

For the purposes of the NDRC Notice, “foreign debts” means RMB-denominated or foreign currency- denominated debt instruments with a maturity of one year or above which are issued offshore by PRC enterprises and their controlled offshore enterprises or branches and for which the principal and interest are repaid on the terms set out therein, including offshore bonds and long-term and medium-term international commercial loans, etc. According to this definition, offshore bonds issued by both PRC enterprises and their controlled offshore enterprises or branches shall be regulated by the NDRC Notice.

Pursuant to the NDRC Notice, an enterprise must: (i) apply to the NDRC for the filing and registration procedures prior to the issuance of the bonds; and (ii) report the information on the issuance of the bonds to the NDRC within ten working days after the completion of each issuance. The materials to be submitted by an enterprise must include an application report and an issuance plan, setting out details such as the currency, size, interest rate, term, use of proceeds and remittance details.

To issue foreign debts, an enterprise must meet these basic conditions:

• have a good credit history with no default in its issued bonds or other debts;

• have sound corporate governance and risk prevention and control mechanisms for foreign debts; and

• have a good credit standing and relatively strong capability to repay its debts.

Pursuant to the NDRC Notice, the NDRC must control the overall size of foreign debts that can be raised by PRC enterprises and their controlled overseas branches or enterprises. Based on trends in the international capital markets, the needs of the PRC economic and social development and the capacity to absorb foreign debts, the NDRC must reasonably determine the overall size of foreign debts and guide the funds towards key industries, key sectors, and key projects encouraged by the State, and effectively support the development of the real economy. According to the NDRC Notice,

− 132 − the proceeds raised may be used onshore or offshore according to the actual needs of the enterprises, but priority must be given to supporting the investment in major construction projects and key sectors, such as the “Belt and Road” Initiative (一帶一路), the Integration of Beijing-Tianjin- Hebei, the Yangtze River Economic Belt, international cooperation on production capacity, and the manufacturing of equipment. As the NDRC Notice is relatively newly published, certain detailed aspects of its interpretation and application remain subject to further clarification.

On 6 June 2019, the NDRC promulgated Circular 666, which further provides that (i) where all enterprises (including local state-owned enterprises) and overseas enterprises or subsidiaries controlled by them issue foreign debts, domestic enterprises shall apply for record-filing and registration to the NDRC; (ii) as for the application for record-filing and registration of issuance of foreign debts by all enterprises (including local state-owned enterprises), applicants shall submit a commitment letter on authenticity of application materials, which shall be signed and confirmed by the main decision maker of the enterprises; (iii) where a local state-owned enterprise applies for the record-filing and registration of issuance of foreign debts, it shall have operated continuously for not less than three years; and (iv) foreign debts issued by a local state-owned enterprise undertaking local government financing function can be only used for repaying medium-and-long-term foreign debts due within the future one year.

SAFE ADMINISTRATION

The Interim Provisions on the Management of Foreign Debts《外債管理暫行辦法》 ( ), jointly issued by NDRC, Ministry of Finance and SAFE on 1 March 2003, which came into effect on the same date, set the basic principle to regulate the act of raising foreign debts and providing foreign guaranty. According to the Administrative Measures for Foreign Debt Registration《外債登記管理辦法》 ( (匯發[2013]19號)) and its operating guidelines《外債登記管理操作指引》 ( ), effective as at 13 May 2013 and amended on 4 May 2015, 26 April 2016 and 9 June 2016, respectively, issuers of foreign debts are required to register with the SAFE. Issuers other 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 foreign debt agreement. If the receipt and payment of funds related to the foreign debt of such issuer is not handled through a domestic bank, the issuer shall, in the event of any change in the amount of money withdrawn, principal and interest payable or outstanding debt, go through relevant record-filing procedures with the local branch of the SAFE.

According to the Circular of PBOC on Matters Concerning the Macro-prudential Management of Full-Covered Cross-Border Financing《中國人民銀行關於全口經跨境融資宏現審慎管理有關事宜 ( 的通知》) (the “PBOC Circular”) issued by the PBOC on 12 January 2017, which is not applicable to government financing platforms or real estate enterprises, enterprises conducting cross-border financing shall complete the filing with the capital project information system of SAFE after the execution of cross-border financing contracts and three PRC business days prior to drawing for SAFE’s records. Enterprises shall also promptly update information on cross- border financing and rights and interests each year (including overseas creditors, borrowing term, amount, interest rate and its net assets, etc.). In the case of any change in the audited net assets, overseas creditors, borrowing term, amount, or interest rate involved in the financing contracts, the enterprise shall promptly file the change for SAFE’s records.

According to the Notice by the PBOC and the SAFE of Adjusting the Macro-Prudent Adjustment Parameter for Full-Covered Cross-Border Financing《中國人民銀行、國家外匯管理局關於調整全 ( 口徑跨境融資宏觀審慎調節參數的通知》) issued by the PBOC and the SAFE on 11 March 2020, for purposes of further expanding the use of foreign funds, facilitating the cross-border financing of domestic institutions, and reducing the financing costs of the real economy, the PBC and the SAFT raised the macro-prudent adjustment parameter in the “PBOC Circular” from 1 to 1.25. According to the Notice by the PBOC and the SAFE of Adjusting the Macro-Prudent Adjustment Parameter for

− 133 − Cross-Border Financing of Enterprises《中國人民銀行、國家外匯管理局關於調整企業跨境融資宏 ( 觀審慎調節參數的通知》) issued by the PBOC and the SAFE on 7 January 2021, the PBOC and the SAFE adjusted the macro-prudent adjustment parameter for enterprises in the “PBOC Circular” from 1.25 to 1.

In accordance with the Notice of the State Administration of Foreign Exchange on the Issuance of “Guidelines for Operation of Foreign Exchange Operations on Capital Projects (2020 Edition)” (國家外匯管理局綜合司關於印發《資本項目外匯業務操作指引(2020年版)》的通知)) issued by the SAFE on 22 January 2021, which came into effect on the same date, issuers shall complete foreign debt registration with the local branches of the SAFE within 15 PRC business days after the debt contracts have been signed and five PRC business days after the debt has been closing.

PBOC REGISTRATION

Under the PBOC Circular《中國人民銀行關於全口徑跨境融資宏觀審慎管理有關事宜的通知》 ( ), an enterprise shall report the information on the conclusion of cross-border financing contracts to the capital account information system of the SAFE for recordation after the date of conclusion but no later than three working days before the withdrawal date. In addition, the enterprise is also required to update the information with respect to the cross-border financing every year. If the audited net assets, or the creditor, loan terms, amount or interest rate of the cross-border financing agreement changes, the enterprise is required to complete the change of the filing in due course.

THE PRC LEGAL SYSTEM

The PRC legal system is based on the PRC Constitution and is made up of written laws, regulations, directives and local laws, laws of Special Administrative Regions and laws resulting from international treaties entered into by the PRC government. In general, PRC court judgments do not constitute binding precedents. However, they are used for the purposes of judicial reference and guidance.

The National People’s Congress of the People’s Republic of China (the “NPC”) and the Standing Committee of the NPC are empowered by the PRC Constitution to exercise the legislative power of the State. The NPC has the power to amend the PRC Constitution and enact and amend basic laws governing State agencies and civil, criminal and other matters. The Standing Committee of the NPC is empowered to enact and amend all laws except for the laws that are required to be enacted and amended by the NPC.

The State Council is the highest organ of the State administration and has the power to enact administrative rules and regulations. The ministries and commissions under the State Council are also vested with the power to issue orders, directives and regulations within the jurisdiction of their respective departments. All administrative rules, regulations, directives and orders promulgated by the State Council and its ministries and commissions must be consistent with the PRC Constitution and the national laws enacted by the NPC. In the event that a conflict arises, the Standing Committee of the NPC has the power to annul such administrative rules, regulations, directives and orders.

At the regional level, the provincial and municipal congresses and their respective standing committees may enact local rules and regulations and the people’s governments may promulgate administrative rules and directives applicable to their own administrative areas. These local rules and regulations must be consistent with the PRC Constitution, the national laws and the administrative rules and regulations promulgated by the State Council.

The State Council, provincial and municipal governments may also enact or issue rules, regulations or directives in new areas of the law for experimental purposes or in order to enforce the law. After gaining sufficient experience with experimental measures, the State Council may submit legislative proposals to be considered by the NPC or the Standing Committee of the NPC for enactment at the national level.

− 134 − The PRC Constitution vests the power to interpret laws in the Standing Committee of the NPC. The Supreme People’s Court, in addition to its power to give general interpretation on the application of laws in judicial proceedings, also has the power to interpret specific cases. The State Council and its ministries and commissions are also vested with the power to interpret rules and regulations that they have promulgated. At the regional level, the power to interpret regional rules and regulations is vested in the regional legislative and administrative bodies which promulgated such laws.

THE PRC JUDICIAL SYSTEM

Under the PRC Constitution and the Law of Organisation of the People’s Courts, the judicial system is made up of the Supreme People’s Court, the local courts, military courts and other special courts.

The local courts are comprised of the basic courts, the intermediate courts and the higher courts. The basic courts are organised into civil, criminal, economic, administrative and other divisions. The intermediate courts are organised into divisions similar to those of the basic courts, and are further organised into other special divisions, such as the intellectual property division. The higher level courts supervise the basic and intermediate courts. The people’s procuratorate also have the right to exercise legal supervision over the civil proceedings of courts at the same level and lower levels. The Supreme People’s Court is the highest judicial body in the PRC; it supervises the administration of justice by all other courts.

The courts employ a two-tier appellate system. A party may appeal against a judgment or order of a local court to the court at the next higher level. Second judgments or orders given at the next higher level and the first judgments or orders given by the Supreme People’s Court are final. If, however, the Supreme People’s Court or a court at a higher level finds an error in a judgment which has been given by any court at a lower level, or the president of a court finds an error in a judgment which has been given in the court over which he presides, the case may then be retried in accordance with the judicial supervision procedures.

The Civil Procedure Law of the PRC《中華人民共和國民事訴訟法》 ( ), which was adopted on 9 April 1991 and amended on 28 October 2007, 31 August 2012 and 27 June 2017, respectively, sets forth the criteria for instituting a civil action, the jurisdiction of the courts, the procedures to be followed for conducting a civil action and the procedures for enforcement of a civil judgment or order. All parties to a civil action conducted within the PRC must comply with the Civil Procedure Law. Generally, a civil case is initially heard by a local court of the municipality or province in which the defendant resides. The parties to a contract may, by express agreement, select a jurisdiction where civil actions may be brought, provided that the jurisdiction is either the plaintiff’s or the defendant’s place of residence, the place of execution or implementation of the contract or the place of the object of the contract. However, such contractual selection may not override the stipulations of the mandated jurisdiction of the different levels of court and the exclusive jurisdiction of a given court in any case.

A foreign individual or enterprise generally has the same litigation rights and obligations as a citizen or legal person of the PRC. If a foreign country’s judicial system limits the litigation rights of PRC citizens and enterprises, the PRC courts may apply the same limitations to the citizens and enterprises of that foreign country within the PRC. If any party to a civil action refuses to comply with a judgment or order made by a court or an award granted by an arbitration panel in the PRC, the aggrieved party may apply to the court to request for enforcement of the judgment, order or award. The time limit imposed on the right to apply for such enforcement is two years. If a person fails to satisfy a judgment made by the court within the stipulated time, the court will, upon application by any party to the action, mandatorily enforce the judgment.

− 135 − A party seeking to enforce a judgment or order of a court against a party who is not located within the PRC and does not own any property in the PRC may apply to a foreign court with proper jurisdiction for recognition and enforcement of the judgment or order. A foreign judgment or ruling may also be recognised and enforced by a PRC court in accordance with the PRC enforcement procedures if the PRC has entered into, or acceded to, an international treaty with the relevant foreign country, which provides for such recognition and enforcement, or if the judgment or ruling satisfies the court’s examination in accordance with the principle of reciprocity, unless the court finds that the recognition or enforcement of such judgment or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or security, or for reasons of social and public interests.

PRC CURRENCY CONTROLS

Renminbi is not a freely convertible currency. The remittance of Renminbi into and outside the PRC is subject to control imposed under the PRC laws.

Current Account Items

Under the PRC foreign exchange control regulations, current account item payments include payments for imports and exports of goods and services, payments of income and current transfers into and outside the PRC.

Prior to July 2009, all current account items were required to be settled in foreign currencies. Since July 2009, the PRC has commenced a pilot scheme pursuant to which Renminbi may be used for settlement of imports and exports of goods between approved pilot enterprises in five designated cities in the PRC including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprises in designated offshore jurisdictions including Hong Kong and Macau. In June 2010, August 2011 and February 2012 respectively, the PRC government promulgated the Circular on Issues concerning the Expansion of the Scope of the Pilot Program of Renminbi Settlement of Cross-Border Trades《關於 ( 擴大跨境貿易人民幣結算試點有關問題的通知》), the Circular on Expanding the Regions of Cross-border Trade Renminbi Settlement《關於擴大跨境貿易人民幣結算地區的通知》 ( ) and the Notice on Matters Relevant to the Administration of Enterprises Engaged in Renminbi Settlement of Export Trade in Goods《關於出口貨物貿易人民幣結算企業管理有關問題的通知》 ( ) (together, the “Circulars”) with regard to the expansion of designated cities and offshore jurisdictions implementing the pilot Renminbi settlement scheme for cross-border trades. Pursuant to these Circulars, (i) Renminbi settlement of imports and exports of goods and of services and other current account items became permissible, (ii) the list of designated pilot districts were expanded to cover all provinces and cities in the PRC, (iii) the restriction on designated offshore districts has been lifted and (iv) any enterprise qualified for the export and import business is permitted to use Renminbi as settlement currency for exports of goods, provided that the relevant provincial government has submitted to the PBOC and five other PRC authorities (the “Six Authorities”) a list of key enterprises subject to supervision and the Six Authorities have verified and signed off such list (the “Supervision List”).

On 5 July 2013, the PBOC promulgated the Circular on Policies related to Simplifying and Improving Cross- border Renminbi Business Procedures《關於簡化跨境人民幣業務流程和完善有關政策的通 ( 知》) (the “2013 PBOC Circular”), which, in particular, simplifies the procedures for cross-border Renminbi trade settlement under current account items. For example, PRC banks may conduct settlement for PRC enterprises (excluding those on the Supervision List) upon the PRC enterprises presenting the payment instruction. PRC banks may also allow PRC enterprises to make/receive payments under current account items prior to the relevant PRC bank’s verification of underlying transactions (noting that verification of underlying transactions is usually a precondition for cross-border remittance).

The Circulars and the 2013 PBOC Circular are subject to interpretation and application by the relevant PRC authorities. Local authorities may adopt different practices in applying these circulars and impose conditions for settlement of current account items.

− 136 − Capital Account Items

Under the applicable PRC foreign exchange control regulations, capital account items include cross-border transfers of capital, direct investments, securities investments, derivative products and loans. Capital account payments are generally subject to approval of and/or registration or filing with the relevant PRC authorities.

Until recently, settlement for capital account items were generally required to be made in foreign currencies. For instance, foreign investors (including any Hong Kong investors) are required to make any capital contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out in the relevant joint venture contracts and/or articles of association as approved by the relevant authorities. Foreign invested enterprises or relevant PRC parties were also generally required to make capital account payments including proceeds from liquidation, transfer of shares, reduction of capital, interest and principal repayment to foreign investors in a foreign currency.

On 11 May 2013, the SAFE promulgated the Provisions on the Foreign Exchange Administration of Domestic Direct Investment by Foreign Investors《外國投資者境內直接投資外匯管理規定》 ( ) (the “SAFE Provisions”), which became effective on 13 May 2013 and amended on 10 October 2018. According to the SAFE Provisions, foreign investors can use cross-border Renminbi (including Renminbi inside and outside the PRC held in the capital accounts of non-PRC residents) to make a contribution to an onshore enterprise or make a payment for the transfer of an equity interest of an onshore enterprise by a PRC resident within the total investment amount approved by the competent authorities (for example, MOFCOM and/or its local counterparts as well as financial regulators). Capital account transactions in Renminbi must generally follow the current foreign exchange control regime applicable to foreign currencies.

On 3 December 2013, the MOFCOM promulgated the Announcement on Issues in relation to Cross-border Renminbi Foreign Direct Investment《商務部關於跨境人民幣直接投資有關問題的公 ( 告》(2013年第87號)) (the “MOFCOM Announcement”), which became effective on 1 January 2014, to further facilitate foreign direct investment by simplifying and streamlining the applicable regulatory framework. Pursuant to the MOFCOM Announcement, the appropriate office of MOFCOM and/or its local counterparts will grant written approval for each foreign direct investment and specify “Renminbi Foreign Direct Investment” and the amount of capital contribution in the approval. The MOFCOM Announcement also removes the approval requirement for foreign investors who intend to change the currency of its existing capital contribution from a foreign currency to Renminbi. In addition, the MOFCOM Announcement specifically prohibits the use of funds used for foreign direct investment for any investment in securities and financial derivatives (except for investment in the PRC listed companies as strategic investors) or for entrustment loans in the PRC.

Under current rules promulgated by the SAFE, foreign debts borrowed and the foreign security provided by an onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under the current PRC foreign debt and foreign security regime.

The SAFE Provisions, the MOFCOM Circular and the Administrative Measures on Renminbi Settlement of Foreign Direct Investment (外商直接投資人民幣結算業務管理辦法) (the “PBOC FDI Measures”), which are new regulations and were revised on 5 June 2015, have been promulgated to control the remittance of Renminbi for payment of transactions categorised as capital account items and such new regulations are subject to interpretation and application by the relevant PRC authorities. The Circular on Reforming the Administrative Approach of the Foreign Exchange Capital Settlement for Foreign Invested Enterprises《關於改革外商投資企業外匯資本金結匯管理方式的通知》 ( ) became effective on 29 May 2015 (the “2015 SAFE Circular”). In addition to the option to settle foreign current capital through payment-based foreign exchange settlement (支付結匯制), the 2015 SAFE Circular allows foreign-invested enterprises to settle up to 100 per cent. (subject to future adjustment at discretion of the SAFE) of the foreign currency capital (which has been processed through the SAFE’s equity interest confirmation procedure for capital contribution in cash or registered by a bank on the SAFE’s system for account-crediting for such capital contribution) into

− 137 − Renminbi according to their actual operational needs on a voluntary basis. In principle, the Renminbi proceeds through the aforementioned voluntary settlement shall be deposited into designated bank account called capital account item — account for foreign currency settlement pending payment (資本項目 — 結匯待支付賬戶) (the “Account for Foreign Currency Settlement Pending Payment”) as opened by such foreign-invested enterprise, and accordingly all future payments shall be processed from such Account for Foreign Currency Settlement Pending Payment. A negative list with respect to the usage of the foreign currency capital and the Renminbi proceeds settled therefrom is set forth under the 2015 the SAFE Circular. In particular, a foreign invested enterprise with investment as its main business (including the foreign-invested investment company (外商投資性公司), foreign-invested venture capital enterprise (外商投資創業投資企業)or foreign-invested equity investment enterprise (外商投資股權投資企業)) is permitted to use the Renminbi proceeds settled from its foreign currency capital (whether directly settled, or from the Renminbi deposit in its Account for Foreign Currency Settlement Pending Payment as previously settled through voluntary settlement) to make equity contribution to its invested enterprises directly, without further filings with SAFE. PRC entities are also permitted to borrow Renminbi- denominated loans from foreign lenders (which are referred to as “foreign debt”) and lend Renminbi-denominated loans to foreign borrowers (which are referred to as “outbound loans”), as long as such PRC entities have the necessary quota, approval or registration. PRC entities may also denominate security or guarantee arrangements in Renminbi and make payments thereunder to parties in the PRC as well as other jurisdictions (which is referred to as “cross-border security”).

On 9 June 2016, the SAFE promulgated the Notice on Reforming and Standardizing the Administrative Provisions on Capital Account Foreign Exchange Settlement《關於改革和規範資本 ( 項目結匯管理政策的通知》(匯發[2016]16號)) (the “SAFE Circular 16”) which took effect on the same day. According to the SAFE Circular 16, enterprises registered in PRC could settle the external debts in foreign currencies to Renminbi at their own discretion. The SAFE Circular 16 sets a uniform standard for discretionary settlement of foreign currencies under capital accounts (including but not limited to foreign currency capital, foreign debts and repatriated funds raised through overseas listing), which is applicable to all enterprises registered in the PRC. It reiterated that the Renminbi funds obtained from the settlement of foreign currencies shall not be used directly or indirectly for purposes beyond the company’s scope of business, and shall not be used for domestic securities investment or investments and wealth management products other than principal-protected products issued by banks, unless otherwise expressly prescribed. Furthermore, such Renminbi funds shall not be used for disbursing loans to non-affiliated enterprises, unless the scope of business expressly provides so; and shall not be used to construct or purchase real estate not for self-use (except for real estate enterprises).

On 10 April 2020, the SAFE promulgated the Notice by the State Administration of Foreign Exchange of Optimizing Foreign Exchange Administration to Support Foreign Business Development《國家外 ( 匯管理局關於優化外匯管理支持涉外業務發展的通知》(匯發[2020]8號)) (the “SAFE Circular 8”), which took effect on the same day. According to the SAFE Circular 8, when enterprises registered in PRC settle the external debts in foreign currencies to Renminbi at their own discretion without providing delegated banks with authenticity certification materials on a transaction-by-transaction basis in advance, under the premise that funds are used in a truthful and compliant manner and comply with the existing provisions on the administration of use of receipts under capital accounts.

Under current rules promulgated by the SAFE, foreign debts borrowed, outbound loans extended, and the cross-border security provided by a PRC onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under the current PRC foreign debt, outbound loan and cross-border security regimes applicable to foreign currencies. However, there remains potential inconsistencies between the provisions of the SAFE rules and the provisions of the 2013 PBOC Circular. It is not clear how regulators will deal with such inconsistencies in practice.

− 138 − Further, if any new PRC regulations are promulgated in the future which have the effect of permitting or restricting (as the case may be) the remittance of Renminbi for payment of transactions categorised as capital account items, then such remittances will need to be made subject to the specific requirements or restrictions set out in such rules.

REGULATIONS ON FISCAL DEBTS OF LOCAL GOVERNMENTS

In accordance with the Guidance on Further Strengthening Adjustment of Credit Structure 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》(銀發[2009]92號)) issued jointly by the PBOC and the CBRC in March 2009, local governments are encouraged to establish financing platforms to issue financing instruments such as enterprise bonds and med-term notes.

In order to strengthen the management of financing platforms and effectively prevent fiscal financial risks, the Notice on Strengthening Management of Financing Platform of Local Government《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》(國發[2010]19號)) (the “Circular 19”) and the Notice on Further Regulating Issuance of Bonds by Financing Platform of Local Government《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》(發改辦財金[2010]2881號)) (the “Circular 2881”) were separately promulgated in June 2010 and November 2010. In accordance with Circular 19, all levels of local governments shall clear up the debts of their respective financing platforms and financing platform companies that only undertake financing tasks for public interest projects and repay debts mainly by governmental fiscal funds shall not undertake financing tasks in the future. In accordance with Circular 2881, the level of indebtedness of local governments will have an impact on the ability of the financing platform to issue enterprise bonds, and more than 70 per cent. of the funds for debt must be sourced from the proceeds of the financing platform company.

On 21 September 2014, the Opinion on Enhancing the Administration of Fiscal Debts of Local Governments《國務院關於加強地方政府性債務管理的意見》 ( ) (the “Circular 43”) was promulgated by the State Council. Circular 43 aims at regulating the local government debts. In accordance with Circular 43, financing platforms shall no longer serve the fiscal financing functions nor incur new government debts. Public interest projects may be funded by the government through issuing government bonds, since the new Budget Law of the PRC, which took effect on 1 January 2015 and amended on 29 December 2018, empowers local governments to issue government bonds, and public interest projects with income generated, such as city infrastructure construction, may be operated independently by social investors or jointly by the government and social investors through the establishment of special purpose companies. 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 special purpose companies shall bear the obligation to pay off such debts and the government shall not be liable for any of the social investors’ or special purpose companies’ debts. Circular 43 also sets forth the general principles of dealing with existing debts of financing platforms. Based on the auditing results of such debts run by the local governments, the existing debts that should be repaid by the local governments shall be identified, reported to State Council for approval, and then included in the budget plan of local governments.

On 11 May 2015, Opinion on the Proper Solution of the Follow-up Financing Issues for Projects under Construction of Financing Platform of Local Governments issued jointly by the Ministry of Finance of the 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的通知》) (the “Circular 40”) was promulgated by the General Office of the State Council of the PRC. In accordance with Circular 40, local governments at all levels and banking financial institutions shall properly deal with follow-up financing issues for projects under

− 139 − construction of financing platform companies. Projects under construction refer to projects that have started construction upon the completion of examination, approval or filing procedures in accordance with relevant regulations by competent investment authorities before the date when the Circular 43 was promulgated.

The key tasks of local governments and banking financial institutions are as follows:

• Support stock financing needs for projects under construction. Local governments at all levels and banking financial institutions shall ensure the orderly development of projects under construction. In respect of loans to the projects under construction of financing platform companies, if the loan contracts which are legally binding have been signed before 31 December 2014 and the loans have been granted but the contracts have not yet expired, banking financial institutions shall, under the premise of fully controlling risks and implementing credit conditions, continue to grant loans as agreed in the contracts, and shall not blindly call in loans in advance, delay or suspend the granting of loans.

• Regulate incremental financing for projects under construction. Local governments at all levels shall pay close attention to any incremental financing needs which are expected to be given fiscal support for the projects under construction of the financing platform companies, and shall, under the premise of compliance with laws and regulations and standard administration, make overall arrangements for various kinds of capital such as fiscal capital and social capital and ensure the continuation and completion of projects under construction. For the projects under construction of financing platform companies for which the loan amount in the contracts that have been signed fails to meet the construction needs, if it is suitable for them to adopt a government and social capital cooperation mode, they shall prioritise such mode to make up the needs. And if they are in compliance 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 incremental financing needs shall be incorporated into government budget management and solved through issuing 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 on supporting the projects under construction of financing platform companies, such as farmland water conservancy facilities, affordable housing projects and urban railway systems.

• Improve supporting measures. Under the premise of ensuring fiscal expenditure needs, in the regions where there are corresponding amounts of government bonds issuance and where the treasury balances exceed the treasury payment for one and a half months, the local financial departments are allowed to, within the limit of the amount of government bonds issuance, make more efforts to effectively use the stock of fiscal funds in the previous years and use the surplus amount of the treasury for capital flow before government bond issuance, so as to address the time difference between the financing for projects under construction and government bonds issuance.

Neither Circular 43 nor Circular 40 is applicable to the Notes and neither Chengdu SASAC nor any other government authority has any obligation to repay any amount under the Notes. In the event the Issuer does not fulfil its payment obligations under the Notes, investors will only be able to claim against the Issuer, and not Chengdu SASAC or any other government authority.

On 28 March 2018, the MOF promulgated the MOF Circular 23, which came into effect on the same day. Under the MOF Circular 23, when providing intermediary services for local government financing platform companies and other local state-owned enterprises regarding issuance of bonds at home and abroad, state-owned financial enterprises shall prudently evaluate the financial capability of fund-raisers and their source of funds for repayment. Where the source of revenue of bond-issuing enterprises involves fiscal funds, due diligence investigation shall be carried out, and the compliance

− 140 − and authenticity of fiscal funds shall be diligently verified. In bond prospectuses and other documents, local financial revenues and expenditures, government debt data, or any other information implicitly or explicitly indicating support of government credit shall not be disclosed, and misleading publicity connecting with government credit shall be prohibited. It shall be specified in relevant transaction documents that the local government shall only assume limited liability to the extent of its amount of contribution and the relevant debts shall be repaid by local state-owned enterprises as independent legal persons.

On 11 May 2018, the NDRC and the MOF jointly issued the Joint Circular 706. Under the Joint Circular 706, enterprises that take on foreign debts shall have materialized operations, conduct financing activities in compliance with laws after fully demonstrating the necessity of taking on such foreign debts. It is forbidden for enterprises to require or accept local governments and their subordinate departments to provide guarantees or assume debt repayment obligations for their market-oriented financing behaviours in a variety of ways, so as to ensure that “whoever borrows, who borrows from them, who borrows them, makes prudent decisions, and takes risks at his own expense”. Further, the assets owned by such enterprises shall be of good quality, the ownership shall be clear. It is forbidden that public schools, public hospitals, public cultural facilities, parks, public squares, government office buildings, municipal roads, non-toll bridges, non-operating water conservancy facilities, non-toll pipeline network facilities, reserved land use rights and other assets relating to public interests be accounted into enterprises’ assets. It is restated that in bond prospectuses and other documents, local financial revenues and expenditures, government debt data, or any other information implicitly or explicitly indicating support of government credit shall not be disclosed, and misleading publicity connected with government credit shall be prohibited, and it shall be specified in relevant transaction documents that the local government shall only assume limited liability to the extent of its amount of contribution and the relevant debts shall be repaid by local state-owned enterprises as independent legal persons.

REGULATIONS ON FINANCIAL LEASING

Civil Code of the PRC《民法典》 ( ) (the “Civil Code”), which was issued on 28 May 2020 and became effective on 1 January 2021, sets forth the definition on financial leasing contracts providing that a financial leasing contract means a contract whereby the lessor, upon purchase of the lessee-selected leased property from a lessee-selected seller, provides the leased property to the lessee for its use, and the lessee pays the rent. A financial leasing contract should be made in written form, and a financial leasing contract concluded by the parties by fabricating the leased property shall be void. In addition, a lessor’s ownership of leased property shall not be effective against a good faith third party without registration.

On 22 October 2004, the Circular of the Ministry of Commerce and the State Administration of Taxation on Relevant Issues concerning Undertaking Financing Lease Business《商務部國家稅務總 ( 局關於從事融資租賃業務有關問題的通知》(商建發[2004]560號)) (the “Circular 560”) was issued and it proposes that the Ministry of Commerce will carry out the piloting of financing lease business by Chinese-funded leasing enterprises. In the meantime, Circular 560 stipulates the conditions the pilot enterprise that undertakes financing lease business shall meet and provides that a financing lease pilot enterprise shall strictly abide by relevant PRC laws and regulations, and may not undertake such businesses as absorbing deposit or depositing in disguised form, providing working capital loans and other loans under the leasing item to the tenant, making securities investment or making equity investment in financial institutions, engaging inter-bank borrowing or lending business.

− 141 − On 12 April 2006, the Circular of the Ministry of Commerce and the State Administration of Taxation on Strengthening the Supervision over Pilot Financing Lease with Domestic Investment《商務部、 ( 國家稅務總局關於加強內資融資租賃試點監管工作的通知》(商建發[2006]160號)) was issued. Circular 160 proposes to establish a sound supervision mechanism to strengthen administration on alteration and to establish a withdrawal mechanism and also proposes that all administrative departments of commerce and taxation throughout the country shall strengthen the instruction of and supervision over pilot enterprises.

On 15 December 2011, the Ministry of Commerce issued the Circular of Guiding Opinions of the Ministry of Commerce on Promoting the Development of Financial Lease Industry during the Twelfth Five-Year Period《商務部關於 ( “十二五”期間促進融資租賃業發展的指導意見》(商服貿發[2011]487 號)) (the “Circular 487”). Circular 487 proposes main tasks to promote the development of financial lease industry during the twelfth five- year period such as innovating the business mode of financial lease enterprises, optimizing the development layout of the financial lease industry, supporting enterprises in expanding new business areas, opening up the overseas assets lease market, broadening the financing channels for enterprises, improving the ability of risk prevention and accelerating the development of industries related to financial leases. Additionally, Circular 487 proposes some safeguard measures to achieve those tasks.

On 31 August 2015, the Circular of Guiding Opinions of the General Office of the State Council on Accelerating the Development of the Financial Leasing Industry《國務院辦公廳關於加快融資租賃 ( 業發展的指導意見》(國辦發 [2015]68 號)) (the “Financial Leasing Circular”) was issued by the General Office of the State Council. The Financial Leasing Circular provides to remove the restrictions on the minimum registered capital for subsidiaries established by finance lease enterprises and provides that (i) finance lease enterprises are allowed to concurrently carry out commercial factoring business relevant to their primary business, (ii) all social capital entering the finance lease industry shall be guided and standardized, and diversification of investment subjects shall be promoted by supporting private capital to establish finance lease companies by promotion and independent third- party service institutions to invest in the establishment of finance lease companies. The Financial Leasing Circular also highlights that manufacturers of construction machinery, railway, electric power, civil aircraft, ships, marine engineering equipment, and other major complete equipment are encouraged to develop international market and cross-border lease by means of finance lease. And that finance lease companies are encouraged to launch cross-border RMB business. Besides, the Financial Leasing Circular supports the integrated development of finance lease companies and the Internet, as well as the enhanced cooperation between finance lease companies and financial institutions of banks, insurance, trusts, and funds, for the innovation in commercial modes.

On 26 May 2020, the Circular of the CBIRC on Issuing the Interim Measures for the Supervision and Administration of Finance Leasing Companies《中國銀保監會關於印發 ( <融資租賃公司監督管理暫行辦法>的通知》(銀保監發[2020]22號)) (the “Interim Measures”) was issued by CBIRC, which provides that the financing activities of the finance leasing companies shall comply with the relevant laws and regulations: (i) the proportion of the financial leasing assets and other leasing assets of a financial leasing company shall not be less than 60 per cent. of its total assets; (ii) the total risk assets of a financial leasing company shall not exceed eight times of its net assets. The total amount of risk assets shall be determined on the basis of the residual assets after the company’s total assets minus cash, bank deposits and treasury bonds; (iii) The fixed-income securities investment business carried out by a financial leasing company shall not exceed 20 per cent. of its net assets; (iv) a financial leasing company shall strengthen the management of key lessees, control the proportion of business with a single lessee and with a lessee as the affiliated party, and effectively prevent and diversify operational risks and follow relevant regulatory indicators. The Interim Measures Finance also highlights that leasing companies shall not have the following business or activities: (i) illegally raising funds, accepting deposits or accepting deposits in a disguised form; (ii) making loans or acting as trustee to make loans; (iii) calling loans with other finance leasing companies or doing so in a disguised form; (iv) raising funds or transferring assets through P2P lending information intermediaries or private investment funds; or (v) other business or activities prohibited by laws and

− 142 − regulations, the CBIRC and local financial regulatory authorities of provinces, autonomous regions and centrally-administered municipalities. Furthermore, the Interim Measures set forth that some regulatory indicators and figures that finance leasing companies established prior to the implementation of the Interim Measures shall meet the requirements hereof within the transition period specified by the local financial regulatory authorities at the provincial level, and such transition period shall not exceed three years in principle. Local financial regulatory authorities at the provincial level may appropriately extend the transitional arrangements according to the actual situation of specific industries.

REGULATIONS ON ASSET MANAGEMENT BUSINESS

The Regulation on Financial Asset Management Companies《金融資產管理公司條例》 ( ), promulgated by the State Council on 11 November 2000, set the regulation framework of financial asset management company. The Administrative Measures for Batch Transfer of Non-performing Assets of Financial Enterprises《金融企業不良資產批量轉讓管理辦法》 ( ) (the “Administrative Measures”), which was issued by the MOF and the former CBRC on 18 January 2012, and the Notice of the CBRC on Relevant Issues concerning Conditions for Qualification Licensing of Local Asset Management Companies to Carry out the Batch Purchase and Disposal of Non-performing Assets of Financial Enterprises《中國銀監會關於地方資產管理公司開展金融企業不良資產批量收購處置業務資質認可 ( 條件等有關問題的通知》), which was issued on 28 November 2013, set forth that any people’s government at the provincial level shall, in principle, establish or authorize one asset management or operating company only and the documents for approval of such establishment or authorization shall be copied to the MOF and the CBRC, and that the aforesaid asset management or operating company shall only participate in the batch transfer of non-performing assets within the province and the non-performing assets acquired by such company shall be disposed of through debt restructuring and shall not be transferred externally. However, the Letter of the General Office of the CBRC on Appropriately Adjusting the Relevant Policies for Local Asset Management Companies《中國銀行業 ( 監督管理委員會辦公廳關於適當調整地方資產管理公司有關政策的函》), which was issued on 14 October 2016, provides that a people’s government at the provincial level may establish one additional local asset management company if it desires to do so and that the non-performing assets acquired by the local asset management company are allowed to be disposed of through debt restructuring as well as to be transferred externally and without territorial limits.

Furthermore, Circular of the General Office of the CBIRC on Heightening the Supervision and Administration of Local Asset Management Companies《中國銀保監會辦公廳關於加強地方資產管 ( 理公司監督管理工作的通知》(銀保監辦發[2019]153號)), which was issued on 5 July 2019, provides that the local financial regulatory departments shall keep a strict rein on market entry and exit of local asset management companies and be responsible for the daily supervision and administration within their respective jurisdictions, including the establishment, change, termination, risk prevention and disposal of local asset management companies, and that local asset management companies shall carry out acquisition and disposal of non-performing assets in a market- oriented and specialized manner and shall not sign or reach with the transferor any agreement that may impose an impact on the real and complete transfer of assets and risks and cause changes to the transaction structure, the risk- bearing entity and the transfer process of the relevant rights and interests, other than the formal legal documents such as the transfer contract, or set any buyback stipulations, either explicitly or implicitly, assist financial enterprises in the removal of their non-performing assets from the balance sheet to make such assets unknown by others, provide financing for enterprises or projects under the cover of acquiring their non-performing assets, acquire creditors’ rights over unreal property or created via false transactions, transfer illegal interests to shareholders or other related persons, or organize clearing and collection by using violence or other illegal means.

− 143 − Based on the Administrative Measures, the Notice of the General Office of the CBRC on Regulating the Acquisitions of Non-Performing Assets of Financial Asset Management Companies《中國銀監會 ( 辦公廳關於規範金融資產管理公司不良資產收購業務的通知》), which was issued on 17 March 2016, provides specific requirements to regulate the acquisitions of non-performing assets of both financial institutions and non-financial institutions conducted by financial asset management companies.

In addition, the Circular of the CBRC on Issuing the Measures for the Administration of the Capital of Financial Asset Management Companies (for Trial Implementation)《中國銀監會關於印發金融資 ( 產管理公司資本管理辦法（試行）的通知》) was promulgated on 26 December 2017, which became effective on 1 January 2018, to strengthen the capital supervision of financial asset management companies and to safeguard the stable operation of asset companies, and the Administrative Measures for Financial Asset Investment Companies (for Trial Implementation)《金融資產投資公司管理辦法 ( （試行）》) was promulgated by the China Banking and Insurance Regulatory Commission on 29 June 2018, which became effective on the same, to promote the healthy and orderly progress of the market-oriented and law-based debt-for-equity swaps by banks and regulate the debt-for-equity swaps by banks.

REGULATIONS ON FINANCING GUARANTEE COMPANIES

Establishment of a Financing Guarantee Company

According to Regulation on the Supervision and Administration of Financing Guarantee Companies (《融資擔保公司監督管理條例》) implemented by the State Council, effective on 1 October 2017, a financing guarantee company is defined as an enterprise which are formed in accordance with the law to conduct the financing guarantee business, and to conduct the financing guarantee business, it shall satisfy the following requirements: (i) its shareholders have good reputation and have no serious violation of law or regulation in the past three years; (ii) the registered capital is not less than 20 million RMB and is paid-in monetary capital; (iii) the candidate directors, supervisors and senior executives have a command of the laws and regulations relating to the financing guarantee business, and have the practicing experience and management capability required for the performance of functions; and (iv) it has sound business rules and internal management rules for risk control, among others.

Pursuant to the Regulation on the Supervision and Administration of Financing Guarantee Companies, an approval from the local financial service offices shall be obtained for establishing a financing guarantee company.

Operation of a Financing Guarantee Company

In addition, under the Regulation on the Supervision and Administration of Financing Guarantee Companies, a financing guarantee company shall comply with the following requirements during its daily operation: (i) the balance of guarantee liability of the financing guarantee company shall not exceed ten times of its net assets. For a financing guarantee company that mainly serves micro and small enterprises, agriculture, rural areas and farmers, the upper limit of the multiplier prescribed in the preceding paragraph may be raised to 15 times; (ii) the ratio of balance of the financing guarantee company’s guarantee liability against the same secured party to the net assets of the financing guarantee company shall not exceed 10%, and the ratio of balance of the financing guarantee company’s guarantee liability against the same secured party and its affiliated parties to the net assets of the financing guarantee company shall not exceed 15%; (iii) a financing guarantee company shall not provide financing guarantee to any of its controlling shareholders and actual controllers, and (iv) the conditions for the provision of financing guarantee to other affiliated parties shall not be better than the conditions for the provision of the same type of guarantee to non-affiliated parties. Where a financing guarantee company provides financing guarantee to any affiliated party, it shall report it to the regulatory department within 30 days as of the date of provision of guarantee, and disclose it in the notes to accounting statements.

− 144 − According to the Regulation on the Supervision and Administration of Financing Guarantee Companies, a financing guarantee company shall not commit the following activities: (i) absorbing deposits or doing so in any disguised form; (ii) operating loans by itself or upon entrustment; (iii) making investment upon entrustment.

Information disclosure and major risk reporting of a Financing Guarantee Company

According to the Notice of the China Banking Regulatory Commission on Issuing Guidelines for Information Disclosure by Financing Guarantee Companies《中國銀監會關於印發 ( <融資性擔保公司資訊披露指引>的通知》) implemented by the China Banking Regulatory Commission, effective on 25 November 2010, the financing guarantee company shall establish an information disclosure system and disclose the following information to creditors and other interested parties by mail, email, and other proper means: (i) annual report; (ii) interim reports on material issues; and (iii) other information disclosed as required by laws, administrative regulations and rules, and provisions of the regulatory department. When a financing guarantee company prepares and discloses an annual report, the following information shall be included: (i) company overview; (ii) corporate governance and internal controls; (iii) risk management; (iv) overview of its guarantee business and status of its financing guarantee business; (v) composition of capital and the use thereof; and (vi) financial accounting report. Where a financing guarantee company employs an external credit rating agency to conduct corporate credit rating, the outline of the company’s credit rating report shall be disclosed in the annual report.

In addition, the Notice of China Banking Regulatory Commission on Issuing the Rules for the Reporting of Major Risk Events of Financing Guarantee Institutions《中國銀監會關於印發融資性擔 ( 保機構重大風險事件報告制度的通知》) implemented by the China Banking Regulatory Commission, effective on 6 September 2010, set forth that a financing guarantee institution shall file a brief report in a timely manner, and file a detailed report within 24 hours after a major risk event occurs, with the regulatory department. The major risk events which a financial guarantee institution shall report include: (i) a mass event caused by a financial guarantee institution; (ii) a guarantee fraud to a financial guarantee institution, which may result in a guarantee compensation or investment loss reaching 5% or more of the net assets of the institution; (iii) a major debt not repaid to a financial guarantee institution at maturity, resulting in any liquidity problem of the institution or inability of the institution to repay any due debt; (iv) the seizure, detainment or freeze of any major asset of a financial guarantee institution; (v) the opening of any administrative or judicial investigation on a financial guarantee institution suspected of any violation of law or regulation; (vi) a discovery that the principal investor of a financial guarantee institution has made false capital contribution, illegally withdrawn the contributed capital or had any other major adverse effect on the institution; (vii) the resignation of 1/2 or more of the members of the board of directors, board of supervisors or senior management of a financial guarantee institution within three months; (viii) the missing, accidental death or loss of civil capacity of the chief of a financial guarantee institution, or any compulsory measure taken by the judicial organ against him; and (ix) other events as required by the regulatory department.

REGULATIONS ON SME FINANCE

Guiding Opinions on the Pilot Operation of Microfinance Companies《關於小額貸款公司試點的指 ( 導意見》) promulgated by the CBRC and the PBOC on 4 May 2008, and Notice on Issues concerning Effectively Conducting the Pilot Operation of Microfinance Companies《關於做好小額貸款公司試 ( 點工作有關事項的通知》), which was promulgated by the general office of the CBRC on 13 August 2009, provide that (i) the establishment of a microfinance company should be approved by the competent administrative departments at the provincial level before the registration with the local administration for industry and commerce and shall also submit the relevant documents to the local public security organ, dispatched office of the CBRC and local branch of the PBOC; (ii) the amount of registered capital for limited liability companies shall be no less than 5 million and that for joint stock limited companies shall be no less than 10 million, and shares held by a sole natural person,

− 145 − corporate legal person, other social organizations and the affiliated of a small-sum loan company shall not exceed 10% of its total amount of registered capital; (iii) a microfinance company shall have associations and administrative systems which are in conformity with the regulations, have necessary place of business, organization structure and professional and experienced employees; and (iv) microfinance companies shall follow market principles to operate, lift the upper limit of interest rate, but that shall not exceed the upper limit prescribed by the judicial department while the lower limit shall be 0.9 times the benchmark lending rate as promulgated by the PBOC.

On 7 May 2010, the State Council further issued Several Opinions of the State Council on Encouraging and Guiding the Healthy Development of Private Investment《國務院關於鼓勵和引導 ( 民間投資健康發展的若干意見》), which encourages and guides the entry of private capital in the field of financial services and properly relaxes the restrictions on the shareholding ratio of a single investor in a petty loan company, and applies the same financial subsidy policies for village banks to petty loan companies in their agriculture-related businesses.

Under the Notice of the Ministry of Finance and the State Administration of Taxation on the Relevant Tax Policies regarding Petty Loan Companies《財政部、國家稅務總局關於小額貸款公司有關稅收 ( 政策的通知》), which was promulgated by the MOF and the SAT On 9 June 2017 and became effective on the same day, several taxation measures apply to small-sum loan companies, which includes: (i) from 1 January 2017 to 31 December 2019, the interest income obtained by small-sum loan companies formed upon approval of the provincial financial management departments (financial offices or bureaus, etc.) from the small-sum loans granted to farmer households shall be exempt from value-added tax; (ii) from 1 January 2017 to 31 December 2019, 90% of the interest income obtained by small-sum loan companies formed upon approval of the provincial financial management departments (financial offices or bureaus, etc.) from the small-sum loans granted to farmer households shall be included in the total income in the calculation of taxable income; and (iii) from 1 January 2017 to 31 December 2019 the loan loss reserve set aside according to 1 per cent. of the loan balance at the end of the year of a small-sum loan companies formed upon approval of the provincial financial management departments, is permitted of pre-tax deduction of enterprise income tax.

Official Reply of the Supreme People’s Court on the Scope of Application of New Judicial Interpretations on Private Lending (Fa Shi [2020]27)《最高人民法院關於新民間借貸司法解釋適用 ( 範圍的批復》(法釋[2020]27號)), adopted on 9 November 2020 and effective on 1 January 2021, provides that seven types of local financial organisations under the supervision of local financial supervision departments, including microfinance companies, financing guarantee companies, regional equity markets, pawnshops, finance lease companies, commercial factoring companies, and local asset management companies are financial institutions established with the approval of financial regulatory authorities, and the new judicial interpretations on private lending shall not apply to the disputes caused by their engaging in relevant financial businesses.

SECURITY AND ESCORT SERVICES

Security Services

In March 2000, the Ministry of Public Security issued the Provisions of The Ministry of Public Security on the Standardized Administration of Security Service Companies《公安部關於警衛服務 ( 公司規範管理的若干規定》（公通字〔2000〕13號〕). According to such Provisions, the public security administration department is the competent authority of the security services companies, and the scope of service of a security service company is as follows: (i) security service for enterprises and institutions, organs and organisations, residential areas and public places; (ii) escort service for currencies, negotiable securities, gold, silver and jewellery, cultural relics, works of art and other precious materials, explosions, chemicals and other dangerous goods; (iii) security service of exhibitions, exhibitions, sports, commerce and other activities; (iv) to develop, popularize and apply various kinds of security technical protection products and equipment, to undertake various kinds of security technical protection system engineering, and to provide corresponding technical services; and (v) counseling services on security protection.

− 146 − On 1 January 2010, the Regulation on the Administration of Security and Guarding Services《警衛 ( 服務管理條例》) issued by the State Council became effective. This regulation clarifies that a security and guarding services company shall satisfy the following requirements: (i) it has at least 1 million RMB of registered capital; (ii) its candidate legal representative and major managers shall have the professional knowledge and work experience for the relevant positions and have no such bad records as having been subject to criminal punishment, labor re-education, rehabilitation or compulsory isolated drug treatment, or having been dismissed by a government organ or public institution or state-owned enterprise, or having been dismissed from the army; (iii) it has professional technicians commensurate with its security and guarding services, among them, those for whom any law or administrative regulation prescribes qualification requirements shall have obtained the corresponding qualifications; (iv) it has a premise and facilities and equipment necessary for the provision of security and guarding services; and (v) it has a sound organisational structure and security and guarding services management system, post accountability system and security guard management system. Only if the applicant meets the relevant requirements aforementioned, shall a security and guarding service licence be issued by the public security organ of the province, autonomous region or municipality directly under the Central Government, for the applicant to conduct security and guarding services.

The Measures for the Public Security Organs to Implement the Regulation on the Administration of Security and Guarding Services《公安機關實施警衛服務管理條例辦法》 ( ) was issued by the Ministry of Public Security on 3 February 2010 and amended on 14 January 2016 (the “Measures”), the aim of which is to further regulate the public security organs’ supervision and administration of security and guarding services. According to the Measures, the Ministry of Public Security shall be responsible for the supervision and administration of security and guarding services throughout the country, and the local public security organs at all levels shall supervise and administer security and guarding services according to law under the principles of territorial jurisdiction and level-to-level responsibility. The Measures further clarify the materials to submit for applying for setting up a security and guarding service company of different natures (such as a limited liability company, a Chinese- foreign equity joint venture, a Chinese-foreign contractual joint venture or a wholly foreign-owned company) and of different types of business (including the general security service, security guard training service and armed escorting service). Under the Measures, the public security organ shall inspect the following aspects of a security company:(i) basic information about the security company; (ii) information about the establishment of branches and the provision of security and guarding services in another province, autonomous region or municipality directly under the Central Government; (iii) information about the performance of security and guarding service contracts and the system of keeping surveillance video data and alarm records; (iv) information about the installation, change and use of security technical protection products and equipment involved in the security and guarding services; (v) information about the establishment and implementation of the security and guarding service management system, post accountability system, security guard management system and emergency response plan; (vi) information about the security management system for firearms used for official purposes and the construction of storage facilities of a security company engaging in the armed escorting service; (vii) information about the management of security guards and their uniforms and the sign and equipment for security and guarding services; (viii) information about the implementation of in-service training of security guards and the protection of their rights and interests; (ix) information about the rectification of problems complained about or exposed; and (x) other matters requiring inspection. If a security and guarding service company fails to meet the requirements set in the Measures for conducting related business, the company may be subject to public security administration punishment.

− 147 − Security Escort Services

According to the Regulation on the Administration of Security and Guarding Services《警衛服務管 ( 理條例》), a security company which intends to engage in the armed escorting services shall conform to the requirements of the public security department of the State Council for the planning and distribution of armed escorting services, meet the requirements for a general security and guarding service company, and satisfy the following conditions in addition: (i) having at least 10 million RMB of registered capital; (ii) being a wholly state-owned company or having state-owned capital which accounts for at least 51% of the total amount of its registered capital; (iii) having escorting security guards who meet the requirements as prescribed in the Regulation on the Management of Use of Firearms by Full-time Escorting Security Guards; and (iv) having the designated transport vehicles and communication and alarming devices which conform to the national standards or industrial standards. If the applicant satisfies the relevant requirements, the public security organ of the province, autonomous region or municipality directly under the Central Government shall issue a security and guarding service licence for the armed escorting business or add an indication of armed escorting business to its security and guarding service licence.

On 1 August 2017, the Notice of the Ministry of Public Security on Issuing the Provisions on the Administration of Security Guard and Escort Companies《公安部關於印發 ( <警衛守押運公司管理規定>的通知》) which was issued by the Ministry of Public Security became effective, under which, the requirements of escort security guards, the escort of guns and ammunition, escort vehicles and the scope of escort service were further stipulated.

REGULATIONS ON THE ESTABLISHMENT OF REAL ESTATE ENTERPRISES

Establishment of a Real Estate Development Enterprise

According to the Law of the People’s Republic of China on Administration of Urban Real Estate《中 ( 華人民共和國城市房地產管理法》) (the “Urban Real Estate Law”) implemented by the Standing Committee of the National People’s Congress of the PRC (中華人民共和國全國人民代表大會常務委員會)(“SCNPC”), effective on 1 January 1995, amended on 30 August 2007 and 27 August 2009, a real estate developer is defined as an enterprise which engages in the development and sale of real estate for the purpose of making profit. Under the Regulations on Administration of Development of Urban Real Estate《城市房地產開發經營管理條例》 ( ) (the “Development Regulations”) implemented by the State Council on 20 July 1998 and amended on 8 January 2011 and revised on 19 March 2018 and 24 March 2019, an enterprise which is to engage in the development of real estate shall satisfy the following requirements: (i) its registered capital shall be RMB1.0 million or more; and (ii) it shall have four or more full-time professional real estate/construction technicians and two or more full-time accounting officers, each of whom shall hold the relevant qualification certificate. The Development Regulations also stipulate that the local government of a province, autonomous region or city directly under the central government may, based on local circumstances, impose more stringent requirements on the registered capital and the professional personnel of a real estate developer.

Pursuant to the Development Regulations, a developer who aims to establish a real estate development enterprise shall apply for registration with the relevant administrative body for industry and commerce. The real estate developer must also report its establishment to the real estate development authority in the location of the registration authority within 30 days of the receipt of its business licence.

− 148 − The Notice on Adjusting the Portion of Capital Fund for Fixed Assets Investment《關於調整固定資 ( 產投資項目資本金比例的通知》) issued by the State Council on 25 May 2009 provides that the requirement for the minimum capital for social welfare housing and general commercial residence is 20 per cent., while the requirement on the minimum capital for other real estate projects is 30.0 per cent. In addition, under the Notice on Adjusting and Perfecting the System of Capital Fund for Fixed Assets Investment《國務院關於調整和完善固定資產投資項目資本金制度的通知》 ( ) by the State Council on 9 September 2015, the minimum portion of capital funding for social welfare housing and general commercial residence remains at 20 per cent., while the minimum portion of capital funding for other real estate projects has been reduced from 30 percent. to 25 per cent.

Qualification of a Real Estate Developer

Classification of a real estate enterprise’s qualification

Under the Development Regulations, a real estate developer must record its establishment to the governing real estate development authorities in the location of its registration authority within 30 days after receiving its business licence. The real estate development authorities shall examine applications for the classification of a real estate developer’s qualification by considering its assets, professional personnel and industrial achievements. A real estate enterprise shall only engage in real estate development projects which are in compliance with its approved qualification.

Under the Provisions on Administration of Qualifications of Real Estate Developers《房地產開發企 ( 業資質管理規定》) (the “Provisions on Administration of Qualifications”) implemented by the Ministry of Construction of PRC on 29 March 2000 and amended on 4 May 2015, a real estate developer shall apply for the registration of its qualifications. An enterprise may not engage in the development and sale of real estate without obtaining a qualification classification certificate for real estate development.

In accordance with the Provisions on Administration of Qualifications, qualifications of an enterprise are classified into four classes: class 1, class 2, class 3 and class 4. Different classes of qualification have to be examined and approved by the relevant corresponding authorities. The class 1 qualification shall be subject to preliminary examination by the construction authority under the PRC government of the relevant province, autonomous region or city directly under the central government and then final approval of the construction authority under the State Council. There is no limitation on the construction scale for an enterprise who holds a class 1 qualification. Procedures for approval of developers of class 2 or lower shall be formulated by the construction authority under the people’s government of the relevant province, autonomous region or city directly under the central government. The GFA of each project developed by an enterprise which holds a class 2 or lower qualification shall not exceed 250,000.0 sq.m. A developer that passes the qualification examination will be issued a qualification certificate of the relevant class by the qualification examination authority. For a newly established real estate developer, after it reports its establishment to the real estate development authority, the latter shall issue the Provisional Qualification Certificate ( 《暫定資質證書》) to the eligible developer within 30 days. The Provisional Qualification Certificate is effective for one year from its issuance while the real estate development authority may extend the validity to a period of no longer than two years considering the actual business situation of the enterprise. The real estate developer shall apply for qualification classification by the real estate development authority within one month before the expiry of the Provisional Qualification Certificate.

− 149 − Annual inspection of a real estate developer

Pursuant to the Provisions on Administration of Qualifications, the qualification of a real estate developer shall be subject to annual inspection. The construction authority under the State Council or its authorised institution is responsible for conducting the annual inspection of the qualification of class 1 real estate developers. Measures for annual inspection of developers of class 2 or lower qualification shall be formulated by the construction authorities under the people’s government of the relevant province, autonomous region or provincial-level city.

REGULATIONS ON THE LAND AND THE DEVELOPMENT OF REAL ESTATE PROJECTS

Land Grants

In April 1988, the National People’s Congress of the PRC (the “NPC”) passed an amendment to the Constitution of the PRC. The amendment allowed the transfer of land use rights for value to prepare for reforms of the legal regime governing the use of land and transfer of land use rights. In December 1988, the SCNPC amended the Land Administration Law of the PRC（《中華人民共和國土地管理法》）to permit the transfer of land use rights for value.

Under the Provisional Regulations of the People’s Republic of China on Grant and Transfer of the Land Use Rights of State-owned Urban Land（《中華人民共和國城鎮國有土地使用權出讓和轉讓暫行條例》）(the “Provisional Regulations on Grant and Transfer”) implemented by the State Council on 19 May 1990, a system of assignment and transfer of the right to use state-owned land was adopted. A land user shall pay land premium to the government as consideration for the grant of the right to use a land site within a certain term, and the land user may transfer, lease out, mortgage or otherwise commercially exploit the land use rights within the term of use. Under the Provisional Regulations on Grant and Transfer and the Urban Real Estate Law, the land administration authority under the local government of the relevant city or county shall enter into an assignment contract with the land user to provide for the grant of land use rights. The land user shall pay the land premium as provided by the assignment contract. After full payment of the land premium, the land user shall register with the land administration authority and obtain a land use rights certificate which evidences the acquisition of land use rights. The Development Regulations provide that the land use rights for a land parcel intended for real estate development shall be obtained through grant except for land use rights which may be obtained through appropriation pursuant to PRC laws or the stipulations of the State Council.

Under the Regulations regarding the Grant of State-Owned Land Use Rights by Way of Public Bidding, Auction and Listing Procedure（《招標拍賣掛牌出讓國有土地使用權規定》）issued by the Ministry of Land and Resources (the “MLR”) on 9 May 2002 and implemented on 1 July 2002 (the “2002 Regulations”) and revised on 28 September 2007 with the name Regulations regarding the Grant of State-Owned Construction Land Use Rights by Way of Public Bidding, Auction and Listing Procedure（《招標拍賣掛牌出讓國有建設用地使用權規定》）(the “2007 Regulations”) effective on 1 November 2007, land for industry (except land for mining), commercial use, tourism, entertainment and residential commodity properties, or where there are two or more intended users for a certain piece of land must be granted by way of public bidding, auction and listing procedure. A number of measures in the 2007 Regulations ensure such grants of land use rights for commercial purposes are conducted openly and fairly. For instance, the local land bureau must take into account various social, economic and planning considerations when deciding on the use of a certain piece of land, and its decision regarding land use designation is subject to the approval of the city or county government. The grantee shall apply for land registration and obtain the land use rights certificate upon full payment of the land premium for the land according to the land grant contract. In the event that the land premium for the land is not paid in full, the grantee will not receive the land use rights certificate. In addition, the announcement of public bidding, auction and listing procedure must be made 20 days prior to the date on which such competitive process begins. Further, the 2007 Regulations stipulates that for listings on a land exchange, the time period for accepting bids must be no less than ten days. Following the 2002 Regulations, the MLR and the Ministry of Supervision issued the Notice on Continuing the Review of the Implementation of the Grant of Land Use Rights for Commercial Uses

− 150 − By Soliciting Public Bidding, Auction and Listing Procedure on a Land Exchange（《關於繼續開展經營性土地使用權招標拍賣掛牌出讓情況執法監察工作的通知》）on 31 March 2004, which requires all local land administration authorities to strictly enforce the 2002 Regulations. In addition, the MLR and the Ministry of Supervision required that beginning from 31 August 2004, no land use rights for commercial uses granted by way of agreement shall be dealt with due to reasons stemming from historical legal legacy issues. In the Urgent Notice of the General Office of the State Council on Intense Regulation and Rectification of the Land Market and Strict Administration of Land（《國務院辦公廳關於深入開展土地市場治理整頓嚴格土地管理的緊急通知》）, issued by the General Office of the State Council on 29 April 2004, the approval process for the change of use from agricultural land to non-agricultural land for development was suspended for a period of approximately six months so that the PRC government could rectify irregularities in land development in China. On 11 May 2011, the MLR implemented the Opinions on Upholding and Improving the System for the Transfer of Land by Public Bidding, Auction and Listing Procedure（《國土資源部關於堅持和完善土地招標拍賣掛牌出讓制度的意見》）, which provides, among other things (i) how to correctly implement the land transfer policy through public bidding, auction and listing procedure; (ii) an explanation of improvements in the transparency of the system of public biddings, auctions and listing procedures for housing land; (iii) an explanation of adjustments and improvements to the land transfer policy through public biddings, auctions and listing procedures; (iv) promotion of online operation of the transfer of land use rights; and (v) improvement in contracts for land transfers through public biddings, auctions and listing procedures.

In the case of tenders, the local land bureau granting the land use rights should examine the qualifications of the intended bidders and encourage those who are qualified to participate in the bidding processes by sending out invitations to tender. Bidders are asked to submit sealed bids together with the payment of a security deposit. When land use rights are granted through tenders, a tender evaluation committee consisting of an odd number of members of at least five people (including a representative of the grantor and relevant expert) shall be formed by the land bureau which is responsible for initiating the tenders and deciding on the successful bidder. The successful bidder will then sign the land grant contract with the land bureau and pay the balance of the land premium before obtaining a land use rights certificate. Where land use rights are granted by way of public bidding, auction and listing procedure, a public bidding, auction and listing procedure will be held by the relevant local land bureau. The land use rights are granted to the highest bidder. The successful bidder will then be asked to sign the land grant contract with the local land bureau and pay the relevant land premium within a prescribed period.

Where land use rights are granted through a listing administered by the local government, a public notice will be issued by the local land bureau to specify, among other things, the location, area, purpose of use of the land and the period for receiving bids. The land use rights are granted to the bidder with the highest bid who satisfies the terms and conditions. The successful bidder will enter into a land grant contract with the local land bureau and pay the relevant land premium within a prescribed period.

On 1 August 2003, the MLR implemented the Regulations on the Grant of State-owned Land Use Rights by Agreement《協議出讓國有土地使用權規定》 ( ). According to this regulation, if there is only one entity interested in using the land, the land use rights (excluding profit-oriented land for commercial use, tourism, entertainment and commodity residential properties) may be assigned by way of agreement. If two or more entities are interested in the land use rights to be assigned, such land use rights shall be granted by means of public bidding auction and listing.

The Circular on Facilitating the Continuously Healthy Development of Property Market（《關於促進房地產市場持續健康發展的通知》）implemented by the State Council on 12 August 2003 requires control of land supply for or the suspension of the approval for high end commodity properties in areas with an over population of high end and large-size properties, high end office buildings and commercial properties. According to the Notice of the Ministry of Land and Resources on Relevant Issues Concerning the Strengthening of Examination and Approval of Land Use in Urban Construction

− 151 − （《關於加強城市建設用地審查報批工作有關問題的通知》）implemented by the MLR on 4 September 2003, from the day of issuance of the notice, the grant of land use rights for high end commodity properties shall be stringently controlled. On 30 September 2007, the MLR issued the Notice on Implementation of the State Council’s Certain Opinions on Resolving Difficulties in Housing of Urban Low-Income Family and Further Strengthening the Macro-control of Land Supply（《關於加強城市建設用地審查報批工作有關問題的通知》）as amended on 3 December 2010, to further enhance the control of land supply. This notice stipulates that the supply of the land to be developed for low-rent housing, economically affordable housing and low or medium priced and small or medium sized housing must be no less than 70.0 per cent. of the total land supply of that year.

On 21 September 2010, MLR and MOHURD jointly implemented the Notice of Further Strengthening Control and Regulation of Land and Construction of Property Development《關於進一步加強房地產 ( 用地和建設管理調控的通知》), which stipulated, among other things, that: (i) at least 70 per cent. of land designated for construction of urban housing must be used for economically affordable housing, housing for redevelopment of shanty towns and small to medium-sized ordinary commercial housing; in areas with high housing prices, the supply of land designated for small or medium sized, price-capped housing must be increased; (ii) developers and their controlling shareholders (as defined under PRC laws) are prohibited from participating in land biddings before the rectification of certain misconduct, including (1) crimes such as swindling land by forging official documents and illegal land speculation; (2) illegal transfer of land use rights; (3) failure to commence required construction within one year from the delivery of land under land grant contracts due to reasons from such developers; and (4) noncompliance with the land development requirements specified in land grant contracts; (iii) developers are required to commence construction within one year from the date of delivery of land under the relevant land grant contract and complete construction within three years from the commencement of the construction; (iv) development and construction of projects of low-density and large-sized housing must be strictly limited and the plot ratio of the planned GFA to the total site area of residential projects must be more than 1:1; and (v) the grant of two or more bundled parcels of lands and undeveloped land is prohibited.

The Measures on the Administration of Reserved Land《土地儲備管理辦法》 ( ), implemented by MOF, PBOC, MLR and the China Banking Regulatory Commission on 3 January 2018, defines “reserved land” and stipulates the administrative, regulatory and implementing procedures involved with the management, planning, allocation, use, development, capital expenditure and supply of reserved land. The measures clarify that land must be reserved in accordance with the relevant land programs or plans, and that in determining land reserves priority must be given to land included in state inventories which is unused, unoccupied or under-utilised.

On 18 November 2009, the MOF, the MLR, PBOC, the National Audit Office and Ministry of Supervision issued the Notice on Further Strengthening the Land Transfer Revenue and Expenditure Management（《土地儲備管理辦法》）jointly, which stipulates:

(a) The city or county land resource department must specify the land transfer price, rent and the total sum of the allocated land price, payment time and payment mode in the state-owned land transfer contract, lease contract and letter of decision on appropriation. If the land use conditions have been changed upon approval in accordance with the relevant law, the city or county land resource management department must specify the additional price of the land that shall be paid in the land transfer and lease contracts and the payer shall pay the sum of money as stipulated by the contract. If a unit or individual fails to pay up the land price as required, the city or county land resource management department must neither approve, issue the state- owned land use certificate nor issue a partial certificate according to the proportion of the land price paid.

(b) The term for paying the full land transfer price by instalments agreed between the city or county land resource management department and land transferee pursuant to law shall not exceed one year. The proportion of first payment shall not be less than 50 per cent. of the total land transfer price.

− 152 − On 8 March 2010, the MLR issued the Notice of the Problems on Strengthening the Supply and Supervision of the Land used for Real Estate Development which highlighted《土地儲備管理辦法》 ( ), among others, strictly regulating commercial land transfer and the lowest price of land transfer, strictly implementing the verification process of land bidder qualification, strictly managing land transfer contracts, and insisting on and improving the land public bidding, auction and listing procedure system.

On 1 May 2012, the MLR implemented the Notice on Further Strengthening and Improving the Preexamination of Land for Construction Projects(《關於進一步加強和改進建設項目用地預審工作的通知》) which reinforces the importance of pre-examination administration of land for commercial and industrial purposes. Taking advantage of the public bidding, auction and listing procedure to avoid the pre-examination of the utility of land or entering into a land use right grant contract in advance or issuing a land use right certificate in substitute for a preexamination opinion is strictly prohibited. Without passing a pre-examination, no application may be made for a project permit or construction land permit. On-line filing for records and tracking supervision has also been improved.

Development of a real estate project

Commencement of real estate project and regulations with respect to idle land

Under the Urban Real Estate Law, those who have been granted the land use rights must develop the land in accordance with the use and construction period as prescribed by the land use right grant contract. Pursuant to the Measures on Disposal of Idle Land(《閑置土地處理辦法》) implemented by the MLR on 28 April 1999 and amended on 22 May 2012, the land can be defined as idle land under any of the following circumstances:

(i) the development and construction of the state-owned idle land have not commenced after one year of the prescribed time limit in the land use right grant contract or allocation decision; or

(ii) the development and construction of the state-owned idle land has commenced but the area under such development and construction is less than one-third of the total area to be developed and constructed or the invested amount is less than 25 per cent. of the total amount of investment and the development and construction have been continuously suspended for one year or more.

Where the delay in the commencement of development is caused by the PRC government or due to the force majeure of natural disasters, the land administrative authorities shall hold discussions with the holder of state- owned construction land use rights and choose one of the following methods for disposal:

(i) extending the time limit for the start of development. The PRC government and the holder of state-owned construction land use rights shall enter into a supplemental agreement and re-specify the time limit for the start of development and construction completion and the liability for breach of contract. The time limit for the start of development shall not be extended to over one year from the date of the start of development specified in the supplemental agreement;

(ii) adjusting the land use and planning conditions. The relevant land use procedure shall be reviewed and the land grant premium shall be checked, collected or returned according to the new land use or planning conditions. The adjusted land use must satisfy the requirements under the overall land use planning and urban and rural planning conditions;

(iii) the PRC government arranges temporary use for the idle land. The holder of state-owned construction land use rights shall redevelop and construct the idle land until the former project satisfies the requirements of development and construction. The time limit of temporary use shall not exceed two years from the date of the temporary use arranged;

− 153 − (iv) getting back the rights to use the state-owned construction land with compensation;

(v) exchanging the idle land. When the land grant premium of the idle land has been paid up, the project funding has been completed and the idle land is caused by amendments to plans according to the law, the PRC government can exchange the idle land for other state-owned construction land of the same value and use for the holder of state-owned construction land use rights to develop and construct. As for the land grant, the holder of state-owned construction land use rights and the PRC government shall re-enter into a land grant contract which shall specify the land as the land to be exchanged; or

(vi) the city-level and county-level land administrative authorities can stipulate other ways of disposal according to the actual situation.

Save for the above item (iv), the time of the commencement of development shall be re-dated according to the newly agreed or stipulated time.

The Notice on Strengthening the Disposing of Idle Land issued（《關於加大閑置土地處置力度的通知》）by the MLR on 8 September 2007 emphasises that the disposal of idle land shall be sped up. The land regulatory authority may impose an idle land penalty of up to 20 per cent. of the land premium and the land regulatory authority may reclaim the idle land without compensation as required by the relevant regulations. For land that becomes idle as a result of illegal approval, such land should be reclaimed before the end of 2007. Where the land premium is not paid in full according to contractual agreement, the land use certificate shall not be issued, nor shall a land use certificate be issued on parts of the land in proportion to the paid-up land premium.

On 3 January 2008, the State Council implemented the Circular on Conservation of Intensive Land Use《關於促進節約集約用地的通知》 ( ), as summarised below:

(i) Strictly implement the public bidding, auction and listing procedure regime for land intended for industrial and business purposes.

(ii) Strictly prohibit unauthorised conversion of agricultural land to land for construction.

(iii) With respect to real estate projects (a) commenced one year after the commencement date as stipulated under the land grant contract, (b) where the area of land developed is less than 1/3 of the entire area, and (c) the investment is less than 1/4 of the total investment amount, financial institutions shall be cautious in granting loans and approving financing, and shall not grant loans or offer financing for listing to projects engaging in illegal land use.

Planning of a real estate project

On 1 January 2008, the SCNPC implemented the PRC City and Countryside Planning Law（《中華人民共和國城鄉規劃法》）which was amended on 24 April 2015 and 23 April 2019, pursuant to which a construction planning permit must be obtained from the relevant urban and rural planning government authorities for building any structure, fixture, road, pipeline or other engineering project within an urban or rural planning area.

After obtaining the construction works planning permit, a real estate developer shall apply for a construction work commencement permit from the construction authority under the local people’s government at the county level or a higher construction authority in accordance with the Measures for the Administration of Construction Permit for Construction Projects（《建築工程施工許可管理辦法》） issued by MOHURD on 25 June 2014 and implemented on 25 October 2014 and amended on 28 September 2018. According to the Notice Regarding Strengthening and Regulating the Administration of Newly-commenced Projects（《國務院辦公廳關於加強和規範新開工項目管理的通知》）issued by the General Office of the State Council on 17 November 2007, before commencement of construction, all projects shall fulfil certain conditions, including, among others, compliance with national

− 154 − industrial policies, development plans, land supply policy and market access standard, completion of all approval and filing procedures, compliance with zoning plans in terms of site and planning, completion of proper land use procedures and obtaining proper environmental valuation approvals and construction work commencement permits or construction start-up reports.

In accordance with the Development Regulations and the Regulation on the Quality Management of Construction Projects(《建設工程質量管理條例》) implemented by the State Council on 30 January 2000 and last amended on 23 April 2019, the Measures for Reporting Details Regarding Acceptance Examination Upon Completion of Buildings and City Infrastructure（《房屋建築工程和市政基礎設施工程竣工驗收備案管理暫行辦法》）implemented by MOHURD on 7 April 2000 and amended on 19 October 2009 and the Rules for the Confirmation of the Completion of Housing Construction and City Infrastructure Projects（《房屋建築和市政基礎設施工程竣工驗收規定》）implemented by MOHURD and implemented on 2 December 2013, after the completion of construction of a project, the real estate must undergo inspection and receive the relevant approvals from local authorities which include approvals from planning bureau, fire safety authorities and environmental protection authorities.

Bidding and Tendering Management

Bidding and tendering of various construction projects have been provided for in the Bidding and Tendering Law of the People’s Republic of China（《中華人民共和國招標投標法》）promulgated by SCNPC on 30 August 1999 which became effective on 1 January 2000, and was amended on 27 December 2017 which became effective on 28 December 2017, Regulation on the Implementation of the Bidding 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, and was last amended on 2 March 2019 which became effective on the same date, 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, Ministry of Railway of the People’s Republic of China, Ministry of Transport of the People’s Republic of China, Ministry of Information Industry of the People’s Republic of China, Ministry of Water Resources of the People’s Republic of China, and Civil Aviation Administration of China promulgated on 8 March 2003 which became effective on 1 May 2003, and was amended on 11 March 2013 which became effective on 1 May 2013, Administrative Measures for the Bidding and Tendering of Design of Construction Projects（《建築工程設計招標投標管理辦法》）issued by MOC on 18 October 2000 which became effective on the same date, and was amended on 24 January 2017 which became effective on 1 May 2017, Provisions on Construction Projects Subject to Mandatory Tenders（《必須招標的工程項目規定》）issued by NDRC on 27 March 2018 and became effective on 1 June 2018 and Administrative Measures for the Bidding and Tendering of Housing Construction and City Infrastructure 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 2001 and became effective on the same date, and was last amended on 28 September 2018 and which amendment became effective on the same date.

In accordance with the Bidding and Tendering Law of the People’s Republic of China, certain types of projects shall go through bidding processes during phases, including project survey, design, construction, supervision and procurement of the essential equipment and materials relating to the project construction. Such projects include projects related to social public interests and public security, including large infrastructure and utilities, projects invested by using state-owned fund or financed by the PRC government in whole or in part and projects using loans or funding aid from international organisations or foreign government.

The process of bidding and tendering consists of five stages including bid invitation, tendering, bid opening, bid evaluation and bid award. The principles of openness, fairness and equal competition shall be followed in the bidding and tendering for construction project contracting and the contractor shall be chosen after evaluation. After the contractor is determined, the tenderee shall issue the notification to the successful bidder. The notification is legally binding on both the tenderee and the bid winner.

− 155 − In accordance with the Bidding and Tendering Law of the People’s Republic of China and Measures for the Construction Bidding and Tendering of Construction Projects, if any project that should undergo bidding as required by law fails to go through the bidding process, or the items subject to bidding are disintegrated or the bidding process is otherwise evaded, the relevant administrative supervision department shall order rectification within a specified period, and may impose a fine of 0.5 per cent. up to 1 per cent. of the contract amount of the project. For projects using the state-owned funds in whole or in part, the project approval authority may suspend the implementation of the project or suspend the fund appropriation, and impose punishment on the person directly in charge of the entity or other person directly liable. Further, in accordance with the provisions of the Interpretations of the Supreme People’s Court on Issues of Law Application during the Trial of Construction Contracts for Building 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 by the Supreme People’s Court on 25 October 2004 and which became effective on 1 January 2005, if any project that is required to undergo a bidding process fails to go through the bidding process or the bid award is invalid, 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 of China（《中華人民共和國建築法》）which became effective on 1 March 1998 and was last amended on 23 April 2019 which became effective on 23 April 2019, Regulation on Quality Management of Construction Projects（《建設工程質量管理條例》）issued by the State Council on 30 January 2000 which became effective on the same date, and was last amended on 23 April 2019 which became effective on the same date; Administrative Measures for Quality Management of Construction Project Survey（《建設工程勘察質量管理辦法》）amended by MOC on 22 November 2007 and became effective on the same date; Administrative Measures for Completion Acceptance Record of Building Construction and City Infrastructure 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 on 19 October 2009 and became effective on the same date, Measures for Quality Warranty of Building Construction Projects（《房屋建築工程質量保修辦法》）issued by MOC on 30 June 2000 and became effective on the same date; the Provisions on Acceptance Examination Upon Completion of Buildings and Municipal Infrastructure《房屋建築工程和市政基礎設施工程竣 ( 工驗收規定》) promulgated by the MOC on 2 December 2013; 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 its implementation rules（《公路工程竣（交）工驗收辦法實施細則》）which was promulgated on 1 May 2010 and Measures for the Management of Construction Project Quality Deposits（《建設工程質量保證金管理辦法》）issued by the MOHURD and the Ministry of Finance on 20 June 2017 and became effective on 1 July 2017.

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 the construction projects. The competent administrative department of construction at or above county level is the competent authority for quality supervision and management of construction projects

REGULATION ON ENVIRONMENT

Environmental Protection Management

Major laws and regulations on environmental protection during the project construction process include the 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 on Environmental 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 and last amended on 29 December 2018, 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 and amended on 16 July 2017, and Administrative Measures

− 156 − for Environmental Protection Acceptance of Construction Projects upon Completion（《建設項目竣工環境保護驗收管理辦法》）promulgated by SEPA on 27 December 2001 which became effective on 1 February 2002 and amended on 22 December 2010 which amendment became effective on the same date.

In accordance with the provisions of the Administrative Regulations on Environmental Protection of Construction Projects and Administrative Measures for Environmental Protection Acceptance of Construction Projects upon Completion, the PRC government implements the system of environmental impact assessment on construction projects. After the completion of a construction project, the competent administrative department of environmental protection will undergo environmental protection acceptance process and assess whether the construction project has met the requirements for environmental protection.

Environmental Protection

The Environmental Protection Law《環境保護法》 ( ), promulgated on 26 December 1989 by the Standing Committee of the National People’s Congress, which became effective on 26 December 1989, as amended 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 work in the PRC and establishes national standards for the discharge of pollutants. Each of the local environmental protection bureaus is responsible for the environmental protection work within their respective jurisdictions.

Air Pollution

The Air Pollution Prevention Law《大氣污染防治法》 ( ), promulgated on 5 September 1987 by the Standing Committee of the National People’s Congress, which became effective on 1 June 1988 and was last amended on 26 October 2018 and became effective on the same date, establishes the legal framework for air pollution prevention in the PRC. The environmental protection department of the State Council formulates national air quality standards. Each of the local environmental protection bureaus is authorised to regulate air pollution within each of their respective jurisdictions by formulating 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 Standing Committee of the National People’s Congress, which became effective on 1 November 1984, and last amended on 27 June 2017, establishes the legal framework for water pollution prevention in the PRC. The environmental protection department of the State Council formulates national 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 each of its respective jurisdictions by formulating more specific local standards, and may impose penalties for violation, including suspending operations.

Noise Pollution

The Noise Pollution Prevention Law《環境嗓聲污染防治法》 ( ), promulgated by the Standing Committee of the National People’s Congress on 29 October 1996, which became effective on 1 March 1997, amended on 29 December 2018 and became effective on the same date establishes the framework for noise pollution prevention in the PRC. Under the Noise Pollution Prevention Law, any person undertaking a construction, decoration or expansion project which might cause environmental noise pollution, shall prepare and submit an environmental impact report to the environmental protection authority for approval. Facilities for prevention and control of environmental noise

− 157 − pollution shall be designed and approved by the environmental protection authority prior to the commencement 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 or suspended 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 Committee of the National People’s Congress on 28 October 2002, which became effective on 1 September 2003 and was last amended on 29 December 2018, 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 29 November 1998 and was amended on 16 July 2017, and Interim Measures on Environmental Protection Acceptance on Construction Projects《建設專案竣工環境保護驗收暫行辦法》 ( ) promulgated by the Ministry of Environmental Protection On 20 December 2017, require enterprises planning construction projects to engage qualified professionals to provide assessment reports on the environmental impact of such projects. The assessment report shall be filed with and approved by the relevant environmental protection bureau prior to the commencement of any construction work. A project must not be put into production or use before the environmental protection facilities are accepted. The project contractor should make public project information, like date of completion, debugging period and project acceptance report, on its website or through other convenient means.

The construction of pollution prevention and control facilities in a construction project must be designed, constructed and commenced simultaneously with the main facility. Provisions on the Graded Examination and Approval of Environmental Impact Assessment Documents of Construction Projects《建設項目環境影響評價文件分級審批規定》 ( ) promulgated by the Ministry of Environmental Protection of the PRC, which took effect from 1 March 2009 further classified the construction projects whose environmental impact assessment shall be submitted to and approved by the Ministry of Environment and its local counterparts at provincial level. For those approvals made by lower environmental authorities in respect of construction projects that should have been submitted for approval to a higher competent environmental authority, the higher competent authority may revoke the approval made by such lower authority.

REGULATIONS ON LABOUR

Employment Contracts

The Labour Contract Law《勞動合同法》 ( ), promulgated by the Standing Committee of the National People’s Congress on 29 June 2007, which became effective on 1 January 2008 and was amended on 28 December 2012 and became effective on 1 July 2013, and the PRC Labor Contract Law Implementation Rules《中華人民共和國勞動合同法實施條例》promulgated by the State Council on September 18, 2008, governs the relationship between employers and employees and provides for specific provisions in relation to the terms and conditions of an employee contract. The Labour Contract Law stipulates that employee contracts shall be in writing and signed. It imposes more stringent requirements on employers in relation to entering into fixed-term employment contracts, hiring of temporary employees and dismissal of employees. Pursuant to the Labour Contract Law, employment contracts lawfully concluded prior to the implementation of the Labour Contract Law and continuing as at the date of its implementation shall continue to be performed. Where an employment relationship was established prior to the implementation of the Labour Contract Law but no written employment contract was concluded, a contract shall be concluded within one month after its implementation.

− 158 − 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, which became effective on 1 July 2011 and was amended on 29 December 2018; the Provisional Regulations on the Collection and Payment of Social Insurance Premiums《社會保險費 ( 徵繳暫行條例》), promulgated by the State Council on 22 January 1999, which became effective on 22 January 1999, and amended on 24 March 2019 and became effective on the same date; and Administrative Regulations on the Housing Provident Fund《住房公積金管理條例》 ( ), promulgated by the State Council on 3 April 1999, which became effective on 3 April 1999 and as amended on 24 March 2019, the Interim Measures concerning the Maternity Insurance《企業職工生育保險試行辦 ( 法》), which were promulgated by the Ministry of Labor on December 14, 1994 and became effective on January 1, 1995; the Regulations on Occupational Injury Insurance《工傷保險條例》 ( ), which were promulgated by the State Council on April 27, 2003 and became effective on January 1, 2004 and then amended on December 20, 2010; employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity leave insurance and to housing provident funds. These payments are made to local administrative authorities and any employer who fails to contribute may be fined and ordered to pay the outstanding amount within a stipulated time period.

− 159 − SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN PRC GAAP AND IFRS

The consolidated financial statements of the Group included in this Offering Circular have been prepared and presented in accordance with PRC GAAP. PRC GAAP is substantially in line with IFRS, except for certain modifications which reflect the PRC’s unique circumstances and environment. The following is a general summary of certain differences between PRC GAAP and IFRS on recognition and presentation as applicable to the consolidated financial statements of the Group. The Group is responsible for preparing the summary below. Since the summary is not meant to be exhaustive, there is no assurance regarding the completeness of the financial information and related footnote disclosure between PRC GAAP and IFRS and no attempt has been made to quantify such differences. Had any such quantification or reconciliation been undertaken by the Group, other potentially significant accounting and disclosure differences may have been required that are not identified below. Additionally, no attempt has been made to identify possible future differences 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 could affect future comparisons or events that may occur in the future.

Accordingly, no assurance is provided that the following summary of differences between PRC GAAP and IFRS is complete. In making an investment decision, each investor must rely upon its own examination of the Group, the terms of the offering and other disclosure contained herein. Each investor should consult its own professional advisors for an understanding the differences between PRC GAAP and IFRS and/or between PRC GAAP and other generally accepted accounting principles, and how those differences might affect the financial information contained herein.

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 be reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.

Related party disclosures

Under PRC GAAP, government-related entities are not treated as related parties. Under IFRS, government- related entities are still treated as related parties.

Asset valuation

Under PRC GAAP, asset values are typically measured by compounding historical costs. Under IFRS, asset values can be measured either using historical costs or by re-evaluating assets (such as property, plants and equipment) to obtain their fair value, and then deducting the cumulative depreciation and impairment losses from this value.

− 160 − SUBSCRIPTION AND SALE

The Issuer has entered into a subscription agreement with the Joint Lead Managers on 31 March 2021 (the “Subscription Agreement”), pursuant to which and subject to certain conditions contained therein, the Issuer has undertaken, among other things, that the Notes will be issued on 12 April 2021 (the “Issue Date”), and the Joint Lead Managers have severally and not jointly agreed with the Issuer to subscribe and pay for, or procure subscribers to subscribe and pay for, the Notes at an issue price of 100.0 per cent. of their principal amount in the amount set forth below:

Principal amount of Notes to be Joint Lead Managers subscribed

(U.S.$)

ICBC International Securities Limited ...... 30,000,000.00 Bank of China Limited ...... 30,000,000.00 Guotai Junan Securities (Hong Kong) Limited ...... 30,000,000.00 BOSC International Company Limited ...... 10,000,000.00 Industrial and Commercial Bank of China (Europe) S.A...... 10,000,000.00 Bank of Communications Co., Ltd. Hong Kong Branch ...... 10,000,000.00 China Minsheng Banking Corp., Ltd., Hong Kong Branch ...... 10,000,000.00 CLSA Limited ...... 10,000,000.00 Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch ...... 10,000,000.00 Luso International Banking Ltd ...... 10,000,000.00 Huatai Financial Holdings (Hong Kong) Limited ...... 10,000,000.00 China CITIC Bank International Limited ...... 10,000,000.00 Winsome Capital Limited ...... 10,000,000.00 Haitong International Securities Company Limited ...... 10,000,000.00 Total ...... 200,000,000.00

The Subscription Agreement provides that the Issuer has agreed to pay the Joint Lead Managers certain fees and commissions, to reimburse the Joint Lead Managers for certain of their expenses in connection with the initial sale and distribution of the Notes, and the Issuer will indemnify the Joint Lead Managers against certain liabilities in connection with the offer and sale of the Notes. The Subscription Agreement provides that the obligations of the Joint Lead Managers are subject to certain conditions precedent, and entitles the Joint Lead Managers to terminate it in certain circumstances prior to payment being made to the Issuer.

The Joint Lead Managers and their respective subsidiaries and affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Joint Lead Managers and certain of their respective subsidiaries and affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for, and entered into certain commercial banking transactions with, the Issuer and/or the Group for which they have received or will receive customary fees and expenses.

The Joint Lead Managers and their respective affiliates may purchase the Notes and be allocated Notes for asset management and/or proprietary purposes but not with a view to distribution. References herein to the Notes being offered should be read as including any offering of the Notes to the Joint Lead Managers and/or their affiliates acting in such capacity. In the ordinary course of their various business activities, the Joint Lead Managers and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their

− 161 − customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Issuer. Such persons do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

The distribution of this Offering Circular, or any offering material, and the offering, sale or delivery of the Notes is restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this Offering Circular, or any offering material, are advised to consult with their own legal advisers as to what restrictions may be applicable to them and to observe such restrictions. This Offering Circular may not be used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorised.

Accordingly, the Notes should not be offered or sold, directly or indirectly, and neither this Offering Circular nor any other offering material, circular, prospectus, form of application or advertisement in connection with the Notes should be distributed or published in or from any jurisdiction, except in circumstances which will result in compliance with any applicable laws and regulations and will not, save as disclosed in this Offering Circular, impose any obligations on the Issuer or the Joint Lead Managers.

In connection with the issue of the Notes, the Stabilising Manager (or any person(s) acting on behalf of such Stabilising Manager) may over-allot the Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no obligation on such Stabilising Manager to do this. Such stabilising, if commenced, may be discontinued at any time, and must be brought to an end after a limited period. Such stabilising shall be in compliance with all applicable laws, regulations and rules.

GENERAL

No action has been taken or will be taken in any jurisdiction that would permit a public offering of the Notes, or possession or distribution of this Offering Circular or any amendment or supplement thereto or any other offering or publicity material relating to the Notes, in any country or jurisdiction where action for that purpose is required. The Issuer will have no responsibility for, and each Joint Lead Manager will obtain any consent, approval or permission required by it for, the acquisition, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in or from which it makes any acquisition, offer, sale or delivery. None of the Joint Lead Managers are authorised to make any representation or use any information in connection with the issue, subscription and sale of the Notes, other than as contained in this Offering Circular or any amendment or supplement thereto.

If a jurisdiction requires that the offering of the Notes be made by a licensed broker or dealer and a Joint Lead Manager or any affiliate of that Joint Lead Managers is a licensed broker or dealer in that jurisdiction, the offering of the Notes shall be deemed to be made by that Joint Lead Managers or its affiliate on behalf of the Issuer in such jurisdiction.

− 162 − UNITED STATES

The Notes have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold 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, warranted and undertaken to the Issuer that:

(i) it has not offered or sold, and will not offer or sell, any Notes constituting part of its allotment within the United States except in accordance with Rule 903 of Regulation S under the Securities Act; and that

(ii) neither it nor any of its Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act) (nor any person acting on behalf of such Joint Lead Managers or any of its Affiliates) has engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the Notes.

Terms used in the paragraph above have the meanings given to them by Regulation S under the Securities Act.

UNITED KINGDOM

Each Joint Lead Manager has represented, warranted and undertaken that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and

(ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

HONG KONG

Each Joint Lead Manager has represented, warranted and undertaken that:

(i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (1) to “Professional Investors” (as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”) and any rules made under the SFO; or (2) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the “C (WUMP)O”) or which do not constitute an offer to the public within the meaning of the C(WUMP)O; and

(ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “Professional Investors”as defined in the SFO and any rules made under the SFO.

− 163 − THE PEOPLE’S REPUBLIC OF CHINA

Each Joint Lead Manager has represented, warranted and undertaken that the Notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC.

SINGAPORE

Each Joint Lead Manager has acknowledged that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each Joint Lead Manager has represented, warranted and agreed that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interests (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person as defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law;

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018 of Singapore.

− 164 − Singapore Securities and Futures Act Product Classification— Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the SFA, the Issuer has determined, and hereby notifies all relevant persons (as defined in 309A of the SFA) that the Notes are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

JAPAN

The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the “Financial Instruments and Exchange Act”). Accordingly, each Joint Lead Manager has represented, warranted and undertaken that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with the Financial Instruments and Exchange Act and other relevant laws, regulations and ministerial guidelines of Japan.

MACAU

The Notes have not been and will not be promoted, distributed, sold or delivered in Macau, nor has or will any document relating to the Notes be distributed or circulated in Macau, except under the terms of and in compliance with the Macau Financial System Act and any other laws in Macau that may apply to the offer and sale of the Notes in Macau. The Notes have not been and will not be registered or otherwise authorised for public offer under the Financial System Act of Macau, thus may not be offered or sold in Macau, unless such offer is made by Macau licensed entities according to the Macau Financial System Act and upon their communication to the Macau Monetary Authority, in observation of the guidelines and recommendations issued by the Macau local regulatory authority from time to time.

− 165 − GENERAL INFORMATION

1. Clearing Systems: The Notes have been accepted for clearance through Euroclear or Clearstream with a Common Code 229974254 and an ISIN XS2299742549. The Legal Entity Identifier number of the Issuer is 300300RK74LAQD12HA28.

2. Listing: Application will be made to the HKSE for the listing of, and permission to deal in, the Notes by way of debt issues to Professional Investors only. It is expected that dealing in, and listing of, the Notes on the HKSE will commence on or about 13 April 2021.

3. Authorisations: The Issuer has obtained all necessary consents, approvals and authorisations in connection with the issue of the Notes, the entry into of the Trust Deed and the Agency Agreement, and the performance of its obligations under the Notes, the Trust Deed and the Agency Agreement. The issue of the Notes was authorised by resolutions of the board of directors of the Issuer passed on 17 August 2020.

Pursuant to 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)) issued by the NDRC on 14 September 2015 which came into effect on the same day, the Issuer has registered the issuance of the Notes with the NDRC and obtained a certificate dated 24 February 2021 from the NDRC in connection with the issuance of the Notes, which remains in full force and effect as at the date of this Offering Circular. The Issuer intends to, and will undertake in the Terms and Conditions of the Notes to, provide the requisite information and documents on the issuance of the Notes to the NDRC within the prescribed timeframe after the Issue Date.

The Issuer intends to, and will undertake in the Terms and Conditions of the Notes to, file or cause to be filed with SAFE the requisite information and documents in accordance with (i) the Administrative Measures for Foreign Debt Registration《外債登記管理辦法》 ( ) issued by SAFE and which came into effect on 13 May 2013, and (ii) the Circular on Relevant Matters about the Macro-Prudential Management of Cross-Border Financing in Full Aperture《中國人民銀行關於 ( 全口徑跨境融資宏觀審慎管理有關事宜的通知》) issued by the PBOC and which came into effect on 12 January 2017 and any implementation rules, reports, certificates, approvals or guidelines as issued by the SAFE or the PBOC, as the case may be, from time to time.

4. No Material Adverse Change: Except as disclosed in this Offering Circular, there has been no material adverse change, or any development reasonably likely to involve an adverse change, in the Group’s financial or trading position, prospects or results of operations of the Group since 30 June 2020.

5. Litigation: Except as disclosed in this Offering Circular, neither the Issuer nor any other member of the Group is involved in any litigation or arbitration proceedings that the Issuer believes are material in the context of the Notes as at the date of this Offering Circular. The Issuer is not aware that any such proceedings are pending or threatened as at the date of this Offering Circular.

− 166 − 6. Available Documents: Copies of the Audited Financial Statements, the Reviewed Financial Statements, the Trust Deed and the Agency Agreement will be available for inspection from the Issue Date during normal business hours (being between 9:00 a.m. (Hong Kong time) to 3:00 p.m. (Hong Kong time) from Monday to Friday (other than public holidays)) on any week day (other than public holidays) at the specified office of the Principal Paying Agent (being at the date of this Offering Circular at 20/F, CCB Tower, 3 Connaught Road Central, Central, Hong Kong) following prior written request and proof of holding and identity satisfactory to the Principal Paying Agent and at the Specified Office of each of the Agents, subject to the Principal Paying Agent having first been provided by the Issuer with copies of the same, so long as any of the Notes are outstanding.

7. Independent Auditors: The Audited Financial Statements as at and for the years ended 31 December 2018 and 2019 and the Reviewed Financial Statements as at and for the six months ended 30 June 2020, which are included elsewhere in this Offering Circular, have been audited or, as the case may be, reviewed by Mazars, the independent auditors of the Group, as stated in its reports appearing herein.

− 167 − INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The unaudited but reviewed consolidated financial statements of the Group as at and for the six months ended 30 June 2020 Review Report ...... F-2 Consolidated Balance Sheet (Assets) ...... F-3 Consolidated Balance Sheet (Liabilities and Equity) ...... F-4 Consolidated Income Statement ...... F-5 Consolidated Statements of Cash Flows ...... F-6 Consolidated Statement of Changes in Equity ...... F-7 Balance Sheet (Assets) ...... F-9 Balance Sheet (Liabilities and Equity) ...... F-10 Income Statement ...... F-11 Statements of Cash Flows ...... F-12 Statement of Changes in Equity ...... F-13 Notes to the Financial Statements (30 June 2020) ...... F-15

The audited consolidated financial statements of the Group as at and for the year ended 31 December 2019 Auditor’s Report ...... F-125 Consolidated Balance Sheet (Assets) ...... F-128 Consolidated Balance Sheet (Liabilities and Equity) ...... F-129 Consolidated Income Statement ...... F-130 Consolidated Statements of Cash Flows ...... F-131 Consolidated Statement of Changes in Equity ...... F-132 Balance Sheet (Assets) ...... F-134 Balance Sheet (Liabilities and Equity) ...... F-135 Income Statement ...... F-136 Statements of Cash Flows ...... F-137 Statement of Changes in Equity ...... F-138 Notes to the Financial Statements (31 December 2018) ...... F-140

The audited consolidated financial statements of the Group as at and for the year ended 31 December 2018 Auditor’s Report ...... F-269 Consolidated Balance Sheet (Assets) ...... F-272 Consolidated Balance Sheet (Liabilities and Equity) ...... F-273 Consolidated Income Statement ...... F-274 Consolidated Statements of Cash Flows ...... F-275 Consolidated Statement of Changes in Equity ...... F-276 Balance Sheet (Assets) ...... F-278 Balance Sheet (Liabilities and Equity) ...... F-279 Income Statement ...... F-280 Statements of Cash Flows ...... F-281 Statement of Changes in Equity ...... F-282 Notes to the Financial Statements (31 December 2017) ...... F-284

− F-1 − − F-2 − − F-3 − − F-4 − − F-5 − − F-6 − − F-7 − − F-8 − − F-9 − − F-10 − − F-11 − − F-12 − − F-13 − − F-14 −

Chengdu Jiaozi Financial Holding Group Co., Ltd. Notes to the financial statements as of 30 June, 2020 (All amounts in RMB unless otherwise stated)

I. Company profile Chengdu Jiaozi Financial Holding Group Co., Ltd. (hereinafter referred to as “the Company” or “Company”) is formerly known as “Chengdu Investment Holding Group Co., Ltd.” or “Chengdu Finance Holdings Group Co., Ltd.” The Company and all its subsidiaries are referred to as “the Group”. The Company is a state-holding limited liability company incorporated in the Chengdu Administration for Industry and Commerce, which was approved by the Chengfu Letter [2008] No. 75 document of Chengdu Municipal People's Government on 3 September, 2008. The Company obtained the business license with the unified social credit code of 915101006796561013 issued by the Chengdu Administration for Industry and Commerce on 8 January, 2019. As of 30 June, 2020, the registered capital of the Group is RMB 5 billion and the actual amount of shareholders’ contributed capital and the shareholding ratio are as follows. Shareholding ratio Investors Amount (RMB’0,000) ˄%˅ Chengdu State-owned Assets Supervision 300,000.00 60.00 and Administration Commission Chengdu Xie Cheng Asset Management Co., Ltd. 200,000.00 40.00

Total 500,000.00 100.00 1. Organization type and registered address Organization type: limited liability company (state-holding company) Registered address: No. 3 Building, Tianfu International Financial Center, No. 966 North Section of Tianfu Avenue, Chengdu

2. Main operating activities and operation period The main operating activities of the Group are investment in financial institutions and non-financial institutions, capital management, venture capital investment, asset management and investment, socio-economic consulting, financial research and innovation. The operation period is from 3 September, 2008 to permanent.

3. Ultimate controller The ultimate controller of the Group is Chengdu State-owned Assets Supervision and Administration Commission.

4. Approval of the financial statements The financial statements were approved by the Company on 31 August, 2020.

II. Basis of preparation of the financial statements

According to the actual events and transactions, the financial statements have been prepared on the basis of going concern and in accordance with the Accounting Standards for Business Enterprises - Basic Standard (issued by the No. 33 Order of the Ministry of Finance and revised by the No. 76 Order of the Ministry of Finance) and 42 specific accounting standards, the guidelines for the application of enterprise accounting standards, the interpretation of enterprise

Page 13 (Total 122 pages)

− F-15 −

accounting standards and other relevant regulations promulgated and amended on and after 15 February, 2006 (hereinafter collectively referred to as the “Accounting Standards for Business Enterprises”).

III. Declaration of compliance with the Accounting Standards for Business Enterprises

The financial statements are in accordance with the requirements of the Accounting Standards for Business Enterprises, and have truly and completely presented the financial status, operating outcomes, cash flows, and other relevant information of the Group.

IV. Significant accounting policies and accounting estimates

1. Accounting period The accounting period of the Group is divided into annual period and interim period. Interim accounting period refers to the reporting period shorter than a complete accounting year. The Group’s accounting year adopts the Gregorian calendar year which begins on 1 January and ends on 31 December every year.

2. Operating cycle The normal operating cycle of the Group is one year.

3. Functional currency The currency used by the Group in preparing the financial statements is RMB.

4. Business combination (1) Scope of consolidated financial statements The scope of consolidated financial statements shall be determined on the basis of control and shall include the Group and all the subsidiaries’ annual financial statements ended on 30 June, 2020. A subsidiary is an entity that is controlled by the Group, including a company, a divisible part of the invested entity, and a structured entity controlled by the Group, etc. Control exists when the investor has power over the investee and rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investment returns. (2) Preparation of consolidated financial statements The consolidated financial statements are prepared by the Group based on the financial statements of the Group itself and its subsidiaries based on other relevant materials. When preparing for the consolidated financial statements, the Group as a whole will be presented as one single accounting entity. The consolidated financial statements are prepared in accordance with the requirements of recognition, measurement and presentation set by the Accounting Standards for Business Enterprises and a unified accounting policy to present the overall financial status, operating outcomes, and cash flows of the Group. When preparing for the consolidated financial statements, if there any difference in accounting policies and accounting periods between the Group and its subsidiaries, necessary adjustments shall be made to the subsidiaries’ financial statements based on the accounting policies and periods of the Group. Financial statements of subsidiaries acquired not under common control shall be adjusted based on the fair value of identifiable net assets defined on the acquisition date. (3) Presentation of minority interests The portion of a subsidiary’s equity that is not attributable to the Company shall be treated as the minority interests and recorded as “minority interests” in the equity section on the consolidated balance sheets. If the portion of a subsidiary’s equity in the current net profit or loss is attributable to the minority interests, it shall be recorded below the net profit section as “minority interests” on the consolidated income statement. Page 14 (Total 122 pages)

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(4) Treatment of excess losses If the amount of a subsidiary’ loss for the current period shared by the minority shareholders exceeds the opening balance of the subsidiary’s equity attributable to the minority shareholders, the excess losses shall be offset against the minority interests. (5) Treatment of acquired and disposed subsidiaries in the current period When preparing for the consolidated balance sheet, the opening balance shall be adjusted for a subsidiary combined under common control during the reporting period and shall not be adjusted for a subsidiary combined not under common control. Besides, no adjustment shall be made to the opening balance of the consolidated balance sheet for a disposed subsidiary during the reporting period. For a subsidiary combined under common control during the reporting period, its income, expense and profit from the beginning of the combination period to the end of the reporting period shall be included in the consolidated income statement. For a subsidiary combined not under common control, its income, expense, and profit from the acquisition date to the ending on the reporting period shall be included in the consolidated income statement and the consolidated statement of cash flows respectively. For a subsidiary disposed during the reporting period, its income, expense, profit, and cash flows from the subsidiary’s beginning date to the disposal date shall be included in the consolidated income statement and the consolidated statement of cash flows respectively. If control over a former subsidiary is lost due to partial disposal of equity investment or any other reasons, the remaining part of the equity investment shall be re-measured at fair value on the date when control is lost. After deducting the proportion of net assets in the former subsidiary calculated by the original shareholding percentage since the acquisition date, the sum of the consideration received on disposal of the equity investment and the fair value of remaining equity investment shall be recorded in investment gain of the period in which the control is lost. Other comprehensive income related to the equity investment in the former subsidiary shall be transferred to the current investment gain when the control is lost. The difference between the long-term equity investment obtained from the acquisition of minority interests and the portion of identifiable net assets in the subsidiary calculated by the new shareholding percentage, or the difference between the income from disposing of partial equity investment in a subsidiary without losing control and the portion of net assets in the subsidiary corresponding with the disposed long-term equity investment, shall both be adjusted to the share premium account in the capital reserve section on the consolidated balance sheet. If the share premium account in the capital reserve section is not sufficient to offset the difference, the retained profit shall be adjusted. (6) Treatment of consolidated financial statements when gradual disposal of equity investment is made until the control is lost If the transactions related to disposal of equity investment in a subsidiary until control is lost become a package deal, each transaction shall be accounted for as one single transaction of disposing equity investment which results in losing control of the subsidiary. However, before losing control, the difference between each disposal income and the disposal of investment which is corresponding to the portion of net assets in the subsidiary shall be recognized as other comprehensive income in the consolidated financial statement, and then shall be transferred to the current profit and loss when control is actually lost. If the transactions do not become a package deal, the accounting treatment shall be carried out before and on the date of losing control in accordance with the aforementioned accounting policies for partial disposal of equity investment in subsidiary with and without losing control respectively. Multiple transactions shall be accounted for as a package deal if the trade terms, conditions and economic impact of disposing of the equity investment in a subsidiary satisfy one or more of the following conditions. ķ These transactions are concluded at the same time or when the impact of one transaction on each other has been considered. ĸ These transactions should be bundled as a whole to achieve a complete business result. Ĺ The occurrence of one single transaction depends on at least one of the other transactions.

Page 15 (Total 122 pages)

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ĺ A single transaction is not economical on its own but becomes economical when it is combined with other transactions.

5. Recognition and measurement of bad debt provision for accounts receivable (1) Receivables that are significant individually and are provided for bad debt individually The criteria or the monetary standard to decide whether account receivables are individually significant or not: The Group determines that the receivables with an individual amount worth more than 15% of the balance at the end of the period are considered to be significant receivables. Methods of provision for bad debts to the individually significant receivables: Impairment test shall be carried on individually on each receivable. If there is objective evidence showing that the receivable has been impaired, a provision shall be made for bad debts according to the difference between the present value of the expected future cash flow and the book value of the receivable, and the provision shall be included in the current profit or loss. Accounts receivable, reserve fund and margin between the Group, state-holding entities, government departments, and financial institutions are not subject to bad debt provision when the non-recovery risk is very extremely low. (2) Receivables that are provided for bad debt according to the credit risk characteristics The accounts receivable portfolios of the Group are divided into the aging portfolio, related-party portfolio and no-risk portfolio such as reserve fund and government-related funds. The related-party portfolio and no-risk portfolio are in general considered to have very low risk of non-recovery, and bad debt provisions shall not be made. The aging analysis method shall be used to provide for the bad debt to the aging portfolio.

Provision percentage of the Provision percentage of the Aging accounts receivable (%) other receivables (%) Within 1 year (including 1 year) 0.00 0.00

1ˉ2 years 5.00 5.00

2ˉ3 years 20.00 20.00

3ˉ4 years 35.00 35.00

4ˉ5 years 50.00 50.00

Over 5 years 100.00 100.00 (3) Receivables that are not significant individually but are provided for bad debt individually The criteria or the monetary standard: Impairments are tested at the end of the reporting period on notes receivables, prepayments and long-term receivables that have similar credit risk characteristics but do not fit with classification of the aging analysis method. Methods of provision for bad debts to the receivables: Impairment test shall be carried on individually on each receivable. If there is objective evidence showing that the receivable has been impaired, a provision shall be made for bad debts according to the difference between the present value of the expected future cash flow and the book value of the receivable. The provision shall be recorded in the current profit or loss.

6. Classification of joint arrangements and accounting treatment for the joint operations (1) Classification of joint arrangements A joint arrangement is an arrangement in which two or more parties have joint control. The Group classifies joint arrangements into joint operations and joint ventures. A joint operation is a joint arrangement in which the parties have rights to the assets and have obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement in which the parties have rights to the net assets relating to the arrangement. A joint arrangement that is structured not via a separate entity is classified as a joint operation. A separate entity is an entity that has a separate and identifiable financial structure, including those Page 16 (Total 122 pages)

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have a separate legal personality and those do not have legal personality but are recognized by the law. A joint arrangement that is structured via a separate entity is classified as a joint venture. If there is tangible evidence showing that the joint arrangement meets one of the following conditions and complies with applicable laws and regulations, it shall be classified as a joint operation. ķ The legal form of the joint arrangement indicates that the parties have rights to the assets and have obligations to the liabilities relating to the arrangement. ĸ The terms of the contractual arrangement state that the parties have rights to the assets and obligations to the liabilities relating to the arrangement. Ĺ Any other facts and circumstances indicate that the parties have rights to the assets and obligations to the liabilities relating to the arrangement, e.g., the parties have rights to almost all the output of the arrangements while the settlement of the liabilities in the arrangements depends on their support. The provision of guarantees to third parties by the arrangement parties does not, by itself, determine that the parties have obligations for the liabilities. The parties who are liable to the obligation of capital contribution subscribed to the joint arrangement shall not be treated as if the parties have the obligations relating to the arrangement. The Group shall re-assess the classification of the joint arrangements when facts and circumstances changes and have caused the changes in the parities’ rights and obligations in the arrangement. The Group shall classify the various joint arrangements separately for multi-arrangements under a same framework agreement for different activities. Please refer to Note (V) 13 for the basis of determining joint control and the accounting policy on the measurement of joint ventures. (2) Accounting treatment of joint operations The Group shall recognize items relating to its portions of interests in a joint operation, and account for them in accordance with the relevant Accounting Standards for Business Enterprises. The accounting treatments include the recognition of the following items. ķ The Group’s solely-owned assets and the jointly-owned assets based on its share of the operation. ĸ The Group’s solely-assumed liabilities and jointly-assumed liabilities based on its share of the operation. Ĺ The Group’s income from selling its share of the output in the joint operation. ĺ The Group’s income from selling the output of the joint operation based on the Group’s share of the operation. Ļ The Group’s solely-incurred expenses and expenses related to the joint operation based on its share. When the Group contributes or sells assets (excluding those constitute businesses) to the joint operation, it shall only recognize the gains and losses arising from the sale of assets to third parties by the joint operation to the extent of shares owned by the other parties in the operation before the transaction. Should the impairment loss of the assets contributed or sold by the Group complies with the regulations of the “Accounting Standard for Business Enterprises No. 8 - Impairment of Assets”, the Group shall recognize the full amount of impairment. When the Group purchases assets (excluding those constitute businesses) from the joint operation, it shall only recognize the gains and losses arising from the sale of assets to third parties to the extent of shares owned by the other parties in the operation before the transaction. Should the impairment loss of the assets purchased by the Group complies with the regulations of the “Accounting Standard for Business Enterprises No. 8 - Impairment of Assets”, the Group shall recognize part of the loss based on its share of operation. When the Group does not have joint control over the joint operation, the accounting treatment shall be carried out as stated above if it has rights to the asset and obligations to the liabilities relating to the arrangement. Otherwise, the accounting treatment shall be carried out according to the “Financial instrument” or the “Long-term equity investment” measurement policy stipulated by the Group.

Page 17 (Total 122 pages)

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7. Recognition criteria of cash and cash equivalents The Group’s cash includes cash on hand and deposits that can be readily drawn on demand. Cash equivalents include the short-term (normally matured within three months after the purchase date) and highly-liquid investments held by the Group which are readily convertible into known amounts of cash, subject to an insignificant risk of fluctuation in value.

8. Recognition and measurement of financial instruments (1) Recognition of financial instruments The Group recognizes a financial asset or financial liability when it becomes a party to a financial instrument contract. (2) Classification and measurement of financial assets 荛 Based on the risk management and investment strategy, and purposes of holding the financial assets, the Group classifies financial assets into financial assets measured at fair value through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets. A. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include trading financial assets and financial assets measured at fair value at initial recognition and whose value changes are recognized in the current profit or loss. Trading financial assets refer to those that could meet one of the following conditions. a. The purpose of acquiring the financial assets is to sell it in the near future. b. The assets are part of an identifiable portfolio of financial instruments that is under centralized management, and there is objective evidence showing that the portfolio has recently been managed through short-term profit seeking method. c. The assets are derivatives but not include derivatives that are designated as effective hedging instruments, or derivatives used for financial guarantee contracts, and derivatives not quoted in an active market and whose fair value cannot be reliably measured and must be settled by delivering the equity instrument. Financial assets can only be designated as at financial assets at fair value through profit or loss at initial recognition if they can meet any of the following requirements. a. The designation can eliminate or significantly reduce the inconsistencies in recognition or measurement of related gains and losses due to the different measurement basis of financial instruments. b. It has been stated clearly in the formal written document of risk management or investment strategies that the portfolio of financial instruments shall be managed and evaluated at fair value, and reported to the key management personnel. c. The financial assets include hybrid instruments which consist of one or more embedded derivatives, except that the embedded derivatives have no major impact on cash flow of the hybrid instruments or it is obvious that embedded derivatives should not be separated from the related hybrid instrument. d. The financial assets include hybrid instruments which consist of embedded derivatives, which need to be separated but cannot be measured individually on the acquisition date or on the subsequent balance sheet date. Equity instrument investments that are not quoted in an active market and the fair value cannot be reliably measured shall not be designated as financial assets at fair value through profit or loss. B. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed or determinable payments and fixed maturity dates and that the Company has the positive intention and ability to hold to maturity. C. Loans and receivables Loans and receivables are non-derivative financial assets that have fixed or determinable payments and that are not quoted in an active market. D. Available-for-sale financial assets Available-for-sale financial assets refer to non-derivative financial assets that are designated as available-for-sale at initial recognition and other than those mentioned above. Page 18 (Total 122 pages)

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Once the Group classifies a certain financial asset as financial assets at fair value through profit or loss at initial recognition, it shall not be re-classified as other types of financial assets, and vice versa. 荜 Financial assets are initially recognized at fair value. In the case of financial assets at fair value through profit or loss, the related transaction costs are recognized in the profit or loss for the current period. For other types of financial assets, related transaction costs are included in the initial recognition amounts. 荝 Subsequent measurement of financial assets A. Financial assets at fair value through profit or loss are subsequently measured at fair value. The gains and losses arising from changes in the fair value of the assets are recognized in the profit or loss of the current period. B. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gains and losses arising from de-recognition, impairment and amortization are recognized in the profit or loss of the current period. C. Loans and receivables are subsequently measured at amortized cost using the effective interest method. The gains or losses arising from de-recognition, impairment or amortization are recognized in the profit or loss of the current period. D. Available-for-sale financial assets are subsequently measured at fair value. The gains and losses arising from changes in fair value of the assets are recognized as other comprehensive income, and are transferred to the profit or loss of the current period until the assets are de-recognized. Interest income and dividends accrued on the assets during the holding period are recognized as the profit or loss of the current period. Both the equity instrument investments that are not quoted in an active market and the fair value cannot be reliably measure, and derivative financial assets that are linked with the equity instrument and must be settled by delivering the equity instrument shall be measured at cost. ĺ Impairment provision of financial assets A. The Group assesses the book value of financial assets except for those at fair value through profit or loss at the end of the reporting period. If there is objective evidence showing that the financial asset is impaired, impairment loss shall be recognized and provisions of impairment shall be made. B. The objective evidence that the Group uses to determine the impairment are as follows. a˅Significant financial difficulty of the issuer or the debtor. b˅A breach of contract by the debtor, such as a default or delinquency in interest or principal payments. c˅The creditor makes concession to the debtor who has financial difficulty due to economic or legal reasons . d˅It is probable that the debtor will go bankruptcy or conduct other financial reorganization. e˅Due to major financial difficulties of the issuer, the financial assets can not continue to be traded in the active market f˅It is impossible to identify whether the cash flow of a certain asset in a group of financial assets has decreased, but after an overall evaluation based on the public data, it is found that the expected future cash flow of the group of financial assets has indeed decreased and can be measured since the initial recognition. For example, the debtor's payment ability of the group of financial assets has gradually deteriorated, or the unemployment rate of the debtor's country or region has increased, or the price of collateral in the region where it is located has dropped significantly, and the industry is in recession. g˅Significant adverse changes have taken place in the technical, market, economic or legal environment in which the debtor operates, so that the equity instrument investor may not be able to recover the investment cost. h˅The fair value of equity instrument investment has a serious or non-temporary decline. i˅Other objective evidence indicating that the financial assets have incurred impairments. C. Measurement of impairment loss of financial assets a˅Measurement of held-to-maturity investments, loans and accounts receivable

Page 19 (Total 122 pages)

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The provision of impairment loss on held-to-maturity investments, loans and accounts receivable (financial assets subsequently measured at amortized cost) shall be measured as the difference between the financial assets’ carrying amount and the present value of estimated future cash flows and shall be recognized in the profit or loss of the current period. The Group conducts impairment tests individually on financial assets that are individually significant. The Group conducts impairment tests on financial assets that are not individually significant individually or includes them in a financial portfolio with similar characteristics of credit risks. Assets that are not impaired in the individual test will be included in the portfolio and tested again, no matter the asset’s value is individually significant or no. Individual asset that is recognized of impairment loss will not be included in a portfolio with similar characteristics of credit risk for the impairment test. After the Group recognizes the impairment loss of the financial assets measured at amortized cost, the impairment loss originally recognized shall be reversed and included in the current profit and loss if there is objective evidence showing that the value of the financial asset has been restored, which is objectively related to the events occurred after the loss is recognized. The loans that are divided into asset portfolios according to the five classifications of risk characteristics, and the proportion of provision for loan losses based on asset portfolio is as follows: Classification of loans Proportion (%)

Normal loans 1.5

Concerned loans 3

Substandard loans 30

Doubtful loans 60

Losses 100 b˅Available-for-sale financial assets The Group considers available-for-sale financial assets as an individual investment and conducts impairment test on them. On the balance sheet date, the Group judges whether the fair value of available-for-sale financial assets incur serious or non-temporary decline. The impairment loss shall be recognized at the amount of the difference between cost and fair value. The cost of available-for-sale financial assets at the end of the period shall be initially measured at investment cost when the assets are acquired and at amortized cost by using weighted average method when the assets are sold. When the fair value of an available-for-sale financial asset has incurred non-temporary decline, the cumulative loss that is due to the decrease in fair value and that that had been directly recognized in other comprehensive income shall be transferred out and recorded in the profit or loss even though the financial asset has not been derecognized. If impairment loss is incurred on available-for-sale financial assets that are not quoted in an active market and the fair value cannot be reliably measured or on derivative financial assets that are linked with the equity instrument and must be settled by delivering the equity instrument, the Group shall be measure the difference between the book value of the equity instrument investment or derivative financial assets and the present value determined by discounting the future cash flow according to the current market return rate of similar financial assets, and recognize the difference as impairment loss in the current profit and loss. Once the impairment loss on available-for-sale financial assets is recognized, if there is objective evidence showing that the value of financial assets has been recovered which is objectively related to events after the recognition of the impairment loss, the previously recognized impairment losses shall be reversed and charged in the current profit and loss. Impairment loss incurred on an available-for -sale equity instrument investment shall not be reversed through profit or loss. At the same time, for an equity instrument not quoted in an active

Page 20 (Total 122 pages)

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market and whose fair value cannot be reliably measured or on a derivative financial asset linked with the equity instrument and must be settled by delivering the equity instrument, the impairment loss incurred shall not be reversed. (3) Classification and measurement of financial liabilities 荛 The Group’s financial liabilities are classified as financial liabilities at fair value through profit or loss and other financial liabilities, Financial liabilities at fair value through profit or loss include trading financial liabilities and financial liabilities designated as at fair value through profit or loss in the initial recognition. Trading financial liabilities refer to the financial liabilities meeting one of the following conditions. The purpose of undertaking the financial liabilities is to repurchase them in the near future. They are a part of identifiable combination of financial instruments for centralized management, and there is objective evidence showing that the enterprise has recently managed the portfolio in a short-term profit seeking way. They are derivatives, but not including derivatives designated as effective hedging instruments or financial guarantee contracts, and derivatives that are linked to equity instrument not quoted in an active market and whose fair value cannot be reliably measured and that must be settled by delivering the equity instrument. Financial liabilities can only be designated as at financial liabilities measured at fair value through current profit or loss at initial recognition if they meet one of the following requirements. a) The designation can eliminate or significantly reduce the inconsistencies in recognition and measurement of related gains and losses due to the different measurement basis of financial instruments. b) It is stated clearly in the formal written document of risk management or investment strategies that the portfolio of financial instruments shall be managed and evaluated at fair value, and reported to the key management personnel. c) The financial liabilities include hybrid instruments which consist of one or more embedded derivatives, except that the embedded derivatives have no major impact on cash flow of the hybrid instruments or it is obvious that embedded derivatives should not be separated from the related hybrid instrument. d) The financial liabilities include hybrid instruments which consist of embedded derivatives, which need to be separated but cannot be measured individually on the acquisition date or on the subsequent balance sheet date. Once the Group classifies a certain financial liability as financial liability measured at fair value through current profit or loss at initial recognition, it shall not be re-classified as other financial liabilities, and vice versa. 荜 Financial liabilities are initially measured at fair value. For financial liability measured at fair value and changes recorded in the current profit or loss, relevant transaction costs are directly charged in the current profit or loss. For other financial liabilities, relevant transaction costs are recorded in the initial recognition amount. 荝 Subsequent measurement of financial liabilities A. Financial liabilities at fair value through profit or loss are subsequently measured at fair value, and gains or losses arising from changes in fair value are recognized in the profit or loss of the current period. B. Other financial liabilities are subsequently measured by amortized cost using effective interest rate. ˄4˅Recognition basis and measurement of transfer of financial assets The Group de-recognizes financial assets when it transfers substantially all the risks and rewards of ownership of the financial assets to the transferee. If the overall transfer of financial assets meets the conditions for de-recognition, the difference between the following two items shall be included in the current profit and loss. 荛 The carrying amount of transferred financial assets. 荜 The sum of the consideration received for the transfer and the cumulative changes in fair value that had been recorded in other comprehensive income (if there are available-for-sale financial assets in the transferred financial assets).

Page 21 (Total 122 pages)

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If the Group’s partial transfer of financial asset meets the de-recognition condition, the carrying amount of the financial asset shall be allocated between the part that continues to be recognized and the part that is de-recognized, based on the relative fair values of those parts. The difference between the values of the following two items shall be recognized in the profit or loss of the current period. 荛 The carrying amount of the de-recognized part. 荜 The sum of the consideration received for the part derecognized and the value of the de-recognized part corresponding to the cumulative changes in fair value previously recorded in other comprehensive income (if there are available-for-sale financial assets in the transferred financial assets). The value of cumulative changes in fair value previously recorded in other comprehensive income corresponding to the de-recognized part shall be determined after this cumulative amount is allocated between the relative fair value of the part that continues to be recognized and the part that is de-recognized in the financial assets. If a transfer of financial assets does not qualify for de-recognition, the transferred assets as a whole shall continue to be recognized, and the consideration received shall be recognized as a financial liability. For the transfer of continuing involvement of financial assets, the Group shall continue to recognize the relevant financial assets or financial liabilities to the extent of its continuing involvement to fully reflect the rights and obligations retained by the Group. ˄5˅Termination of recognition of financial liabilities The Group shall de-recognize the financial liability in full or in part when the prevailing obligations of the financial liability are relieved in all or in part. Where the Group enters into an agreement with a creditor to substitute the existing financial liabilities by assuming a new financial liability, and the contractual stipulations regarding the new financial liability is substantially different from that of the existing one, the Group shall terminate the recognition of the existing financial liability, and shall at the same time recognize the new financial liability. Where the recognition of a financial liability is totally or partially terminated, the difference between the carrying amount of the terminated part and the consideration paid (including the non-cash asset transferred out and the new financial liability assumed) shall be recorded in the current profits and losses. ˄6˅Offset between financial assets and financial liabilities Financial assets and financial liabilities are presented separately on the balance sheet, not offsetting each other. But if the following conditions are satisfied at the same time, the net balance after offsetting each other shall be presented on the balance sheet. The Group has legal rights to offset the recognized amount, and this kind of legal rights is currently executable. The Group plans to settle in net amount, or realize the financial assets and settle the financial liabilities at the same time. If the transfer of financial asset does not satisfy the de-recognition conditions, the transferor shall not offset the transferred financial assets and related liabilities.

9. Accounting treatments for business combinations under common control and not under common control (1) In the reporting period, the Group adopts equity method for business combination under the common control. The assets and liabilities that the combining party obtained in a business combination shall be measured at their carrying amount in the financial statements of the ultimate controller on the combining date. The difference between the carrying amount of net assets acquired by the combining party and the carrying amount of the consideration paid for the combination (or total par value of the shares issued) shall be adjusted to capital surplus. If the capital surplus is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. The business combination costs that are directly attributable to the combination, such as audit fees, valuation fees, and legal service fees shall be recognized in the profits or losses during the current period when they occurred. The bonds issued for a business combination or the handling fees, commissions and other expenses for the payment of other liabilities shall be recorded in initial measurement amount of the bonds issued or

Page 22 (Total 122 pages)

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other debts. The handling fees, commissions and other expenses incurred in the issuance of equity securities in a business combination shall be offset against the premium income of equity securities, if the premium income is not sufficient, the retained earnings shall be offset. Where a relationship between a parent company and a subsidiary company is formed due to a business combination, the parent company shall, on the combining date, prepare consolidated financial statements according to the accounting policy of the Group. The date of the adjustment of comparatives in the consolidated financial statements shall be the later of the obtaining date when the combining party and the date when the combined party are under the control of the ultimate controller. (2) In the reporting period, the Group adopts acquisition method for business combination not under the common control. The combination cost is determined according to the following scenarios. 荛 When business combination is realized through a single exchange transaction, the cost of business combination is the aggregate of the fair value of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree on the acquisition date. 荜 For the business combination involved several exchange transactions, the accounting treatment for equity investment in acquiree held by acquirer before the acquisition date shall be carried out differently in individual and consolidated financial statements according to the following principles. A. In an individual financial statement, the sum of the carrying amount of equity investment in acquiree held by acquirer before the acquisition date and the increase in the cost of equity investment shall be recognized as the initial investment cost, which is accounted for using the cost method. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the acquiree had directly disposed of the related assets or liabilities. Accounting treatment shall be conducted on the previously-held equity investment before the acquisition date in accordance with the Accounting Standard for Business Enterprises No. 22 - Financial Instruments: Recognition and Measurement, and the accumulated changes in fair value previously included in other comprehensive income shall be transferred to the profit or loss for the current period upon commencement of the cost method. B. In the consolidated financial statements, equity investment in the acquiree held by the acquirer before the acquisition date shall be revalued at fair value on the acquisition date, and the difference between fair value and book value shall be included in investment income in the current period. If the equity investment in the acquiree held by the acquirer before the acquisition date involves other comprehensive income calculated under the equity method, the related other comprehensive income shall be recognized as the investment income for the period to which the acquisition date belongs. Moreover, the Group shall disclose in the notes the fair value of this equity investment in the acquiree before the acquisition date and the value of the related profit or loss re-measured by the fair value. Ĺ Audit fees, valuation fees, legal service fees, valuation and consulting fees, and other administrative expenses incurred in the business combination shall be recognized in the profit or loss for the current period when incurred. Commissions and other expenses that are incurred in the business combination for the issuance of equity or debt securities which is the consideration of business combination shall be included in the initial recognition amounts of securities. ĺ When a business combination contract or agreement provides for a future event which may influence the cost of combination, if on the acquisition date the Group assumes that the future event is highly probable to occur and its impact on the cost of combination can be measured reliably, the future event shall be included in the cost of the business combination. On the acquisition date, the Group shall measure the assets given and liabilities incurred or assumed which is the consideration for a business combination at the fair value, and shall record the difference between the fair values and the carrying amounts into the profit and loss of the current period.

Page 23 (Total 122 pages)

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On the acquisition date, the Group shall allocate the combination costs, and shall recognize each of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree in accordance with the following principles. (a) If the combination costs are higher than the fair value of the identifiable net assets obtained from acquiree, the difference shall be recognized as goodwill. (b) If the combination costs are lower than the fair value of the identifiable net assets obtained from acquiree, the measurement of the fair value of the identifiable assets, liabilities and contingent liabilities acquired as well as the combination costs shall be reviewed. If after the review, the combination cost is still lower than the fair value of the identifiable net assets of the acquiree, the difference shall be recorded into the profit and loss of the current period. When a relationship between a parent company and a subsidiary is formed due to a business combination, the Company shall prepare for a memorandum book to record the fair value of each of the identifiable assets, liabilities and contingent liabilities obtained from the subsidiary company on the acquisition date. When preparing for consolidated financial statements, it shall adjust the financial statements of the subsidiary on the basis of the fair value of the identifiable assets, liabilities and contingent liabilities determined on the acquisition date according to the Group’s accounting policy of “Consolidated financial statements”.

10. Classification and measurement of inventory (1) Inventories include raw materials, revolving materials, goods in stock, goods under development, and development costs, etc. (2) Recognition of inventory: The Group shall recognize inventories when the following conditions are satisfied. 荛 It is probable that future economic benefits associated with the inventories will flow to the enterprise. 荜 The cost of the inventories can be measured reliably. (3) Costing method for inventories received and delivered: The Group shall measure inventories received at costs on initial recognition, and shall measure the actual costs of inventories delivered using the first-in first-out method. (4) Amortization method of low-value consumables and packages: According to the real situation, low-value consumables and packages shall be fully amortized when they are received and consumed. (5) Measurement of the ending inventory: Inventories shall be measured at the lower of cost and net realizable value on the balance sheet date. If the net realizable value is lower than the cost, the difference shall be recognized as provision for impairment of inventories and charged to the current profit or loss. 荛 Determination of the net realizable value When determining the net realizable value of inventories, tangible evidence obtained should be accounted for, and the purpose of holding the inventories and the impact of the events after balance sheet date should also be taken into consideration. Materials and other supplies held for production purposes are measured at cost when the net realizable value of the finished goods produced by them is higher than the cost. However, when a decline in the price of materials indicates that the cost of the finished products exceeds the net realizable value, the materials shall be measured at net realizable value. The net realizable value of inventories held for execution of sales or service contracts is based on the contract price. If the quantity specified in sales contracts is less than the quantity of inventories held, the net realizable value of the excess portion of inventories shall be calculated on the basis of the normal selling price. 荜 Provision for obsolete inventory shall be generally made for each inventory item. For inventories with large quantities and low unit price, provisions for obsolete inventory shall be made according to the inventory categories. Provision for obsolete inventory shall be combined for inventories that are used in the production and sales of goods in the same region, or that have the same or similar end-use or purposes and are difficult to be measured separately from other items. (6) Inventory system: The Group adopts the perpetual inventory system. Page 24 (Total 122 pages)

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11. Recognition criteria and accounting treatment of held-for-sale assets (1) Recognition criteria of held-for-sale assets The Group mainly classifies a non-current asset or disposal group to recover their book value thorough selling them (including the exchange of non-monetary assets with commercial substance, the same below) rather than using them continuously. The non-current assets or disposal group are recognized as held-for-sale assets when all the following conditions are satisfied. ķ The Group has a past practice of selling such assets or disposal group in a similar transactions and considers that they can be sold immediately under current conditions; ĸ A sale is highly probable, which means the Group has already made a resolution on a sales plan and obtained a definitive purchase commitment, and the sale is expected to be concluded within one year. Regulations require the relevant authority or regulatory department of the Group to approve the sale before the transaction takes place. A definitive purchase commitment refers to a legally binding purchase agreement between the Group and other parties. The agreement contains important terms such as transaction price, time, and sufficiently severe penalty for breach of contract, which ensure the possibility of making adjustments or cancelling the agreement is remote. The non-current assets or disposal group acquired by the Group exclusively for resale purpose shall be classified as held-for-sale assets on the date of acquisition should they meet the requirement of “being scheduled for sale within one year” on the acquisition date, and it is probable to meet other requirements of being classified as held-for-sale assets in the short term (usually 3 months). A disposal group refers to a group of assets that are disposed of together as a whole through sale or other means in a transaction, and the liabilities directly related to these assets transferred in the transaction. If an asset group or combination of asset groups which incorporate the disposal group and apportion the goodwill acquired in a business combination in accordance with the “Accounting Standards for Business Enterprises No. 8 - Asset Impairment”, the disposal group shall include the goodwill allocated to the disposal group. (2) Accounting treatment of held-for-sale assets Non-current assets and disposal groups classified as held-for-sale assets are initially measured or re-measured at the lower of their book values and their fair value less the disposal expenses by the Group. If the net amount of the fair value minus the disposal expenses is lower than the original book value, the difference shall be recognized as the impairment loss of the assets in the current profit and loss, and impairment provisions of the held-for-sale assets shall be made. For the amount of impairment loss recognized for a held-for-sale disposal group, firstly, it shall be offset against the book value of the goodwill of the disposal group, and then offset against the book value of non-current assets in proportion to the individual book value of non-current assets to the total value of the disposal group. If there is an increase in the net value of the held-for-sale non-current assets which equals to the fair value less the selling expenses after the balance sheet date, the previously written-down amount shall be recovered and reversed within the amount of impairment loss recognized after the assets being classified as held for sale, and the reversed amount shall be recognized in the current profit and loss. If the impairment loss was recognized after before the assets are classified as held for sale, the written-down amount shall not be reversed. If there is an increase in the net value of the held-for-sale disposal group which equals to the fair value less the selling expenses after the balance sheet date, the previously written-down amount shall be recovered and reversed within the amount of impairment loss recognized after the assets being classified as held for sale in accordance with the measurement requirements on non-current assets, and the reversed amount shall be recognized in the current profit and loss. The book value of the goodwill that has been offset, and the impairment losses on non-current assets recognized prior to classification as held for sale shall not be reversed. When the amount of the impairment loss on the held-for-sale disposal group is reversed subsequently, the book value of non-current assets except for the goodwill within the disposal group shall be increased according to the proportion of book value of each non-current asset in the disposal group. The held-for-sale non-current assets or the non-current assets in the disposal group shall not record depreiciation Page 25 (Total 122 pages)

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and amortization, interest and other expenses on liabilities in the held-for-sale disposal group shall continue to be recognized. Deferred income tax assets, financial assets regulated by the "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments", investment real estate and biological assets measured at fair value, contract rights arising from insurance contracts, and benefits from employee benefits The resulting assets are not applicable to the measurement method of the held-for-sale category, but are measured in accordance with relevant standards or corresponding accounting policies formulated by the Group. If the disposal group contains non-current assets for which the measurement method of the held for sale category is applicable, the measurement method of the held for sale category is applicable to the entire disposal group. The measurement of liabilities in the disposal group shall be subject to relevant accounting standards. When a non-current asset or disposal group no longer meets the held-for-sale recognition conditions, it shall not be classified as the held-for-sale assets and shall be removed from the held-for-sale disposal group and recognized at the lower value of the following two items. ķ The book value of the asset or disposal group before classified as a held-for-sale asset, which is adjusted by the depreciation, amortization or impairment recognized with the assumption that it had not been classified as a held-for-sale asset. ĸ The recoverable amount.

12. Measurement of long-term equity investment Long-term equity investment includes equity investment in subsidiaries, joint ventures and associates. (1) Initial measurement There are two scenarios where the Group uses two different methods in the initial measurement of long-term equity investment. ķ The following principles are applicable to the initial measurement of long-term equity investment obtained in business combination under common control. A. If the business combination is under the same control and the acquirer obtains long-term equity investment in the form of paying cash, transferring non-monetary asset or bearing the acquiree’s liabilities, the initial cost of the long-term equity investment shall be the carrying amount of the acquirer’s proportion in the acquiree’s equity at the acquisition date. The difference between the amounts of cash paid, the carrying amount of the non-monetary asset transferred and liabilities assumed and the initial cost of the long-term equity investment shall be adjusted to capital reserve. If the capital reserve is not sufficient for adjustment, retained earnings shall be adjusted. Costs that are directly attributable to the business combination, such as audit fees, valuation fees, and legal service fees and so on shall be recognized in profit or loss during the current period when they occurred. If the acquirer issues equity securities as the consideration, the initial cost of the long-term equity investment is the book value of the share of the acquiree’s equity in the consolidated financial statements of the ultimate controller at the acquisition date. The amount of share capital shall equal to the total par value of the shares issued. The difference between initial cost of the long-term equity investment and the par value of shares issued shall be adjusted to capital reserve. If the capital reserve is not sufficient for adjustment, retained earnings shall be adjusted. The commissions and other expenses incurred in the issuance of equity securities for business combination shall be offset against the premium of equity securities. If the premium is not enough to offset the expenses, they shall be offset against the retained earnings B. For business combination not under the same control, the Group shall measure the business combination costs in different ways in the following scenarios. a˅For business combination realized in one exchange transaction, the business combination costs shall be the fair value of assets paid occurred, liabilities incurred or assumed, and equity securities issued for obtaining control of the acquire on the acquisition date.

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b˅For business combination realized in multiple exchanges and transactions step by step, the initial investment costs shall be sum of the book value of the acquirer’s equity investment in the acquiree prior to the acquisition date and the new investment cost on the acquisition date. c˅The audit fees, legal service fees, valuation and advisory fees and other expenses incurred in the business combination shall be recorded in the current profit and loss when they incur, the transaction costs of equity securities or debt securities issued as the consideration for business combination shall be included in the initial amount of equity securities or debt securities. d˅Future events that may affect the business combination costs are stipulated in the business combination contract or agreement, which states if it is estimated on the acquisition date that the future events are highly probable to occur and their impact on the costs of business combination can be reliably measured, they shall be included in the business combination costs. ĸ Except for the long-term equity investment obtained in a business combination, the initial investment cost of long-term equity investment obtained by other methods shall be determined according to the following requirements. A. The initial investment cost of the long-term equity investment obtained by paying cash shall be the actual purchase price paid. The initial investment cost includes expenses, taxes and other necessary expenses directly related to obtaining the long-term equity investments. B. For long-term equity investments obtained by issuing equity securities, the initial investment cost shall be the fair value of the issued equity securities and shall not include the declared but unpaid cash dividends or profits that should have been collected from the investee. Transaction costs incurred when issuing or acquiring the equity instruments that are directly attributed to equity transactions shall be deducted from equity. C. For long-term equity investments obtained through exchanges of non-monetary assets, the initial investment cost shall be determined according to the “Accounting Standard for Business Enterprises No. 7 - Exchanges of non-monetary assets”. D. For long-term equity investments obtained through debt restructurings, the initial investment cost shall be determined according to the “Accounting Standard for Business Enterprises No. 12 - Debt restructuring”. Ĺ Regardless of how the long-term equity investment is formed, when the investment is obtained, the declared but not issued cash dividends or profits of the investee included in the consideration paid shall be accounted separately as receivables, and shall not constitute the initial investment cost of the long-term investment equity. (2) Subsequent measurement The cost method shall be used when the Group has control over the investee enterprise. The equity method shall be used when the Group has joint control or significant influence over the investee enterprise. ķ The long-term equity investment under cost method shall be measured by the initial investment cost. Additional or redeemed investment shall be adjusted to the cost of long-term equity investment. Cash dividends or profits that are declared by the investee shall be recognized in the current profit and loss. ĸ For the long-term equity investment under equity method, if the initial cost of the long-term equity investments exceeds the fair value of the Group’s interest in the identifiable net assets of the investee, the initial cost of the long-term equity investment shall not be adjusted. If the initial cost of the long-term equity investments is less than the fair value of the Group’s interest in the identifiable net assets of the investee, the difference shall be included in the current profit and loss, and the cost of the long-term equity investment shall be adjusted accordingly. After a long-term equity investment is acquired, the Group shall recognize its share of the investee’s net profit or loss and its share of the investee’s other comprehensive income as investment income or losses and other comprehensive income respectively, and shall adjust the book value of the investment accordingly. The Group shall reduce the book value of the long-term investment regarding the declared cash dividend or profit distribution of the investee. If the investee’s equity components changes except for net profit or loss, other comprehensive income or profit distribution, the book value of the long-term equity investment shall be adjusted accordingly and recorded into capital reserve. When confirming the share of the net profit and loss

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of the investee, the net profit of the investee shall be recognized after it is adjusted on the basis of the fair value of all identifiable assets of the investee when the investment is made. When the accounting policies adopted by the investee are different from those adopted by the Group, the financial statements of the investee shall be adjusted according to the Group’s accounting policies, the investment income and other comprehensive income shall be recognized accordingly. The net loss incurred by the investee shall be recognized based on the book value of the long-term investment and other investments essentially constituting the long-term equity of the investee till the book value is reduced to zero. But this requirement does not apply to the situation where the Group has an obligation to undertake extra losses for the investee. Once the investee realizes net profit in the subsequent period, the Group shall resume recognizing its share of profits after the share of previously unrealized losses has been recovered. When calculating the Group’s share of the investee’s net profit or loss, the profit and loss of unrealized internal transaction between the Group, associates and joint ventures shall be offset according to the proportion attributable to the Group, and the investment profit shall be recognized accordingly. If the loss of unrealized internal transaction between the Group the the investee is recognized as asset impairment loss, the amount shall be recognized in full. If part of the Group’s equity investments in associates is held indirectly through entities such as venture capital institutions, mutual funds, trust companies, such investments shall be measured at fair value through profit and loss according to the “Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments”, regardless of whether the above entities have a significant influence on this part of the investment. The other part of investments shall be measured by the equity methods. Ĺ When the Group disposes long-term equity investment, the difference between the book value of the investment and the actual amount paid shall be included in the current profit and loss. When the Group disposes long-term equity investment measured under equity method, the original amount recorded in other comprehensive income shall be accounted on the same basis as the investee’s direct disposal of relevant assets or liabilities according to the corresponding proportion. ĺ If the shareholding of the Group in a subsidiary decreases due to the capital increase held by other investment parties in the subsidiary, which results in the Group’s loss of control but it can still exercise joint control or exert significant influence, the measurement of long-term equity investment shall be changed from the cost method to the equity method in an individual financial statements. First of all, the difference between the increased share of the original subsidiary’ net asset which is based on the original shareholding ratio the and the original book value of the long-term equity investment corresponding to the decline in the proportion of shares that should be carried forward shall be recorded in the current profits and losses. Then, the investment shall be adjusted under the equity method according to the new shareholding ratio from the moment it is acquired. ˄3˅Basis for recognition of joint control or significant influence over an investee Joint control refers to sharing control according to a contractually arrangement. Any decision on relevant activities of joint control shall only be made when the unanimous consent of the parties sharing control have been obtained. Relevant activities of joint control refer to those that have significant influence on the return of an arrangement. Significant influence is the power to participate in the decision-making of the investee’s financial and operating policy, it is not control or joint control on those policies. ˄4˅Impairment test and method of provision for impairment loss The impairment test of long-term equity investment is conducted and the impairment loss is provided in accordance with the accounting policy “Impairment of assets” of the Group.

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Ĺ A building that is leased out. ˄2˅An investment property shall be recognized when the following conditions are satisfied. ķ It is probable that future economic benefits associated with the investment property will flow into the Group. ĸ The cost of the investment property can be measured reliably. ˄3˅Initial measurement The initial measurement of the investment property shall be made at its cost. ķ The cost of an investment property by acquisition consists of the acquisition price, relevant taxes, and other expenses directly attributable to the asset. ĸ The cost of a self-constructed investment property composes of the necessary expenses for constructing the property to the usable condition. Ĺ The cost of an investment property obtained by other ways shall be recognized in accordance with the relevant accounting standards. ˄4˅Subsequent measurement The Group shall use the cost model for subsequent measurement of the investment property, which shall be depreciated or amortized in the same way as intangible assets and fixed assets. When the Group has tangible evidence showing that the use of properties has changed either from self-use properties or inventories to investment properties or from investment properties to self-use properties, the book value before the conversion shall be the recording value of the property after the conversion. At the end of an accounting period, the investment property under the cost method shall be measured at the lower of the cost and the recoverable amount. If the recoverable amount is lower than the cost, the difference shall be recognized as an impairment loss. Once the impairment loss is recognized, it shall not be reversed.

14. Recognition and measurement 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 life more than one year. (1) A fixed asset shall be initially recognized at cost when the following conditions are satisfied. ķ It is probable that future economic benefits associated with the fixed assets will flow to the enterprise. ĸ The cost of the fixed assets can be measured reliably. (2) Depreciation Subsequent expenditure relating to a fixed asset shall be added to the carrying amount of the asset when the expenditure qualifies for capitalization. Subsequent expenditure that does not qualify for capitalization shall be recognized as an expense for the current period. The depreciation method adopted by the Group is the straight-line method. The estimated useful lives, residual value and annual depreciation rate of fixed assets are shown as follows. Residual value rate Annual depreciation Category Useful life (years) (%) rate (%) Houses and buildings 20-50 5 1.9-4.75

Machinery equipment 5-20 5 4.75-19

Transportation equipment 4-10 5 9.50-23.75

Electronic equipment 5-20 5 4.75-19

Office equipment 3-5 5 19-31.67

Other equipment 5-20 5 4.75-19

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The Group reviews the useful life, estimated residual value and depreciation method of a fixed asset at the end of each financial year. If the useful life is different from the previous estimate, it shall be revised accordingly. If the expected residual value is different from the previous estimate, it shall also be revised accordingly. If there has been a significant change in the expected realization pattern of economic benefits from those assets, the depreciation method shall be changed accordingly. The changes in useful life, estimated residual value and depreciation method shall be treated as change in accounting estimates. (3) Fixed assets acquired under finance lease The Group identifies a lease of fixed asset as finance lease when all the risks and rewards associated with the asset are substantially transferred. The cost of a fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased asset and the present value of the minimum lease payments at the inception of lease. The depreciation method of fixed assets acquired under finance lease is consistent with that of the depreciable assets owned by the Group. If the Group can reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the useful life of the asset. If the Group cannot reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated over the shorter of the useful life of the leased asset and the lease term. (4) Impairment of fixed asset shall be carried out in accordance with the accounting policy “Impairment of assets” of the Group.

15. Accounting method of construction in progress (1) Valuation of construction in progress: Construction in progress shall be recorded at actual costs incurred, which include borrowing costs eligible for capitalization and gain or loss of exchange difference. (2) The Group transfers construction in progress to fixed assets when the project is available for use. For the construction in progress which can be operated in the manner intended by management but does not have the final account for completed project, an estimated value is recognized as the cost of the fixed assets and is depreciated. When the final account for completed project is obtained, cost of the asset should be adjusted to the actual cost. However, there is no need to adjust the accrued amount of depreciation. (3) Impairment of construction in progress shall be carried out in accordance with the accounting policy “Impairment of assets” of the Group.

16. Accounting method of borrowing costs (1) Recognition principle and period of capitalization of borrowing costs When the borrowing costs incurred by the Group can be directly attributable to the acquisition and construction or production of assets which are eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets when the following requirements are simultaneously met. ķ The asset disbursements have already incurred; ĸ The borrowing costs have already incurred; Ĺ The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale purposes have already started. Borrowing costs that do not meet the capitalization criteria shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. The borrowing costs incurred during such period shall be recognized as expenses and recorded into the profits and losses of the current period until the acquisition and construction or production of the asset restarts. If the interruption is a necessary step for making the qualified asset ready for the intended use or sale purposes, the capitalization of the borrowing costs shall continue.

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When the qualified asset under acquisition and construction or production is ready for the intended use or sale purposes, the capitalization of the borrowing costs shall be ceased. The borrowing costs incurred after that shall be recognized as expenses. Assets eligible for capitalization refer to assets such as fixed assets, investment property, inventories and other assets which need to go through a long period of acquisition and construction or production activities to reach the intended use or status for sale. (2) Calculation method of capitalized amount of borrowing costs As for loans specifically drawn for the acquisition and construction or production of assets which are eligible for capitalization, the cost shall be the amount of actual cost of interest expenses incurred during the period after deducting the interest or investment income from the unused borrowing funds deposited in the bank or invested temporarily. Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the interest cost shall be the product of the weighted average asset disbursement, which is calculated by deducting the special loan from the accumulative asset disbursements, and the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined based on the weighted average interest rate of the general borrowing. During the period of capitalization, the foreign exchange differences on foreign currency specific borrowings shall be capitalized. Exchange differences on foreign currency general borrowings shall be recorded in the current profits and losses.

17. Recognition and measurement of intangible assets Intangible assets are identifiable non-monetary asset that are owned or controlled by the Group and are without physical substance. (1) Recognition of intangible assets The Group shall recognize an intangible asset when both of the following conditions are met. ķ It is probable that the economic benefits associated with that intangible asset will flow to the Company. ĸ The cost of that intangible asset can be measured reliably. (2) Measurement of intangible assets ķ An intangible asset is measured initially at its cost. ĸ Subsequent measurement of intangible assets A. For an intangible asset with finite useful life, its useful life shall be estimated at the time of acquisition and it shall be amortized during the useful life in a reasonable and systematic way. The amount of amortization is allocated to relevant costs and expenses according to the nature of beneficial items. Intangible asset with infinite useful life shall not be amortized. Item Estimated useful life Basis for the estimation

Software 3-10 years Expected durable years

Land-use right 40 years Durable years At the end of the reporting period, the useful life and amortization method of an intangible asset with finite useful life shall be reviewed, if there is any change occurred, it shall be treated as a change in accounting estimate. In addition, the useful life of an intangible asset with infinite useful life shall be reviewed, if there is evidence indicating that the duration of generating economic benefits to the Company from an intangible asset is foreseeable, then its useful life shall be estimate and the asset shall be amortized in accordance with the amortization policy of intangible assets with finite useful life. B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Group.

18. Accounting method of long-term deferred expenses Long-term deferred expenses are defined as expenses incurred on the improvement of the fixed assets which should be recorded in this period and subsequent periods with an amortization period Page 31 (Total 122 pages)

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of more than one year. Long-term deferred expenses shall be amortized using the straight-line method within the amortization period.

19. Impairment of non-current and non-financial assets The following evidence may indicate an impairment of asset. (1) The market value of assets declines significantly, which is much higher than the expected decline in asset value due to the passage of time or normal use. (2) Significant changes in economy, technology, and laws or the market of assets will take place in the current period or in the near future, causing an unfavorable impact on the Group. (3) The market interest rate or the rate of return on other market investments has increased in the current period, which affects the discount rate used to calculate the present value of the expected future cash flow of assets, resulting in a significant reduction in the recoverable amount of assets. (4) There is evidence showing that the assets have incurred obsolescence or physical damage. (5) The assets are idle, or have been terminated for use or part of a restructuring or are planned for an early disposal. (6) Evidence from the internal reporting of the Group shows that the economic performance of assets has been lower or will be lower than expected, such as the net cash flow created by the assets or the realized operating profit (or loss) is far lower than the estimated amount. (7) There is other evidence showing that the assets have been impaired. On the balance sheet date, the Group shall analyze the long-term equity investment, fixed assets, engineering materials, construction in progress, intangible assets (except for those with uncertain useful life) and other assets in accordance with the "Accounting Standards for Business Enterprises No. 8-Asset Impairment". When there is an indication of impairment, impairment test shall be performed and the recoverable amount shall be estimated and measured as the higher of an asset’s fair value less disposal costs and the present value of estimated future cash flows. If the recoverable amount is lower than the book value, the book value shall be reduced to the recoverable amount, and the written-down amount shall be recognized as an asset impairment loss and recorded in the current loss. Provision for asset impairment shall be made at the same time. If there are signs showing that an asset may be impaired, the Group usually estimates its recoverable amount on an individual item basis. However, if it is difficult to estimate the recoverable amount of individual asset, the Group shall determine the recoverable amount of the asset group to which the asset belongs. An asset group is the smallest group of assets that can generate cash inflows independently from other assets or asset groups. An asset group is consisted of assets that can generate cash inflows and shall be recognized only when the main cash inflows are independent from that of the other assets or asset groups. The Group conducts impairment tests on the goodwill formed by business combinations and intangible assets with uncertain useful life, regardless of whether there are signs of impairment. The impairment test of goodwill is carried out in conjunction with the related asset group or combination of asset groups. Once impairment loss is recognized, it cannot be reversed in the subsequent financial periods.

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The Group classifies post-employment benefit plans into defined contribution plans and defined benefit plans. The post-employment benefits plan refers to the agreement reached between the Group and employees, or the rules or methods formulated by the Group in providing post-employment benefits to employees. Among them, the defined contribution plan refers to a post-employment benefit plan in which the Group no longer undertakes further payment obligations after the fixed fee is paid to an independent fund. The defined benefit plan refers to a post-employment benefit plan other than the defined contribution plan. A. Defined contribution plans During the accounting period in which the employees provide service, the due amount set by the defined contribution plans shall be recognized as the debt and included in the current profit and loss or the cost of relevant assets. (3) Termination benefits When the Group provides termination benefits to the employees, it shall charge the employee compensation liability the current profit and loss. The liability shall be determined from at the earlier of the two following dates:ķthe date on which the Group is unable to unilaterally withdraw the termination benefits provided by the labor relationships termination plans or the layoff proposals. ĸThe date on which the Group recognizes the costs or expenses in connection with the reorganization involving the termination benefits. ˄4˅Other long-term employee benefits If the other long-term employee benefits provided by the Group to employees can be classified as defined contribution plan, the accounting treatment shall be carried out in accordance with that of the defined contribution plan as mentioned above, and otherwise shall be accounted for in accordance with the accounting policy on recognition and the measurement of defined benefit plan.

21. Recognition criteria and measurement of accrued liabilities (1) Recognition criteria of accrued liabilities An obligation related to a contingency is recognized as the accrued liability when all the following conditions are satisfied. ķ The obligation is a present obligation of the Group; ĸ It is probable that an outflow of economic benefits from the Group will be required to settle the obligation; Ĺ The amount of the obligation can be measured reliably. (2) Measurement of accrued liabilities Accrued liabilities are initially measured at the best estimate of the payment to settle the associated obligations. If there is a continuous range of possible amounts of the expenditure required to settle the liability, and each amount has equal probabilities of occurrence, the median of the range shall be used to determine the best estimate. In other cases, the best estimate should be determined in accordance with the following methods. ķ For contingency involves a single item, the best estimate should be determined according to the most likely outcome. ĸ For contingency involves several items, the best estimate should be determined by weighting all possible outcomes by their associated probabilities of occurrence. To determine the best estimate, overall consideration should be given to factors such as: risks related to the contingency, uncertainty, and time value of money. If the impact of time value of money is significant, the best estimate shall be determined after discounting present value of future cash outflow. Where some or all of the expenditures to settle the liability are expected to be reimbursed by a third party, the reimbursement shall be separately recognized as an asset only when it is virtually received. The amount recognized shall not exceed the carrying amount of the liability. The Group reviews the carrying amount of accrued liabilities on the balance sheet date. If there is tangible evidence showing that the book value does not truly indicate the current best estimate, the adjustment should be made to the book value to reflect the best estimate.

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22. Recognition criteria and methods of revenue When the contract between the Group and the customer meets the following conditions at the same time, the Group shall recognize the revenue when the customer obtains the right to control the relevant commodities. (1) The parties to the contract have approved the contract and have promised to perform their respective obligations. (2) The contract specifies the rights and obligations of the parties involved in the transfer of goods or services (hereinafter referred to as “transfer of commodities”). (3) The contract has definite terms of payment relating to the commodities to be transferred. (4) The contract has a commercial nature, that is, fulfilling the contract will change the risk, time distribution or amount of future cash flow of an enterprise. (5) The consideration that the enterprise is entitled to obtain for the transfer of commodities is likely to be received.

23. Recognition and measurement of government grants Government grants comprise of government grants related to an asset and government grants related to income. A government grant related to an asset is a grant obtained by the Group used for purchase, construction, or forming the long-term assets in other ways. Otherwise, the government grant is treated as a government grant related to income. If the documentation on government grant does not clearly identify the party that receives the subsidy, judgment shall be made based on the basic conditions that must be met to obtain the subsidy. If the basic conditions require purchases, constructing, or forming long-term assets, the subsidy shall be considered as a government grant related to an asset, otherwise it shall be considered as a government grant related to income. (1) Recognition of government grants A government grant is recognized only when all the following conditions are met. ķ The Group can meet all the conditions needed to obtain the subsidy. ĸ The Group can receive the government subsidies. (2) Measurement of government grants ķ If a government grant is a monetary asset, it shall be measured in the light of the received or receivable amount. If a government subsidy is a non-monetary asset, it shall be measured at its fair value. If the fair value cannot be obtained in a reliable way, it shall be measured at its nominal amount. ĸ Government grants pertinent to assets shall be recognized as deferred income when they are received, and shall be included in a reasonable and systematic way in the current profits and losses in stages within the useful lives of the relevant assets when they reach usable status. If the relevant assets are sold, transferred, obsolete or destroyed before the end of the useful lives, undistributed deferred income shall be transferred to the current profits and losses of disposal of assets. Government grants pertinent to incomes that are used to compensate relevant costs, expenses or losses after the reporting period shall be recognized as deferred income when they are received, and shall be included in the current profits and losses. Government grants pertinent to daily activities shall be recorded in other income, and those are not pertinent to daily activities shall be recorded in non-operating income and expenditure. Ĺ If any policy preferential loan discount is obtained, it shall be treated respectively in accordance with the circumstances as follows. A. If the interest-deducted loans of the Finance Department are appropriated to the bank and then provided to the Group by the bank at a preferential interest rate, the amount of loans actually received shall be taken as the book value of the loan, and the relevant borrowing costs shall be calculated according to the loan principal and the preferential interest rate. B. If the interest-deducted loans of the Finance Department are appropriated directly to the Group, the corresponding deducted interests shall be offset against relevant borrowing costs. ĺ If it is necessary to refund any government grants that has been recognized, it shall be treated respectively in accordance with the circumstances as follows.

Page 34 (Total 122 pages)

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A. If the deferred income is concerned, the book balance of the deferred income shall be offset against, and the excessive part shall be included in the current profits and losses. B. Otherwise it shall be recorded directly in the current profits and losses.

24. Accounting treatment of income tax The Group adopts the balance sheet liability method for the accounting treatment of income tax. (1) Deferred tax asset ķ For assets and liabilities whose book value has deductible temporary differences with the tax base, the Group shall recognize the deferred tax asset arising from deductible temporary differences to the extent of the taxable income, which is probable to be obtained by the Group in the future to offset the deductible temporary differences. In the calculation process, the applicable tax rate in the recovery of the asset or settlement of liability shall be used. ĸ On the balance sheet date, if there is tangible evidence showing that it is probable to obtain sufficient taxable income in the future to offset the deductible temporary differences, the deferred income tax assets that have not been recognized in the previous period shall be recognized. Ĺ On the balance sheet date, the book value of deferred income tax assets shall be reviewed. If it is unlikely that sufficient taxable income can be obtained in the future to offset the benefits of deferred income tax assets, the book value of the deferred income tax assets shall be written down. When it is probable to obtain sufficient taxable income, the written-down amount shall be reversed. (2) Deferred tax liability If there is a taxable temporary difference between the book value of assets and liabilities and the tax base, the deferred income tax liabilities arising from the taxable temporary difference shall be recognized according to the expected applicable tax rate during the period when the asset is recovered or the liability is settled

25. Accounting treatment of operating lease and finance lease (1) Operating leases If the Group is the lessee in an operating lease, it shall record the lease payment under an operating lease as a relevant asset cost or the current profit and loss on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized as the current profits and losses. Contingent rents shall be recorded into the current profits and losses when they occur. If the Group is the lessor in an operating lease, it shall include assets used in the lease in the balance sheet according to the nature of assets. Lease income from operating leases shall be recorded in the current profits and losses on a straight-line basis over the lease term, and initial direct costs shall be recorded into the current profit and loss. Fixed assets used in the lease shall be depreciated according to the depreciation method of similar assets, and other assets used in the lease shall be depreciated in a systematic and reasonable way. Contingent rents shall be recorded into the current profits and losses when they occur. ˄2˅Finance leases If the Group is the lessee in a finance lease, since the inception of lease, it shall record the entry value of the leased asset at the lower of the fair value of the asset on the inception date and the present value of the minimum lease payments, and shall record the minimum lease payments as the entry value of long-term payables and treat the difference as unrecognized financial expenses. In addition, the initial direct costs incurred during the lease negotiation and signing of the lease contract that can be attributed to the leased item shall be also included in the value of the leased assets. The costs include commissions, legal fees, travel expenses, and stamp duty. The unrecognized financial expenses shall be allocated to each period over the lease term, and the current finance expenses shall be calculated according to the actual interest rate method. Contingent rents shall be recorded into the current profits and losses when they occur. If the interest rate implicit in the lease can be obtained, the interest rate implicit in the lease shall be used as the discount rate to calculate the present value of the minimum lease payments. Otherwise the interest rate specified in the lease agreement shall be used as the discount rate. If

Page 35 (Total 122 pages)

− F-37 −

the interest rate implicit in the lease cannot be obtained, the current bank loan interest rate shall be used as the discount rate. The Group uses the depreciation policy consistent with that of similar assets to calculate the depreciation of the leased assets. If there is reasonable certainty that the lessee will obtain ownership of the asset by the end of the lease term, the depreciation shall be allocated over the useful life of the asset, otherwise the asset shall be depreciated over the shorter of the lease term and its useful life. If the Group is the lessor in a finance lease, on the initial date of the lease, it shall record the sum of the minimum lease payments and initial direct costs as the finance lease receivables, and also record the unguaranteed residual value. It shall recognize the sum of minimum lease payments, initial direct costs and unguaranteed residual value after deducting the sum of their present values as the unrealized financial income, and allocate the unrealized financial income to each period over the lease term. It shall adopt the effective interest rate to calculate and recognize the current financial income. Contingent rents shall be recorded into the current profit and loss when they occur.

26. Fair value measurement Fair value is the price that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Relevant assets or liabilities are measured at fair value with consideration of the characteristics of the assets or liabilities. It is assumed that the market participants sell assets or transfer liabilities on the measurement date is an orderly transaction under the prevailing market conditions. It is also assumed that the orderly sale of assets or transfer of liabilities takes place in the principal market of the relevant asset or liability, and if there is no such major market, it is assumed that the transaction is carried out in the most profitable market of the underlying asset or liability. The Group adopts assumptions that market participants use to maximize their economic benefits when pricing the asset or liability. The Group determines whether the fair value at the initial recognition equals to the transaction price according to the nature of transactions and the characteristics of related assets or liabilities. If the transaction price is not equal to the fair value, the relative gains or losses shall be accounted for into the current profits and losses, except for those specified in the relevant accounting standards. The Group adopts valuation techniques that are applicable to the current circumstances and when it has sufficient available data and other information to support them. The valuation techniques used mainly include the market method, the income method and the cost method. In the application of valuation techniques, the relevant observable inputs are prioritized, and unobservable inputs can only be used if the relevant observable inputs are not available or feasible. The input values used in fair value measurement of the Group are divided into three levels, and the input values at the first level are used firstly, the input values at the second level are used secondly, and the input values at the third level are used last. The first level of input values are the unadjusted quoted price of the same assets or liabilities that can be obtained on the measurement date in an active market. The second level of input values refers to the direct or indirect observable inputs of the relevant assets or liabilities other than the first level of input values. The third level of input values refers to the unobservable inputs of the underlying asset or liability. Non-financial assets within the Group are measured at fair value, given the capability of the market participants to generate economic benefits from the best use of the assets, or to sell the assets to other market participants who can generate economic benefits from the best use of the assets. The measurement of a liability at fair value is based on the assumptions that the liability will be transferred to other market participants on the measurement date, and the liability will continue after the transfer, which will be performed by the market participant as the transferee. Equity instruments of the Group are measured at the fair value on the assumptions that the equity instruments will be transferred to other market participants on the measurement date, the instruments will continue to exist after transfer, and the market participants who are the transferees shall obtain the relevant right and assume the corresponding obligation. Page 36 (Total 122 pages)

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27. Discontinued operations Discontinued operations refer to a separately identifiable constituent part that satisfies one of the following conditions and that has been disposed of by the Group or has been classified as held-for-sale. (1) The constituent part represents an independent main business or a separate main business area. (2) The constituent part is part of an associated plan that is intended to be disposed of in an independent main business or a separate major business area. (3) The constituent part is a subsidiary that is specifically acquired for resale. The Group presents profits and losses from continuing operations and discontinued operations in the consolidated income statement and the standalone income statement respectively. For held-for-sale non-current assets or disposal groups that do not meet the definition of discontinued operations, the impairment losses, reversal amounts and profits or losses from disposals are presented as profits and losses from continuing operations. The profits and losses from operations or disposals such as impairment losses and reversal amounts, etc. from the terminated operations are reported as profits or losses from the discontinued operations. For discontinued operations occurred in the current period, the information which is previously presented as profits or losses from continuing operations shall be reclassified as profits or losses from discontinued operations of the comparable accounting period in the current financial statements. If a disposal group that will no longer be used but will not be sold satisfies the conditions of relevant components as defined in the terminated operation, it shall be reported as a discontinued operation from the date of cessation of use. If the Group loses control of a subsidiary due to the sale of investment in the subsidiary or other reasons, and the subsidiary meets the definition of discontinued operation, the related profits and losses shall be reported in the consolidated income statement.

− F-39 −

Guardian and Escort Co. Ltd., the subsidiary, have calculated and paid for the value-added tax according to Article 1, which states that labor dispatch service provider shall calculate and pay the value-added tax using the simplified 5% taxation method, and the sales revenue is calculated by deducting the wages and benefits paid to the dispatched employees and the social insurance and housing provident fund paid by the agency from the total price and non-price expenses of the service provided as stipulated in the “Announcements on Policies Regarding the Further Promotion of Pilot Reform of Removing Duplicated Taxation in Labor Dispatch Service and Highway Tolls Deduction Policies” jointly issued by the Ministry of Finance and the General Administration of Taxation (Cai Kuai [2016] No. 47). ĸ According to the document of “Announcements on Policies Related to Deepening the Reform of Value Added Tax” issued by the Customs Head Office, General Administration of Taxation, Ministry of Finance (No.39 of 2019), Deyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, the subsidiary of the Group, shall be allowed to add 10% of the current deductible input tax to offset the tax payable from 1 April, 2019 to 31 December, 2021. (2) Tax preference for corporate income tax ķ According to the [2015] No.251 Document of “Reply on Confirming the Main Business of 29 Enterprises including Chengdu Huachang Property Development Co., Ltd. as the National Encouraged Industrial Project” issued by Sichuan Provincial Economic and Information Department in 2015, Chengdu Financial Holding and Leasing Co., Ltd., a subsidiary of the Group, was recognized by “The Encouraged Industries in Western Regions”. According to Article 2 of Cai Shui [2011] No. 58 and the document of Gao Guo Shui Tong [2018] No. 20172 “Notice of Tax Matters” issued by the State Administration of Taxation and Chengdu High Tech Industrial Development Zone, the applicable tax rate of corporate income tax is 15%. ĸ Chengdu Financial Holding Financing Guarantee Co., Ltd., the subsidiary of the Group, has met the criteria of industries defined in “The Encouraged Industries in Western Regions” in the Announcement of the State Administration of Taxation on Issues Related to Corporate Income Tax in Deepening the Implementation of the Western Development Strategy (No.12 of 2012), and its main business revenue account for more than 70% of the total revenue this period. Therefore, the corporate income tax of the subsidiary can be reduced by 15% in this period. Ĺ According to the Notice on Tax Matters of Local Taxation Bureau of Jinjiang District, Chengdu Jindi Taxation Yi Suo Shui Tong [2018] No.6248 and the Confirmation Letter of Encouraged Industries in Western China by Chengdu Development and Reform Commission [2016] No.219, the subsidiary Chengdu Financial Holding Micro Credit Co., Ltd. has met the criteria of newly-added encouraged industries in western regions in “The Catalogue of Encouraged Industries in Western Regions”. Therefore, the applicable tax rate of corporate income tax is 15% this period.

Page 38 (Total 122 pages)

− F-40 −

VII. Business combination and consolidated financial statements 1. Subsidiaries

Paid-in Method of Business Shareholding Invested amount No. Name Level Type Registered address Business nature capital Voting rights acquisition location ratio (%) (RMB:0’000) (RMB:0’000) Chengdu Financial Business Holding and Chengdu, 1 2 1 Chengdu, Sichuan Process 5,000.00 100 100 5,000.00 1 Financial Sichuan Outsourcing Services Co., Ltd.

− F-41 Chengdu Chengdu, Investment and 2 2 1 Chengdu, Sichuan 50,000.00 100 100 50,000.00 1 Rongxing Sichuan consulting Venture Capital Co., Ltd.

Smart card Chengdu City Chengdu, Sichuan Chengdu, 3 2 1 production and 1,500.00 70 70 1,050.00 4 Card Co., Ltd. Sichuan sales

Chengdu Financial Holding Financial Chengdu, Sichuan Chengdu, Equity 4 Development 2 1 51,000.00 100 100 51,000.00 1 Sichuan investment Equity Investment Fund Co., Ltd.

5 Chengdu 2 1 Chengdu, Sichuan Chengdu, Equity 54,000.00 100 100 54,000.00 1

Page 39 (Total 122 pages)

Paid-in Method of Business Shareholding Invested amount No. Name Level Type Registered address Business nature capital Voting rights acquisition location ratio (%) (RMB:0’000) (RMB:0’000) Financial Sichuan investment Holding Tourism Development Equity Investment Fund Co., Ltd.

Chengdu Financial Holding Real Chengdu, Sichuan Chengdu, Real estate − F-42 6 2 1 134,000.00 100 100 134,000.00 1 Estate Co., Ltd. Sichuan development

Chengdu Dingli Asset Chengdu, Asset 7 2 1 Chengdu, Sichuan 133,500.00 100 100 133,500.00 4 Management Sichuan management Co., Ltd.

Chengdu Investment 8 2 1 Chengdu, Sichuan Chengdu, 20,100.00 100 100 20,100.00 1 Exchange management Sichuan Investment Group Co., Ltd.

Investment in Chengdu Jiaozi Chengdu, financial and 9 Xinxing 2 1 Chengdu, Sichuan 200,000.00 100 100 200,000.00 1 Sichuan non-financial Financial institutions Investment Group Co., Ltd.

Page 40 (Total 122 pages)

Paid-in Method of Business Shareholding Invested amount No. Name Level Type Registered address Business nature capital Voting rights acquisition location ratio (%) (RMB:0’000) (RMB:0’000)

Chengdu Agriculture Equity Chengdu, 10 Exchange Co., 2 1 Chengdu, Sichuan Trading service 5,000.00 60 60 3000 4 Sichuan Ltd.

Chengdu Financial Development Chengdu, Holding Data and application − F-43 11 2 1 Chengdu, Sichuan Sichuan 10,800.00 100 100 10,800.00 1 Service Co., of computer

Ltd. software

Chengdu Financial Holding Credit Enterprise Chengdu, Sichuan Chengdu, 12 Reference Co., 2 1 credit service 2,000.00 100 100 2,000.00 1 Sichuan Ltd.

Chengdu Western Cultural Tourism Equity Investment Chengdu, Sichuan Chengdu, Investment 13 2 1 13,600.00 100 100 13,600.00 1 Fund Sichuan management Partnership (Limited Partnership)

Page 41 (Total 122 pages)

Paid-in Method of Business Shareholding Invested amount No. Name Level Type Registered address Business nature capital Voting rights acquisition location ratio (%) (RMB:0’000) (RMB:0’000)

Chengdu Financial Holding Industry Chengdu, Sichuan Chengdu, Investment 14 Leading Equity 2 1 1,000.00 100 100 1,000.00 1 Sichuan management Investment Fund Management Co., Ltd.

Chengdu Chengdu, − F-44 15 2 1 Chengdu, Sichuan Security service 43,000.00 100 100 43,000.00 4 Security Service Sichuan Corporation

Chengdu

Financial City Real estate Please refer 16 2 1 Chengdu, Sichuan Chengdu, 474,859.37 46.24 219,582.11 4 Investment development to the notes. Sichuan Development Co., Ltd.

Chengdu Financial City Construction and Project Development Chengdu, investment, Please refer 17 2 1 Chengdu, Sichuan 200,000.00 10 20,000.00 1 Investment Sichuan asset to the notes. Management management Center (Limited Partnership)

Page 42 (Total 122 pages)

Paid-in Method of Business Shareholding Invested amount No. Name Level Type Registered address Business nature capital Voting rights acquisition location ratio (%) (RMB:0’000) (RMB:0’000) Chengdu Yihang Asset Management Chengdu, Asset 18 2 2 Chengdu, Sichuan 436,000.00 51.03 51.03 222,500.00 1 Co., Ltd. Sichuan management

Chengdu Smart Car City Property Development Chengdu, Sichuan Chengdu, development 19 2 1 50,000.00 65 65 32,500.00 1 Co., Ltd. Sichuan and real estate management

− F-45 Chengdu Jiaozi Industry Fund Management Chengdu, Equity 20 2 1 Chengdu, Sichuan 1,000.00 100 100 1,000.00 1 Co., Ltd. Sichuan investment

Chengdu Jiaozi Supply Chain Investment Financial Chengdu, Sichuan Chengdu, management 21 2 1 5,600.00 80.36 80.36 4,500.00 1 Services Co., Sichuan and sales of Ltd. goods

Chengdu 22 Financial Holding Wealth Equity Chengdu, Sichuan Chengdu, Equity 2 1 5,250.00 95.21 100 4,998.50 4 Investment Sichuan investment Fund Partnership (Limited

Page 43 (Total 122 pages)

Chengdu Financial Dreamwork Investment Chengdu, Investment 23 2 1 Chengdu, Sichuan 43,000.00 100 100 43,000.00 2 Management Sichuan management Co., Ltd.

− F-46 24 Chengdu Jiaozi 2 1 Chengdu, Sichuan Chengdu, Equity 300.00 100 100 300.00 1 Dongjin Sichuan investment Investment Development Partnership (Limited Partnership)

25 Chengdu 2 1 Chengdu, Sichuan Chengdu, Enterprise 981.80 100 100 28,692.05 4 Jingguang Sichuan management, Enterprise house leasing and Management Co., property Ltd. management

Page 44 (Total 122 pages)

Note: Types of enterprises are classified as: 1. Domestic non-financial subsidiaries, 2. Domestic financial subsidiaries, 3. Overseas subsidiaries, 4. Public institutions and 5. Infrastructure units. Acquisition methods are classified as: 1. Investment, 2. Business combination under the same control, 3. Business combination not under the same control and 4. Others

2. The reasons why the parent company has less than half (including half) of the voting rights of the investee but can exert control over the investee Share- Registered Invested Reasons for No holdin capital amount being included Company Level . g ratio ˄RMB’ ˄RMB’ in the scope of ˄%˅ 0,000˅ 0,000˅ consolidation Chengdu Financial City The parent Construction and company has Development Investment 1 10.00 1,000,000.00 20,000.00 Level 2 actual control Management Center over the (Limited Partnership) investee.

The parent Chengdu Financial City company has 2 Investment Development 46.24 474,859.37 233,644.24 Level 2 actual control Co., Ltd. over the investee. Note: The main decision-making body of Chengdu Financial City Construction and Development Investment Management Center (Limited Partnership) is the Investment Committee. In 2018, the company made all its investment in enterprises. When the investing company has power over the investee, enjoys variable returns through participating in the related activities of the investeed company, and has the ability to use the power over the investeed company to affect the amount of return, control has been formed over the investeed company and the investeed company is included in the scope of company’s consolidation. The main decision-making body of Chengdu Financial City Investment Development Co., Ltd. is the Board of Directors. In 2019, when the Board of Directors and the Management that possess substantial control over the company has control over the investee, enjoys variable returns through participating in the related activities of the investee, and has the ability to use the power over the investee to affect the amount of return, control has been formed over the investee and the investee is included in the scope of company’s consolidation.

3. Significant non-wholly owned subsidiaries (1) Minority shareholders Profit or loss Dividends Minority Shareholding attributable to paid to the shareholders' ratio of the minority minority accumulated No. Company minority shareholders in shareholders equity at the end shareholders the current in the current of the period period period Chengdu Financial City Investment 1 Development Co., 53.76 4,517,197.23 3,418,952,017.71 Ltd.

Page 45 (Total 122 pages)

− F-47 −

Profit or loss Dividends Minority Shareholding attributable to paid to the shareholders' ratio of the minority minority accumulated No. Company minority shareholders in shareholders equity at the end shareholders the current in the current of the period period period Chengdu Financial City Construction and Development 2 Investment 90.00 51,315,762.36 51,240,000.00 1,800,168,128.28 Management Centre (Limited Partnership)

Chengdu Yihang 3 Asset Management 48.97 100,958,650.65 2,383,575,132.08 Co., Ltd. (2) Main financial information A. Closing balance/information of the current period Amount in the current period Amount in the previous period Chengdu Chengdu Financial City Financial City Chengdu Construction Chengdu Construction Chengdu Chengdu Financial and Yihang and Yihang Financial City Item City Development Asset Development Asset Investment Investment Investment Managem Investment Manage Development Developmen Management ent Co., Management ment Co., Ltd. t Co., Ltd. Center Ltd. Center Co., Ltd. (Limited (Limited Partnership) Partnership) Current asset 3,711,570,655.17 2,001,350.09 12,272,018,791.21 3,725,353,869.15 2,965,738.57 4,813,801,852.44

Non-curre nt asset 10,747,083,313.68 2,000,000,000.00 5,870,543.51 9,922,632,632.25 2,000,000,000.00 1,410,023.03

Total assets 14,458,653,968.85 2,002,001,350.09 12,277,889,334.72 13,647,986,501.40 2,002,965,738.57 4,815,211,875.47

Current liability 1,245,706,921.68 1,814,540.89 3,932,949,145.68 2,422,010,772.76 1,814,540.89 338,575,595.62

Non-curre 6,853,289,276.14 3,477,500,000.00 7,058,494,147.29 nt liability

Total liabilities 8,098,996,197.82 1,814,540.89 7,410,449,145.68 9,480,504,920.05 1,814,540.89 338,575,595.62

Operating revenue 35,673,760.04 53,710,691.82 390,195,435.35 89,768,801.97 53,417,191.15 98,512,509.65

Net profit 8,402,524.61 53,324,180.40 206,173,169.51 43,678,585.05 52,032,836.66 22,805,687.48

Total

Comprehe 8,402,524.61 53,324,180.40 206,173,169.51 43,678,585.05 52,032,836.66 22,805,687.48 nsive Income Page 46 (Total 122 pages)

− F-48 −

Amount in the current period Amount in the previous period Chengdu Chengdu Financial City Financial City Chengdu Construction Chengdu Construction Chengdu Chengdu Financial and Yihang and Yihang Financial City Item City Development Asset Development Asset Investment Investment Investment Managem Investment Manage Development Developmen Management ent Co., Management ment Co., Ltd. t Co., Ltd. Center Ltd. Center Co., Ltd. (Limited (Limited Partnership) Partnership)

Cash flow

from -3,001,725,683.5 203,644,074.21 53,343,903.69 528,398,690.75 32,750,212.55 52,052,559.95 operating 4 activities

4. Previous subsidiaries that are no longer included in the scope of consolidation in the current period: None.

5. Subsidiaries that are included in the consolidation scope this period for the first time Year of Net assets at the Total profit of the Name o consolidation end of the period period Chengdu Jiaozi Dongjin Investment Development Partnership (Limited 2020 3,001,125.00 1,125.00 Partnership)

Chengdu Jingguang Enterprise 2020 225,708,064.64 -3,345,467.67 Management Co., Ltd.

6. Business combination not under the same control in the current period˖None.

VIII. Explanation of key items in the consolidated financial statements Unless otherwise specified in the notes below, the closing balance refers to the balance on 30 June, 2020, the opening balance refers to the balance on 31 December, 2019, the amount incurred in the current period refers to the amount incurred in January to June in 2020, and the amount in the previous period refers to the amount incurred in January to June in 2019. The unit is RMB. 1. Cash and cash equivalents Item Closing balance Opening balance Cash on hand 519,326.46 518,258.94 Bank deposits 11,823,360,148.08 15,349,715,292.74 Other cash and cash equivalents 254,716,076.67 557,952,626.18 Total 12,078,595,551.21 15,908,186,177.86 Note: Cash and cash equivalents whose usage at the end of the period is limited. Item Closing balance Opening balance Performance bond 9,702,687.28 4,780,000.00 Time deposit or call deposit for 138,738,002.30 144,448,883.04 guarantee Total 148,440,689.58 149,228,883.04

Page 47 (Total 122 pages)

− F-49 −

2. Financial assets at fair value through the current profits and losses Fair value at the end of the Fair value at the Item period beginning of the period Trading financial assets 551,133,561.87 645,971,175.69 Including: debt instrument investment 519,683,561.87 635,971,175.69 Other 31,450,000.00 10,000,000.00 Total 551,133,561.87 645,971,175.69

3. Accounts receivable (1) Accounts receivable disclosed by categories Closing balance

Category Book balance Provision for bad debts Book value Amount (%) Amount (%) Receivables that are individually significant in amount and provided 206,098,400.00 17.53 206,098,400.00 for bad debt separately

Receivables provided for bad debt according to portfolio of credit risk characteristics

Including: Aging 524,446,080.03 44.60 7,356,027.20 1.40 517,090,052.83 portfolio

Related party portfolio 126,619,613.14 10.77 126,619,613.14

Risk free portfolios of margins, government 250,421,942.33 21.30 250,421,942.33 funds, etc.

Subtotal 901,487,635.50 76.67 7,356,027.20 0.82 894,131,608.30

Receivables that are individually insignificant in amount 68,186,609.34 5.80 943,944.78 1.38 67,242,664.56 but provided for bad debt separately

Total 1,175,772,644.84 100.00 8,299,971.98 0.71 1,167,472,672.86

Continued˖

Page 48 (Total 122 pages)

− F-50 −

Opening balance

Category Book balance Provision for bad debts Book value Amount (%) Amount (%) Receivables that are individually significant in amount and provided 206,098,400.00 23.65 206,098,400.00 for bad debt separately

Receivables provided for bad debt according to portfolio of credit 564,161,719.44 64.73 6,623,275.83 1.17 557,538,443.61 risk characteristics

Including: Aging portfolio 228,673,314.92 26.24 6,623,275.83 2.9 222,050,039.09

Related party portfolio 114,216,404.52 13.11 114,216,404.52

Risk free portfolios of margins, government 221,272,000.00 25.39 221,272,000.00 funds, etc.

Subtotal 564,161,719.44 64.73 6,623,275.83 1.17 557,538,443.61

Receivables that are individually insignificant in amount 101,243,788.00 11.62 943,944.78 0.93 100,299,843.22 but provided for bad debt separately Total 871,503,907.44 100.00 7,567,220.61 0.87 863,936,686.83

(2) Receivables that are individually significant in amount and provided for bad debt separately Closing balance Book balance Provision (%) Reasons for Name of the company for bad making the debts provision Chengdu Recoverable and Architectural Design & Research 206,098,400.00 not provided for Institute bad debts. Total 206,098,400.00

(3) Receivables provided for bad debt according to portfolio of credit risk characteristics

ķ Receivables provided for bad debt according to the aging analysis method

Page 49 (Total 122 pages)

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Closing balance Aging Provision for bad Book balance Provision (%) debts Within 1 year (including 1 year) 505,219,041.41

1-2 years (including 2 years) 7,649,433.35 402,471.67 5.00

2-3 years (including 3 years) 3,138,214.37 607,642.87 20.00

3-4 years (including 4 years) 1,800,377.61 630,132.16 35.00

4-5 years (including 5 years) 1,846,465.59 923,232.80 50.00

Over 5 years 4,792,547.70 4,792,547.70 100.00 Total 524,446,080.03 7,356,027.20 1.40 Continued˖ Opening balance Aging Book balance Provision for bad debts Provision (%) Within 1 year (including 1 210,159,652.86 year) 1-2 years (including 2 8,049,433.34 402,471.67 5.00 years) 2-3 years (including 3 2,774,778.68 554,955.74 20.00 years) 3-4 years (including 4 2,479,375.75 867,781.51 35.00 years) 4-5 years (including 5 824,014.75 412,007.38 50.00 years) Over 5 years 4,386,059.54 4,386,059.53 100.00 Total 228,673,314.92 6,623,275.83 2.90

(4) Bad debts that are provided for in the current period: The amount of bad debts provided for in the current period is RMB 732,751.37. (5) The top 5 debtors based on the closing balance of the accounts receivable: The total amount of top 5 debtors’ accounts receivable based on the closing balance of the debtor is RMB 608,570,804.81, which accounts for 51.76% of the total closing balance of accounts receivable. The total amount of corresponding provision for bad debts at the end of the period is RMB 0.

4. Prepayment (1) Prepayment presented by aging. Closing balance Opening balance Aging Percentage in the Percentage in the Amount Amount total amount (%) total amount (%) Within 1 year 101,549,782.99 74.72 65,949,412.01 73.71 (including 1 year)

1-2 years (including 32,015,639.71 23.56 20,672,062.72 23.11 2 years)

Page 50 (Total 122 pages)

− F-52 −

Closing balance Opening balance Aging Percentage in the Percentage in the Amount Amount total amount (%) total amount (%)

2-3 years (including 693,710.21 0.51 951,848.26 1.06 3 years)

Over 3 years 1,651,404.20 1.22 1,894,959.70 2.12 Total 135,910,537.11 100 89,468,282.69 100 (2) The top 5 prepayments based on the closing balance: The total amount of top 5 prepayments based on the closing balance of suppliers is RMB 119,656,066.16, which accounts for 88.04% of the total closing balance of prepayments.

5. Other receivables Item Closing balance Opening balance Interests receivable 12,189,681.09 21,849,000.43 Dividends receivable 8,520.00 8,520.00 Other receivables 4,845,354,006.64 5,838,179,496.51 Total 4,857,552,207.73 5,860,037,016.94 (1) Interests receivable Item Closing balance Opening balance

Interests of loan by mandate 2,839,846.54

Other 12,189,681.09 19,009,153.89

Total 12,189,681.09 21,849,000.43 Note: Interest Receivable-Others include: ķThe amount of interest receivables arising from the exchange rate conversion of the Group’s Headquarters hedging instruments in Shanghai Pudong Development Bank and Industrial and Commercial Bank of China is RMB 9,442,600. ĸThe remaining interest receivables are mainly the interests on the receivables of Da Yi Financial Holding Real Estate Co., Ltd. (2) Other receivables disclosed by categories Closing balance Category Book balance Provision for bad debts Book value Amount (%) Amount (%) Receivables that are individually significant in amount 2,260,865,104.51 42.19 2,260,865,104.51 and provided for bad debt separately

Receivables provided for bad debt according to portfolio of credit risk characteristics

Including: Aging portfolio 621,001,794.78 11.59 1,956,399.30 0.32 619,045,395.48

Page 51 (Total 122 pages)

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Closing balance Category Book balance Provision for bad debts Book value Amount (%) Amount (%) Related party portfolio 136,300,000.00 2.54 136,300,000.00 Risk free portfolio of margins, government 160,320,952.24 2.99 160,320,952.24 funds, etc.

Subtotal 917,622,747.02 17.12 1,956,399.30 0.22 915,666,347.72

Receivables that are individually 2,180,683,543.97 40.69 511,860,989.56 23.47 1,668,822,554.41 insignificant in amount but provided for bad debt separately Total 5,359,171,395.50 100 513,817,388.86 9.62 4,845,354,006.64 Continued˖ Opening balance Category Book balance Provision for bad debts Book value Amount (%) Amount (%) Receivables that are individually significant in amount 2,692,773,325.68 45.51 2,692,773,325.68 and provided for bad debt separately

Receivables provided for bad debt according to portfolio of credit 0.00 risk characteristics

Including: Aging portfolio 349,843,394.73 5.91 2,937,327.20 0.84 346,906,067.53

Related party portfolio 650,667,861.41 11 650,667,861.41

Risk free portfolio of 111,536,261.47 1.89 111,536,261.47 margins, government funds, etc.

Subtotal 1,112,047,517.61 18.8 2,937,327.20 0.26 1,109,110,190.41

Receivables that are individually 2,111,841,017.72 35.69 75,545,037.30 3.58 2,036,295,980.42 insignificant in amount but provided for bad debt separately Total 5,916,661,861.01 100.00 78,482,364.50 3.84 5,838,179,496.51

Page 52 (Total 122 pages)

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ķ Receivables that are individually significant in amount and provided for bad debt separately at the end of the period Closing balance Provision Reason for Company Provision Book balance for bad making the (%) debts provision There is a Chengdu Xie Cheng Asset guarantee 906,777,528.97 Management Co., Ltd. for collection.

There is a Chengdu Xin Tian Yi Investment 1,354,087,575.54 guarantee Co., Ltd. for collection. Total 2,260,865,104.51

ĸ Other receivables whose provisions for bad debts are based on the aging analysis method in the portfolio. Closing balance Aging Provision for bad Book balance Provision (%) debts Within 1 year (including 611,281,922.79 1 year) 1-2 years (including 2 4,987,937.60 249,396.88 5 years) 2-3 years (including 2 2,477,920.35 495,584.07 20 years) 3-4 years (including 3 62,148.71 21,752.05 35 years) 4-5 years (including 4 2,004,398.06 1,002,199.03 50 years) Over 5 years 187,467.27 187,467.27 100

Total 621,001,794.78 1,956,399.30 1.01

Opening balance Aging Provision for Book balance Provision (%) bad debts Within 1 year 337,041,526.62 (including 1 year) 1-2 years (including 2 8,025,687.94 401,284.40 5.00 years) 2-3 years (including 2 1,486,265.00 297,253.00 20.00 years) 3-4 years (including 3 74,049.35 25,917.27 35.00 years) 4-5 years (including 4 2,005,986.58 1,002,993.29 50.00 years) Over 5 years 1,209,879.24 1,209,879.24 100.00 Total 349,843,394.73 2,937,327.20 0.84

Page 53 (Total 122 pages)

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Please refer to note (IV) 5 for the basis of determining the portfolio. (3) Bad debts provided for, recovered or reversed in the current period: The amount of bad debts provided for in the current period is RMB -980,927.90. There are no bad debts recovered or reversed in the current period. (4) The top 5 debtors based on based on the closing balance of the other receivables Percentage in the Closing closing balance of Nature of balance of Company Closing balance Aging the bad fund the total debt other provisions receivables (%) Less than 1 Chengdu Xin Tian Yi Related year, 1-2 1,354,087,575.54 27.60 Investment Co., Ltd. transactions years, over 5 years Chengdu Xie Cheng Asset Management Related 906,777,528.97 1-4 years 18.48 Co., Ltd. transactions

Pujiang Financial Advance More than 3 Holding Real Estate payment 168,645,896.15 3.44 years Co., Ltd.

Chengdu Checheng Debt Less than 1 150,000,000.00 3.06 Real Estate Co., Ltd. payment year

Da Yi Financial Debt Less than 1 Holding Real Estate 153,839,735.37 3.14 payment year Co., Ltd. Total 2,733,350,736.03 55.72

(5) Other receivables that are individually insignificant but are provided for bad debts separately at the end of the period Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Chengdu Dinghong Xintai Asset Management Co., Ltd. 70,000,000.00 No recovery risk

Sichuan Xing Kong Network Loss is expected to Co., Ltd. 29,847,690.69 1,492,384.53 5.00 occur

Sichuan Tanshi Guanfucai Catering Development Co., Loss is expected to 29,371,956.63 1,468,597.83 5.00 Ltd. occur

Sichuan Changhe Technology Loss is expected to Co., Ltd. 28,608,079.30 1,430,403.97 5.00 occur

Page 54 (Total 122 pages)

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Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Lezhi Panda Machinery Loss is expected to Manufacturing Co., Ltd. 26,910,000.00 1,345,500.00 5.00 occur

Sichuan Minzheng Construction Co., Ltd. 25,605,696.78 No recovery risk

Chengdu Jiakang Investment Development Co., Ltd. 25,000,000.00 No recovery risk

Chengdu Xiaochu Property Co., Ltd. 22,000,000.00 No recovery risk

Chengdu Tanyutou Investment Expected to be 21,333,127.76 20,503,127.76 96.11 Co., Ltd. irrecoverable

Chengdu Linhai Electronics Loss is expected to Co., Ltd. 20,550,000.00 1,027,500.00 5.00 occur

Da Yi Financial Holding Real Estate Co., Ltd. 17,539,735.37 17,539,735.37 100.00 Irrecoverable

Sichuan Taisenhao Furniture Loss is expected to Manufacturing Co., Ltd. 14,898,000.00 744,900.00 5.00 occur

Execution funds receivable with Chengdu Shifu Real Estate security and not 10,079,899.90 Co., Ltd. provided for bad debts

Direct rental Sichuan Mianzhu City project, entrusted Taizhong Machinery 10,000,000.00 2,000,000.00 20.00 purchase of leased Construction Co., Ltd. assets

No recovery risk Sichuan Juzhan Construction 7,800,000.00 Co., Ltd.

Page 55 (Total 122 pages)

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Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Direct rental project without input tax invoice, pending

Zigong City Huaran Natural

Gas Co., Ltd. 6,961,603.63

No recovery risk Staff LI Bo 6,457,125.27

The back-office

center handles the Housing maintenance and 6,260,588.03 certificate and pays renovation unds the housing maintenance fund, no drawing

Chengdu Kaimo Steel Trade Loss is expected to 4,484,936.01 896,987.20 20.00 Co., Ltd. occur

Sichuan Zhongsheng Zhengyin Tourism Investment Expected to be 3,500,000.00 3,500,000.00 100.00 Management Co., Ltd. irrecoverable

Sichuan Lianfa Medical & Health Products Co., Ltd. - Expected to be 2,930,000.00 2,930,000.00 100.00 cashing bonds irrecoverable

Sichuan Kangda Decoration Long aging and Co., Ltd. 2,888,921.00 2,888,921.00 100.00 cannot be recovered

Municipal Commercial Expected to be 2,000,000.00 2,000,000.00 100.00 Network Construction Office irrecoverable

Expected to be Chengdu Textile Company 1,900,000.00 1,900,000.00 100.00 irrecoverable

Chengdu Shiyan Shopping 1,800,000.00 1,800,000.00 100.00 Expected to be Mall irrecoverable

Xinjin County Transportation Direct rental project 1,608,669.11 Construction Investment Co., without input tax Ltd. invoice, pending

Page 56 (Total 122 pages)

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Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions

According to the lawyer's confirmation letter, ZENG Cheng 1,295,419.61 1,295,419.61 100.00 the uncollected part of the stolen escort money shall be withdrawn in full

Expected to be New Age Square 1,200,000.00 1,200,000.00 100.00 irrecoverable

Expected to be Commercial Group Company 1,200,000.00 1,200,000.00 100.00 irrecoverable

Expected to be

recoverable and not ZENG Shu (Advanced 1,023,117.86 provided for bad transfer fee) debts

Jiangsu Jinghua Industrial Co., Long aging and Ltd. 924,277.60 924,277.60 100.00 cannot be recovered

Expected to be recoverable and not Sichuan Tianlun Tanxianglou 856,967.50 provided for bad Food Co., Ltd. debts

No recovery risk Staff LEI Tong 603,092.87

Expected to be Chengdu Clothes Building 600,000.00 600,000.00 100.00 irrecoverable

Long aging and Baoding Taihang Equipment 583,900.00 583,900.00 100.00 cannot be recovered Factory

Direct rental project Chongqing Liangjiang 549,630.60 without input tax International Rehabilitation invoice, pending Hospital Co., Ltd.

No recovery risk Staff DENG Yang 544,405.07

Overdue debts that Chengdu High-tech Zone are not expected to Comprehensive Management 503,396.66 503,396.66 100.00 be recoverable Office

Expected to be Chengdu Shandi Property 500,000.00 500,000.00 100.00 irrecoverable Company

Page 57 (Total 122 pages)

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Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Expected to be Wenhua Clock Supply Station 500,000.00 500,000.00 100.00 irrecoverable

Expected to be Sichuan Tonglian Automobile 488,240.00 488,240.00 100.00 irrecoverable Co., Ltd.

Sichuan Kexin Zhihua Expected to be 480,000.00 480,000.00 100.00 Industrial Co., Ltd. irrecoverable

Expected to be ZENG Gang (Advanced recoverable and not 479,410.16 transfer fee) provided for bad debts

No recovery risk Staff TANG Shitao 460,425.37

Other sporadic current Expected to be accounts 1 3,850,252.77 3,801,745.77 98.74 irrecoverable

Expected to be Other sporadic accounts 2 1,934,978.45 recoverable

Compensation funds- other Note 1: 1,761,769,999.97 436,315,952.26 24.77 companies

Total 2,180,683,543.97 511,860,989.56 23.47 Note 1: Please refer to the note 33 “Reserves for insurance contract” for the policy of providing for bad debts of the compensation funds.

Goods in stock 1,904,727.07 364,763.20 1,539,963.87 3,351,885.33 364,763.20 2,987,122.13

Developme nt costs 3,582,145,833.61 3,582,145,833.61 3,342,343,638.94 3,342,343,638.94

Developme nt goods 545,549,657.82 545,549,657.82 508,476,271.63 508,476,271.63

Page 58 (Total 122 pages)

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Closing balance Opening balance Item Provision Provision Book balance for Book value Book balance for Book value impairment impairment Packaging materials, low consumptio 17,661,854.62 17,661,854.62 17,626,082.57 17,626,082.57 n goods, etc.

Others 12,431,766.55 83,589.00 12,348,177.55 11,624,714.91 83,589.00 11,541,125.91

Total 4,161,965,699.60 668,522.74 4,161,297,176.86 3,886,130,666.02 668,522.74 3,885,462,143.28 The details are as follows: A. Products under development Estimated Starting Estimated total Opening Closing Provi Project completion time investment balance balance sion time Financial Back Office July,2012 1,838,000,000.00 540,595,780.59 547,479,492.60 Service Center

Jintang December, CBD 2021 1,238,000,000.00 207,760,153.39 207,764,557.63 2012 Project

Pengzhou February, 958,000,000.00 171,179,579.95 171,574,742.12 CBD 2014

Twin March,2012 2,072,000,000.00 1,649,650,156.43 1,705,707,601.00 Tower Project

Exchange December, December, 1,220,000,000.00 497,027,755.39 535,998,015.44 Building 2018 2020

Land B08 March,2018 March,2021 1,750,049,000.00 276,130,213.19 374,957,837.83

Western Hydrogen December, Energy July,2023 2,299,822,000.00 38,663,586.99 2020 Industrial Park Total 3,342,343,638.94 3,582,145,833.61

B. Finished product Completio Opening Closing Provisi Project Increase Decrease n time balance balance on Jinkong December, 132,172,856.35 31,965,133.16 164,137,989.51 Times 2014 Page 59 (Total 122 pages)

− F-61 −

Completio Opening Closing Provisi Project Increase Decrease n time balance balance on Square (CSRC Building) Building 3 of Financial Back Office June, 2018 90,636,249.69 5,780,437.70 96,416,687.39 Service Center

Building 4 of Financial June, 2018 Back Office Service Center

Basement of office 2,145,972.76 2,145,972.76 Service Center

Jintang 42,528,982.17 42,528,982.17 9-11# Building

Xinjin CBD December, 141,942,331.30 128,489.00 141,813,842.30 2012 Commercia l housing 273,239.30 273,239.30 renovation

Rong Jin December, 100,922,612.82 543,695.67 100,378,917.15 Cheng 2013 Total 508,476,271.63 39,891,543.62 2,818,157.43 545,549,657.82

(2) Provision for impairment of inventories Decrease during Categories of Opening Increase during the period Closing the period inventories balance balance Provision Other Reverse Resell Other Raw 220,170.54 220,170.54 materials Goods in 364,763.20 364,763.20 stock Others 83,589.00 83,589.00 Total 668,522.74 668,522.74 (3) Statement of inventories’ balance at the end of the period which contains the capitalized amount of borrowing costs In the balance of the inventories at the end of the period, the total amount of capitalized borrowing costs is RMB 1,578,997,435.09, and the Group uses the real interest rate of the financing cost as the capitalization rate of the borrowing.

7. Non-current assets due within 1 year

Page 60 (Total 122 pages)

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Items Closing balance Opening balance Note Long-term receivables due within one Please refer to 1,514,373,875.08 1,174,179,870.56 year note˄XII˅12 Other non-current assets due within one year Total 1,514,373,875.08 1,174,179,870.56

8. Other current assets Items Closing balance Opening balance Debt investment (Purchase of non-performing asset) 8,901,285,999.45 6,145,740,965.46

Entrusted loans 252,065,689.44 252,065,689.44

VAT 60,641,037.67 60,082,290.13

Prepaid income tax 8,312,456.02 10,816,810.97

Prepaid additional tax 436,338.88 454,706.36

Prepaid rentals 87,384.33 155,960.93

Less: Provision for losses 46,769,730.00 58,937,389.00

Total 9,176,059,175.79 6,410,379,034.29

9. Loans and advances (1) Loans and advances by individuals and businesses Items Closing balance Opening balance

Personal loans and advances 345,199,866.74 340,120,104.92

—Housing mortgage 286,610,000.00 271,003,632.15

—Other 58,589,866.74 69,116,472.77

Corporate loans and advances 206,884,066.50 159,052,339.32

—Loans 206,884,066.50 159,052,339.32

Total loans and advances 552,083,933.24 499,172,444.24

Less: Provision for losses 104,607,380.81 99,205,602.51

Including: Specific provision 13,268,073.23 13,505,869.02

Combined provision 91,339,307.58 85,699,733.49 Book value of loans and 447,476,552.43 399,966,841.73 advances

(2) Loans and advances by industries Percentage Percentage Industries Closing balance Opening balance (%) (%)

Page 61 (Total 122 pages)

− F-63 −

Percentage Percentage Industries Closing balance Opening balance (%) (%)

Agriculture, animal 11,730,000.00 2.12 12,976,636.36 2.60 husbandry and fishery

Extractive industry 15,530,000.00 2.81 15,435,000.00 3.09

Real estate industry 76,750,000.00 13.90 74,397,998.22 14.90

Construction industry 33,060,000.00 5.99 27,596,711.90 5.53

Finance and Insurance 110,000.00 0.02 0.00 industry

Other industries 414,903,933.24 75.15 368,766,097.76 73.88

Total loans and advances 552,083,933.24 100.00 499,172,444.24 100.00

Less: Provisions for loan 104,607,380.81 99,205,602.51 losses

Including: Specific 13,268,073.23 13,505,869.02 provision

Combined provision 91,339,307.58 85,699,733.49

Book value of loans and 447,476,552.43 399,966,841.73 advances

(3) Loans and advances by regions Regions Closing balance Percentage (%) Opening balance Percentage (%) South China North China Other regions 552,083,933.24 100.00 499,172,444.24 100.00

Total loans and 552,083,933.24 100.00 499,172,444.24 100.00 advances

Less: Provisions for 104,607,380.81 99,205,602.51 loan losses

Including: Specific 13,268,073.23 13,505,869.02 provision

91,339,307.58 85,699,733.49 Combined provision Book value of loans 447,476,552.43 399,966,841.73 and advances (4) Loans and advances by ways of guarantees Items Closing balance Opening balance

Credit loans 2,464,621.99 835,062.81

Page 62 (Total 122 pages)

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Items Closing balance Opening balance

Guarantee loans 87,249,470.06 91,572,944.05

Collateral loans 462,369,841.19 406,764,437.38

Including: Mortgage loans 441,016,633.53 395,311,229.72

Pledged loans 21,353,207.66 11,453,207.66

Total loans and advances 552,083,933.24 499,172,444.24

Less: Provisions for loan 104,607,380.81 99,205,602.51 losses

Including: Specific provision 13,268,073.23 13,505,869.02

Combined provision 91,339,307.58 85,699,733.49

Book value of loans and 447,476,552.43 399,966,841.73 advances (5) Provisions for loan losses Amount of the current period Amount of the previous period Items Specific Combined Specific Combined

Opening balance 13,505,869.02 85,699,733.49 453,207.66 91,209,287.49

The amount of provision made 5,639,574.09 13,052,661.36 15,863,052.16 in this period

The amount reversed this 56,512.73 period

The amount written off this 21,372,606.16 period

The amount transferred in this 181,283.06 period

-Reversal due to recovery of the original resale loans and advances

-Reversal due to rising discounted value of loans and advances

-Reversal due to other reasons

Page 63 (Total 122 pages)

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Amount of the current period Amount of the previous period Items Specific Combined Specific Combined

Closing balance 13,268,073.23 91,339,307.58 13,505,869.02 85,699,733.49

Continued˖ Closing balance Items Book balance Provision Book value Available-for-sale debt instrument Available-for-sale equity instrument 1,596,119,647.50 36,996,965.24 1,559,122,682.26 Including: Equity instrument at fair 295,022,973.49 295,022,973.49 value Equity instrument at cost 1,301,096,674.01 36,996,965.24 1,264,099,708.77 Total 1,596,119,647.50 36,996,965.24 1,559,122,682.26 (2) Available-for-sale financial assets measured at fair value at the end of the period Categories Available-for-sale Available-for-sale Total equity instrument debt instrument Cost of equity instruments / amortized cost of debt 172,886,680.39 172,886,680.39 instruments

Fair value 295,471,793.49 295,471,793.49

Fair value changes that are 122,585,113.10 122,585,113.10 accumulated in the other comprehensive income Accrued impairment (3) Available-for-sale financial assets measured at cost at the end of the period For equity investments are not quoted in an active market and whose fair value cannot be reliably measured, the Group shall measure them at the costs and has no disposal plan of the relevant equity investments in the foreseeable future. As at the end of the reporting period, the equity instruments measured at cost are as follows.

Shareh Book balance olding Invested Company Opening Closing ratio Increase Decrease balance balance (%) Page 64 (Total 122 pages)

− F-66 −

Shareh Book balance olding Invested Company Opening Closing ratio Increase Decrease balance balance (%)

Chengdu Jiaozi Juntong

Jnvestment Development 500,000,000.00 500,000,000.00 50 Partnership (Limited

Partnership)

Chengdu Jiaozi Dongfang

Jnvestment Development 500,000,000.00 500,000,000.00 50

Partnership (Limited Partnership)

Chengdu Development Fund

(Phase I) Partnership (Limited 334,333,333.33 334,333,333.33 1.11

Partnership)

Sichuan Province Zipingpu 330,000,000.00 330,000,000.00 15 Development Co., Ltd.

Chengdu Financing Re-guarantee 250,000,000.00 250,000,000.00 16.67 Co., Ltd.

Tianfu (Sichuan) Credit 200,000,000.00 200,000,000.00 5 Enhancement Co., Ltd.

Vanho Securities Co., Ltd. (Note 1) 171,025,975.21 171,025,975.21 3.22

Chengdu Jinchangying Airport

New Town Construction 151,000,000.00 151,000,000.00 60.3 Investment Partnership (Limited

Partnership)

Chengdu Ziguang Integrated

Circuit Industry Equity Investment 1,000,000.00 126,875,000.00 127,875,000.00 14.37 Fund (Chengdu) Partnership

(Limited Partnership)

Page 65 (Total 122 pages)

− F-67 −

Shareh Book balance olding Invested Company Opening Closing ratio Increase Decrease balance balance (%)

Sichuan Zhongsheng Zhengyin

Tourism Investment Management 118,767,720.27 118,767,720.27 49.4

Co., Ltd.

Sichuan Provincial Credit 100,000,000.00 100,000,000.00 5 Re-guarantee Co., Ltd.

Chengdu Trust Investment Co., 31,396,965.24 31,396,965.24 62.46 Ltd.

Chengdu Hutong Panji Yinke

Equity Investment Fund 4,900,000.00 4,900,000.00 10

Partnership (Limited Partnership)

Chengdu Gongtou Hongtu 700,000.00 700,000.00 35 Innovation Investment Co., Ltd.

Others 147,766,375.44 112,329,429.96 260,095,805.40

Subtotal 1,301,096,674.01 1,778,998,125.44 3,080,094,799.45

˄Continued˅

Provision Current Invested Company Opening Closing cash Increase Decrease balance balance dividend Chengdu Trust Investment 31,396,965.24 31,396,965.24 Co., Ltd. Chengdu Gongtou Hongtu Innovation Investment Co., 700,000.00 700,000.00 Ltd. Chengdu Hutong Panji Yinke Equity Investment Fund 4,900,000.00 4,900,000.00 Partnership (Limited Partnership) Total 36,996,965.24 36,996,965.24

Page 66 (Total 122 pages)

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Note 1: According to the resolution of the 6th extraordinary general meeting of shareholders of Vanho Securities Co., Ltd. (hereinafter referred to as " Vanho securities") in 2019, the Group no longer has no member in the board of directors of Vanho securities, so the investment in Vanho securities is transferred from the "long-term equity investment" account to this account in the current period.

(4) Changes in the impairment of available-for-sale financial assets during the reporting period Increase Decrease Including: Including: reversed due Opening transferred to increase in Closing Categories balance Amount from other Amount fair value balance comprehensive after the income reporting period Available-for-sale 36,996,965.24 36,996,965.24 equity instrument Total 36,996,965.24 36,996,965.24

11. Held-to-maturity investment Closing balance Opening balance Provision Provision Items for Book balance for decrease Book value Book balance Book value decrease in value in value Treasury 255,915.00 255,915.00 255,915.00 255,915.00 bills Total 255,915.00 255,915.00 255,915.00 255,915.00

12. Long-term receivables Closing balance Opening balance Range Categori of Book Book Book Book discou es Provision Provision nt balance value balance balance rates Finance 3,446,155,289.99 77,449,002.31 3,368,706,287.68 2,135,823,529.79 77,508,129.75 2,058,315,400.04 8.5-9.0 lease

Includin g˖ Long-ter 1,931,781,414.91 77,449,002.31 1,854,332,412.60 961,643,659.23 77,508,129.75 884,135,529.48 m receivab les

Non-cur rent assets 1,514,373,875.08 1,514,373,875.08 1,174,179,870.56 1,174,179,870.56 due within one year

Page 67 (Total 122 pages)

− F-69 −

Closing balance Opening balance Range Categori of Book Book Book Book discou es Provision Provision nt balance value balance balance rates Includin g˖ Unrealiz ed 98,920,393.80 98,920,393.80 110,319,081.01 110,319,081.01 financin g income Total 1,931,781,414.91 77,449,002.31 1,854,332,412.60 961,643,659.23 77,508,129.75 884,135,529.48 8.5-9.0 Note: The Company records the present value of the minimum lease receivables due within one year in the account of “non-current assets due within one year” and records the present value of the minimum lease receivables more than one year in the account of “long-term receivables”.

Page 68 (Total 122 pages)

− F-70 −

13. Long-term equity investment Closing balance Opening balance Invested company Book balance Provision Book value Book balance Provision Book value

1. Joint ventures

Chengdu Weixin Jiaozi Digital Technology Co., Ltd. 3,001,943.96 3,001,943.96 3,001,943.96 3,001,943.96

Subtotal 3,001,943.96 3,001,943.96 3,001,943.96 3,001,943.96

2. Associates

Chengdu Tianfu Tong Financial Services Co., Ltd. 144,181,309.64 144,181,309.64 152,607,144.94 152,607,144.94

− F-71 Jintai Insurance Co., Ltd. 195,858,897.76 195,858,897.76 193,311,161.99 193,311,161.99

Vanho Securities Co., Ltd. 171,025,975.21 171,025,975.21

Chengdu Rural Commercial Bank Co., Ltd. 4,243,020,047.54 4,243,020,047.54 3,975,193,319.04 3,975,193,319.04

Bank of Chengdu 6,922,822,604.12 6,922,822,604.12 6,416,913,061.52 6,416,913,061.52 Chengdu Institute of New Economic Development Co., 2,564,897.65 2,564,897.65 3,126,247.79 3,126,247.79 Ltd. Chengdu Hi-tech Sanyi Yimin Comprehensive Outpatient 1,449,627.20 1,449,627.20 2,037,931.02 2,037,931.02 Department Co., Ltd. Chengdu Yihu Santai Financial Service Co., Ltd. 5,855,604.01 5,855,604.01 7,219,179.17 7,219,179.17

Chengdu Financial Holding Tongju Investment Co., Ltd. 36,710,410.48 36,710,410.48 37,954,657.88 37,954,657.88 Guoxin Ronghui Equity Investment Fund Management 7,829,771.99 7,829,771.99 5,539,297.19 5,539,297.19 Co., Ltd. Chengdu Rural Property Rights Collection and Storage 8,000,000.00 8,000,000.00 15,791,638.59 15,791,638.59 Co., Ltd. Chengdu Yinke Venture Capital Co., Ltd. 145,813,515.63 145,813,515.63 145,622,597.93 145,622,597.93

Page 69 (Total 122 pages)

Closing balance Opening balance Invested company Book balance Provision Book value Book balance Provision Book value

Sichuan Xinyongtong Digital Technology Co., Ltd. 25,091,420.93 25,091,420.93 25,040,480.61 25,040,480.61

Chengdu Digital City Operation Management Co., Ltd. 4,320,524.91 4,320,524.91 4,082,545.78 4,082,545.78 Chengdu Financial Holding Human Resource 1,439,467.50 1,439,467.50 1,439,467.50 1,439,467.50 Management Co., Ltd. Chengdu Financial Holding Development Equity 6,814,794.32 6,814,794.32 6,945,933.18 6,945,933.18 Investment Fund Management Co., Ltd. Chengdu Yuehua Land Consolidation Co., Ltd. 4,905,184.26 4,905,184.26 Chengdu Chenghua Ronghua Land Consolidation Co., 4,999,756.06 4,999,756.06

− F-72 Ltd. Chengdu Beicheng Construction Development Co., Ltd. 4,978,101.50 4,978,101.50 4,978,101.50 4,978,101.50 Sichuan Jinhong Xinzhan Equity Investment Fund 1,404,146.07 1,404,146.07 1,194,287.81 1,194,287.81 Management Co., Ltd. Chengdu Financial Holding Busi City Development 121,094.95 121,094.95 164,434.51 164,434.51 Equity Investment Fund Management Co., Ltd. Chengdu Financial Holding Culture & Tourism Equity 5,020,747.01 5,020,747.01 5,007,305.05 5,007,305.05 Investment Fund Management Co., Ltd. Chengdu Rong’ou Railway Port Equity Investment Fund 900,298.16 900,298.16 908,732.40 908,732.40 Management Co., Ltd. Jishi Equity Investment Fund Management (Chengdu) 5,129,509.82 5,129,509.82 5,868,722.42 5,868,722.42 Co., Ltd. Sichuan Financial Assets Exchange Co., Ltd. 27,020,550.43 27,020,550.43 31,911,365.18 31,911,365.18

Chengdu Financial Assets Exchange Co., Ltd. 14,240,639.14 14,240,639.14 14,240,639.14 14,240,639.14

Chengdu Depository and Clearing Co., Ltd. 9,548,162.28 9,548,162.28 9,548,162.28 9,548,162.28

Southwest United Equity Exchange Co., Ltd. 35,206,260.00 35,206,260.00 46,166,260.00 46,166,260.00

Page 70 (Total 122 pages)

Closing balance Opening balance Invested company Book balance Provision Book value Book balance Provision Book value

Tianfu (Sichuan) United Equity Exchange Co., Ltd. 16,110,174.28 16,110,174.28 16,110,174.28 16,110,174.28

Sichuan United Environment Exchange Co., Ltd. 21,247,503.56 21,247,503.56 21,247,503.56 21,247,503.56

Chengdu Zhiyirong Financial Technology Co., Ltd. 4,117,582.27 4,117,582.27 4,117,582.27 4,117,582.27 Sichuan Zhongsheng Zhengyin Tourism Investment 118,767,720.27 118,767,720.27 Management Co., Ltd. Subtotal 11,896,817,663.15 11,896,817,663.15 11,453,986,570.33 11,453,986,570.33

Total 11,899,819,607.11 11,899,819,607.11 11,456,988,514.29 11,456,988,514.29 − F-73

(Continued) Increase or decrease during the period Investment Other profit and loss Declared cash Invested company Increase in Decrease in comprehensiv Changes in other Provis recognized dividends or Others investment investment e income equity ions under the profits adjustments equity method 1.Joint ventures Chengdu Weixin Jiaozi Digital

Technology Co., Ltd. Subtotal 2.Associates Chengdu Tianfu Tong Financial -8,425,835.30 Services Co., Ltd. Jintai Insurance Co., Ltd. 2,547,735.77

Page 71 (Total 122 pages)

Increase or decrease during the period Investment Other profit and loss Declared cash Invested company Increase in Decrease in comprehensiv Changes in other Provis recognized dividends or Others investment investment e income equity ions under the profits adjustments equity method Vanho Securities Co., Ltd. 59,546,224.80 61,560.01 -104,551,393.04 -6,989,917.38 Chengdu Rural Commercial Bank 267,826,728.50 Co., Ltd. Bank of Chengdu 505,909,542.60 Chengdu Institution of New -561,350.14 Economic Development Co., Ltd. Chengdu Hi-tech SanYi Yimin − F-74 Comprehensive Outpatient -588,303.82 Department Co., Ltd. Chengdu Yihu Santai Financial 1,036,424.84 2,400,000.00 Service Co., Ltd. Chengdu Financial Holding Tongju -1,244,247.40 Investment Co., Ltd. Guoxin Ronghui Equity Investment 2,290,474.80 Fund Management Co., Ltd. Chengdu Rural Property Rights 4,000,000.00 -36,757.64 -11,754,880.95 Collection and Storage Co., Ltd. Chengdu Yinke Venture Capital 190,917.70 Co., Ltd. Sichuan Xinyongtong Digital 50,940.32 Technology Co., Ltd. Chengdu Digital City Operation 237,979.13 Management Co., Ltd. Chengdu Financial Holding Human - Resource Management Co., Ltd. Chengdu Financial Holding -131,138.86 - Development Equity Investment

Page 72 (Total 122 pages)

Development Co., Ltd.

− F-75 Sichuan Jinhong Xinzhan Equity Investment Fund Management Co., 209,858.26 Ltd. Chengdu Financial Holding Busi City Development Equity -43,339.56 Investment Fund Management Co., Ltd. Chengdu Financial Holding Culture & Tourism Equity 13,441.96 Investment Fund Management Co., Ltd. Chengdu Rong’ou Railway Port Equity Investment Fund -1,192.05 7,242.19 Management Co., Ltd. Jishi Equity Investment Fund -739,212.60 Management (Chengdu) Co., Ltd. Sichuan Financial Assets Exchange 4,890,814.75 Co., Ltd. Chengdu Financial Assets

Exchange Co., Ltd.

Page 73 (Total 122 pages)

Co., Ltd. Southwest United Equity Exchange 10,960,000.00 Co., Ltd. Tianfu (Sichuan) United Equity

Exchange Co., Ltd. Sichuan United Environment

Exchange Co., Ltd.

− F-76 Chengdu Zhiyirong Financial

Technology Co., Ltd. Sichuan Zhongsheng Zhengyin Tourism Investment Management -118,767,720.27 Co., Ltd. Subtotal 4,000,000.00 69,346,224.80 768,542,666.51 61,560.01 -104,551,393.04 18,258,056.94 -137,617,458.92 Total 4,000,000.00 69,346,224.80 768,542,666.51 61,560.01 -104,551,393.04 18,258,056.94 -137,617,458.92

Page 74 (Total 122 pages)

14. Investment property Housings and Land use rights Total Items buildings

I. Original book value

1.Opening balance 1,175,518,266.34 20,901,059.29 1,196,419,325.63

2.Increase 242,580,772.77 242,580,772.77

˄1˅Purchase ˄2˅Transferred from inventories/ fixed assets/ construction in progress

˄3˅Business combination 242,580,772.77 - 242,580,772.77

3.Decrease

˄1˅Disposal

˄2˅Other transferred out

4.Closing balance 1,418,099,039.11 20,901,059.29 1,439,000,098.40

II. Accumulated depreciation and

amortization

1.Opening balance 221,780,571.31 6,117,627.51 227,898,198.82

2.Increase 22,613,829.68 22,613,829.68

˄1˅Depreciation / Amortization 18,973,577.77 18,973,577.77

˄2˅Business combination 3,640,251.91 3,640,251.91

3.Decrease

˄1˅Disposal

˄2˅Other transferred out

4.Closing balance 244,394,400.99 6,117,627.51 250,512,028.50

III. Impairment loss

1.Opening balance

2. Increase

˄1˅Provision

3.Decrease

˄1˅Disposal

˄2˅Other transferred out

4.Closing balance

IV. Book value

Page 75 (Total 122 pages)

− F-77 −

Housings and Land use rights Total Items buildings

1ˊAt the beginning of the period 953,737,695.03 14,783,431.78 968,521,126.81

2ˊAt the end of the period 1,173,704,638.12 14,783,431.78 1,188,488,069.90

Note: Investment properties whose certificate of title has not been issued Reasons for not obtaining the Items Book value certificate of title The certificate of property Urban Smart Governance Center 70,589,290.79 rights can be issued after the final accounts are processed.

21F, Block B, Youyi Plaza 4,105,662.40 Free transfer, no certificate of title.

Zhougongshan Villa in Ya'an 1,455,150.00 Free transfer, no certificate of title.

No. 2-54, Tongyou Road 25.00 Free transfer, no certificate of title.

2-8 , No. 2 Caotang North Road 7.00 Free transfer, no certificate of title.

10.00 Free transfer, no certificate of No. 45-65 Jinghua South Road title.

No.38, Jule Road Crossing, West First 11,782,900.00 In progress Section of the First Ring Road

No.70, Commercial Street, Qingyang 12,151,300.00 In progress District

No. 2, Zhanqi East Road, Qingyang 11,020,800.00 In progress District

No.38 Huaishu Street, Qingyang District 18,179,100.00 In progress

No.1-2 , Unit 1, Business Room Unit 1, Building 4, Nanyuan Community, 7,363,100.00 In progress Yongchuan Road, South Section 4, Wuhou First Ring Road

No. 69, 71, 73, Jiulidi South Road, Jinniu District 8,121,900.00 In progress

1-33 Shuyuan West Street, Jinjiang 41,598,700.00 In progress District (Yatai Building)

No. 68 Zouma Street, Jinjiang District, 5,682,500.00 In progress Chengdu

Page 76 (Total 122 pages)

− F-78 −

Reasons for not obtaining the Items Book value certificate of title No. 118-124 Xiangheli, Chenghua District 8,614,200.00 In progress

No. 75-77, No. 79-81, 1F, Shuanglin Zhongheng Road, Chenghua District 3,026,600.00 In progress

1-3, Building A, Jixiang Building, No. 47 18,292,400.00 In progress Shangnan Street, Jinjiang District

No. 234 Fuqin West Road, Jinniu District 20,135,500.00 In progress

The debt dispute between the housing developers and the Hongma Building, Chunxi Road 4,793,143.00 construction party leading to the property rights not yet being issued. Total 246,912,288.19

Page 77 (Total 122 pages)

− F-79 −

15. Fixed assets (1) Information of fixed assets Land and Electronic Items Machinery Motor vehicle Office equipment Other Total buildings equipment I. Original book value 1ˊOn 31 December, 1,416,223,511.19 21,533,336.65 346,461,766.61 16,653,975.21 106,878,215.98 897,145.12 1,908,647,950.76 2019 2ˊIncrease during 6,302,517.25 262,831.85 1,432,267.32 2,183,850.94 2,203,592.66 261,536.00 12,646,596.02 January to June, 2020 ˄1˅Purchase 2,630,163.00 262,831.85 1,432,267.32 2,183,850.94 2,203,592.66 261,536.00 8,974,241.77 ˄2˅Transferred from 3,672,354.25 3,672,354.25 construction in progress ˄3˅Business

combination − F-80 3ˊDecrease during 33,375,455.02 301,646.00 33,677,101.02 January to June, 2020 ˄1˅Disposal / Scrap 33,375,455.02 301,646.00 33,677,101.02

4ˊOn 30 June, 2020 1,422,526,028.44 21,796,168.50 314,518,578.91 18,837,826.15 108,780,162.64 1,158,681.12 1,887,617,445.76 II. Accumulated

depreciation 1ˊOn 31 December, 62,584,863.01 6,836,812.77 277,941,751.96 11,225,997.14 92,175,254.10 387,355.36 451,152,034.34 2019 2ˊIncrease during 16,788,808.50 1,121,638.07 10,646,329.01 1,645,282.25 784,860.57 9,438.76 30,996,357.16 January to June, 2020 ˄1˅Depreciation 16,788,808.50 1,121,638.07 10,646,329.01 1,645,282.25 784,860.57 9,438.76 30,996,357.16 ˄2˅Business

combination 3ˊDecrease during 31,795,410.86 190,161.20 31,985,572.06 January to June, 2020 ˄1˅Disposal / Scrap 31,795,410.86 190,161.20 31,985,572.06

4ˊOn 30 June, 2020 79,373,671.51 7,958,450.84 256,792,670.11 12,871,279.39 92,769,953.47 396,794.12 450,162,819.44

Page 78 (Total 122 pages)

Land and Electronic Items Machinery Motor vehicle Office equipment Other Total buildings equipment III. Impairment

provisions 1ˊOn 31 December, 2,054,872.89 4,769,962.00 6,824,834.89 2019 2ˊIncrease during

January to June, 2020 ˄1˅Provision 3ˊDecrease during

January to June 2020 ˄1˅Disposal / Scrap

4ˊOn 30 June, 2020 2,054,872.89 4,769,962.00 6,824,834.89 − F-81 IV. Book value 1. On 31 December, 1,351,583,775.29 14,696,523.88 68,520,014.65 5,427,978.07 9,932,999.88 509,789.76 1,450,671,081.53 2019 2ˊOn 30 June, 2020 1,341,097,484.04 13,837,717.66 57,725,908.80 5,966,546.76 11,240,247.17 761,887.00 1,430,629,791.43

Page 79 (Total 122 pages)

(2) Fixed assets whose certificate of title has not been issued: None.

16. Construction in progress (1) General information of construction in progress Closing balance Projects Book balance Provision Net book value Huashui Bay Project 4,876,680.87 4,876,680.87

Chengdu Financial Cadre Training 23,654,679.95 23,654,679.95 Center Lingyan Hotel Hot Spring Project 1,011,741.69 1,011,741.69

Temporary Office Building 1,692,315.72 1,692,315.72 Construction Project of Chengdong Office

Chengdu Financial City Cultural 1,169,999.97 1,169,999.97

Center Project Office Building 142,474,689.52 142,474,689.52 Smart City Governance Center 2,456,527.67 2,456,527.67

Sporadic projects 2,442,703.62 2,442,703.62 Total 179,779,339.01 23,654,679.95 156,124,659.06 Continued:

Opening balance Project Book balance Provision Net book value

Huashui Bay Project 4,819,265.89 4,819,265.89

Chengdu Financial Cadre Training Center 23,654,679.95 23,654,679.95

Lingyan Hotel Hot Spring Project 1,011,741.69 1,011,741.69

Temporary Office Building 1,413,093.69 1,413,093.69 Construction Project of Chengdong Office

Chengdu Financial City Cultural Center 1,169,999.97 1,169,999.97 Project

Office Building 148,500,542.15 148,500,542.15

Smart City Governance Center

Sporadic projects 2,442,703.62 2,442,703.62

Total 183,012,026.96 23,654,679.95 159,357,347.01

(2) Changes in significant constructions in progress

Page 80 (Total 122 pages)

− F-82 −

Capitalizat Transferre ion rate of Opening Other Closing Project Increase d to fixed current balance decrease balance assets interests (%) Office 148,500,542.15 5,714,791.05 3,672,354.25 8,068,289.43 142,474,689.52 Building Huashui 4,819,265.89 57,414.98 4,876,680.87 Bay Project Smart City Governance 2,456,527.67 2,456,527.67 Center Temporary Office Building Constructio 1,413,093.69 279,222.03 1,692,315.72 n Project of Chengdong Office Total 154,732,901.73 8,507,955.73 3,672,354.25 8,068,289.43 151,500,213.78 Continued: Proportion Accumulated Including: of project amount of capitalized Budgets Sources cumulative Progress of capitalized amount of Project (RMB 0’000) of funds investment construction interest current in the interest budget Office Self-raised 16,825.83 92.00 92.00 Building funding

17. Intangible assets (1) Information of intangible assets Network Land use Items Software platform Others Total right construction

I.Original book value

1.On 31 December, 46,762,898.29 375,660,525.15 15,436,417.50 1,870,328.11 439,730,169.05

2019

2ˊIncrease during 496,895.09 13,200.00 510,095.09

January to June,

2020

˄1˅Purchase 192,040.72 13,200.00 205,240.72

˄2˅Internally 304,854.37 304,854.37 developed

˄3˅Business

Page 81 (Total 122 pages)

− F-83 −

Network Land use Items Software platform Others Total right construction combination

3ˊDecrease during 7,453.02 7,453.02

January to June,

2020

˄1˅Disposal 7,453.02 7,453.02

4ˊOn 30 June, 2020 47,252,340.36 375,660,525.15 15,436,417.50 1,883,528.11 440,232,811.12

II. Accumulated amortization

1. On 31 17,657,800.69 27,101,476.40 1,757,134.48 115,858.17 46,632,269.74

December, 2019

2ˊIncrease during 1,844,037.44 7,217,422.40 1,934,895.78 34,928.32 11,031,283.94

January to June,

2020

˄1˅Amortization 1,844,037.44 7,217,422.40 1,934,895.78 34,928.32 11,031,283.94

˄2˅Business combination

3ˊDecrease during

January to June,

2020

˄1˅Disposal

4ˊOn 30 June, 2020 19,501,838.13 34,318,898.80 3,692,030.26 150,786.49 57,663,553.68

III. Impairment provisions

1. On 31 December,

2019

2ˊIncrease during

January to June,

2020

Page 82 (Total 122 pages)

− F-84 −

Network Land use Items Software platform Others Total right construction

˄1˅Provision

3ˊDecrease during

January to June,

2020

˄1˅Disposal

4ˊOn 30 June, 2020

IV.Book value

1. On 31 December, 29,105,097.60 348,559,048.75 13,679,283.02 1,754,469.94 393,097,899.31

2019

2ˊOn 30 June, 2020 27,750,502.23 341,341,626.35 11,744,387.24 1,732,741.62 382,569,257.44

18. Development expenditure Increase Decrease Transferre Recognize Opening Internal d to the Closing Projects d as balance development Other current Other balance intangible expenditure profit or assets loss Healthy Chengdu 11,095,561.19 11,095,561.19

Medical administratio n and health 5,641,861.67 1,041,858.13 6,683,719.80 supervision

Financial big data service 95,919.11 95,919.11 platform

Multi-level smart 190,933.58 190,933.58 governance

Bank of personal data 146,165.48 146,165.48

Public services 149,280.01 149,280.01 integration

Page 83 (Total 122 pages)

− F-85 −

Increase Decrease Transferre Recognize Opening Internal d to the Closing Projects d as balance development Other current Other balance intangible expenditure profit or assets loss Community open 231,419.98 231,419.98 platform

Progress payment of software upgrade and 248,932.04 55,922.33 304,854.37 development cost

"Nongdai Tong" Project 1,167,167.20 1,167,167.20 platform

Risk Control Service Gateway 64,150.95 64,150.95 Platform Project

"Zhixin Products" 38,843.40 38,843.40 Project

App research and development for “Digital 16,853.00 16,853.00 Agricultural Exchange” Total 16,986,354.90 1,928,351.62 1,270,161.55 304,854.37 19,880,013.70 ˄Continued˅ Research and Start point of The specific basis for Projects development progress capitalization capitalization by the end of period

When development Project approval Still being research and Healthy Chengdu started completed developed

Medical administration When development Project approval Still being research and started developed and health supervision completed

Financial big data service When development Project approval Still being research and started developed platform completed

Page 84 (Total 122 pages)

− F-86 −

Research and Start point of The specific basis for Projects development progress capitalization capitalization by the end of period

Multi-level smart When development Project approval Still being research and started developed governance completed

When development Project approval Still being research and Bank of personal data started developed completed

When development Project approval Still being research and Public services integration started developed completed

When development Project approval Still being research and Community open platform started developed completed

Progress payment of When development Project approval Still being research and software upgrade and started completed developed development cost

"Nongdai Tong" Project When development Project approval Still being research and started developed platform completed

Risk Control Service When development Project approval Still being research and Gateway Platform started developed completed Project

When development Project approval Still being research and "Zhixin Products" Project started developed completed

App research and When development Project approval Still being research and development for “Digital started developed completed Agricultural Exchange”

Total

19. Goodwill

Invested company or Increase Decrease Opening Closing matters that formed the Business balance Other Disposal Other balance goodwill combination

Chengdu Wanhe Plaza 6,300,000.00 6,300,000.00

Co., Ltd.

Page 85 (Total 122 pages)

− F-87 −

Invested company or Increase Decrease Opening Closing matters that formed the Business balance Other Disposal Other balance goodwill combination

Chengdu Tertiary 8,302,365.85 8,302,365.85

Industry Development

Company

Chengdu Financial 3,012,147.21 3,012,147.21

Holding Wealth Equity

Investment Fund

Partnership (Limited

Partnership)

Chengdu Jingguang 57,866,963.42 57,866,963.42

Enterprise Management

Co., Ltd

Total 17,614,513.06 57,866,963.42 75,481,476.48 Note: There is no impairment for the goodwill at the end of the period.

20. Long-term deferred expenses

Opening Other Closing Items Increase Amortization Other balance decrease balance

Housing renovation fees 40,452,713.51 13,686,044.56 941,073.99 53,197,684.08 Hotel supplies that can be used for a long time

Housing rental fees 14,840.87 12,599.59 2,241.28 澳

Trust file escrow fees 45,348.20 13,374.00 31,974.20 澳 Cost of former Traffic 746,589.06 195,535.29 551,053.77 澳 Police Brigade

1,122,254.65 73,994.76 1,048,259.89 澳 Parking lot

Others 7,936,675.83 1,368,263.13 2,917,331.36 6,387,607.60 澳

Total 50,318,422.12 15,054,307.69 4,153,908.99 61,218,820.82 澳

21. Deferred tax assets and deferred tax liabilities

(1) Deferred income tax assets that have been recognized

Page 86 (Total 122 pages)

− F-88 −

Closing balance Opening balance Deductible Deductible Items Deferred tax Deferred tax temporary temporary assets assets differences differences Impairment provision for 1,050,454,746.67 170,979,740.90 1,061,215,682.73 169,681,682.94 assets Deductible losses 34,344,415.44 5,376,830.46 34,344,415.44 5,376,830.46 Gross profit of expected 236,522.44 59,130.61 236,522.44 59,130.61 revenue Changes in fair value of available-for-sale financial assets that are 31,847,829.78 7,961,957.45 31,847,829.78 7,961,957.45 included in other comprehensive income Deferred income 1,281,600.00 320,400.00 1,931,600.00 482,900.00

Total 1,118,165,114.33 184,698,059.42 1,129,576,050.39 183,562,501.46 (2) Deferred income tax liabilities that have been recognized Closing balance Opening balance Taxable Taxable Items Deferred tax Deferred tax temporary temporary liabilities liabilities differences differences Changes in fair value of available-for-sale financial assets that 157,400,952.90 39,350,238.24 157,400,952.90 39,350,238.24 are included in other comprehensive income Total 157,400,952.90 39,350,238.24 157,400,952.90 39,350,238.24

22. Other non-current assets Items Closing balance Opening balance Money lending:

Chengdu Xiecheng Asset Management Co., Ltd. 525,277,000.00 525,277,000.00

Chengdu Modern Agriculture Development 447,655,000.00 447,655,000.00 Investment Co., Ltd.

972,932,000.00 972,932,000.00 Subtotal

Others˖ Purchase of non-performing assets of the former 184,879,146.00 184,879,146.00 Chengdu Rural Credit Cooperatives (Note 3)

Debt-offsetting Assets of Huayi Flower (Note 2) 220,011.00 220,011.00 Page 87 (Total 122 pages)

− F-89 −

Items Closing balance Opening balance

Operating assets of Lingyan Valley (Note 1) 41,762.25 43,926.63

Construction funds for municipal infrastructure 10,098,059,388.16 9,386,322,698.36

Debt-offsetting assets 179,111,455.05 148,922,123.49

Prepayment of corporate income tax 1,398,730.04

Suspended inventory losses of fixed assets 12,180.08 11,542,150.19

Subtotal 10,462,323,942.54 9,733,328,785.71 Total 11,435,255,942.54 10,706,260,785.71 Note 1: Lingyan's operating assets are transferred from Chengdu Municipal Bureau of Land and Resources to Chengdu Dingli Asset Management Co., Ltd., the subsidiary, and the decrease in this period is mainly due to depreciation. Note 2: Huayi Flower's debt-offsetting assets are flowers, trees, structures, and low-value consumables located in No. 57 Caojia Alley (now is No. 24, Xinghui Middle Road). The No. 57 land of Caojia Alley has been auctioned, and the above-mentioned structures have also been demolished. At present, the other non-current assets are mainly flowers and plants transplanted in Chengdu Bihai Environmental Protection Technology Co., Ltd. Note 3: Chengdu Financial Holding Real Estate Co., Ltd. purchased the divested assets of Chengdu Rural Credit Cooperative, including 191 acres of land and above-ground buildings.

23. Assets whose ownership or use rights are restricted Items Closing balance Reasons for restrictions Cash and cash 148,440,689.58 Deposits paid equivalents Other current assets 881,600,000.00 Pledge for loan Inventory 1,705,707,601.00 Pledge for loan Long-term receivables 2,763,513,881.10 Pledge for loan Long-term equity 1,769,932,162.33 Pledge for loan investment Investment property 37,868,588.01 Pledge for loan Total 7,307,062,922.02

24. Short-term borrowings Items Closing balance Opening balance Pledged loan 50,000,000.00 Mortgage loan 100,000,000.00 Guaranteed loan 300,000,000.00 500,000,000.00 Credit loan 5,431,515,900.00 3,376,515,900.00 Total 5,831,515,900.00 3,926,515,900.00

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25. Financial liabilities at fair value through profit or loss Items Closing balance Opening balance Trading financial liabilities Including: trading bonds issued Others 9,540,000.00 Total 9,540,000.00

26. Accounts payable Items Closing balance Opening balance Within 1 year (including 1 146,516,604.05 182,326,094.37 year) Over 1 year 149,709,546.53 128,762,055.11 Total 296,226,150.58 311,088,149.48

(2) Significant accounts payable over 1 year Creditor Closing balance Cause of overdue The project funds that are accrued after the houses and China MCC5 Group Corp. Ltd. 26,515,267.96 buildings are transferred to fixed assets

The final accounts of the Chengdu Construction Group Co., Ltd. 14,604,057.35 project are still being processed

Chengdu Yinxing Property Management Property management fees 5,980,417.34 Co., Ltd. accrued

Sinohydro Bureau 7 Co., Ltd. 2,937,568.02 Not the settlement time yet

Audit of the project is still Chengdu Xiya Technology Development 2,813,728.12 ongoing, and the payment shall Co., Ltd. be made according to the audit results. Total 52,851,038.79

27. Advance from customers (1) Breakdown Items Closing balance Opening balance Within 1 year˄including 1 87,061,716.63 109,647,682.15 year˅ Over 1 year 8,974,136.49 7,979,990.70

Total 96,035,853.12 117,627,672.85

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(2) Significant advances over 1 year Creditor Closing balance Cause of overdue

Chengdu Municipal Big Data 3,152,960.72 Advances of rentals Center

Prepaid housing funds, but the LIU Tao, CAI Yanyan, YANG 1,371,211.00 housing has not been Baoyong, XU Junhua transferred

Sichuan Shanli Hexin Real Estate 500,000.00 Not settled yet Co., Ltd.

Chengdu Iron Tower Factory 218,400.00 Advances

LI Jiajun of Longyue Jindu 109,272.00 Advances Entertainment Company

Total 5,351,843.72

28. Payroll payable (1) Categories Opening Closing Items Increase Decrease balance balance 1. Short-term payroll 149,799,599.79 883,773,924.39 966,348,607.10 67,224,917.08 2. Post-employment benefits-defined 634,920.62 117,924,346.48 115,344,737.04 3,214,530.06 contribution plans 3.Termination benefits 4.Other benefits due within one year 5.Other Total 150,434,520.41 1,001,698,270.87 1,081,693,344.14 70,439,447.14 (2) Short-term payroll Opening Closing Items Increase Decrease balance balance 1. Salary, bonus, allowance, 138,733,203.91 783,783,662.43 867,416,659.73 55,100,206.61 and subsidy 2. Employee welfare 2,134,088.65 15,083,751.37 15,003,180.37 2,214,659.65 3. Social insurance 151,331.45 53,419,597.01 53,435,960.15 134,968.31 Including˖Medical 120,738.72 44,493,737.31 44,514,368.49 100,107.54 insurance Work injury insurance 4,562.81 2,201,387.93 2,197,724.46 8,226.28

Page 90 (Total 122 pages)

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Opening Closing Items Increase Decrease balance balance Maternity insurance 26,029.92 5,441,862.00 5,441,257.43 26,634.49 Other 1,282,609.77 1,282,609.77 4. Housing funds 298,196.44 24,985,178.85 24,098,591.69 1,184,783.60 5. Union funds and employee education 7,598,087.33 3,869,814.12 3,162,271.44 8,305,630.01 expenses 6. Short-term paid absence

7. Short-term profit-sharing plan

8. Other short-term 884,692.01 2,587,596.68 3,187,619.79 284,668.90 payroll 9.Other short-term payroll 44,323.93 44,323.93 Total 149,799,599.79 883,773,924.39 966,348,607.10 67,224,917.08 (3) Defined contribution plans Opening Closing Items Increase Decrease balance balance 1. Basic endowment insurance 243,268.92 108,510,538.54 106,914,129.46 1,839,678.00

2. Unemployment insurance 17,392.63 4,207,566.75 4,190,390.87 34,568.51

3. Annuity payment 374,259.07 5,206,241.19 4,240,216.71 1,340,283.55

Total 634,920.62 117,924,346.48 115,344,737.04 3,214,530.06

29. Taxes payable Items Closing balance Opening balance VAT 6,421,633.80 14,621,575.24 Corporate income tax 81,317,115.16 93,096,378.44 Urban maintenance and 746,363.40 1,754,735.44 construction tax Property tax 1,791,081.09 1,143,046.60 Land use tax 44,545.32 41,140.79 Personal income tax 1,477,333.52 3,905,780.80 Educational surcharge 349,323.48 1,266,263.12 Land-value increment tax 18,642,693.41 47,833,276.73 Other taxes and fees 21,486,329.12 3,044,154.15 Total 132,276,418.30 166,706,351.31

30. Other payables Items Closing balance Opening balance Interests payable 155,160,783.50 184,393,552.19

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Items Closing balance Opening balance Dividends payable 20,985,000.00 23,712,083.33 Other payables 2,933,168,732.66 1,998,168,779.92 Total 3,109,314,516.16 2,206,274,415.44 (1) Interests payable Items Closing balance Opening balance Interests on long-term loans with interest paid in installments and principal repayable at 2,463,105.59 18,985,106.71 maturity Corporate bond interests 122,048,955.60 74,997,016.21 Interests payable on short term loans 855,117.13 67,767,083.08 Others 29,793,605.18 22,644,346.19 Total 155,160,783.50 184,393,552.19 (2) Dividends payable Reasons for not paying over Items Closing balance Opening balance 1 year Dividends of common 20,985,000.00 20,985,000.00 shares Dividends of preferred share / perpetual bond 2,727,083.33 classified as equity instruments Total 20,985,000.00 23,712,083.33 (3) Other payables presented by nature Items Closing balance Opening balance Margin 169,157,612.47 177,440,033.23 Shareholders' proposed 565,520,000.00 565,520,000.00 investment Incomings and outgoings 239,786,119.70 61,576,904.27 Special trust funds 16,873,976.08 16,866,621.20 Temporary collection 340,056,178.11 545,232,886.23 Index price of construction 1,522,625,316.00 516,023,697.00 land Fund collected and paid on 221,687.24 11,333,843.24 behalf of others Others 78,927,843.06 104,174,794.75 Total 2,933,168,732.66 1,998,168,779.92

(1) Other significant payables over 1 year Creditors Closing balance Reason for overdue Chengdu Hi-tech Investment 565,520,000.00 Capital increase is expected (note) Group Co., Ltd. Total 565,520,000.00 Note: On June 29, 2016, Chengdu Financial City Investment Development Co., Ltd., the subsidiary of the Company received RMB 300 million of proposed new investment as the new

Page 92 (Total 122 pages)

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registered capital from Chengdu Hi-tech Investment Group Co., Ltd. (hereinafter referred to as “Chengdu Hi-tech Investment Group”). The investment was made according to the “Reply on capital increase in Chengdu Financial City Investment Development Co., Ltd. by Chengdu Hi-tech Investment Group” (Chenggao Caifa [2016] No. 110) issued by the Finance Bureau of Hi-tech Zone, Chengdu. On March 30, 2018, Chengdu Financial City Investment Development Co., Ltd. received RMB 53,520,000 of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group. The investment was made according to “Notice on capital increase in Chengdu Financial City Investment Development Co., Ltd.” (Chenggao Caifa [2018] No. 50) issued by the Finance Bureau of Hi-tech Zone, Chengdu. The document also states that Chengdu Hi-tech Investment Group will hold 34.15% of the equity in company after the capital increase. On November 27, 2018, Chengdu Financial City Investment Development Co., Ltd. received RMB 106 million of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group, which was made according to the “Notice on approving capital increase in Chengdu Financial City Investment Development Co., Ltd. by Chengdu Hi-tech Investment Group Co., Ltd.” (Chenggao Caifa [2018] No. 234) issued by the Finance Bureau of Hi-tech Zone, Chengdu. On April 18, 2019, Chengdu Financial City Investment Development Co., Ltd. received RMB 106 million of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group, which was made according to the “Notice on capital increase in Chengdu Financial City Investment Development Co., Ltd.” (Chenggao Caifa [2019] No. 66) issued by the Finance Bureau of Hi-tech Zone, Chengdu. The document also states that Chengdu Hi-tech Investment Group will hold 37.59% of the equity in company after the capital increase. The above increase of investment funds proposed by the shareholders has not been agreed by the shareholders' meeting of the Financial City Company, so they are presented as liabilities.

31. Non-current liabilities due within one year Category Closing balance Opening balance Long-term borrowings due 1,183,000,000.00 4,607,823,354.29 within one year Bonds payable due within one 2,040,202,100.00 499,983,333.34 year

Long-term payables due within 125,000,000.00 78,800,000.00 one year

Other non-current liabilities 620,000,000.00 due within one year Total 3,968,202,100.00 5,186,606,687.63

32. Other current liabilities Items Closing balance Opening balance Customer guarantee deposits 36,338,117.09 35,702,710.83 Total 36,338,117.09 35,702,710.83

33. Reserves for insurance contract Items Opening balance Increase Decrease (Note) Closing balance Guarantee liability 841,875,630.02 444,997,417.37 396,878,212.65 reserves Including: compensation reserves received from

Page 93 (Total 122 pages)

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Items Opening balance Increase Decrease (Note) Closing balance the government this year Undue guarantee liability 5,905,681.00 5,905,681.00 reserves Total 847,781,311.02 444,997,417.37 402,783,893.65 Note: Decrease of the period is related to 1. According to Article 31 of the “Interim Measures for Administration of Financing Guarantee Companies in Sichuan Province”, the Company makes reserves for guarantee compensation equivalent to 1% of the guarantee liability balance at the end of the year, and makes undue guarantee liability reserves equivalent to 50% of the guarantee fee income of the current year. The amount of reserves made in this period is RMB -8,681,465.11. 2. Supplementary reserves for guarantee liability shall be made for the compensation loss that could be formed and cannot be covered after reserves are made according to the above-mentioned measures. RMB 436,315,952.26 shall be presented in the “Other receivables” account (Please refer to note VII 5Ļ).

34. Long-term borrowings Items Closing balance Opening balance

Pledged loans 2,641,287,629.37 2,268,712,218.15

Mortgage loans 1,883,000,000.00 2,858,000,000.00

Guaranteed loans 1,247,500,000.00 1,786,000,000.00

Credit loans 6,629,544,000.00 3,843,250,000.00

Total 12,401,331,629.37 10,755,962,218.15

35. Bonds payable (1) Categories Items Closing balance Opening balance Corporate bonds 6,811,720,816.00 6,816,475,090.16 Total 6,811,720,816.00 6,816,475,090.16 Including RMB 2,040,202,100.00 of bonds due within one year is reclassified to "non-current liabilities due within one year". (2) Increase and decrease of bonds payable Name of the Par value Issue date Maturity Total value Opening balance bonds 16 Rongjin 25 May, 1,500,000,000.00 5 years 1,500,000,000.00 1,040,215,000.00 01 Bond 2016 18 Chengdu 22 August, Financial 1,500,000,000.00 5 years 1,500,000,000.00 1,499,762,565.11 2018 MTN001 18 Rongshu 3 January, 01 Distress 1,500,000,000.00 3 years 1,500,000,000.00 1,499,710,161.72 2019 Relief Bond CDJZ FIN N2211 15 (40061)300 2,092,860,000.00 November, 3 years 2,092,860,000.00 2,079,832,638.75 million USD 2019 notes

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Name of the Par value Issue date Maturity Total value Opening balance bonds 19 Jiaozi 23 October, 180 Financial 500,000,000.00 500,000,000.00 499,983,333.34 2019 days SCP002 2020 Short-term Commercial 25 270 Paper for 500,000,000.00 February, 500,000,000.00 days Epidemic 2020 Prevention& Control 2020 Second Short-term 29 April, 180 500,000,000.00 500,000,000.00 Commercial 2020 days Paper Special Bond of Chengdu Financial City Investment Development 23 October, 700,000,000.00 7 years 700,000,000.00 696,954,724.58 Co., Ltd. in 2018 2018

20 Yihang Asset PPN001 Total 8,792,860,000.00 8,792,860,000.00 7,316,458,423.50 Continued: Total amount Interests Amortization Repayment Name of the of issue in the accrued at of premium for the Closing balance bonds current period face value or discount period 16 Rongjin 01 20,804,299.98 1,040,215,000.00 Bond 18 Chengdu Financial -72,826.56 1,499,835,391.67 MTN001 18 Rongshu 01 Distress-relief 37,275,000.00 -70,699.02 1,499,780,860.74 Bond CDJZ FIN N2211 (40061)300 34,529,473.80 -35,317,210.08 2,115,149,848.83 million USD notes 19 Jiaozi Financial 4,166,666.68 -16,666.66 500,000,000 SCP002 2020 Short-term Commercial 500,000,000.00 3,833,333.32 20,833.32 499,979,166.68 Paper for Epidemic

Page 95 (Total 122 pages)

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Total amount Interests Amortization Repayment Name of the of issue in the accrued at of premium for the Closing balance bonds current period face value or discount period Prevention& Control 2020 Second Short-term 500,000,000.00 1,508,333.34 -7,923.50 500,007,923.50 Commercial Paper Special Bond 696,954,724.58 of Chengdu

Financial City

Investment

Development

Co., Ltd. in

2018

20 Yihang 1,000,000,000.00 Asset PPN001 1,000,000,000.00 Total 2,000,000,000.00 102,117,107.12 -35,464,492.50 500,000,000 8,851,922,916.00 The closing balance of bonds payable includes RMB 2,040,202,100.00 of bonds payable due within one year. Note 1: On 25 May, 2016, the Company successfully issued RMB 1.5 billion of “16 Rongjin 01 Bond”, which is a fixed simple interest rate bond with a maturity of 5 years. The bond gives the issuer the option to increase the coupon rate and gives the investor the option to sell the bond back. This means that at the end of the third year of the current bond’s duration, the issuer may choose to increase the coupon rate for two years at the end of the third year of the duration. And the investor will have the right to sell some or all of the current bonds back to the issuer. On 25 May, 2019, the investors who have been effectively registered sold the “16 Rongjin 01 Bond” back to Chengdu Jiaozi Financial Holding Group Co., Ltd. The number of registered sell-back within the validity period is 4,597,850, and the amount of sell-back is RMB 459,785,000. The issuer raises the coupon rate to 4.00% in two years after the duration. Note 2: On 22 August, 2018, the Company successfully issued RMB 1.5 billion of “18 Chengdu Financial MTN001”, a medium-term note that adopts the fixed interest rate and simple interest calculation and has a maturity of 5 years. The bond gives the issuer the option to increase the coupon rate and gives the investor the option to sell the bond back. This means that at the end of the third year of the current bond’s duration, the issuer has the right to raise the coupon rate for two years after the end of the third year of the duration, which will remain unchanged for 2 years after the bond's duration. And the investor will have the right to sell some or all of the current bonds back to the issuer. Note 3: On 15 November, 2019, the Company successfully issued US $300 million of overseas bond " CDJZ FIN N2211 (40061)", which adopts fixed interest rate and simple interest calculation and has a maturity of 3 years. Note 4: On 03 January, 2019, the Company successfully issued RMB 1.5 billion of Distress-relief bond “18 Rongshu 01”, which adopts fixed interest rate and simple interest calculation and has a maturity of 3 years. The bond was available in the market on 16 January, 2019. Note 5: On 22 October, 2019, the Company successfully issued RMB 500 million of short-term commercial paper "19 Jiaozi Financial SCP 002", which has a maturity of 180 days, adopts fixed interest rate and simple interest calculation, and has been repaid at the end of the period. Note 6: On 22 October, 2018, Chengdu Financial City Investment Development Co., Ltd., the subsidiary of the Group successfully issued "18 Chengjin 01" special bonds, to which the headquarters of the Company provides a full amount of unconditional and irreversible joint liability guarantee. The duration of the bond is 7 years, and adopts fixed interest rate and simple interest calculation.

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Note 7: On 25 February 2020, the Company successfully issued RMB 500 million of short-term commercial paper "20 Jiaozi Financial (Epidemic Prevention & Control)", which has a maturity of 270 days, adopts fixed interest rate and simple interest calculation, and the coupon rate is 2.3%. Note 8: On 29 April, 2020, the Company successfully issued RMB 500 million of short-term commercial paper "20 Jiaozi Financial SCP002", which has a maturity of 180 days, adopts fixed interest rate and simple interest calculation, and the coupon rate is 1.8%. Note 9: On 23 June, 2020, the Company successfully issued RMB 1 billion of "20 Yihang Assets PN001", which has a maturity of 3 years, adopts fixed interest rate and simple interest calculation, and the coupon rate is 4.2%.

36. Long-term payables Items Closing balance Opening balance Long-term payables 1,822,494,448.02 1,372,638,501.59 Special accounts payable 4,782,115,025.03 5,656,771,659.40

Subtotal 6,604,609,473.05 7,029,410,160.99

Less: Long-term payables due within one year 125,000,000.00 78,800,000.00

Total 6,479,609,473.05 6,950,610,160.99 (1) Long-term payables Long-term payables presented by nature Items Closing balance Opening balance

Finance lease payables 60,015,000.00 67,085,000.00

Local government debt 1,621,000,000.00 1,210,274,053.57

Construction arrears 5,029,448.02 5,029,448.02

Government funds 11,450,000.00 11,450,000.00

Local government debt due within one year (note) 125,000,000.00 78,800,000.00

Total 1,822,494,448.02 1,372,638,501.59 Note: Local government debt due within one year has been re-classified in “non-current liabilities due within one year”. (2) Special accounts payable Items Opening balance Increase Decrease Closing balance Special funds of central 63,150,000.00 63,150,000.00 underground integrated pipes Chengdu Land and Resources 1,080,039,551.56 1,080,039,551.56 Bureau – appropriated funds Partial tax refunds 86,860,000.00 86,860,000.00 of Jinjiang District Chengdu 2,896,884,758.13 15,092,551.67 847,720,610.05 2,064,256,699.75 Development

Page 97 (Total 122 pages)

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Items Opening balance Increase Decrease Closing balance Fund (1) Industry guidance 1,520,708,715.16 9,380,679.51 60,409,255.50 1,469,680,139.17 fund Basic construction 1,300,000.00 1,300,000.00 investment funds Special fund for guiding the 9,000,000.00 9,000,000.00 development of service industry Government funds 6,400,040.99 6,400,040.99 Others 1,428,593.56 1,428,593.56 Total 5,656,771,659.40 33,473,231.18 908,129,865.55 4,782,115,025.03

37. Deferred income Opening Closing Items Increase Decrease balance balance

Government grants 2,342,739.62 14,208.54 2,328,531.08

Including˖Disposal fee for the 1,281,600.00 1,281,600.00 administrative center (note)

Subsidy for steady operation 128.73 49.38 79.35 Municipal budgetary special funds for infrastructure 650,000.00 650,000.00 construction in 2018 Provincial special fund for intellectual property rights in 300,000.00 300,000.00 2019 Special fund for soft science research project of Chengdu 50,000.00 50,000.00 Science and Technology Bureau in 2019

Fixed assets 61,010.89 14,159.16 46,851.73

Total 2,342,739.62 14,208.54 2,328,531.08 Note: According to the “Meeting minutes on researching the assets disposal of the Municipal Administrative Office Center” (Chengjin Jianyue [2009] No. 2) of the Construction Leading Group of Chengdu Municipal Financial Headquarters Business District, RMB 30 million has been arranged as special work funds by the Chengdu Finance Bureau in revenues from disposing the assets of Chengdu Administrative Office Center. The Financial City Company recognizes the special work funds received as deferred income, which is carried forward to other business income in proportion to the proportion of assets that has been disposed of to the total assets to be disposed of.

38. Other non-current liabilities Items Closing balance Opening balance Principal of fixed assets financing 500,000.00 500,000.00 lease (leaseback) Total 500,000.00 500,000.00

39. Paid-in capital

Page 98 (Total 122 pages)

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Unit: RMB’ 0,000 Opening balance Closing balance Name of the investors Investment Percentage Increase Decrease Investment Percentage amount ˄%˅ amount ˄%˅ Chengdu State-owned Assets Supervision and 300,000.00 60.00 300,000.00 60.00 Administration Commission Chengdu Xie Cheng Asset Management 200,000.00 40.00 200,000.00 40.00 Co., Ltd. Total 500,000.00 100.00 500,000.00 100.00

40. Other equity instrument investment Outstanding Opening balance Increase Decrease Closing balance financial Book Book instruments Number Book value Number Number Number Book value value value Perpetual 1,500,000,000.00 1,500,000,000.00 bonds Total 1,500,000,000.00 1,500,000,000.00 Note: On 25 September, 2019, the Industrial and Commercial Bank of China Limited, the investor, and Chengdu Branch of the Industrial and Commercial Bank of China, the agent of financial planning and project manager, signed the Perpetual Bond Investment Agreement with the Company. The bond will exist for a long time. After the initial investment period of three years, the Company can choose to cash the bond in the current period or postpone the payment of the bond. The interests accrued on the bond can also be paid in the current period or be deferred, so it shall be classified as the equity instrument.

41. Capital reserve Opening Items Increase Decrease Closing balance balance Capital 225,392,193.67 225,392,193.67 premium Other capital 6,011,107,708.92 6,011,107,708.92 reserve Subtotal 6,236,499,902.59 6,236,499,902.59

42. Other comprehensive income

Page 99 (Total 122 pages)

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Current amount The Less: included in after-ta Amount The other x incurred after-tax comprehensive portion Opening before Less: portion Closing Items income in the attribut attributable balance income tax income tax balance previous period able to to the for the expenses and transferred to the minority current the current profit parent shareholde period and loss compan rs y (1) Other comprehensive income that cannot be

− F-102 subsequently reclassified into profit and loss Including: Changes in net liability or net asset arising from re-measurement of the defined benefit plan Not reclassified to profit or loss for the invested

entity under the equity method (2) Other comprehensive income that can be 298,659,988.32 448,820.00 299,108,808.32 subsequently reclassified into profit and loss Including˖Reclassified to profit or loss for the 207,411,748.13 448,820.00 207,860,568.13 invested entity under the equity method Changes in fair value of available-for-sale 91,248,240.19 91,248,240.19 financial assets Profit or loss from reclassification of held-to-maturity investment to available-for-sale financial assets Effective portion of profit or loss from cash

flow hedging Exchange difference on translating foreign

currency statements Total 298,659,988.32 448,820.00 299,108,808.32 Page 100 (Total 122 pages)

43. Surplus reserve Items Opening balance Increase Decrease Closing balance Statutory surplus 538,382,178.69 538,382,178.69 reserve Discretionary surplus reserve Total 538,382,178.69 538,382,178.69

44. Retained earnings Items Amount of the current period Amount of the previous period

Opening balance 3,765,255,128.11 2,940,138,961.38

Increase 724,890,100.44 1,006,216,857.89 Including: Transferred from 724,822,486.78 1,006,216,857.89 current period's net profit Other adjustment factors 67,613.66

Decrease 42,641,666.67 181,100,691.16 Including: The amount of surplus reserve provided for 86,443,672.44 this period The amount of general risk 40,361,185.39 provisions made for this period Distribution of cash dividends 42,641,666.67 54,295,833.33 for the current period Increased capital

Other decrease

Closing balance 4,447,503,561.88 3,765,255,128.11

45. Operating revenue and costs Amount of the current period Amount of the previous period Items Revenue Cost Revenue Cost Finance lease income 101,945,265.75 83,125,260.22 Asset management income 481,804,738.52 22,752,432.87 214,741,975.45 29,722,634.13 Financial property income 16,047,015.67 -17,993,950.40 356,535,180.00 251,846,934.75 Including: Sales revenue of property (note) -346,666.62 -29,658,165.43 293,765,590.20 234,782,781.50

Income from construction of 16,393,682.29 11,664,215.03 62,769,589.80 17,064,153.25 related infrastructure

Income from public 32,000.00 6,661.00 100,778.76 21,341.00 transportation

Page 101 (Total 122 pages)

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Amount of the current period Amount of the previous period Items Revenue Cost Revenue Cost

Income from escort and 1,068,601,942.66 838,396,227.29 1,046,061,526.31 866,518,989.55 security services Other income 125,938,622.85 55,822,549.16 46,335,232.68 13,919,095.70 Interest income 25,917,118.98 26,231,625.86 Premiums earned 15,134,050.76 24,055,681.00 Total operating revenue 1,835,420,755.19 898,983,919.92 1,797,187,260.28 1,162,028,995.13 Note: In this period, the sales revenue of property and the cost is negative, which is due to (1) partial sales refund of “Jinkong Times Square Phase 4” in this period, and (2) in the final settlement of “Jinkong Times Square Phase 4”, the actual costs are lower than the pre-transferred costs and the excess costs that have been carried forward in the previous period have been offset in this period.

46. Net amount of withdrawal of insurance contract reserve Amount of the current Amount of the Item period previous period Net amount of withdrawal of insurance contract reserve 2,216,900.00 2,685,500.00

47. Finance costs Amount of the current Amount of the Item period previous period Interest expense 501,256,497.68 407,752,129.58

Less: Interest income 58,114,401.30 57,850,692.90

Exchange loss 48,421,358.51 1,782,179.86

Less: Exchange gain 16,042,841.14

Other 3,742,129.39 7,337,128.45

Total 479,262,743.14 359,020,744.99

48. Other income Amount of the current Amount of the Item period previous period

Three financial policy projects for business start-ups (the first batch) of Chengdu Hi-tech 140,000.00

Zone in 2017

Chengdu Treasury Bureau Special Fund 779,400.00 Subsidy

Page 102 (Total 122 pages)

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Amount of the current Amount of the Item period previous period

Subsidy for steady operation 7,365,001.91 686,155.82

VAT deduction and exemption 11,262,694.96 1,979.13

Tax deduction and exemption 7,230.86 1,468,062.39

Three commission fees 67,702.32 90,183.88

Subsidy for financial insurance platform in all 16,000,000.00 rural areas of Sichuan Province

Government-subsidized transaction funds 15,986,310.91

Government subsidies for depreciation of fixed 14,159.16 14,159.16 assets

Policy-related subsidy of Urban-rural Relating and Agriculture and Forestry Bureau of 1,873,800.00

Qingbaijiang District of Chengdu in 2018

Subsidy funds supported by Agriculture and 400,000.00 Forestry Bureau of Xinjin County in 2018

Government support subsidies of the

Centralized Collection and Payment Center of 4,289,200.00

Pidu District Treasury, Chengdu

Subsidy funds supported by theUrban-rural

Relating Work Committee of Longquanyi 1,000,000.00

District, Chengdu in 2019

Subsidy of Deyang Municipal Government in 1,000,000.00 2018

Government support subsidies 300,000.00

Fee reduction subsidy guaranteed by the

Municipal Commission of Economy and 4,860,000.00

Information Technology

Total 51,622,500.12 15,983,540.38

49. Investment income

Page 103 (Total 122 pages)

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Amount of the current Amount of the previous Source of investment income period period Long-term equity investment income under 768,542,666.51 603,740,713.73 the equity method Investment income arising from the disposal -141,459.64 of long-term equity investment Investment income arising from the period of holding financial assets at fair value through profit or loss Investment income arising from the period of holding held-to-maturity investment Investment income arising from the period 1,300,325.52 15,353,454.36 of holding available-for-sale financial assets Investment income arising from the disposal of financial assets at fair value through profit 21,218,754.85 or loss Investment income arising from the disposal of held-to-maturity investment Investment income arising from the disposal of available-for-sale financial assets Other -10,701,438.60 Total 780,218,848.64 619,094,168.09

50. Gains from changes in fair value Amount of Amount of the current Source of gains from changes in fair value the previous period period Financial assets at fair value through profit or loss 30,990,000.00 Other Total 30,990,000.00

51. Non-operating income (1) Classification The amount included in the Amount of the Amount of the Item current current period previous period non-recurring profit and loss

Income from debt restructuring

Donation income

Government subsidies not related to the 404,553.15 404,553.15 daily activities of enterprises

Income from inventory profit

Differences in initial investment cost of

Page 104 (Total 122 pages)

− F-106 −

The amount included in the Amount of the Amount of the Item current current period previous period non-recurring profit and loss subsidiaries acquired at the level of business combination

Income from compensation for breach 80,572.74 472,900.65 80,572.74 of contract

Other income 430,833.36 527,534.02 430,833.36

Total 915,959.25 1,000,434.67 915,959.25 (2) Government subsidies not related to the daily activities of enterprises that are included in the current profit and loss Amount of Amount of the current Item the previous period period

Fund for the establishment of the epidemic prevention system for enterprises returning to work of Qingyang 22,676.40

District Bureau of Commerce, Chengdu

Enterprise-support Award of Shuangqiaozi Sub-district

Office of Chenghua District People's 149,233.00

Government ,Chengdu Subsidy for steady operation 163,821.71

General social security subsidies allocated by Pengzhou 7,112.77 Employment Service Administration

Taxes calculated and collected according to the

Announcement No. 4 of the State Administration of 16,915.87

Taxation in 2019

Tax return and other subsidies 44,793.40

Total 404,553.15

52. Non-operating expenses The amount included in the Amount of the Amount of the Item current non-recurring profit current period previous period and loss

External donation 205,087.60 3,000.00 205,087.60

Page 105 (Total 122 pages)

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The amount included in the Amount of the Amount of the Item current non-recurring profit current period previous period and loss Losses from debt restructuring

Other 1,732,193.61 1,098,287.11 1,732,193.61

Total 1,937,281.21 1,101,287.11 1,937,281.21

V. Contingencies 1. Pending litigation/arbitration (1) On December 20, 2016, the subsidiary of the Company, Tourism Fund, and Sichuan Zhongsheng Zhengyin Tourism Investment Management Co., Ltd. (hereinafter referred to as "Zhongsheng Zhenyin Company”) filed a lawsuit on the entrusted loan contract炷the entrusted loan principal is RMB100 million炸to Chengdu Intermediate People's Court for. Tourism Fund applied for preservation measures within the property value range of RMB 148 million. Jintai Insurance Company provided guarantee for this application for preservation measures. On 29 March, 2017, the Court made a ruling on (2017) Chuan 01 Zhibao No.118 as follows. ķ To suspend land receivables payments of RMB 118 million to the respondent Zhongsheng Zhenyin Company in the Dujiangyan Land Reserve Center. ĸ To freeze the 30% equity (capital contribution of RMB 15 million) of Sichuan Ruikun Zhengyin Travel Investment Co., Ltd. held by the respondent Zhongsheng Zhenyin Company., and the 40% equity (capital contribution of RMB 20 million) of Sichuan Ruikun Zhengyin Travel Investment Co., Ltd. held by the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. To freeze the 55% equity (capital contribution of RMB 11 million) of Sichuan Zhongsheng Chuanxin Real Estate Co., Ltd., the 40% equity (capital contribution of RMB 8 million) of Sichuan Zhongshenghong Investment Co., Ltd., and the 100% equity (capital contribution of RMB 3 million) of Chengdu Zhongyan Cultural Development Co., Ltd. held by the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. The freezing period lasts for three years, from 12 April ,2017 to 11 April ,2020. Ĺ To freeze the 100% equity (capital contribution of RMB 5 million) of Sichuan Huaxiong Education Investment Co., Ltd. held by the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. The freezing period lasts for three years, from 29 March, 2017 to 28 March, 2020. Now the case has been judged and decided by the Civil Judgment of Chengdu Intermediate People's Court of Sichuan Province ((2017) Chuan 01 Min Chu No. 185). Zhongsheng Zhengyin Company must pay an entrusted loan of RMB 100 million and overdue interests, which is now in the process of enforcement. (2) On 20 December, 2016, the Group’s subsidiary, Tourism Fund filed a lawsuit to the Sichuan Higher People's Court against the non-fulfilment of commitments by Sichuan Zhengyin Investment Co., Ltd., Zhongsheng Wanji Culture Investment Group Co., Ltd., Poly Longma Asset Management Co., Ltd., and Chengdu Xinyi Investment Co., Ltd. regarding their obligations of profit distribution, difference offsetting, and equity repurchase according to the investment agreement. The Court made the rulings on (2017) Chuan Min Chu No.2 as follows: to freeze the land consolidation fund of RMB 170 million of the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. within the value range of RMB 240 million in the Dujiangyan Land Reserve Center, the corresponding rights and the bank deposit account of the fund in Chengdu Wucheng Sub-branch of China CITIC Bank (account number: 7412010182600096113). The freezing period of the bank account is one year, and the freezing period of other property rights is three years. The second instance of the case was judged by the Supreme People's Court Civil Judgment ((2018) Supreme Faculty No. 764). Sichuan Zhengyin Investment Co., Ltd. and

Page 106 (Total 122 pages)

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Zhongsheng Wanji Culture Investment Group Co., Ltd. must pay for the equity repurchase’s amount and overdue interests. An application for enforcement is being made. (3) On 15 November, 2013, the Group's controlling subsidiary (shareholding ratio of 51.43%) Chengdu Financial Holding Financial Leasing Co., Ltd. (hereinafter referred to as “Financial Holding Leasing”) and Zigong City Huaran Natural Gas Co., Ltd. (hereinafter referred to as “Zigong Huaran”") signed the Financial Holding [2013] Rent No. 041 "Financial Lease Contract", Zigong Huaran applied for direct lease financing of RMB 60 million to Financial Holding Leasing to purchase LNG gas distribution station equipment and urban gas pipeline network equipment. Later, due to difficulties in the operation of Zigong Huaran, the rent was overdue. On 20 September, 2018, Financial Holding Leasing submitted the application for pre-litigation preservation to the Chengdu Intermediate People's Court, and it was accepted on the same day. The assets to be preserved mainly include the equities of 10 natural gas companies in Yunnan Province and Hunan Province held by Zigong Huaran and Shaanxi Ranchao Energy Technology Co., Ltd., and two bank accounts under the name of DENG Chao, the actual controller of Zigong Huaran. The above assets have been preserved. On 8 November, 2018, Financial Holding Leasing filed a lawsuit to the Chengdu Intermediate People's Court and received the (2018) Chuan 01 Min Chu No. 5104 notice of case acceptance from the Court on the same day. According to the ruling of the Court, the defendant Zigong Huaran shall pay for the rent, liquidated damages, lawyer's fees, insurance premiums of litigation preservation and other expenses to the plaintiff Financial Holding Lease within 10 days from the legal effect date of this judgment. The plaintiff Financial Holding Lease has the pledge of equity rights recorded in the registration notice of equity pledge, and has the mortgage right over the mortgage recorded in the certificate of other rights and the registration of chattel mortgage. There is no adverse impact on the company's production, operation, solvency and financial status.

2. Guarantee matters Please refer to Note (XI) 5(3) for the Group’s related guarantee matters. Other guarantee matters of the Group are as follows. In 2018, the Group provided joint guarantee for the corporate loans of Chengdu China Panda Display Technology Co., Ltd. with Chengdu Industrial Investment Group Co., Ltd., Chengdu Communications Investment Group Co., Ltd., Chengdu Environment Investment Group Co., Ltd., Chengdu Xingcheng Investment Group Co., Ltd., Chengdu Culture & Tourism Group Co., Ltd., and Nanjing China Panda Display Technology Co., Ltd. The amount of joint guarantee is US $500 million and RMB 7 billion. The loan period is 10 years, and the guarantee period is 3 years from the date of debt maturity. The Company's guaranteed amount is RMB 519 million and holds a joint guarantee liability.

VI. Events after the balance sheet date The Group has no events after the balance sheet date that need to be disclosed.

VII. Relationship between the related parties and the transactions 1. Parent company of the Group Voting Shareholding Nature Registered rights Registered ratio (%) in Name of the company of capital percentage address the business (%) in the Group Group Chengdu State-owned Assets Supervision and Administration Chengdu 60.00 60.00 Commission

2. Associates and joint ventures of the Group

Page 107 (Total 122 pages)

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1. Equity in the associates or joint ventures (1) Basic information of significant associates and joint ventures Shareholding Main Nature of ratio (%) Name of the invested company business Address Accounting business Indir treatment location Direct ect 1.Associates Scientific Chengdu Weixin Jiaozi Digital research and Equity Chengdu Chengdu 30.00 Technology Co., Ltd. technology method services 2. Joint ventures Monetary and financial Equity Bank of Chengdu Co., Ltd. Chengdu Chengdu 18.06 services method

Monetary Chengdu Rural Commercial and financial Equity Chengdu Chengdu 9.81 Bank Co., Ltd. services method

Insurance Equity Jintai Insurance Co., Ltd. Chengdu Chengdu business 20.00 method

Business Chengdu Yinke Venture Capital Equity Chengdu Chengdu services 20.00 Co., Ltd. method

Southwest United Equity Business Equity Chengdu Chengdu 27.40 Exchange Co., Ltd. services method

Page 108 (Total 122 pages)

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3. Other related parties Company Relationship with the Group Note Chengdu Xie Cheng Asset Management Co., Shareholder of the Group Ltd. Enterprises controlled by the Chengdu Xin Tian Yi Investment Co., Ltd. controlling shareholders of the Company Da Yi Financial Holding Real Estate Co., Ltd. Subsidiary of an associate

4. Related party transactions (1) Related transactions (2) Usage of funds Amount of the Amount of the previous Name of the related party current period period Da Yi Financial Holding Real Estate Co., Ltd. -8,862,933.59 -16,891,854.19

Total -8,862,933.59 -16,891,854.19 Note: 1. Interest expense is a positive number and interest income is a negative number. 2. The money-lending agreement with Chengdu Xiecheng Asset Management Co., Ltd. has not stipulated interests, and the group has not charged interests in the current period.

Page 109 (Total 122 pages)

− F-111 − (3) Related guarantee

Chengdu Financial City Chengdu Jiaozi Investment Development Joint liability Loan No Financial Holding None 70,000.00 Co., Ltd. Group Co., Ltd. guarantee guarantee

− F-112 Chengdu Financial City Chengdu Jiaozi Investment Development Joint liability Loan No Financial Holding None 30,000.00 Co., Ltd. Group Co., Ltd. guarantee guarantee

Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan No Yi Investment Co., Holding Group Co., Ltd. None 50,000.00 Ltd. guarantee guarantee

Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan No Yi Investment Co., Holding Group Co., Ltd. None 70,000.00 Ltd. guarantee guarantee

Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan No Yi Investment Co., Holding Group Co., Ltd. None 30,000.00 30,000.00 Ltd. guarantee guarantee

Chengdu Jiaozi Chengdu Dingli Asset Joint liability Loan No Financial Holding Management Co., Ltd. None 20,000.00 20,000.00 Group Co., Ltd. guarantee guarantee

Chengdu Jiaozi Chengdu Dingli Asset Joint liability Loan Financial Holding Management Co., Ltd. None 20,000.00 20,000.00 No guarantee guarantee Group Co., Ltd. Page 110 (Total 122 pages)

Chengdu Jiaozi Chengdu Financial Holding Joint liability Loan Financial Holding None 10,000.00 10,000.00 No Real Estate Co., Ltd. Group Co., Ltd. guarantee guarantee

Chengdu Jiaozi Chengdu Financial City Joint liability Loan No Financial Holding Investment Development None Group Co., Ltd. Co., Ltd. guarantee guarantee 5,000.00

Chengdu Jiaozi Chengdu Financial City Joint liability Loan Financial Holding Investment Development None No Group Co., Ltd. Co., Ltd. guarantee guarantee

Chengdu Jiaozi Chengdu Financial City Joint liability Loan No Financial Holding Investment Development 18,500.00 None Group Co., Ltd. Co., Ltd. guarantee guarantee

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Page 111 (Total 122 pages)

5. Related party balances (1) Accounts receivable Related parties˄item˅ Closing balance Opening balance Jintai Insurance Co., Ltd. 11,212,476.55 11,404,738.50 Total 11,212,476.55 11,404,738.50 (2) Other receivables Related parties˄items˅ Closing balance Opening balance

Chengdu Xie Cheng Asset Management Co., 906,777,528.97 1,188,685,750.14 Ltd.

Chengdu Xin Tian Yi Investment Co., Ltd. 1,354,087,575.54 1,504,087,575.54

Da Yi Financial Holding Real Estate Co., Ltd. 153,839,735.37 18,623,651.02

Total 2,414,704,839.88 2,711,396,976.70 (3) Other non-current assets Related parties˄item˅ Closing balance Opening balance

Chengdu Xie Cheng Asset Management 525,277,000.00 525,277,000.00 Co., Ltd. (4) Advances from customers Related parties˄item˅ Closing balance Opening balance

Chengdu Hi-tech Investment 565,520,000.00 565,520,000.00 Group Co., Ltd.

VIII. Notes to main items of financial statements of the parent company 1. Other receivables (1) Other receivables disclosed by categories Item Closing balance Opening balance Interests receivable 9,442,637.10 9,945,270.72 Dividends receivable 17,100,000.00 232,100,000.00 Other receivables 3,789,343,955.25 4,511,294,471.88 Total 3,815,886,592.35 4,753,339,742.60 Below are the notes to interest receivables Item Closing balance Opening balance Other 9,442,637.10 9,945,270.72 Total 9,442,637.10 9,945,270.72 Below are the notes to dividends receivable Item Closing balance Opening balance Chengdu Dingli Asset Management Co., Ltd. 25,000,000.00

Chengdu Rongxing Venture Capital 15,000,000.00 Co., Ltd.

Page 112 (Total 122 pages)

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Item Closing balance Opening balance Chengdu Financial Holding Real Estate Co., Ltd. 31,000,000.00 Zhong Rong Security Service Co., Ltd. 144,000,000.00 Chengdu Financial Holding Micro Credit Co., Ltd. 17,100,000.00 17,100,000.00

Total 17,100,000.00 232,100,000.00 Below are the notes to other receivables Closing balance

Category Book balance Provisions Percentage Percentage Book value Amount Amount (%) (%)

Receivables that are individually significant in amount and provided for bad debt separately

Receivables provided for bad debt according 3,789,343,955.25 3,789,343,955.25 to portfolio of credit risk characteristics

Including: Aging 48,744,840.70 48,744,840.70 portfolio

Related party portfolio 3,740,599,114.55 3,740,599,114.55

Risk free portfolios of margins, government funds, etc.

Subtotal

Receivables that are individually insignificant in amount but provided for bad debt separately

Total 3,789,343,955.25 3,789,343,955.25

Page 113 (Total 122 pages)

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Continued˖

Opening balance

Category Book balance Provisions Percentage Amo Percentage Book value Amount (%) unt (%)

Receivables that are individually significant in amount and provided for bad debt separately

Receivables provided for bad debt according to 4,510,664,831.08 99.99 4,510,664,831.08 portfolio of credit risk characteristics

Including: Aging 287,877,082.51 6.38 287,877,082.51 portfolio

Related party 4,222,787,748.57 93.60 4,222,787748.57 portfolio

Subtotal 4,510,664,831.08 99.99 4,510,664,831.08

Receivables that are individually insignificant in 629,640.80 0.01 629,640.80 amount but provided for bad debt separately

Total 4,511,294,471.88 100.00 4,511,294,471.88 (2) Bad debts provided for, recovered or reversed in the current period: The amount of bad debts provided for, recovered or reversed in the current period is RMB 0. (3) Other receivables provided for bad debt according to portfolio of credit risk characteristics: Other receivables provided for bad debt according to the aging analysis method in the portfolio are as follows.

Page 114 (Total 122 pages)

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Closing balance Percentage Provision for bad of Book balance Aging debt provision (%) Within 1 year (including 1 year) 48,057,361.86 98.59

1-2 year (including 2 year) 687,478.84 1.41

Total 48,744,840.70 100

Opening balance Aging Book balance Book balance Within 1 year 287,877,082.51 (including 1 year) Total 287,877,082.51 Please refer to note (IV) 5 for the basis of determining the portfolio. Other receivables in the portfolio whose bad debt provisions are made by other methods: (4) The top 5 debtors based on the closing balance of the other receivables Percentage in the closing Provisio Nature of balance of the ns for Name of the debtors Book balance Aging fund total other bad receivables debts ˄%˅ Chengdu Financial Related 1,395,058,828.15 Holding Real Estate transactions 1-2 years 36.82 Co., Ltd.

Chengdu Xin Tian Yi Related 1,351,625,967.54 Investment transactions 1-2 years 35.67 Management Co., Ltd.

Chengdu Xie Cheng Related 604,186,211.23 Asset Management transactions 1-2 years 15.94 Co., Ltd.

Chengdu Dingli Asset Related 335,287,485.26 1-2 years 8.85 Management Co., Ltd. transactions

Chengdu Jiaozi Xinxing Financial Related 48,751,357.65 1-2 years 1.29 Investment Group Co., transactions Ltd. Total 3,734,909,849.83 98.56

2. Long-term equity investment Closing balance Item Impairment Book balance Book value provisions Investment in 11,916,210,650.32 10,500,000.00 11,905,710,650.32 subsidiaries

Page 115 (Total 122 pages)

− F-117 −

Closing balance Item Impairment Book balance Book value provisions Investment in associates and joint 11,598,708,910.18 11,598,708,910.18 ventures Total 23,514,919,560.50 10,500,000.00 23,504,419,560.50 Continued˖ Opening balance Item Impairment Book balance Book value provisions Investment in 10,630,890,154.59 10,500,000.00 10,620,390,154.59 subsidiaries Investment in associates and joint 11,003,112,636.96 11,003,112,636.96 ventures Total 21,634,002,791.55 10,500,000.00 21,623,502,791.55 (1) Investment in subsidiaries Provision at the end Provision Invested Opening of the Increase Decrease Closing balance made in company balance period this period Closing balance Chengdu Dingli Asset 1,089,593,410.30 1,089,593,410.30 Manageme nt Co., Ltd. Chengdu Rongxing Venture 499,996,060.99 499,996,060.99 Capital Co., Ltd. Chengdu Financial Holding 50,000,000.00 50,000,000.00 Financial Service Co., Ltd. Chengdu Financial Holding 1,175,000,000.00 1,175,000,000.00 Real Estate Co., Ltd. Chengdu Financial Holding Tourism Developme 427,500,000.00 427,500,000.00 nt Equity Investment Fund Co., Ltd.

Page 116 (Total 122 pages)

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Provision at the end Provision Invested Opening of the Increase Decrease Closing balance made in company balance period this period Closing balance Chengdu Financial Holding Financial Developme 427,500,000.00 427,500,000.00 nt Equity Investment Fund Co., Ltd. Chengdu Jiaozi Xinxing Financial 999,750,000.00 1,000,000,000.00 1,999,750,000.00 Investment Group Co., Ltd. Chengdu Financial Holding 102,600,000.00 5,400,000.00 108,000,000.00 Data Service Co., Ltd. Chengdu Financial Holding 20,000,000.00 20,000,000.00 Credit Reference Co., Ltd. Chengdu Jiaozi Dongjin Investment Developme 1,000,000.00 1,000,000.00 nt Partnership (Limited Partnership) Chengdu Financial City 2,336,442,382.41 2,336,442,382.41 Investment Developme nt Co., Ltd. Chengdu Western Cultural Tourism 134,640,000.00 134,640,000.00 Equity Investment Fund Partnership

Page 117 (Total 122 pages)

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Provision at the end Provision Invested Opening of the Increase Decrease Closing balance made in company balance period this period Closing balance (Limited Partnership) Chengdu Rural Property Rights 30,000,000.00 30,000,000.00 Collection and Storage Co., Ltd. Chengdu Financial Holding Industry Leading 10,000,000.00 10,000,000.00 Equity Investment Fund Manageme nt Co., Ltd. Chengdu Financial Holding 49,985,000.00 49,985,000.00 Wealth Fund Chengdu Security 611,693,049.33 611,693,049.33 Service Corporation Chengdu Financial City Constructio n and Developme 150,000,000.00 150,000,000.00 nt Investment Manageme nt Center (Limited Partnership) Chengdu Yihang Asset 1,500,000,000.00 1,500,000,000.00 Manageme nt Co., Ltd. Chengdu Jiaozi Commercia 268,000,000.00 268,000,000.00 l Factoring Co., Ltd

Page 118 (Total 122 pages)

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Provision at the end Provision Invested Opening of the Increase Decrease Closing balance made in company balance period this period Closing balance Chengdu Financial Dreamwork 380,000,000.00 380,000,000.00 Investment Manageme nt Co., Ltd. Chengdu Smart Car City 65,000,000.00 260,000,000.00 325,000,000.00 Developme nt Co., Ltd. Chengdu Jiaozi Supply Chain 45,000,000.00 45,000,000.00 Financial Services Co., Ltd. Chengdu Jiaozi Industry 10,000,000.00 10,000,000.00 Fund Manageme nt Co., Ltd. Chengdu Jingguang Enterprise 286,920,495.73 286,920,495.73 Manageme nt Co., Ltd. Chengdu City Card 10,500,000.00 10,500,000.00 10,500,000.00 Co., Ltd. Chengdu Exchange Investment 237,690,251.56 237,690,251.56 Group Co., Ltd. Total 10,630,890,154.59 1,553,320,495.73 268,000,000.00 11,916,210,650.32 0.00 10,500,000.00

(2) Investment in associates and joint ventures

Invested Closing balance Opening balance company Book balance Provisions Book value Book balance Provisions Book value

1. Associates 2.Joint ventures Chengdu Tianfu 144,181,309.64 144,181,309.64 152,607,144.94 152,607,144.94 Tong Financial

Page 119 (Total 122 pages)

− F-121 −

Invested Closing balance Opening balance company Book balance Provisions Book value Book balance Provisions Book value Services Co., Ltd. Jintai Insurance 195,858,897.76 195,858,897.76 193,311,161.99 193,311,161.99 Co., Ltd. Vanho Securities 171,025,975.21 171,025,975.21 Co., Ltd. Chengdu Rural

Commercial 4,243,020,047.54 4,243,020,047.54 3,975,193,319.04 3,975,193,319.04 Bank Co., Ltd. Bank of 6,922,822,604.12 6,922,822,604.12 6,416,913,061.52 6,416,913,061.52 Chengdu Chengdu

Institution of

New Economic 2,564,897.65 2,564,897.65 3,126,247.79 3,126,247.79

Development Co., Ltd. Chengdu Intellectual

Property 90,261,153.47 90,261,153.47 90,935,726.47 90,935,726.47 Exchange Co., Ltd.

Subtotal 11,598,708,910.18 11,598,708,910.18 11,003,112,636.96 11,003,112,636.96

Total 11,598,708,910.18 11,598,708,910.18 11,003,112,636.96 11,003,112,636.96 (Continued) Increase and decrease of investment in the current period

Subtotal

Page 120 (Total 122 pages)

− F-122 −

Increase and decrease of investment in the current period

Decl aratio Invested Investment Other n of Provisi Inc company loss under the comprehens Changes in cash on for rea Decrease Increase equity ive income other equity divid impair se method adjustments ends ment or profit s 2.Joint ventures Chengdu Tianfu Tong Financial -8,425,835.30 Services Co., Ltd. Jintai Insurance 2,547,735.77 Co., Ltd. Vanho -104,551,393.0 59,546,224.80 61,560.01 -6,989,917.38 Securities 4 Co., Ltd. Chengdu Rural Commercial 267,826,728.50 Bank Co., Ltd. Bank of 505,909,542.60 Chengdu Chengdu Institution of New -561,350.14 Economic Developmen t Co., Ltd. Chengdu Intellectual Property -674,573.00 Exchange Co., Ltd. Subtotal 59,546,224.80 766,622,248.43 61,560.01 -104,551,393.04 Total 59,546,224.80 766,622,248.43 61,560.01 -104,551,393.04 -6,989,917.38

3. Investment income Amount in the Amount in the previous Source of investment income current period period Long-term equity investment income calculated 766,622,248.43 605,438,746.40 under the equity method Investment income arising from the disposal of -648,321.61 long-term equity investment Investment income arising from the period of

holding financial assets at fair value through profit

Page 121 (Total 122 pages)

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AUDITOR’S REPORT

ZHSZ (2020) No.280024

To All Shareholders of Chengdu Jiaozi Financial Holding Group Co., Ltd.:

Opinion

We have audited the financial statements of Chengdu Jiaozi Financial Holding Group Co., Ltd. (hereinafter referred to as “the Group”), which consist of the consolidated and the parent company’s balance sheets as at 31 December 2019, the consolidated and the parent company’s income statements, the statements of cash flows, and the changes in owners’ equity for the year then ended, and notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and parent company’s financial position as at 31 December 2019, and their financial performance and cash flows for the year then ended in accordance with the Accounting Standards for Business Enterprises.

Basis of Opinion

We conducted our audit in accordance with the Chinese Standards on Auditing (CSA). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report. We are independent of the Group in accordance with Code of Ethics for Chinese Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other Information

Management of the Group is responsible for the other information. The other information includes information in the 2019 annual report of the Group, but does not include the financial statements and our auditors’ report thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

− F-125 −

If, based on our work we have performed, we conclude that there is a material misstatement of this other information; we are required to report the fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Management of the Group is responsible for the preparing and presenting fair the financial statements in accordance with the Accounting Standards for Business Enterprises, and designing, implementing and maintaining internal control which is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the assumption of going concern, unless the Management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the CSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the CSA, we exercise professional judgement and maintain professional skepticism throughout the audit. At the same time, we also:

•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

澳

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Chengdu Jiaozi Financial Holding Group Co., Ltd. Notes to the financial statements for the year ended 31 December 2019 (All amounts in RMB unless otherwise stated)

I. Company profile Chengdu Jiaozi Financial Holding Group Co., Ltd. (hereinafter referred to as “the Company” or “Company”) is formerly known as “Chengdu Investment Holding Group Co., Ltd.” or “Chengdu Finance Holdings Group Co., Ltd.” The Company and all its subsidiaries are referred to as “the Group”. The Company is a state-holding limited liability company incorporated in the Chengdu Administration for Industry and Commerce, which was approved by the Chengfu Letter [2008] No. 75 document of Chengdu Municipal People's Government on 3 September, 2008. The Company obtained the business license with the unified social credit code of 915101006796561013 issued by the Chengdu Administration for Industry and Commerce on 8 January, 2019. As of 31 December, 2019, the registered capital of the Group is RMB 5 billion and the actual amount of shareholders’ contributed capital and the shareholding ratio are as follows. Shareholding Investors Amount (RMB’0,000) ratio˄%˅ Chengdu State-owned Assets Supervision 300,000.00 60.00 and Administration Commission Chengdu Xie Cheng Asset Management Co., Ltd. 200,000.00 40.00

Total 500,000.00 100.00

1. Organization type and registered address Organization type: limited liability company (state-holding company) Registered address: No. 3 Building, Tianfu International Financial Center, No. 966 North Section of Tianfu Avenue, Chengdu

3. Ultimate controller The ultimate controller of the Group is Chengdu State-owned Assets Supervision and Administration Commission.

4. Approval of the financial statements The financial statements were approved by the Company on 28 April, 2020.

II. Basis of preparation of the financial statements

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by the No. 76 Order of the Ministry of Finance) and 42 specific accounting standards, the guidelines for the application of enterprise accounting standards, the interpretation of enterprise accounting standards and other relevant regulations promulgated and amended on and after 15 February, 2006 (hereinafter collectively referred to as the “Accounting Standards for Business Enterprises”).

III. Declaration of compliance with the Accounting Standards for Business Enterprises

IV. Significant accounting policies and accounting estimates

2. Operating cycle The normal operating cycle of the Group is one year.

3. Functional currency The currency used by the Group in preparing the financial statements is RMB.

4. Business combination (1) Scope of consolidated financial statements The scope of consolidated financial statements shall be determined on the basis of control and shall include the Group and all the subsidiaries’ annual financial statements ended on 31 December, 2018. A subsidiary is an entity that is controlled by the Group, including a company, a divisible part of the invested entity, and a structured entity controlled by the Group, etc. Control exists when the investor has power over the investee and rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investment returns. (2) Preparation of consolidated financial statements The consolidated financial statements are prepared by the Group based on the financial statements of the Group itself and its subsidiaries based on other relevant materials. When preparing for the consolidated financial statements, the Group as a whole will be presented as one single accounting entity. The consolidated financial statements are prepared in accordance with the requirements of recognition, measurement and presentation set by the Accounting Standards for Business Enterprises and a unified accounting policy to present the overall financial status, operating outcomes, and cash flows of the Group. When preparing for the consolidated financial statements, if there any difference in accounting policies and accounting periods between the Group and its subsidiaries, necessary adjustments shall be made to the subsidiaries’ financial statements based on the accounting policies and periods of the Group. Financial statements of subsidiaries acquired not under common control shall be adjusted based on the fair value of identifiable net assets defined on the acquisition date. (3) Presentation of minority interests The portion of a subsidiary’s equity that is not attributable to the Company shall be treated as the minority interests and recorded as “minority interests” in the equity section on the consolidated balance sheets.

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If the portion of a subsidiary’s equity in the current net profit or loss is attributable to the minority interests, it shall be recorded below the net profit section as “minority interests” on the consolidated income statement. (4) Treatment of excess losses If the amount of a subsidiary’ loss for the current period shared by the minority shareholders exceeds the opening balance of the subsidiary’s equity attributable to the minority shareholders, the excess losses shall be offset against the minority interests. (5) Treatment of acquired and disposed subsidiaries in the current period When preparing for the consolidated balance sheet, the opening balance shall be adjusted for a subsidiary combined under common control during the reporting period and shall not be adjusted for a subsidiary combined not under common control. Besides, no adjustment shall be made to the opening balance of the consolidated balance sheet for a disposed subsidiary during the reporting period. For a subsidiary combined under common control during the reporting period, its income, expense and profit from the beginning of the combination period to the end of the reporting period shall be included in the consolidated income statement. For a subsidiary combined not under common control, its income, expense, and profit from the acquisition date to the ending on the reporting period shall be included in the consolidated income statement and the consolidated statement of cash flows respectively. For a subsidiary disposed during the reporting period, its income, expense, profit, and cash flows from the subsidiary’s beginning date to the disposal date shall be included in the consolidated income statement and the consolidated statement of cash flows respectively. If control over a former subsidiary is lost due to partial disposal of equity investment or any other reasons, the remaining part of the equity investment shall be re-measured at fair value on the date when control is lost. After deducting the proportion of net assets in the former subsidiary calculated by the original shareholding percentage since the acquisition date, the sum of the consideration received on disposal of the equity investment and the fair value of remaining equity investment shall be recorded in investment gain of the period in which the control is lost. Other comprehensive income related to the equity investment in the former subsidiary shall be transferred to the current investment gain when the control is lost. The difference between the long-term equity investment obtained from the acquisition of minority interests and the portion of identifiable net assets in the subsidiary calculated by the new shareholding percentage, or the difference between the income from disposing of partial equity investment in a subsidiary without losing control and the portion of net assets in the subsidiary corresponding with the disposed long-term equity investment, shall both be adjusted to the share premium account in the capital reserve section on the consolidated balance sheet. If the share premium account in the capital reserve section is not sufficient to offset the difference, the retained profit shall be adjusted. (6) Treatment of consolidated financial statements when gradual disposal of equity investment is made until the control is lost If the transactions related to disposal of equity investment in a subsidiary until control is lost become a package deal, each transaction shall be accounted for as one single transaction of disposing equity investment which results in losing control of the subsidiary. However, before losing control, the difference between each disposal income and the disposal of investment which is corresponding to the portion of net assets in the subsidiary shall be recognized as other comprehensive income in the consolidated financial statement, and then shall be transferred to the current profit and loss when control is actually lost. If the transactions do not become a package deal, the accounting treatment shall be carried out before and on the date of losing control in accordance with the aforementioned accounting policies for partial disposal of equity investment in subsidiary with and without losing control respectively. Multiple transactions shall be accounted for as a package deal if the trade terms, conditions and economic impact of disposing of the equity investment in a subsidiary satisfy one or more of the following conditions.

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ķ These transactions are concluded at the same time or when the impact of one transaction on each other has been considered. ĸ These transactions should be bundled as a whole to achieve a complete business result. Ĺ The occurrence of one single transaction depends on at least one of the other transactions. ĺ A single transaction is not economical on its own but becomes economical when it is combined with other transactions.

5. Recognition and measurement of bad debt provision for accounts receivable (1) Receivables that are significant individually and are provided for bad debt individually The criteria or monetary standard to decide whether account receivables are individually significant or not: The Group determines that the receivables with an individual amount worth more than 15% of the year-end balance are considered to be significant receivables. Methods of provision for bad debts to the individually significant receivables: Impairment test shall be carried on individually on each receivable. If there is objective evidence showing that the receivable has been impaired, a provision shall be made for bad debts according to the difference between the present value of the expected future cash flow and the book value of the receivable, and the provision shall be included in the current profit or loss. Accounts receivable, reserve fund and margin between the Group, state-holding entities, government departments, and financial institutions are not subject to bad debt provision when the non-recovery risk is very extremely low. (2) Receivables that are provided for bad debt according to the credit risk characteristics The accounts receivable portfolios of the Group are divided into the aging portfolio, related-party portfolio and no-risk portfolio such as reserve fund and government-related funds. The related-party portfolio and no-risk portfolio are in general considered to have very low risk of non-recovery, and bad debt provisions shall not be made. The aging analysis method shall be used to provide for the bad debt to the aging portfolio.

Provision percentage of the Provision percentage of the Aging accounts receivable (%) other receivables (%) Within 1 year (including 1 0.00 0.00 year) 1ˉ2 years 5.00 5.00

2ˉ3 years 20.00 20.00

3ˉ4 years 35.00 35.00

4ˉ5 years 50.00 50.00

6. Classification of joint arrangements and accounting treatment for the joint operations (1) Classification of joint arrangements

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A joint arrangement is an arrangement in which two or more parties have joint control. The Group classifies joint arrangements into joint operations and joint ventures. A joint operation is a joint arrangement in which the parties have rights to the assets and have obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement in which the parties have rights to the net assets relating to the arrangement. A joint arrangement that is structured not via a separate entity is classified as a joint operation. A separate entity is an entity that has a separate and identifiable financial structure, including those have a separate legal personality and those do not have legal personality but are recognized by the law. A joint arrangement that is structured via a separate entity is classified as a joint venture. If there is tangible evidence showing that the joint arrangement meets one of the following conditions and complies with applicable laws and regulations, it shall be classified as a joint operation. ķ The legal form of the joint arrangement indicates that the parties have rights to the assets and have obligations to the liabilities relating to the arrangement. ĸ The terms of the contractual arrangement state that the parties have rights to the assets and obligations to the liabilities relating to the arrangement. Ĺ Any other facts and circumstances indicate that the parties have rights to the assets and obligations to the liabilities relating to the arrangement, e.g., the parties have rights to almost all the output of the arrangements while the settlement of the liabilities in the arrangements depends on their support. The provision of guarantees to third parties by the arrangement parties does not, by itself, determine that the parties have obligations for the liabilities. The parties who are liable to the obligation of capital contribution subscribed to the joint arrangement shall not be treated as if the parties have the obligations relating to the arrangement. The Group shall re-assess the classification of the joint arrangements when facts and circumstances changes and have caused the changes in the parities’ rights and obligations in the arrangement. The Group shall classify the various joint arrangements separately for multi-arrangements under a same framework agreement for different activities. Please refer to Note (V) 13 for the basis of determining joint control and the accounting policy on the measurement of joint ventures. (2) Accounting treatment of joint operations The Group shall recognize items relating to its portions of interests in a joint operation, and account for them in accordance with the relevant Accounting Standards for Business Enterprises. The accounting treatments include the recognition of the following items. ķ The Group’s solely-owned assets and the jointly-owned assets based on its share of the operation. ĸ The Group’s solely-assumed liabilities and jointly-assumed liabilities based on its share of the operation. Ĺ The Group’s income from selling its share of the output in the joint operation. ĺ The Group’s income from selling the output of the joint operation based on the Group’s share of the operation. Ļ The Group’s solely-incurred expenses and expenses related to the joint operation based on its share. When the Group contributes or sells assets (excluding those constitute businesses) to the joint operation, it shall only recognize the gains and losses arising from the sale of assets to third parties by the joint operation to the extent of shares owned by the other parties in the operation before the transaction. Should the impairment loss of the assets contributed or sold by the Group complies with the regulations of the “Accounting Standard for Business Enterprises No. 8 - Impairment of Assets”, the Group shall recognize the full amount of impairment. When the Group purchases assets (excluding those constitute businesses) from the joint operation, it shall only recognize the gains and losses arising from the sale of assets to third parties to the extent of shares owned by the other parties in the operation before the transaction. Should the impairment loss of the assets purchased by the Group complies with the regulations of the “Accounting Standard for Business

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Enterprises No. 8 - Impairment of Assets”, the Group shall recognize part of the loss based on its share of operation. When the Group does not have joint control over the joint operation, the accounting treatment shall be carried out as stated above if it has rights to the asset and obligations to the liabilities relating to the arrangement. Otherwise, the accounting treatment shall be carried out according to the “Financial instrument” or the “Long-term equity investment” measurement policy stipulated by the Group.

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Held-to-maturity investments are non-derivative financial assets that have fixed or determinable payments and fixed maturity dates and that the Company has the positive intention and ability to hold to maturity. C. Loans and receivables Loans and receivables are non-derivative financial assets that have fixed or determinable payments and that are not quoted in an active market. D. Available-for-sale financial assets Available-for-sale financial assets refer to non-derivative financial assets that are designated as available-for-sale at initial recognition and other than those mentioned above. Once the Group classifies a certain financial asset as financial assets at fair value through profit or loss at initial recognition, it shall not be re-classified as other types of financial assets, and vice versa. 荜 Financial assets are initially recognized at fair value. In the case of financial assets at fair value through profit or loss, the related transaction costs are recognized in the profit or loss for the current period. For other types of financial assets, related transaction costs are included in the initial recognition amounts. 荝 Subsequent measurement of financial assets A. Financial assets at fair value through profit or loss are subsequently measured at fair value. The gains and losses arising from changes in the fair value of the assets are recognized in the profit or loss of the current period. B. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gains and losses arising from de-recognition, impairment and amortization are recognized in the profit or loss of the current period. C. Loans and receivables are subsequently measured at amortized cost using the effective interest method. The gains or losses arising from de-recognition, impairment or amortization are recognized in the profit or loss of the current period. D. Available-for-sale financial assets are subsequently measured at fair value. The gains and losses arising from changes in fair value of the assets are recognized as other comprehensive income, and are transferred to the profit or loss of the current period until the assets are derecognized. Interest income and dividends accrued on the assets during the holding period are recognized as the profit or loss of the current period. Both the equity instrument investments that are not quoted in an active market and the fair value cannot be reliably measure, and derivative financial assets that are linked with the equity instrument and must be settled by delivering the equity instrument shall be measured at cost. ĺImpairment provision of financial assets A. The Group assesses the book value of financial assets except for those at fair value through profit or loss at the end of the reporting period. If there is objective evidence showing that the financial asset is impaired, impairment loss shall be recognized and provisions of impairment shall be made. B. The objective evidence that the Group uses to determine the impairment are as follows. a˅Significant financial difficulty of the issuer or the debtor. b˅A breach of contract by the debtor, such as a default or delinquency in interest or principal payments. c˅The creditor makes concession to the debtor who has financial difficulty due to economic or legal reasons . d˅It is probable that the debtor will go bankruptcy or conduct other financial reorganization. e˅Due to major financial difficulties of the issuer, the financial assets can not continue to be traded in the active market f˅It is impossible to identify whether the cash flow of a certain asset in a group of financial assets has decreased, but after an overall evaluation based on the public data, it is found that the expected future cash flow of the group of financial assets has indeed decreased and can be measured since the initial recognition. For example, the debtor's payment ability of the group of financial assets has gradually deteriorated, or the unemployment rate of the debtor's country or

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region has increased, or the price of collateral in the region where it is located has dropped significantly, and the industry is in recession. g˅Significant adverse changes have taken place in the technical, market, economic or legal environment in which the debtor operates, so that the equity instrument investor may not be able to recover the investment cost. h˅The fair value of equity instrument investment has a serious or non-temporary decline. i˅Other objective evidence indicating that the financial assets have incurred impairments. C. Measurement of impairment loss of financial assets a˅Measurement of held-to-maturity investments, loans and accounts receivable The provision of impairment loss on held-to-maturity investments, loans and accounts receivable (financial assets subsequently measured at amortized cost) shall be measured as the difference between the financial assets’ carrying amount and the present value of estimated future cash flows and shall be recognized in the profit or loss of the current period. The Group conducts impairment tests individually on financial assets that are individually significant. The Group conducts impairment tests on financial assets that are not individually significant individually or includes them in a financial portfolio with similar characteristics of credit risks. Assets that are not impaired in the individual test will be included in the portfolio and tested again, no matter the asset’s value is individually significant or no. Individual asset that is recognized of impairment loss will not be included in a portfolio with similar characteristics of credit risk for the impairment test. After the Group recognizes the impairment loss of the financial assets measured at amortized cost, the impairment loss originally recognized shall be reversed and included in the current profit and loss if there is objective evidence showing that the value of the financial asset has been restored, which is objectively related to the events occurred after the loss is recognized. The loans that are divided into asset portfolios according to the five classifications of risk characteristics, and the proportion of provision for loan losses based on asset portfolio is as follows: Classification of loans Proportion (%)

Normal loans 1.5

Concerned loans 3

Substandard loans 30

Doubtful loans 60

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Group shall be measure the difference between the book value of the equity instrument investment or derivative financial assets and the present value determined by discounting the future cash flow according to the current market return rate of similar financial assets, and recognize the difference as impairment loss in the current profit and loss. Once the impairment loss on available-for-sale financial assets is recognized, if there is objective evidence showing that the value of financial assets has been recovered which is objectively related to events after the recognition of the impairment loss, the previously recognized impairment losses shall be reversed and charged in the current profit and loss. Impairment loss incurred on an available-for -sale equity instrument investment shall not be reversed through profit or loss. At the same time, for an equity instrument not quoted in an active market and whose fair value cannot be reliably measured or on a derivative financial asset linked with the equity instrument and must be settled by delivering the equity instrument, the impairment loss incurred shall not be reversed. (3) Classification and measurement of financial liabilities 荛 The Group’s financial liabilities are classified as financial liabilities at fair value through profit or loss and other financial liabilities, Financial liabilities at fair value through profit or loss include trading financial liabilities and financial liabilities designated as at fair value through profit or loss in the initial recognition. Trading financial liabilities refer to the financial liabilities meeting one of the following conditions. The purpose of undertaking the financial liabilities is to repurchase them in the near future. They are a part of identifiable combination of financial instruments for centralized management, and there is objective evidence showing that the enterprise has recently managed the portfolio in a short-term profit seeking way. They are derivatives, but not including derivatives designated as effective hedging instruments or financial guarantee contracts, and derivatives that are linked to equity instrument not quoted in an active market and whose fair value cannot be reliably measured and that must be settled by delivering the equity instrument. Financial liabilities can only be designated as at financial liabilities measured at fair value through current profit or loss at initial recognition if they meet one of the following requirements. a) The designation can eliminate or significantly reduce the inconsistencies in recognition and measurement of related gains and losses due to the different measurement basis of financial instruments. b) It is stated clearly in the formal written document of risk management or investment strategies that the portfolio of financial instruments shall be managed and evaluated at fair value, and reported to the key management personnel. c) The financial liabilities include hybrid instruments which consist of one or more embedded derivatives, except that the embedded derivatives have no major impact on cash flow of the hybrid instruments or it is obvious that embedded derivatives should not be separated from the related hybrid instrument. d) The financial liabilities include hybrid instruments which consist of embedded derivatives, which need to be separated but cannot be measured individually on the acquisition date or on the subsequent balance sheet date. Once the Group classifies a certain financial liability as financial liability measured at fair value through current profit or loss at initial recognition, it shall not be re-classified as other financial liabilities, and vice versa. 荜 Financial liabilities are initially measured at fair value. For financial liability measured at fair value and changes recorded in the current profit or loss, relevant transaction costs are directly charged in the current profit or loss. For other financial liabilities, relevant transaction costs are recorded in the initial recognition amount. 荝 Subsequent measurement of financial liabilities A. Financial liabilities at fair value through profit or loss are subsequently measured at fair value, and gains or losses arising from changes in fair value are recognized in the profit or loss of the current period. B. Other financial liabilities are subsequently measured by amortized cost using effective interest rate. Page 21 (Total 141 pages)

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˄4˅Recognition basis and measurement of transfer of financial assets The Group derecognizes financial assets when it transfers substantially all the risks and rewards of ownership of the financial assets to the transferee. If the overall transfer of financial assets meets the conditions for de-recognition, the difference between the following two items shall be included in the current profit and loss. 荛 The carrying amount of the transferred financial assets. 荜 The sum of the consideration received for the transfer and the cumulative changes in fair value that had been recorded in other comprehensive income (if there are available-for-sale financial assets in the transferred financial assets). If the Group’s partial transfer of financial asset meets the de-recognition condition, the carrying amount of the financial asset shall be allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts. The difference between the values of the following two items shall be recognized in the profit or loss of the current period. 荛 The carrying amount of the derecognized part. 荜 The sum of the consideration received for the part derecognized and the value of the derecognized part corresponding to the cumulative changes in fair value previously recorded in other comprehensive income (if there are available-for-sale financial assets in the transferred financial assets). The value of cumulative changes in fair value previously recorded in other comprehensive income corresponding to the derecognized part shall be determined after this cumulative amount is allocated between the relative fair value of the part that continues to be recognized and the part that is derecognized in the financial assets. If a transfer of financial assets does not qualify for de-recognition, the transferred assets as a whole shall continue to be recognized, and the consideration received shall be recognized as a financial liability. For the transfer of continuing involvement of financial assets, the Group shall continue to recognize the relevant financial assets or financial liabilities to the extent of its continuing involvement to fully reflect the rights and obligations retained by the Group. ˄5˅Termination of recognition of financial liabilities The Group shall de-recognize the financial liability in full or in part when the prevailing obligations of the financial liability are relieved in all or in part. Where the Group enters into an agreement with a creditor to substitute the existing financial liabilities by assuming a new financial liability, and the contractual stipulations regarding the new financial liability is substantially different from that of the existing one, the Group shall terminate the recognition of the existing financial liability, and shall at the same time recognize the new financial liability. Where the recognition of a financial liability is totally or partially terminated, the difference between the carrying amount of the terminated part and the consideration paid (including the non-cash asset transferred out and the new financial liability assumed) shall be recorded in the current profits and losses. ˄6˅Offset between financial assets and financial liabilities Financial assets and financial liabilities are presented separately on the balance sheet, not offsetting each other. But if the following conditions are satisfied at the same time, the net balance after offsetting each other shall be presented on the balance sheet. The Group has legal rights to offset the recognized amount, and this kind of legal rights is currently executable. The Group plans to settle in net amount, or realize the financial assets and settle the financial liabilities at the same time. If the transfer of financial asset does not satisfy the de-recognition conditions, the transferor shall not offset the transferred financial assets and related liabilities.

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ultimate controller on the combining date. The difference between the carrying amount of net assets acquired by the combining party and the carrying amount of the consideration paid for the combination (or total par value of the shares issued) shall be adjusted to capital surplus. If the capital surplus is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. The business combination costs that are directly attributable to the combination, such as audit fees, valuation fees, and legal service fees shall be recognized in the profits or losses during the current period when they occurred. The bonds issued for a business combination or the handling fees, commissions and other expenses for the payment of other liabilities shall be recorded in initial measurement amount of the bonds issued or other debts. The handling fees, commissions and other expenses incurred in the issuance of equity securities in a business combination shall be offset against the premium income of equity securities, if the premium income is not sufficient, the retained earnings shall be offset. Where a relationship between a parent company and a subsidiary company is formed due to a business combination, the parent company shall, on the combining date, prepare consolidated financial statements according to the accounting policy of the Group. The date of the adjustment of comparatives in the consolidated financial statements shall be the later of the obtaining date when the combining party and the date when the combined party are under the control of the ultimate controller. (2) In the reporting period, the Group adopts acquisition method for business combination not under the common control. The combination cost is determined according to the following scenarios. 荛 When business combination is realized through a single exchange transaction, the cost of business combination is the aggregate of the fair value of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree on the acquisition date. 荜 For the business combination involved several exchange transactions, the accounting treatment for equity investment in acquiree held by acquirer before the acquisition date shall be carried out differently in individual and consolidated financial statements according to the following principles. A. In an individual financial statement, the sum of the carrying amount of equity investment in acquiree held by acquirer before the acquisition date and the increase in the cost of equity investment shall be recognized as the initial investment cost, which is accounted for using the cost method. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the acquiree had directly disposed of the related assets or liabilities. Accounting treatment shall be conducted on the previously-held equity investment before the acquisition date in accordance with the Accounting Standard for Business Enterprises No. 22 - Financial Instruments: Recognition and Measurement, and the accumulated changes in fair value previously included in other comprehensive income shall be transferred to the profit or loss for the current period upon commencement of the cost method. B. In the consolidated financial statements, equity investment in the acquiree held by the acquirer before the acquisition date shall be revalued at fair value on the acquisition date, and the difference between fair value and book value shall be included in investment income in the current period. If the equity investment in the acquiree held by the acquirer before the acquisition date involves other comprehensive income calculated under the equity method, the related other comprehensive income shall be recognized as the investment income for the period to which the acquisition date belongs. Moreover, the Group shall disclose in the notes the fair value of this equity investment in the acquiree before the acquisition date and the value of the related profit or loss re-measured by the fair value. Ĺ Audit fees, valuation fees, legal service fees, valuation and consulting fees, and other administrative expenses incurred in the business combination shall be recognized in the profit or loss for the current period when incurred. Commissions and other expenses that are incurred in the business combination for the issuance of equity or debt securities which is the consideration of business combination shall be included in the initial recognition amounts of securities. ĺWhen a Page 23 (Total 141 pages)

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business combination contract or agreement provides for a future event which may influence the cost of combination, if on the acquisition date the Group assumes that the future event is highly probable to occur and its impact on the cost of combination can be measured reliably, the future event shall be included in the cost of the business combination. On the acquisition date, the Group shall measure the assets given and liabilities incurred or assumed which is the consideration for a business combination at the fair value, and shall record the difference between the fair values and the carrying amounts into the profit and loss of the current period. On the acquisition date, the Group shall allocate the combination costs, and shall recognize each of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree in accordance with the following principles. (a) If the combination costs are higher than the fair value of the identifiable net assets obtained from acquiree, the difference shall be recognized as goodwill. (b) If the combination costs are lower than the fair value of the identifiable net assets obtained from acquiree, the measurement of the fair value of the identifiable assets, liabilities and contingent liabilities acquired as well as the combination costs shall be reviewed. If after the review, the combination cost is still lower than the fair value of the identifiable net assets of the acquiree, the difference shall be recorded into the profit and loss of the current period. When a relationship between a parent company and a subsidiary is formed due to a business combination, the Company shall prepare for a memorandum book to record the fair value of each of the identifiable assets, liabilities and contingent liabilities obtained from the subsidiary company on the acquisition date. When preparing for consolidated financial statements, it shall adjust the financial statements of the subsidiary on the basis of the fair value of the identifiable assets, liabilities and contingent liabilities determined on the acquisition date according to the Group’s accounting policy of “Consolidated financial statements”.

10. Classification and measurement of inventory (1) Classification of inventory: Inventories include raw materials, revolving materials, goods in stock, goods under development, and development costs, etc. (2) Recognition of inventory: The Group shall recognize inventories when the following conditions are satisfied. 荛 It is probable that future economic benefits associated with the inventories will flow to the enterprise. 荜 The cost of the inventories can be measured reliably. (3) Costing method for inventories received and delivered: The Group shall measure inventories received at costs on initial recognition, and shall measure the actual costs of inventories delivered using the first-in first-out method. (4) Amortization method of low-value consumables and packages: According to the real situation, low-value consumables and packages shall be fully amortized when they are received and consumed. (5) Measurement of the ending inventory: Inventories shall be measured at the lower of cost and net realizable value on the balance sheet date. If the net realizable value is lower than the cost, the difference shall be recognized as provision for impairment of inventories and charged to the current profit or loss. 荛 Determination of the net realizable value When determining the net realizable value of inventories, tangible evidence obtained should be accounted for, and the purpose of holding the inventories and the impact of the events after balance sheet date should also be taken into consideration. Materials and other supplies held for production purposes are measured at cost when the net realizable value of the finished goods produced by them is higher than the cost. However, when a decline in the price of materials indicates that the cost of the finished products exceeds the net realizable value, the materials shall be measured at net realizable value. The net realizable value of inventories held for execution of sales or service contracts is based on the contract price.

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If the quantity specified in sales contracts is less than the quantity of inventories held, the net realizable value of the excess portion of inventories shall be calculated on the basis of the normal selling price. 荜 Provision for obsolete inventory shall be generally made for each inventory item. For inventories with large quantities and low unit price, provisions for obsolete inventory shall be made according to the inventory categories. Provision for obsolete inventory shall be combined for inventories that are used in the production and sales of goods in the same region, or that have the same or similar end-use or purposes and are difficult to be measured separately from other items. (6) Inventory system: The Group adopts the perpetual inventory system.

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reversed. If there is an increase in the net value of the held-for-sale disposal group which equals to the fair value less the selling expenses after the balance sheet date, the previously written-down amount shall be recovered and reversed within the amount of impairment loss recognized after the assets being classified as held for sale in accordance with the measurement requirements on non-current assets, and the reversed amount shall be recognized in the current profit and loss. The book value of the goodwill that has been offset, and the impairment losses on non-current assets recognized prior to classification as held for sale shall not be reversed. When the amount of the impairment loss on the held-for-sale disposal group is reversed subsequently, the book value of non-current assets except for the goodwill within the disposal group shall be increased according to the proportion of book value of each non-current asset in the disposal group. The held-for-sale non-current assets or the non-current assets in the disposal group shall not record depreciation and amortization, interest and other expenses on liabilities in the held-for-sale disposal group shall continue to be recognized. Deferred income tax assets, financial assets regulated by the "Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments", investment real estate and biological assets measured at fair value, contract rights arising from insurance contracts, and benefits from employee benefits The resulting assets are not applicable to the measurement method of the held-for-sale category, but are measured in accordance with relevant standards or corresponding accounting policies formulated by the Group. If the disposal group contains non-current assets for which the measurement method of the held for sale category is applicable, the measurement method of the held for sale category is applicable to the entire disposal group. The measurement of liabilities in the disposal group shall be subject to relevant accounting standards. When a non-current asset or disposal group no longer meets the held-for-sale recognition conditions, it shall not be classified as the held-for-sale assets and shall be removed from the held-for-sale disposal group and recognized at the lower value of the following two items. ķ The book value of the asset or disposal group before classified as a held-for-sale asset, which is adjusted by the depreciation, amortization or impairment recognized with the assumption that it had not been classified as a held-for-sale asset. ĸ The recoverable amount.

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If the capital reserve is not sufficient for adjustment, retained earnings shall be adjusted. The commissions and other expenses incurred in the issuance of equity securities for business combination shall be offset against the premium of equity securities. If the premium is not enough to offset the expenses, they shall be offset against the retained earnings B. For business combination not under the same control, the Group shall measure the business combination costs in different ways in the following scenarios. a˅For business combination realized in one exchange transaction, the business combination costs shall be the fair value of assets paid occurred, liabilities incurred or assumed, and equity securities issued for obtaining control of the acquire on the acquisition date. b˅For business combination realized in multiple exchanges and transactions step by step, the initial investment costs shall be sum of the book value of the acquirer’s equity investment in the acquiree prior to the acquisition date and the new investment cost on the acquisition date. c˅The audit fees, legal service fees, valuation and advisory fees and other expenses incurred in the business combination shall be recorded in the current profit and loss when they incur, the transaction costs of equity securities or debt securities issued as the consideration for business combination shall be included in the initial amount of equity securities or debt securities. d˅Future events that may affect the business combination costs are stipulated in the business combination contract or agreement, which states if it is estimated on the acquisition date that the future events are highly probable to occur and their impact on the costs of business combination can be reliably measured, they shall be included in the business combination costs. ĸExcept for the long-term equity investment obtained in a business combination, the initial investment cost of long-term equity investment obtained by other methods shall be determined according to the following requirements. A. The initial investment cost of the long-term equity investment obtained by paying cash shall be the actual purchase price paid. The initial investment cost includes expenses, taxes and other necessary expenses directly related to obtaining the long-term equity investments. B. For long-term equity investments obtained by issuing equity securities, the initial investment cost shall be the fair value of the issued equity securities and shall not include the declared but unpaid cash dividends or profits that should have been collected from the investee. Transaction costs incurred when issuing or acquiring the equity instruments that are directly attributed to equity transactions shall be deducted from equity. C. For long-term equity investments obtained through exchanges of non-monetary assets, the initial investment cost shall be determined according to the “Accounting Standard for Business Enterprises No. 7 - Exchanges of non-monetary assets”. D. For long-term equity investments obtained through debt restructurings, the initial investment cost shall be determined according to the “Accounting Standard for Business Enterprises No. 12 - Debt restructuring”. ĹRegardless of how the long-term equity investment is formed, when the investment is obtained, the declared but not issued cash dividends or profits of the investee included in the consideration paid shall be accounted separately as receivables, and shall not constitute the initial investment cost of the long-term investment equity. (2) Subsequent measurement The cost method shall be used when the Group has control over the investee enterprise. The equity method shall be used when the Group has joint control or significant influence over the investee enterprise. ķ The long-term equity investment under cost method shall be measured by the initial investment cost. Additional or redeemed investment shall be adjusted to the cost of long-term equity investment. Cash dividends or profits that are declared by the investee shall be recognized in the current profit and loss. ĸ For the long-term equity investment under equity method, if the initial cost of the long-term equity investments exceeds the fair value of the Group’s interest in the identifiable net assets of the investee, the initial cost of the long-term equity investment shall not be adjusted. If the initial cost of the long-term equity investments is less than the fair value of the Group’s interest in the

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identifiable net assets of the investee, the difference shall be included in the current profit and loss, and the cost of the long-term equity investment shall be adjusted accordingly. After a long-term equity investment is acquired, the Group shall recognize its share of the investee’s net profit or loss and its share of the investee’s other comprehensive income as investment income or losses and other comprehensive income respectively, and shall adjust the book value of the investment accordingly. The Group shall reduce the book value of the long-term investment regarding the declared cash dividend or profit distribution of the investee. If the investee’s equity components changes except for net profit or loss, other comprehensive income or profit distribution, the book value of the long-term equity investment shall be adjusted accordingly and recorded into capital reserve. When confirming the share of the net profit and loss of the investee, the net profit of the investee shall be recognized after it is adjusted on the basis of the fair value of all identifiable assets of the investee when the investment is made. When the accounting policies adopted by the investee are different from those adopted by the Group, the financial statements of the investee shall be adjusted according to the Group’s accounting policies, the investment income and other comprehensive income shall be recognized accordingly. The net loss incurred by the investee shall be recognized based on the book value of the long-term investment and other investments essentially constituting the long-term equity of the investee till the book value is reduced to zero. But this requirement does not apply to the situation where the Group has an obligation to undertake extra losses for the investee. Once the investee realizes net profit in the subsequent period, the Group shall resume recognizing its share of profits after the share of previously unrealized losses has been recovered. When calculating the Group’s share of the investee’s net profit or loss, the profit and loss of unrealized internal transaction between the Group, associates and joint ventures shall be offset according to the proportion attributable to the Group, and the investment profit shall be recognized accordingly. If the loss of unrealized internal transaction between the Group the the investee is recognized as asset impairment loss, the amount shall be recognized in full. If part of the Group’s equity investments in associates is held indirectly through entities such as venture capital institutions, mutual funds, trust companies, such investments shall be measured at fair value through profit and loss according to the “Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments”, regardless of whether the above entities have a significant influence on this part of the investment. The other part of investments shall be measured by the equity methods. Ĺ When the Group disposes long-term equity investment, the difference between the book value of the investment and the actual amount paid shall be included in the current profit and loss. When the Group disposes long-term equity investment measured under equity method, the original amount recorded in other comprehensive income shall be accounted on the same basis as the investee’s direct disposal of relevant assets or liabilities according to the corresponding proportion. ĺIf the shareholding of the Group in a subsidiary decreases due to the capital increase held by other investment parties in the subsidiary, which results in the Group’s loss of control but it can still exercise joint control or exert significant influence, the measurement of long-term equity investment shall be changed from the cost method to the equity method in an individual financial statements. First of all, the difference between the increased share of the original subsidiary’ net asset which is based on the original shareholding ratio the and the original book value of the long-term equity investment corresponding to the decline in the proportion of shares that should be carried forward shall be recorded in the current profits and losses. Then, the investment shall be adjusted under the equity method according to the new shareholding ratio from the moment it is acquired. ˄3˅Basis for recognition of joint control or significant influence over an investee Joint control refers to sharing control according to a contractually arrangement. Any decision on relevant activities of joint control shall only be made when the unanimous consent of the parties sharing control have been obtained. Relevant activities of joint control refer to those that have significant influence on the return of an arrangement. Significant influence is the power to

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participate in the decision-making of the investee’s financial and operating policy, it is not control or joint control on those policies. ˄4˅Impairment test and method of provision for impairment loss The impairment test of long-term equity investment is conducted and the impairment loss is provided in accordance with the accounting policy “Impairment of assets” of the Group.

13. Recognition and measurement of investment property ˄1˅The term “Investment Property” refers to the properties held by the Group for generating rent and/or gaining capital appreciation or both. Including: ķA land use right that is leased out; ĸA land use right held and ready to transfer after appreciation; ĹA building that is leased out. ˄2˅An investment property shall be recognized when the following conditions are satisfied. ķIt is probable that future economic benefits associated with the investment property will flow into the Group. ĸThe cost of the investment property can be measured reliably. ˄3˅Initial measurement The initial measurement of the investment property shall be made at its cost. ķThe cost of an investment property by acquisition consists of the acquisition price, relevant taxes, and other expenses directly attributable to the asset. ĸThe cost of a self-constructed investment property composes of the necessary expenses for constructing the property to the usable condition. ĹThe cost of an investment property obtained by other ways shall be recognized in accordance with the relevant accounting standards. ˄4˅Subsequent measurement The Group shall use the cost model for subsequent measurement of the investment property, which shall be depreciated or amortized in the same way as intangible assets and fixed assets. When the Group has tangible evidence showing that the use of properties has changed either from self-use properties or inventories to investment properties or from investment properties to self-use properties, the book value before the conversion shall be the recording value of the property after the conversion. At the end of an accounting period, the investment property under the cost method shall be measured at the lower of the cost and the recoverable amount. If the recoverable amount is lower than the cost, the difference shall be recognized as an impairment loss. Once the impairment loss is recognized, it shall not be reversed.

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Residual value rate Annual depreciation Category Useful life (years) (%) rate (%) Houses and buildings 20-50 5 1.9-4.75

Machinery equipment 5-20 5 4.75-19

Transportation equipment 4-10 5 9.50-23.75

Electronic equipment 5-20 5 4.75-19

Office equipment 3-5 5 19-31.67

Other equipment 5-20 5 4.75-19 The Group reviews the useful life, estimated residual value and depreciation method of a fixed asset at the end of each financial year. If the useful life is different from the previous estimate, it shall be revised accordingly. If the expected residual value is different from the previous estimate, it shall also be revised accordingly. If there has been a significant change in the expected realization pattern of economic benefits from those assets, the depreciation method shall be changed accordingly. The changes in useful life, estimated residual value and depreciation method shall be treated as change in accounting estimates. (3) Fixed assets acquired under finance lease The Group identifies a lease of fixed asset as finance lease when all the risks and rewards associated with the asset are substantially transferred. The cost of a fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased asset and the present value of the minimum lease payments at the inception of lease. The depreciation method of fixed assets acquired under finance lease is consistent with that of the depreciable assets owned by the Group. If the Group can reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the useful life of the asset. If the Group cannot reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated over the shorter of the useful life of the leased asset and the lease term. (4) Impairment of fixed asset shall be carried out in accordance with the accounting policy “Impairment of assets” of the Group.

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Ĺ The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale purposes have already started. Borrowing costs that do not meet the capitalization criteria shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. The borrowing costs incurred during such period shall be recognized as expenses and recorded into the profits and losses of the current period until the acquisition and construction or production of the asset restarts. If the interruption is a necessary step for making the qualified asset ready for the intended use or sale purposes, the capitalization of the borrowing costs shall continue. When the qualified asset under acquisition and construction or production is ready for the intended use or sale purposes, the capitalization of the borrowing costs shall be ceased. The borrowing costs incurred after that shall be recognized as expenses. Assets eligible for capitalization refer to assets such as fixed assets, investment property, inventories and other assets which need to go through a long period of acquisition and construction or production activities to reach the intended use or status for sale. (2) Calculation method of capitalized amount of borrowing costs As for loans specifically drawn for the acquisition and construction or production of assets which are eligible for capitalization, the cost shall be the amount of actual cost of interest expenses incurred during the period after deducting the interest or investment income from the unused borrowing funds deposited in the bank or invested temporarily. Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the interest cost shall be the product of the weighted average asset disbursement, which is calculated by deducting the special loan from the accumulative asset disbursements, and the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined based on the weighted average interest rate of the general borrowing. During the period of capitalization, the foreign exchange differences on foreign currency specific borrowings shall be capitalized. Exchange differences on foreign currency general borrowings shall be recorded in the current profits and losses.

Software 3-10 years Expected durable years

Land-use right 40 years Durable years

Page 31 (Total 141 pages)

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At the end of the reporting period, the useful life and amortization method of an intangible asset with finite useful life shall be reviewed, if there is any change occurred, it shall be treated as a change in accounting estimate. In addition, the useful life of an intangible asset with infinite useful life shall be reviewed, if there is evidence indicating that the duration of generating economic benefits to the Company from an intangible asset is foreseeable, then its useful life shall be estimate and the asset shall be amortized in accordance with the amortization policy of intangible assets with finite useful life. B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the Group.

18. Accounting method of long-term deferred expenses Long-term deferred expenses are defined as expenses incurred on the improvement of the fixed assets which should be recorded in this year and subsequent periods with an amortization period of more than one year. Long-term deferred expenses shall be amortized using the straight-line method within the amortization period.

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20. Employee benefits Employee benefits refer to the various forms of remuneration or compensation provided by the Group to obtain services provided by employees or to terminate labor relations with them. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits, as well as benefits offered to the employees' spouses, children, dependent’s, survivors of deceased employees, and other beneficiaries. (1) Short-term employee benefits During the accounting period during which employees provide services, the Group shall recognize the short-term compensations that are actually incurred as a liability and records it in the current profit and loss, and shall include it in the cost of assets as required or allowed by other accounting standards. (2) Post-employment benefits The Group classifies post-employment benefit plans into defined contribution plans and defined benefit plans. The post-employment benefits plan refers to the agreement reached between the Group and employees, or the rules or methods formulated by the Group in providing post-employment benefits to employees. Among them, the defined contribution plan refers to a post-employment benefit plan in which the Group no longer undertakes further payment obligations after the fixed fee is paid to an independent fund. The defined benefit plan refers to a post-employment benefit plan other than the defined contribution plan. A. Defined contribution plans During the accounting period in which the employees provide service, the due amount set by the defined contribution plans shall be recognized as the debt and included in the current profit and loss or the cost of relevant assets. (3) Termination benefits When the Group provides termination benefits to the employees, it shall charge the employee compensation liability the current profit and loss. The liability shall be determined from at the earlier of the two following dates:ķthe date on which the Group is unable to unilaterally withdraw the termination benefits provided by the labor relationships termination plans or the layoff proposals. ĸThe date on which the Group recognizes the costs or expenses in connection with the reorganization involving the termination benefits. ˄4˅Other long-term employee benefits If the other long-term employee benefits provided by the Group to employees can be classified as defined contribution plan, the accounting treatment shall be carried out in accordance with that of the defined contribution plan as mentioned above, and otherwise shall be accounted for in accordance with the accounting policy on recognition and the measurement of defined benefit plan.

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ĸ For contingency involves several items, the best estimate should be determined by weighting all possible outcomes by their associated probabilities of occurrence. To determine the best estimate, overall consideration should be given to factors such as: risks related to the contingency, uncertainty, and time value of money. If the impact of time value of money is significant, the best estimate shall be determined after discounting present value of future cash outflow. Where some or all of the expenditures to settle the liability are expected to be reimbursed by a third party, the reimbursement shall be separately recognized as an asset only when it is virtually received. The amount recognized shall not exceed the carrying amount of the liability. The Group reviews the carrying amount of accrued liabilities on the balance sheet date. If there is tangible evidence showing that the book value does not truly indicate the current best estimate, the adjustment should be made to the book value to reflect the best estimate.

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Government grants pertinent to daily activities shall be recorded in other income, and those are not pertinent to daily activities shall be recorded in non-operating income and expenditure. Ĺ If any policy preferential loan discount is obtained, it shall be treated respectively in accordance with the circumstances as follows. A. If the interest-deducted loans of the Finance Department are appropriated to the bank and then provided to the Group by the bank at a preferential interest rate, the amount of loans actually received shall be taken as the book value of the loan, and the relevant borrowing costs shall be calculated according to the loan principal and the preferential interest rate. B. If the interest-deducted loans of the Finance Department are appropriated directly to the Group, the corresponding deducted interests shall be offset against relevant borrowing costs. ĺIf it is necessary to refund any government grants that has been recognized, it shall be treated respectively in accordance with the circumstances as follows. A. If the deferred income is concerned, the book balance of the deferred income shall be offset against, and the excessive part shall be included in the current profits and losses. B. Otherwise it shall be recorded directly in the current profits and losses.

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present value of the minimum lease payments, and shall record the minimum lease payments as the entry value of long-term payables and treat the difference as unrecognized financial expenses. In addition, the initial direct costs incurred during the lease negotiation and signing of the lease contract that can be attributed to the leased item shall be also included in the value of the leased assets. The costs include commissions, legal fees, travel expenses, and stamp duty. The unrecognized financial expenses shall be allocated to each period over the lease term, and the current finance expenses shall be calculated according to the actual interest rate method. Contingent rents shall be recorded into the current profits and losses when they occur. If the interest rate implicit in the lease can be obtained, the interest rate implicit in the lease shall be used as the discount rate to calculate the present value of the minimum lease payments. Otherwise the interest rate specified in the lease agreement shall be used as the discount rate. If the interest rate implicit in the lease cannot be obtained, the current bank loan interest rate shall be used as the discount rate. The Group uses the depreciation policy consistent with that of similar assets to calculate the depreciation of the leased assets. If there is reasonable certainty that the lessee will obtain ownership of the asset by the end of the lease term, the depreciation shall be allocated over the useful life of the asset, otherwise the asset shall be depreciated over the shorter of the lease term and its useful life. If the Group is the lessor in a finance lease, on the initial date of the lease, it shall record the sum of the minimum lease payments and initial direct costs as the finance lease receivables, and also record the unguaranteed residual value. It shall recognize the sum of minimum lease payments, initial direct costs and unguaranteed residual value after deducting the sum of their present values as the unrealized financial income, and allocate the unrealized financial income to each period over the lease term. It shall adopt the effective interest rate to calculate and recognize the current financial income. Contingent rents shall be recorded into the current profit and loss when they occur.

Page 36 (Total 141 pages)

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observable inputs of the relevant assets or liabilities other than the first level of input values. The third level of input values refers to the unobservable inputs of the underlying asset or liability. Non-financial assets within the Group are measured at fair value, given the capability of the market participants to generate economic benefits from the best use of the assets, or to sell the assets to other market participants who can generate economic benefits from the best use of the assets. The measurement of a liability at fair value is based on the assumptions that the liability will be transferred to other market participants on the measurement date, and the liability will continue after the transfer, which will be performed by the market participant as the transferee. Equity instruments of the Group are measured at the fair value on the assumptions that the equity instruments will be transferred to other market participants on the measurement date, the instruments will continue to exist after transfer, and the market participants who are the transferees shall obtain the relevant right and assume the corresponding obligation.

V. Changes in significant accounting policies and accounting estimates 1. Changes in significant accounting policies The Group has no need to disclose changes in significant accounting policies in the current reporting period. 2. Changes in accounting estimates The Group has no need to disclose changes in accounting estimates in the current reporting period. 3. Correction of accounting errors in the previous periods (1) Retrospective restatement method The Company's long-term equity investment in Chengdu Rural Commercial Bank is subsequently measured using the equity method. After making a comprehensive correction of the accounting errors of the 2018 financial statements of Chengdu Rural Commercial Bank, the impacts on the Company are summarized as follows. ķ The amount of equity attributable to owners of the parent company at the beginning of 2018 is RMB 36,141,176,000.00, a decrease of RMB 6,613,824,000.00 compared to RMB 42,755,000,000.00 of owner's equity originally attributable to the parent company at the beginning Page 37 (Total 141 pages)

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of the year. The Company reduced the corresponding long-term equity investment at the beginning of 2018 by RMB 450,553,532.35 according to the shareholding ratio and reduced the undistributed profit at the beginning of 2018 by RMB 450,553,532.35. ĸ In 2018, the Company did not recognize long-term equity investment of RMB 47,335,947.78, which is corresponding to the undistributed profit of RMB 31,568,266.32, and the Company adjusted the amount of other comprehensive income up by RMB 78,904,214.1. (2) Impact on the 2019 consolidated financial statements (amount: RMB) Changes in Correction of Before the the accounting errors After the Item correction consolidatio in the previous correction n scope periods Other comprehensive income 227,956,029.79 78,904,214.10 306,860,243.89

Retained earnings 3,426,701,587.21 -486,562,625.83 2,940,138,961.38

VI. Taxation 1. Main tax categories and tax rates (1) The value-added output tax rates are 16%, 13%, 10%, 9%, 6%, 5% and 3%, which shall be paid on the balance after deducting the input tax. (2) The urban maintenance & construction tax is paid at 7% and 5% of the turnover tax payable. (3) The educational surcharge is 3% of the turnover tax payable. (4) The local educational surcharge is 2% of the turnover tax payable. (5) The corporate income tax rates are 25% and 15%. 2. Tax preference (1) Tax preference for value-added tax ķ According to the Article 4 of the “Announcements on Policies Regarding the Further Promotion of Pilot Reform of Removing Duplicated Taxation in Reinsurance, Real Estate Lease and Non-academic Education Business” jointly issued by the Ministry of Finance and the General Administration of Taxation (Cai Shui [2016] No. 68), taxpayers who provide security and protection shall pay for tax according to the labor dispatch service policy. Since 1 May 2016, Zhong Rong Security Service Co. Ltd., the subsidiary of the Company and Chengdu Yihu Guardian and Escort Co. Ltd., the subsidiary, have calculated and paid for the value-added tax according to the Article 1, which states that labor dispatch service provider shall calculate and pay the value-added tax using the simplified 5% taxation method, and the sales revenue is calculated by deducting the wages and benefits paid to the dispatched employees and the social insurance and housing provident fund paid by the agency from the total price and non-price expenses of the service provided, as stipulated in the “Announcements on Policies Regarding the Further Promotion of Pilot Reform of Removing Duplicated Taxation in Labor Dispatch Service and Highway Tolls Deduction Policies” jointly issued by the Ministry of Finance and the General Administration of Taxation (Cai Kuai [2016] No. 47). ĸ According to the Document of “Notice on Implementation of the Inclusive Tax Preferential Policy for Small and Micro-Profit Enterprises” issued by the Ministry of Finance and the State Administration of Taxation (Cai Shui [2019] No. 13), the people's governments of provinces, autonomous regions and municipalities directly under the central government shall decide the reduction of up to 50% of tax small-scale VAT taxpayers, based on the actual situation of respective regions and the needs of macro-control including resources tax, urban maintenance and construction tax, real estate tax, urban land use tax, stamp tax (excluding stamp tax on securities trading), farmland occupation tax, education surcharges and local education surcharges. The scope of tax exemption of education surcharges, local education surcharges and water conservancy construction funds shall be expanded from the payers whose monthly sales or turnover not

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exceeding RMB 30,000 (or the quarterly sales or turnover shall not exceeding RMB 90,000) to payers whose monthly sales or turnover not exceeding RMB 100,000 (the quarterly sales or turnover not exceeding RMB 300,000).This policy is applicable to the subsidiaries of the Group, including Chengdu Intellectual Property Exchange Co.,Ltd., Longquanyi Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Meishan Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Pidu Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Ziyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Chongzhou Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Jianyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, and Chengdu Jiaozi Commercial Factoring Co., Ltd. Ĺ According to the Document of “Notice of the State Administration of Taxation on the Management of Value Added Tax exemption policy for Small Enterprises” issued by the Ministry of Finance and the State Administration of Taxation (No.4 of 2019), small enterprise that has made a VAT taxable sale and the total monthly sales volume does not exceed RMB 100,000 (or the quarterly sales volume does not exceed RMB 300,000 if it uses a quarterly tax period), the VAT shall be exempted. This policy is applicable to Chengdu Intellectual Property Exchange Co., Ltd., the subsidiary of the Group. ĺ According to the document of “Announcements on Policies Related to Deepening the Reform of Value Added Tax” issued by the Customs Head Office, General Administration of Taxation, Ministry of Finance (No.39 of 2019), Deyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, the subsidiary of the Group, shall be allowed to add 10% of the current deductible input tax to offset the tax payable from 1 April, 2019 to 31 December, 2021. (2) Tax preference for corporate income tax ķ According to the [2015] No.251 Document of “Reply on Confirming the Main Business of 29 Enterprises including Chengdu Huachang Property Development Co., Ltd. as the National Encouraged Industrial Project” issued by Sichuan Provincial Economic and Information Department in 2015, Chengdu Financial Holding and Leasing Co., Ltd., a subsidiary of the Group, was recognized by “The Encouraged Industries in Western Regions”. According to Article 2 of Cai Shui [2011] No. 58 and the document of Gao Guo Shui Tong [2018] No. 20172 “Notice of Tax Matters” issued by the State Administration of Taxation and Chengdu High Tech Industrial Development Zone, the applicable tax rate of corporate income tax is 15%. ĸ Chengdu Financial Holding Financing Guarantee Co., Ltd., the subsidiary of the Group, has met the criteria of industries defined in “The Encouraged Industries in Western Regions” in the Announcement of the State Administration of Taxation on Issues Related to Corporate Income Tax in Deepening the Implementation of the Western Development Strategy (No.12 of 2012), and its main business revenue account for more than 70% of the total revenue this year. Therefore, the corporate income tax of the subsidiary can be reduced by 15% in this year. Ĺ According to the Notice on Tax Matters of Local Taxation Bureau of Jinjiang District, Chengdu Jindi Taxation Yi Suo Shui Tong [2018] No.6248 and the Confirmation Letter of Encouraged Industries in Western China by Chengdu Development and Reform Commission [2016] No.219, the subsidiary Chengdu Financial Holding Micro Credit Co., Ltd. has met the criteria of newly-added encouraged industries in western regions in “The Catalogue of Encouraged Industries in Western Regions”. Therefore, the applicable tax rate of corporate income tax is 15% this year. ĺ The State Administration of Taxation of Qingyang District of Chengdu City, the State Administration of Taxation of Chenghua District of Chengdu City, and the State Administration of Taxation of Jintang County of Chengdu City agree that for the Group’s subsidiaries including Zhong Rong Security Service Co., Ltd., the subsidiary company of a sub-subsidiary, Chengdu Yihu Guardian and Escort Co. Ltd., and Jintang Branch of Chengdu Security Service Company, the corporate income tax shall be reduced by 15% in 2016, and the corporate income tax shall be paid at 15% in 2019. This in accordance with “Notice on Corporate Income Tax Policy related to Deepening the Western Development Strategy” issued by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation (Cai Shui [2011] No. 58), the Page 39 (Total 141 pages)

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“Announcement of the State Administration of Taxation on the issues of enterprise income tax related to the in-depth implementation of the western development strategy” (Announcement No. 12, 2012 of the State Administration of Taxation), and the “Confirmation Letter of Chengdu Development and Reform Commission on Encouraged Industrial Projects in the western regions” (Government Approval Letter of Chengdu Development and Reform Commission [2016] No. 90). Ļ According to the Document of “Notice on Implementation of the Inclusive Tax Preferential Policy for Small and Micro-Profit Enterprises” (Cai Shui [2019] No. 13), from 1 January, 2019 to 31 December, 2021, the Group’s subsidiaries including Longquan Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Meishan Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Pidu Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Ziyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Chongzhou Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, Deyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange, and Jianyang Rural Property Rights Trading Co., Ltd. of Chengdu Agriculture Equity Exchange shall pay for the corporate income tax based on a 20% tax rate of the 25% of annual taxable income not exceeding RMB 1 million, and a 50% tax rate of the 20% of annual taxable income between RMB 1 million and RMB 3 million.

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VII. Business combination and consolidated financial statements 1. Subsidiaries Share- Acquisi Business holding Voting Invested No. Name Level Type Address Nature of business Paid-in capital tion region ratio rights amount method

Chengdu Financial Chengdu, Chengdu, Business Process 1 Holding and Financial 2 1 5,000.00 100.00 100.00 5,000.00 1 Sichuan Sichuan Outsourcing Services Co., Ltd.

Chengdu, Chengdu, Investment and 2 Chengdu Rongxing 2 1 50,000.00 100.00 100.00 50,000.00 1 Sichuan Sichuan consulting Venture Capital Co., Ltd.

− F-168

Smart card Chengdu City Card Chengdu, Chengdu, 3 2 1 production and 1,500.00 70.00 70.00 1,050.00 4 Co., Ltd. Sichuan Sichuan sales

Chengdu Financial Holding Financial Chengdu, Development Equity Chengdu, 4 2 1 Sichuan Equity investment 51,000.00 100.00 100.00 51,000.00 1 Investment Fund Co., Sichuan

Ltd.

Chengdu Financial Holding Tourism Chengdu, Development Equity Chengdu, 5 2 1 Sichuan Equity investment 54,000.00 100.00 100.00 54,000.00 1 Investment Fund Co., Sichuan

Ltd.

Chengdu Financial Chengdu, Chengdu, Real estate 6 2 1 134,000.00 100.00 100.00 134,000.00 1 Holding Real Estate Sichuan Sichuan development

Page 41 (Total 141 pages)

No. Name Level Type Address Business Nature of business Paid-in capital Share- Voting Invested Acquisi Co., Ltd. i hldi iht t ti

Chengdu Dingli Asset Chengdu, Chengdu, 7 Management Co., 2 1 Asset management 133,500.00 100.00 100.00 133,500.00 4 Sichuan Sichuan Ltd.

Chengdu, Investment 8 Chengdu Exchange 2 1 Chengdu, 20,100.00 100.00 100.00 20,100.00 1 Sichuan management Investment Group Sichuan Co., Ltd.

Investment in Chengdu Jiaozi Chengdu, Chengdu, financial and − F-169 9 Xinxing Financial 2 1 100,000.00 100.00 100.00 100,000.00 1 Sichuan Sichuan non-financial Investment Group institutions Co., Ltd.

Chengdu Agriculture Equity Exchange Co., Chengdu, Chengdu, 10 Ltd. 2 1 Trading service 5,000.00 60.00 60.00 3000 4 Sichuan Sichuan

Chengdu Chengdu, Development and Chengdu, 11 Financial Holding 2 1 Sichuan application of 10,260.00 100.00 100.00 10,260.00 1 Sichuan Data Service Co., Ltd. computer software

Chengdu Financial Chengdu, Enterprise credit Chengdu, 12 Holding Credit 2 1 Sichuan service 2,000.00 100.00 100.00 2,000.00 1 Sichuan Reference Co., Ltd.

Chengdu Western Chengdu, Chengdu, Investment 13 Cultural Tourism 2 1 Sichuan 13,600.00 100.00 100.00 13,600.00 1 Sichuan management Equity Investment

Page 42 (Total 141 pages)

No. Name Level Type Address Business Nature of business Paid-in capital Share- Voting Invested Acquisi Fund Partnership i hldi iht t ti (Limited Partnership)

Chengdu Financial Holding Industry Chengdu, Leading Equity Chengdu, Investment 14 2 1 Sichuan 1,000.00 100.00 100.00 1,000.00 1 Investment Fund Sichuan management

Management Co., Ltd.

Chengdu, Chengdu, 15 2 1 Security service 43,000.00 100.00 100.00 43,000.00 4 Chengdu Security Sichuan Sichuan Service Corporation

− F-170

Chengdu Financial Chengdu, Real estate Please 16 City Investment 2 1 474,859.37 46.24 219,582.11 4 Sichuan Chengdu, development refer to Development Co., Sichuan the notes. Ltd.

Chengdu Financial City Construction and Development Please Investment Chengdu, Chengdu, Project investment, 17 2 1 200,000.00 10.00 refer to 20,000.00 1 Management Center Sichuan Sichuan asset management the notes. (Limited Partnership)

Chengdu Yihang Asset Management Chengdu, Chengdu, 18 Co., Ltd. 2 2 Asset management 436,000.00 51.03 51.03 222,500.00 1 Sichuan Sichuan

Page 43 (Total 141 pages)

No. Name Level Type Address Business Nature of business Paid-in capital Share- Voting Invested Acquisi Chengdu Jiaozi Chengdu, i hldi iht t ti Commercial Sichuan Chengdu, 19 2 1 Financing services 40,000.00 49.00 49.00 26,800.00 1 Factoring Co., Ltd. Sichuan

Chengdu Smart Car Property City Development Chengdu, Chengdu, development and 20 Co., Ltd. 2 1 Sichuan 10,000.00 65.00 65.00 6,500.00 1 Sichuan real estate

management

Chengdu Jiaozi Industry Fund Management Co., Chengdu, Chengdu, 21 2 1 Equity investment 1,000.00 100.00 100.00 1,000.00 1 Ltd. Sichuan Sichuan

− F-171

Chengdu Jiaozi Supply Chain Chengdu, Investment Chengdu, 22 Financial Services 2 1 Sichuan management 5,600.00 80.36 80.36 4,500.00 1 Sichuan Co., Ltd. and sales of goods

Chengdu Financial Holding Wealth Chengdu, Equity Investment Chengdu, 23 2 1 Sichuan Equity investment 5,250.00 95.21 100.00 4,998.50 4 Fund Partnership Sichuan

(Limited Partnership)

Chengdu Financial Dreamwork Chengdu, Chengdu, Investment 24 Investment 2 1 43,000.00 100.00 100.00 43,000.00 2 Sichuan Sichuan management Management Co., Ltd.

Page 44 (Total 141 pages)

2. The reasons why the parent company has less than half (including half) of the voting rights of the investee but can exert control over the investee Shareh Registered Invested Reasons for No olding capital amount being included Company Level . ratio ˄RMB’0,00 ˄RMB’ in the scope of ˄%˅ 0˅ 0,000˅ consolidation Chengdu Financial City The parent Construction and company has Development Investment 1 10.00 1,000,000.00 20,000.00 Level 2 actual control Management Center over the (Limited Partnership) investee.

The parent Chengdu Financial City company has Level 2 2 Investment Development 46.24 474,859.37 233,644.24 actual control

Co., Ltd. over the investee. Note: The main decision-making body of Chengdu Financial City Construction and Development Investment Management Center (Limited Partnership) is the Investment Committee. In 2018, the company made all its investment in enterprises. When the investing company has power over the investee, enjoys variable returns through participating in the related activities of the investeed company, and has the ability to use the power over the investeed company to affect the amount of return, control has been formed over the investeed company and the investeed company is included in the scope of company’s consolidation. The main decision-making body of Chengdu Financial City Investment Development Co., Ltd. is the Board of Directors. In 2019, when the Board of Directors and the Management that possess substantial control over the company has control over the investee, enjoys variable returns through participating in the related activities of the investee, and has the ability to use the power over the investee to affect the amount of return, control has been formed over the investee and the investee is included in the scope of company’s consolidation.

3. Significant non-wholly owned subsidiaries (1) Minority shareholders Profits and Minority losses Dividends paid Shareholding shareholders' attributable to to the minority ratio of accumulated No. Company the minority shareholders in minority equity at the end shareholders in the current shareholders of the year the current year

year Chengdu Financial City Investment 1 Development Co., 53.76 15,672,117.73 3,414,434,820.48 Ltd.

Page 45 (Total 141 pages)

− F-172 −

Profits and Minority losses Dividends paid Shareholding shareholders' attributable to to the minority ratio of accumulated No. Company the minority shareholders in minority equity at the end shareholders in the current shareholders of the year the current year

year Chengdu Financial City Construction and Development Investment 2 90.00 106,365,237.20 102,200,000.00 1,800,092,365.92 Management Centre (Limited Partnership)

Chengdu Yihang 3 Asset Management 48.97 138,842,301.18 2,282,616,481.45 Co., Ltd. (2) Main financial information A. Closing balance/information of the current period Amount in the current year Amount in the previous year Chengdu Chengdu Financial Financial City City Constructi Constructio Chengdu Chengdu on and n and Financial Chengdu Financial Developm Chengdu Developme Item City Yihang Asset City ent Yihang Asset nt Investment Management Investment Investmen Management Investment Development Co., Ltd. Developme t Co., Ltd. Manageme Co., Ltd. nt Co., Ltd. Managem nt Center ent Center (Limited (Limited Partnership Partnershi ) p) Current asset 6,085,670,742.38 1,897,446.40 1,473,794,301.59 3,548,560,362.64 1,873,178.62 4,271,104,139.46

Non-cur rent 10,027,987,352.37 2,000,000,000.00 6,173,149,142.30 9,669,983,605.13 2,000,000,000.00 100,926,997.21 asset

Total assets 16,113,658,094.75 2,001,897,446.40 7,646,943,443.89 13,218,543,967.77 2,001,873,178.62 4,372,031,136.67

Current liability 2,330,901,218.62 1,794,817.60 2,035,176,424.36 2,338,791,824.18 1,794,817.60 4,069,662.22

Non-cur rent 7,431,501,629.71 950,500,000.00 6,755,949,147.29 0.00 liability Total liabilitie 9,762,402,848.33 1,794,817.60 2,985,676,424.36 9,094,740,971.47 1,794,817.60 4,069,662.22 s

Operati 78,017,608.11 107,127,882.97 502,797,683.31 221,530,484.71 105,782,906.91 ng

Page 46 (Total 141 pages)

− F-173 −

Amount in the current year Amount in the previous year Chengdu Chengdu Financial Financial City City Constructi Constructio Chengdu Chengdu on and n and Financial Chengdu Financial Developm Chengdu Developme Item City Yihang Asset City ent Yihang Asset nt Investment Management Investment Investmen Management Investment Development Co., Ltd. Developme t Co., Ltd. Manageme Co., Ltd. nt Co., Ltd. Managem nt Center ent Center (Limited (Limited Partnership Partnershi ) p) revenue

Net 42,197,409.07 106,367,663.98 283,305,545.08 26,972,421.83 100,340,641.02 17,961,474.45 profit Total Compre hensive 42,197,409.07 106,367,663.98 283,305,545.08 26,972,421.83 100,340,641.02 17,961,474.45 Income

Cash flow from operatin -477,950,927.05 106,367,663.98 -132,640,976.40 351,403,348.21 102,111,178.62 -88,534,178.36 g activitie s

4. Previous subsidiaries that are no longer included in the scope of consolidation in the current year (1) Introduction to the previous subsidiaries that are no longer included in the scope of consolidation in the current year Reasons for not including Proportion the Name of the Registered Nature of Shareholding of voting subsidiary in subsidiaries Address business ratio rights the consolidation

The Shuangliu County Service subsidiary is Chengdu, Security Service industry 100% 100% terminated Sichuan Company this year.

The Chengdu subsidiary is Chengdu, Trading Environment 100% 100% terminated Sichuan service Exchange Co., Ltd. this year.

Page 47 (Total 141 pages)

− F-174 −

Reasons for not including Proportion the Name of the Registered Nature of Shareholding of voting subsidiary in subsidiaries Address business ratio rights the consolidation

Development Chengdu Medical The and Health Network Chengdu, subsidiary is application of 51% 51% Management Co., Sichuan terminated computer Ltd. this year. software Chengdu Jindatong The Investment Industrial Dujiangyan, subsidiary is and asset 100% 100% Development Co., Chengdu terminated management Ltd. this year.

(2) Financial status of the previous subsidiary on the disposal date and on the balance sheet date of the previous accounting period Disposal date 31 December, 2018 Dispo Total Total Subsidiary sal Total Total Total Total assets owner's owner's date liabilities assets liabilities equity equity Shuangliu County Security December 852,625.53 852,625.53 1,113,246.76 1,113,246.76 Service 2019 Company

Chengdu Environme nt March 4,036,131.89 19,224.76 4,016,907.13 4,028,300.06 12,922.21 4,015,377.85 Exchange 2019 Co., Ltd.

Chengdu Medical Health Network May 2019 1,375,601.26 212,985.53 1,162,615.73 Manageme nt Co., Ltd.

Chengdu Jindatong April 552,947.24 16,072,356.36 -15,519,409.12 553,250.67 16,070,586.50 -15,517,335.83 Industrial 2019 Developme nt Co., Ltd.

(3) Operating results of the previous subsidiary from the beginning of the current year to the disposal date

Page 48 (Total 141 pages)

− F-175 −

From the beginning of this year to the Name of the subsidiaries Disposal date disposal date Income Expense Net profit Shuangliu County Security December 2019 263,743.67 -260,621.23 Service Company

Chengdu Environment Exchange March 2019 8,800.00 -3,328.17 Co., Ltd.

Chengdu Medical Health Network May 2019 Management Co., Ltd.

Chengdu Jindatong Industrial April 2019 323.29 -2,073.29 Development Co., Ltd.

5. Subsidiaries that are included in the consolidation scope this year for the first time Year of Net assets at the Name of the subsidiaries Total profit of the year consolidation end of the year Chengdu Intellectual Property 2019 303,119,088.24 4,747,277.56 Exchange Co.,Ltd.

Meishan Rural Property Rights 2019 8,000,351.50 370.00 Trading Co., Ltd. of Chengdu Agriculture Equity Exchange

Ziyang Rural Property Rights 2019 6,000,000.00 Trading Co., Ltd. of Chengdu Agriculture Equity Exchange

Deyang Rural Property Rights 2019 7,462,336.07 956,654.94 Trading Co., Ltd. of Chengdu Agriculture Equity Exchange

Chengdu Financial Holding Wealth 2019 46,973,444.26 590.47 Equity Investment Fund Partnership (Limited Partnership)

Chengdu Jiaozi Supply Chain 2019 56,038,399.83 51,199.78 Financial Services Co., Ltd.

Chengdu Jiaozi Commercial 2019 401,418,728.45 1,891,637.93 Factoring Co., Ltd.

Chengdu Jiaozi Industry Fund 2019 5,687,881.40 -4,312,118.60 Management Co., Ltd.

Chengdu Smart Car City 2019 100,005,701.13 7,601.51 Development Co., Ltd.

6. Business combination not under the same control in the current year

Page 49 (Total 141 pages)

− F-176 −

Net Income Fair value of profit of the of the identifiable net Goodwill acquire acquire Name Book Amount e from assets e from Business the of the value of the date of combinat date of purcha compan of net Confirmat considerat Confirmat purcha ion date Amou Amou se to se to y assets ion ion ion the end the end nt nt of the method method of the period period Chengdu Intellectu al Property 29,973. 29,973. 31.2 338. Exchang 1 January, Audit 14,986.55 09 09 1 82 e 2019 Co.,Ltd. .

Deyang Rural Property Rights Trading Co., Ltd. of 228. 89.9 1 January, 656.29 656.29 Audit 328.15 Chengdu 26 4 2019 Agricultu re Equity Exchang e

Chengdu Financial Holding Wealth Equity Investme 1 January, 4,697.2 4,697.2 Audit 4,998.56 301.21 0.06 nt Fund 2019 9 9 Partnersh ip (Limited Partnersh ip)

VIII. Explanation of key items in the consolidated financial statements Unless otherwise specified in the notes below, the closing balance refers to the balance on 31 December, 2019, the opening balance refers to the balance on 1 January, 2019, the amount incurred in the current year refers to the amount incurred in January to December in 2019, and the amount in the previous year refers to the amount incurred in January to December in 2018. The amount unit is RMB. 1. Cash and cash equivalents Item Closing balance Opening balance Cash on hand 518,258.94 535,511.28 Bank deposits 15,349,715,292.74 12,388,393,772.51 Other cash and cash equivalents 557,952,626.18 199,231,353.58 Total 15,908,186,177.86 12,588,160,637.37 Note: Cash and cash equivalents whose usage at the end of the year is limited. Item Closing balance Opening balance

Page 50 (Total 141 pages)

− F-177 −

Item Closing balance Opening balance 4,780,000.00 Performance bond 4,780,000.00 Time deposit or call deposit for 216,737,697.94 guarantee 144,448,883.04 Total 149,228,883.04 221,517,697.94

2. Financial assets at fair value through the current profits and losses Fair value at the end of the Fair value at the Item year beginning of the year Trading financial assets 645,971,175.69 2,000,000,000.00 Including debt instrument investment 635,971,175.69 400,000,000.00 Other 10,000,000.00 1,600,000,000.00 Total 645,971,175.69 2,000,000,000.00

3. Accounts receivable (1) Accounts receivable disclosed by categories Closing balance

Receivables provided for bad debt according to portfolio of credit risk 564,161,719.44 64.73 6,623,275.83 1.17 557,538,443.61 characteristics

Including: Aging portfolio 228,673,314.92 26.24 6,623,275.83 2.90 222,050,039.09

Related party portfolio 114,216,404.52 13.11 114,216,404.52

Risk free portfolios of

221,272,000.00 25.39 margins, government 221,272,000.00 funds, etc.

Subtotal 564,161,719.44 64.73 6,623,275.83 1.17 557,538,443.61 Receivables that are individually insignificant 101,243,788.00 11.62 943,944.78 0.93 100,299,843.22 in amount but provided for bad debt separately Total 871,503,907.44 100.00 7,567,220.61 0.87 863,936,686.83

Page 51 (Total 141 pages)

− F-178 −

Continued˖ Opening balance Book balance Provision for bad debts Category Book value Amount % Amount % Receivables that are individually significant in amount and provided for bad debt separately

Receivables provided 539,474,359.30 95.98 6,141,055.52 1.14 533,333,303.78 for bad debt according to portfolio of credit risk characteristics

Including: Aging 217,069,638.80 38.62 6,141,055.52 2.83 210,928,583.28 portfolio

Related party portfolio 100,896,584.75 17.95 100,896,584.75

Risk free portfolio of 221,508,135.75 39.41 221,508,135.75 margins, government funds, etc.

Subtotal 539,474,359.30 95.98 6,141,055.52 1.14 533,333,303.78

Receivables that are 22,610,173.58 4.02 943,944.78 4.17 21,666,228.80 individually insignificant in amount but provided for bad debt separately Total 562,084,532.88 100.00 7,085,000.30 1.26 554,999,532.58

(2) Receivables that are individually significant in amount and provided for bad debt separately Closing balance Provision Reasons for Name of the company Book balance for bad % making the debts provision Chengdu Recoverable and Architectural Design & Research 206,098,400.00 not provided for Institute bad debts. Total 206,098,400.00

(3) Receivables that are individually insignificant in amount but provided for bad debt separately Closing balance Provision Name of the company Reasons for making Book balance for bad % the provision debts Page 52 (Total 141 pages)

− F-179 −

Closing balance Provision Name of the company Reasons for making Book balance for bad % the provision debts Chengdu Tanyutou Investment Co., Ltd. 758,979.78 758,979.78 100.00 Irrecoverable

Recoverable and Chengdu Construction & 32,015,634.00 not provided for Building Materials Co., Ltd. bad debts.

Recoverable and Chengdu Wanxin Asset 25,892,893.70 not provided for Management Co., Ltd. bad debts.

Recoverable and CCB Life Insurance Company 15,533,853.30 not provided for Limited bad debts.

Recoverable and Bank of Tibet Co., Ltd. 11,809,759.24 not provided for

bad debts.

Recoverable and Bank of Chengdu Co., Ltd. 9,094,179.97 not provided for bad debts.

The court has issued a decree but the receivables Sichuan Liaoweng Tea Co., Ltd. 14,780.00 14,780.00 100.00 have not been recovered yet.

The court has issued a decree but Chengdu Donghui Equipment the receivables Manufacturing Co., Ltd. 108,750.00 108,750.00 100.00 have not been

recovered yet.

The court has Chengdu Tianling Paper Co., issued a decree but Ltd. 43,200.00 43,200.00 100.00 the receivables have not been recovered yet. Tianfu New Area sub branch, Chengdu of the Agricultural 18,235.00 18,235.00 100.00 Irrecoverable Bank of China Co., Ltd.

Not provided for Other 5,953,523.01 bad debts because there is security. Page 53 (Total 141 pages)

− F-180 −

Closing balance Provision Name of the company Reasons for making Book balance for bad % the provision debts Total 101,243,788.00 943,944.78 0.93

(4) Receivables provided for bad debt according to portfolio of credit risk characteristics ķ Receivables provided for bad debt according to the aging analysis method Closing balance Aging Provision for bad Book balance Provision (%) debts Within 1 year (including 1 year) 210,159,652.86

1-2 years (including 2 years) 8,049,433.34 402,471.67 5.00

2-3 years (including 3 years) 2,774,778.68 554,955.74 20.00

3-4 years (including 4 years) 2,479,375.75 867,781.51 35.00

4-5 years (including 5 years) 824,014.75 412,007.38 50.00

Over 5 years 4,386,059.54 4,386,059.53 100.00 Total 228,673,314.92 6,623,275.83 2.90 Continued˖ Opening balance Aging Book balance Provision for bad debts Provision (%) Within 1 year (including 1 195,585,722.22 year) 1-2 years (including 2 7,100,620.60 355,031.03 5 years) 2-3 years (including 3 9,173,221.69 1,834,644.34 20 years) 3-4 years (including 4 824,014.75 288,405.16 35 years) 4-5 years (including 5 1,446,169.10 723,084.55 50 years) Over 5 years 2,939,890.44 2,939,890.44 100 Total 217,069,638.80 6,141,055.52 2.83 ĸ Receivables provided for bad debt according to the methods of other portfolios Closing balance Opening balance Book balance Book balance Portfolio Provision Provision for Provision for bad Provision bad debts Amount debts Amount (%) (%) Related party portfolio 114,216,404.52 34.04 100,896,584.75 31.30

Risk free 221,272,000.00 65.96 221,508,135.75 68.70 Page 54 (Total 141 pages)

− F-181 −

Closing balance Opening balance Book balance Book balance Portfolio Provision Provision for Provision for bad Provision bad debts Amount debts Amount (%) (%) portfolios of margins, government funds, etc. Total 335,488,404.52 100.00 322,404,720.50 100.00 Please refer to note (V) 6 for the basis of determining the portfolio. Ĺ Bad debts that are provided for in the current period: The amount of bad debts provided for in the current period is RMB 482,220.31. ĺ The top 5 debtors based on the closing balance of the accounts receivable: The total amount of top 5 debtors’ accounts receivable based on the closing balance of the debtor is RMB 565,278,927.70, which accounts for 64.86% of the total closing balance of accounts receivable. The total amount of year-end balance of corresponding provision for bad debts is RMB 0.

4. Prepayment (1) Prepayment presented by aging. Closing balance Opening balance Aging Percentage in the Percentage in the Amount Amount total amount (%) total amount (%) Within 1 year (including 1 year) 65,949,412.01 73.71 44,520,620.46 83.88

1-2 years (including 2 years) 20,672,062.72 23.11 6,372,026.30 12.01

2-3 years (including 3 years) 951,848.26 1.06 454,351.60 0.86

Over 3 years 1,894,959.70 2.12 1,723,778.10 3.25 Total 89,468,282.69 100.00 53,070,776.46 100.00 (2) The top 5 prepayments based on the closing balance: The total amount of top 5 prepayments based on the closing balance of suppliers is RMB 74,695,812.85, which accounts for 83.49% of the total closing balance of prepayments.

5. Other receivables Item Closing balance Opening balance Interests receivable 21,849,000.43 15,814,784.19 Dividends receivable 8,520.00 8,520.00 Other receivables 5,838,179,496.51 5,241,883,504.57 Total 5,860,037,016.94 5,257,706,808.76 (1) Interests receivable Item Closing balance Opening balance

Interests of loan by mandate 2,839,846.54

Other 19,009,153.89 15,814,784.19

Page 55 (Total 141 pages)

− F-182 −

Item Closing balance Opening balance

Total 21,849,000.43 15,814,784.19 Note: Interest Receivable-Others include: ķThe interest receivable from Dujiangyan City Land Reserve Center is RMB 5,301,000. According to the Termination Agreement of the State-owned Land Use Right Repossession Agreement and the Supplementary Agreement signed by Chengdu Jincheng Real Estate Co., Ltd., the sub-subsidiary of the Group in March 2017 with Dujiangyan City Land Reserve Center and Chengdu Rural Commercial Bank Co., Ltd. and Chengdu Jiaozi Financial Holding Group Co., Ltd., the Group should receive a land consolidation return of RMB 27,632,900. The amount that has not been recovered at the end of the period is RMB 5,301,000. ĸThe amount of interest receivables arising from the exchange rate conversion of the Group’s Headquarters hedging instruments in Shanghai Pudong Development Bank and Industrial and Commercial Bank of China is RMB 9,945,300. ĹThe remaining interest receivables of RMB 2,972,900 are mainly the interests on the receivables of Da Yi Financial Holding Real Estate Co., Ltd. (2) Dividends receivable Item Closing balance Opening balance Youli Holdings (Assets transferred by government bureau) 8,520.00 8,520.00 Total 8,520.00 8,520.00 (3) Other receivables disclosed by categories Closing balance Category Book balance Provision for bad debts Provision Book value Amount Amount (%) (%) Receivables that are individually significant in amount 2,692,773,325.68 45.51 2,692,773,325.68 and provided for bad debt separately Receivables provided for bad debt according to portfolio of credit risk characteristics Including: Aging portfolio 349,843,394.73 5.91 2,937,327.20 0.84 346,906,067.53 Related party portfolio 650,667,861.41 11.00 650,667,861.41 Risk free portfolio of margins, government funds, etc. 111,536,261.47 1.89 111,536,261.47 Subtotal 1,112,047,517.61 18.80 2,937,327.20 0.26 1,109,110,190.41 Receivables that are individually insignificant in amount but provided for bad debt separately 2,111,841,017.72 35.69 75,545,037.30 3.58 2,036,295,980.42 Total 5,916,661,861.01 100.00 78,482,364.50 1.33 5,838,179,496.51 Continued˖

Page 56 (Total 141 pages)

− F-183 −

Opening balance Category Book balance Provision for bad debts Provision Book value Amount (%) Amount (%) Receivables that are individually significant in amount 2,534,258,467.73 47.56 2,534,258,467.73 and provided for bad debt separately Receivables provided for bad debt according - to portfolio of credit risk characteristics Including: Aging 508,483,217.52 9.54 2,363,499.45 0.46 506,119,718.07 portfolio Related party portfolio 38,665,590.27 0.73 38,665,590.27 Risk free portfolio of margins, government 316,898,918.62 5.95 316,898,918.62 funds, etc. Subtotal 864,047,726.41 16.22 2,363,499.45 0.27 861,684,226.96 Receivables that are individually insignificant in 1,929,770,900.13 36.22 83,830,090.25 4.34 1,845,940,809.88 amount but provided for bad debt separately Total 5,328,077,094.27 100.00 86,193,589.70 1.62 5,241,883,504.57 Receivables that are individually significant in amount and provided for bad debt separately at the end of the period Closing balance Book balance Provision Provision Reason for Company for bad (%) making the debts provision There is a Chengdu Xin Tian Yi Investment guarantee 1,504,087,575.54 Co., Ltd. for collection. There is a Chengdu Xie Cheng Asset guarantee 1,188,685,750.14 Management Co., Ltd. for collection. Total 2,692,773,325.68 Other receivables whose provisions for bad debts are based on the aging analysis method in the portfolio are as follows. Closing balance

Aging Provision for bad Book balance Provision (%) debts Within 1 year (including 1 year) 337,041,526.62

8,025,687.94 401,284.40 5

Page 57 (Total 141 pages)

− F-184 −

Closing balance

Aging Provision for bad Book balance Provision (%) debts 1-2 years (including 2 years) 1,486,265.00 297,253.00 20 3-4 years (including 3 years) 74,049.35 25,917.27 35 4-5 years (including 4 years) 2,005,986.58 1,002,993.29 50

Over 5 years 1,209,879.24 1,209,879.24 100 Total 349,843,394.73 2,937,327.20 0.84

Opening balance Aging Provision for Book balance Provision (%) bad debts Within 1 year 502,451,319.04 (including 1 year) 1,486,265.00 74,313.25 5.00 1-2 years (including 2 74,049.35 14,809.87 years) 20.00 3-4 years (including 3 3,261,704.89 1,141,596.71 years) 35.00 4-5 years (including 4 154,199.24 77,099.62 years) 50.00

1,055,680.00 1,055,680.00 Over 5 years 100.00 Total 508,483,217.52 2,363,499.45 0.46 Please refer to note (IV) 6 for the basis of determining the portfolio. (4) Bad debts provided for, recovered or reversed in the current period: The amount of bad debts provided for in the current period is RMB 573,827.75. The amount of bad debts recovered or reversed in the current period is RMB 8,285,052.95. (5) The top 5 debtors based on based on the closing balance of the other receivables Percentage Closing in the balance of closing the bad Nature of balance of debt Company Closing balance Aging fund the total provisions other receivables (%) Less than 1 Chengdu Xin Tian Related year, 1-2 Yi Investment Co., 1,504,087,575.54 25.42 transactions years, over Ltd. 5 years Chengdu Xie Cheng Asset Related 1,188,685,750.14 1-4 years 20.09 Management Co., transactions Ltd. Temporary Beijing Registration Less than 1 receipt of 286,920,495.73 4.85 &Clearing Co.,Ltd. year transferred Page 58 (Total 141 pages)

− F-185 −

Percentage Closing in the balance of closing the bad Nature of balance of debt Company Closing balance Aging fund the total provisions other receivables (%) funds Sichuan Jiajiang Compensatory Guiju Cement Co., principals and 55,536,008.60 3-4 years 0.94 Ltd. interests

Pujiang Financial Incomings Holding Real Estate 168,645,896.15 1-4 years 2.85 and outgoings Co., Ltd. Total 3,203,875,726.16 54.15

(6) Other receivables that are individually insignificant in amount but are provided for bad debts separately at the end of the period Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Sichuan Jiajiang Guiju 55,536,008.60 Compensation fund Cement Co., Ltd. and not provided for bad debts.

Sichuan Huiyang Investment 42,638,069.85 Compensation fund Co., Ltd. and not provided for bad debts

Chongqing Tongyang 42,173,837.47 Compensation fund Construction Engineering Co., and not provided Ltd. for bad debts

Chengdu Zhongyi Gas Co., 40,982,336.48 Compensation fund Ltd. and not provided for bad debts

Sichuan Huijin Xiandai 35,142,208.29 Compensation fund Logistics Co., Ltd. and not provided for bad debts

Sichuan Xing Kong Network 29,847,690.69 1,492,384.53 5.00 Loss is expected to Co., Ltd. occur

Sichuan Tanshi Guanfucai 29,371,956.63 1,468,597.83 5.00 Loss is expected to Catering Development Co., occur Ltd.

Page 59 (Total 141 pages)

− F-186 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Sichuan Changhe Technology 28,608,079.30 1,430,403.97 5.00 Loss is expected to Co., Ltd. occur

Lezhi Panda Machinery 26,910,000.00 1,345,500.00 5.00 Loss is expected to Manufacturing Co., Ltd. occur

Sichuan Minzheng 25,605,696.78 Debt purchase and Construction Co., Ltd. fund possession costs are charged

Chengdu Jiakang Investment 25,000,000.00 Debt purchase and Development Co., Ltd. fund possession costs are charged

Chengdu Xiaochu Property 22,000,000.00 Debt purchase and Co., Ltd. fund possession costs are charged

Chengdu Tanyutou Investment 21,333,127.76 20,503,127.76 96.11 Subrogation, Co., Ltd. accrued according to the expected recoverable amount

Chengdu Linhai Electronics 20,550,000.00 1,027,500.00 5.00 Loss is expected to Co., Ltd. occur

Changcheng Guoxing 18,000,000.00 Recoverable and Financial Leasing Co., Ltd. not provided for bad debts

Da Yi Financial Holding Real 17,539,735.37 17,539,735.3 100.00 Irrecoverable Estate Co., Ltd. 7

Sichuan Taisenhao Furniture 14,898,000.00 744,900.00 5.00 Loss is expected to Manufacturing Co., Ltd. occur

Chengdu Shifu Real Estate 10,079,899.90 Execution funds Co., Ltd. receivable with security and not provided for bad debts

Sichuan Mianzhu City 10,000,000.00 2,000,000.00 20.00 Direct rental Taizhong Machinery project, entrusted Construction Co., Ltd. purchase of leased assets

Page 60 (Total 141 pages)

− F-187 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Sichuan Juzhan Construction 7,800,000.00 Debt purchase and Co., Ltd. fund possession costs are charged

Zigong City Huaran Natural 6,961,603.63 Direct rental project Gas Co., Ltd. without input tax invoice, pending

Chengdu Kaimo Steel Trade 4,484,936.01 896,987.20 20.00 Loss is expected to Co., Ltd. occur

LUO Xiaobing 3,941,062.00 No recovery risk

Sichuan Zhongsheng 3,500,000.00 3,500,000.00 100.00 Expected to be Zhengyin Tourism Investment irrecoverable Management Co., Ltd.

Sichuan Lianfa Medical & 2,930,000.00 2,930,000.00 100.00 Irrecoverable Health Products Co., Ltd. - cashing bonds

Sichuan Kangda Decoration 2,888,921.00 2,888,921.00 100.00 Long aging and Co., Ltd. cannot be recovered

Chengdu Sikaide Trade Co., 2,666,598.59 Recoverable and Ltd. not provided for bad debts

Municipal Commercial 2,000,000.00 2,000,000.00 100.00 Irrecoverable Network Construction Office

Chengdu Textile Company 1,900,000.00 1,900,000.00 100.00 Irrecoverable

Chengdu Shiyan Shopping 1,800,000.00 1,800,000.00 100.00 Irrecoverable Mall

Xinjin County Transportation 1,608,669.11 Direct rental project Construction Investment Co., without input tax Ltd. invoice, pending

ZENG Cheng 1,295,419.61 1,295,419.61 100.00 According to the lawyer's confirmation letter, the uncollected part of the stolen escort money shall be withdrawn in full

New Age Square 1,200,000.00 1,200,000.00 100.00 Irrecoverable

Page 61 (Total 141 pages)

− F-188 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions

Commercial Group Company 1,200,000.00 1,200,000.00 100.00 Irrecoverable

ZENG Shu 1,023,117.86 Expected to be recoverable and not provided for bad debts

Jiangsu Jinghua Industrial Co., 924,277.60 924,277.60 100.00 Long aging and Ltd. cannot be recovered

Sichuan Tianlun Tanxianglou 856,967.50 Expected to be Food Co., Ltd. recoverable and not provided for bad debts

Sichuan Provincial Higher 627,900.00 Litigation costs and People's Court preservation commission fees are expected to be recoverable

Chengdu Xingcheng 619,114.40 Recoverable and Investment Group Co., Ltd. not provided for bad debts

Sichuan Xinjin Power Supply 600,000.00 Electricity Co., Ltd. consumption deposits that can be returned and not provided for bad debts

Chengdu Clothes Building 600,000.00 600,000.00 100.00 Irrecoverable

Baoding Taihang Equipment 583,900.00 583,900.00 100.00 Long aging and Factory cannot be recovered

Chongqing Liangjiang 549,630.60 Direct rental project International Rehabilitation without input tax Hospital Co., Ltd. invoice, pending

Chengdu High-tech Zone 503,396.66 503,396.66 100.00 Overdue debts that Comprehensive Management are not expected to Office be recoverable

Chengdu Shandi Property 500,000.00 500,000.00 100.00 Irrecoverable Company

Page 62 (Total 141 pages)

− F-189 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Wenhua Clock Supply Station 500,000.00 500,000.00 100.00 Irrecoverable

Sichuan Tonglian Automobile 488,240.00 488,240.00 100.00 Irrecoverable Co., Ltd.

Sichuan Kexin Zhihua 480,000.00 480,000.00 100.00 Irrecoverable Industrial Co., Ltd.

ZENG Gang 479,410.16 Expected to be recoverable and not provided for bad debts TANG Shitao 475,850.39 No recovery risk

Chengdu Aquatic Products 450,000.00 450,000.00 100.00 Irrecoverable Company

Provincial Gaoda Real Estate 400,000.00 400,000.00 100.00 Irrecoverable Development Corporation

Dayi County Highway and 360,000.00 360,000.00 100.00 Irrecoverable Bridge Engineering Company

YANG Yingchang 352,620.94 Expected to be recoverable and not provided for bad debts

Daguan Waterworks 300,000.00 300,000.00 100.00 Long aging and cannot be recovered

Tailai Decoration Company 280,000.00 280,000.00 100.00 Irrecoverable

Sichuan Kuncheng Shipping 270,157.71 Expected to be Co., Ltd. recoverable and not provided for bad debts

Chengdu Qinghuaju Food 200,000.00 200,000.00 100.00 Irrecoverable Factory

Chengdu Meigang Materials 188,000.00 The deposit is Co., Ltd. expected to be recovered and not provided for bad debts

Guangdong Jirong Equipment 180,000.00 180,000.00 100.00 Long aging and Factory cannot be recovered

Page 63 (Total 141 pages)

− F-190 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions

Transfer of Xinding creditor's 174,802.69 174,802.69 100.00 Irrecoverable rights

Tianfu Hotel of Dujiangyan 140,000.00 140,000.00 100.00 Irrecoverable City Catering Service Company

Wanhe Brokerage Company 134,563.16 134,563.16 100.00 Irrecoverable

Sichuan Kangda Construction 120,000.00 120,000.00 100.00 Long aging and Equipment Factory cannot be recovered

Guangsha Real Estate 101,500.00 101,500.00 100.00 Irrecoverable Company

Dujiangyan Fenghua Electric 100,000.00 100,000.00 100.00 Long aging and Appliance Factory cannot be recovered

Chengdu Hengxin 100,000.00 100,000.00 100.00 Irrecoverable Development Co., Ltd.

Yankou City Branch of 100,000.00 100,000.00 100.00 Irrecoverable Industrial and Commercial Bank of China

Chengdu Jinjiang Urban Rural 99,000.00 No recovery risk Development Investment Co., Ltd.

Beijing Shizong Technology 89,500.00 89,500.00 100.00 Long aging and Co., Ltd. cannot be recovered

Chengdu Jinniu Jintong 84,930.00 84,930.00 100.00 Long aging and Electric Appliance Co., Ltd. cannot be recovered

Sichuan Airlines Industrial 75,600.00 75,600.00 100.00 Irrecoverable Co., Ltd.

Sichuan Kaiyuanda 71,100.00 Expected to be Agricultural Development recoverable and not Co., Ltd provided for bad debts

Special account for self-raised 70,000.00 70,000.00 100.00 Irrecoverable capital construction deposit

Page 64 (Total 141 pages)

− F-191 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Southwest United Equity 63,084.00 Expected to be Exchange Co., Ltd. recoverable and not provided for bad debts

XIANG Yang 60,588.00 60,588.00 100.00 Not expected to be recovered

Sichuan Yiao Paintings Co., 59,481.50 Expected to be Ltd. recoverable and not provided for bad debts

Tax Bureau of Chengdu 57,313.65 Expected to be High-tech Industrial recoverable and not Development Zone, State provided for bad Administration of Taxation debts

Bulk cement Office 56,730.00 56,730.00 100.00 Irrecoverable

Agricultural Machinery 51,060.00 2,553.00 5.00 Loss is expected to Company occur

Special account of Chengdu 49,750.00 Expected to be Shuangliu District Finance recoverable as the Bureau receivables belong to the government departments

Chengdu Yiyang company 43,800.00 43,800.00 100.00 Long aging and cannot be recovered

China Capital Tendering Co., 42,400.00 Recoverable and Ltd. not provided for bad debts

Chengdu Hongxiang 42,000.00 The deposit is Pharmaceutical Co., Ltd. expected to be recovered and not provided for bad debts

Sichuan Rongyao Investment 39,443.00 Expected to be Co., Ltd. recoverable and not provided for bad debts

Page 65 (Total 141 pages)

− F-192 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Dujiangyan Gardening Bureau 38,000.00 Not provided for bad debts as the receivables belong to the government departments

New image company 30,000.00 30,000.00 100.00 Irrecoverable

Wuhan Zhishang Decoration 30,000.00 30,000.00 100.00 Irrecoverable Design Engineering Co., Ltd.

SUN Qixiang, ZHAO Ying 30,000.00 Expected to be recoverable and not provided for bad debts

Chengdu Metal Structure 29,250.00 29,250.00 100.00 Long aging and Factory cannot be recovered

Chengdu Yujia Co., Ltd. 25,068.00 25,068.00 100.00 Long aging and cannot be recovered

Tanghu Material Supply 25,000.00 25,000.00 100.00 Long aging and Company cannot be recovered

Chengdu securities trading 20,000.00 20,000.00 100.00 Irrecoverable margin - other receivables

Qionglai Rende hospital 11,308.00 Expected to be recoverable and not provided for bad debts

CLSA Capital Markets Co., 10,526.40 Recoverable and Ltd. not provided for bad debts

Chengdu Commercial Service 10,123.92 10,123.92 100.00 Irrecoverable Company

Chengdu Tuoyuan Water 6,000.00 Not provided for Supply Co., Ltd. the deposits

Page 66 (Total 141 pages)

− F-193 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions Local Taxation Bureau of 5,353.17 Expected to be Chengdu High- tech Zone recoverable

Chongqing Baofeng Cable 5,000.00 Expected to be Co., Ltd. recoverable and not provided for bad debts

Sichuan Dahong Culture 4,800.00 Expected to be Communication Co., Ltd. recoverable and not provided for bad debts

Chengdu Subsidiary of China 4,800.00 Expected to be Telecom Co., Ltd. recoverable and not provided for bad debts

Municipal Mu Lin Sen 4,000.00 4,000.00 100.00 Irrecoverable Company

Local governance and Social 3,860.01 Expected to be Affairs Bureau of Chengdu recoverable as the High-tech Zone receivables belong to the government departments

QU Bin of Lanling Company 3,000.00 3,000.00 100.00 Irrecoverable

Chengdu High-tech Zone 2,989.53 Expected to be Branch (Agent) of PRC recoverable as the National Treasury receivables belong to the government departments

Chongqing Mingjia Shipping 2,800.00 Expected to be Co., Ltd. recoverable and not provided for bad debts

Sichuan Huiyuan Agricultural 2,000.00 Expected to be Industrial Group Co., Ltd. recoverable and not provided for bad debts

Page 67 (Total 141 pages)

− F-194 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions YAO Jiali 1,969.00 Expected to be recoverable and not provided for bad debts

Company annuity 1,517.96 Expected to be recoverable and not provided for bad debts

Sichuan Jintong Shuangfeng 1,501.72 Recoverable and Power Electronic Engineering not provided for Co., Ltd. bad debts

DAI Zelan 1,499.28 Expected to be recoverable and not provided for bad debts

Sichuan Shunyuan Asset 1,400.00 Advances that are Management Co., Ltd. recoverable and not provided for bad debts Registration fee of property 1,360.00 Registration right advances of property right that are recoverable and not provided for bad debts

Jintang County Branch of the 1,000.00 POS deposits that Agricultural Bank of China are recoverable and Co., Ltd. not provided for bad debts

Mingxing Purified Water 720.00 Expected to be Business Department of recoverable and not Chenghua District, Chengdu provided for bad debts

Individual 512.20 Advances of social security payment for employees, not provided for bad debts

Page 68 (Total 141 pages)

− F-195 −

Closing balance Company Bad debt Provision Reasons for making Book balance provisions ˄%˅ the provisions LUO Minghua 495.00 495.00 100.00 Social security for departing employees, not provided for bad debts

YAO Yao 242.00 242.00 100.00 Social security for departing employees, not provided for bad debts

Taxation Bureau of Longquan 35.28 Very likely to be District recoverable

Other companies 1,534,311,799.36 Compensation funds and not provided for bad debts Total 2,111,841,017.72 75,545,037.30 3.58

6. Inventory (1) Classification of inventory: Closing balance Opening balance Item Provision Provision Book balance for Book value Book balance for Book value impairment impairment Raw 2,708,072.64 220,170.54 2,487,902.10 2,185,444.05 220,170.54 1,965,273.51 materials Goods in 3,351,885.33 364,763.20 2,987,122.13 2,854,596.77 2,854,596.77 stock Development 2,829,639,787.7 3,342,343,638.94 3,342,343,638.94 2,829,639,787.71 costs 1 Developed 508,476,271.63 508,476,271.63 588,567,092.00 588,567,092.00 goods Packaging materials, low 17,626,082.57 17,626,082.57 18,402,421.97 18,402,421.97 consumption goods, etc. Others 11,624,714.91 83,589.00 11,541,125.91 11,534,823.23 11,534,823.23 3,452,963,995.1 3,886,130,666.02 668,522.74 3,885,462,143.28 3,453,184,165.73 220,170.54 Total 9 The details are as follows: A. Products under development

Page 69 (Total 141 pages)

− F-196 −

Provisi Estimated on for Starting Estimated total Opening Closing Project completion impair time investment cost balance balance time ment

Financial Back Office July, 2012 2018 1,838,000,000.00 610,949,990.73 540,595,780.59 Service Center

Jintang CBD December, 2021 1,238,000,000.00 207,679,789.69 207,760,153.39 Project 2012

Pengzhou February, CBD 958,000,000.00 170,815,250.25 171,179,579.95 2014

Twin Tower March,2012 2019 2,072,000,000.00 1,394,468,996.07 1,649,650,156.43 Project

Exchange December, December, 1,220,000,000.00 210,091,846.83 497,027,755.39 Building 2018 2020

Land B08 March, 2018 March, 2021 1,750,049,000.00 235,633,914.14 276,130,213.19 Total 9,076,049,000.00 2,829,639,787.71 3,342,343,638.94 B. Finished product Provision for Completion Opening Closing Project Increase Decrease impairme time balance balance nt

Financial Holding Times December, 135,408,696.95 46.47 3,235,887.07 132,172,856.35 Square 2014 (CSRC Building)

Building 3 of Financial June, 2018 96,416,687.39 5,780,437.70 90,636,249.69 Back Office Service Center

Building 4 of Financial June, 2018 64,374,064.53 3,338,282.51 67,712,347.04 Back Office Service Center

Building 1 of Back 152,142,804.04 152,142,804.04 Office Service Page 70 (Total 141 pages)

− F-197 −

Provision for Completion Opening Closing Project Increase Decrease impairme time balance balance nt

Center

Basement of Back 33,569,219.72 33,569,219.72 Office Service Center

Jintang 42,528,982.17 42,528,982.17 9-11# Building

December, 4,856,597.36 141,942,331.30 Xinjin CBD 146,798,928.66 2012

Commercia 273,239.30 273,239.30 l housing renovation

Rong Jin December, 102,766,493.00 1,843,880.18 100,922,612.82 Cheng 2013 Total 588,567,092.00 189,050,352.74 269,141,173.11 508,476,271.63 (2) Provision for impairment of inventories Decrease during Categories of Opening Increase during the year Closing the year inventories balance balance Provision Other Reverse Resell Other Raw materials 220,170.54 220,170.54 Goods in stock 364,763.20 364,763.20 Others 83,589.00 83,589.00 Total 220,170.54 448,352.20 668,522.74 (3) Statement of inventories’ year-end balance which contains the amount of capitalized borrowing costs In the year-end balance of the inventories, the total amount of capitalized borrowing costs is RMB 1,538,258,433.52, and the Group uses the real interest rate of the financing cost as the capitalization rate of the borrowing.

7. Non-current assets due within 1 year Items Closing balance Opening balance Note Long-term receivables due within one Please refer to year 1,174,179,870.56 1,302,760,518.00 note˄XIII˅12 Other non-current assets due within one year Page 71 (Total 141 pages)

− F-198 −

Items Closing balance Opening balance Note Total 1,174,179,870.56 1,302,760,518.00

8. Other current assets Items Closing balance Opening balance Debt investment (Purchase of non-performing asset) 6,145,740,965.46 100,239,904.21

Entrusted loans 252,065,689.44 473,663,877.87

VAT 60,082,290.13 23,106,936.43

Prepaid income tax 10,816,810.97 6,450,491.41

Prepaid additional tax 454,706.36 227,983.67

Prepaid rentals 155,960.93

Expected loss of fixed assets 14,396.66

Less: Provision for losses 58,937,389.00 85,248,101.07 Total 6,410,379,034.29 518,455,489.18

9. Loans and advances (1) Loans and advances by individuals and businesses Items Closing balance Opening balance

Personal loans and advances 340,120,104.92 251,283,739.07

—Housing mortgage 271,003,632.15 187,823,260.53

—Other 69,116,472.77 63,460,478.54

Corporate loans and advances 159,052,339.32 209,940,569.29

—Loans 159,052,339.32 209,940,569.29

Total loans and advances 499,172,444.24 461,224,308.36

Less: Provision 99,205,602.51 91,662,495.15

Including: Specific provision 13,505,869.02 453,207.66

Combined provision 85,699,733.49 91,209,287.49 Book value of loans and advances 399,966,841.73 369,561,813.21

(2) Loans and advances by industries Percentage Percentage Industries Closing balance Opening balance (%) (%)

Page 72 (Total 141 pages)

− F-199 −

Percentage Percentage Industries Closing balance Opening balance (%) (%) Agriculture, animal husbandry and fishery 12,976,636.36 2.60 12,443,754.19 2.7 Extractive industry 15,435,000.00 3.09 18,180,000.00 3.94 Real estate industry 74,397,998.22 14.90 97,469,958.54 21.13

Construction industry 27,596,711.90 5.53 15,800,000.00 3.43

Other industries 368,766,097.76 73.88 317,330,595.63 68.8 Total loans and advances 499,172,444.24 100.00 461,224,308.36 100.00 Less: Provisions for loan losses 99,205,602.51 91,662,495.15 Including: Specific provision 13,505,869.02 453,207.66 Combined provision 85,699,733.49 91,209,287.49 Book value of loans and advances 399,966,841.73 369,561,813.21

(3) Loans and advances by regions Regions Closing balance Percentage (%) Opening balance Percentage (%) South China North China Other regions 499,172,444.24 100.00 461,224,308.36 100.00

Total loans and advances 499,172,444.24 100.00 461,224,308.36 100.00

Less: Provisions for loan losses 99,205,602.51 91,662,495.15

Including: Specific provision 13,505,869.02 453,207.66

Combined provision 85,699,733.49 91,209,287.49 Book value of loans and advances 399,966,841.73 369,561,813.21 (4) Loans and advances by ways of guarantees Items Closing balance Opening balance Credit loans 835,062.81 1,505,481.84 Guarantee loans 91,572,944.05 110,524,804.60 Collateral loans 406,764,437.38 349,194,021.92 Including: Mortgage loans 395,311,229.72 328,194,021.92 Pledged loans 11,453,207.66 21,000,000.00 Total loans and advances 499,172,444.24 461,224,308.36 Less: Provisions for loan losses 99,205,602.51 91,662,495.15 Including: Specific provision 13,505,869.02 453,207.66

Page 73 (Total 141 pages)

− F-200 −

Items Closing balance Opening balance Combined provision 85,699,733.49 91,209,287.49 Book value of loans and advances 399,966,841.73 369,561,813.21 (5) Provisions for loan losses Amount of the previous Amount of the current year Items year Specific Combined Specific Combined Opening balance 453,207.66 91,209,287.49 79,793,109.49 The amount of provision made this year 13,052,661.36 15,863,052.16 453,207.66 11,685,795.00 The amount reversed this year The amount written off this year 21,372,606.16 The amount transferred in this year 269,617.00 -Reversal due to recovery of the original resale loans and advances -Reversal due to rising discounted value of loans and advances - Reversal due to other reasons 269,617.00 Closing balance 13,505,869.02 85,699,733.49 453,207.66 91,209,287.49

10. Available-for-sale financial assets (1) Categories Closing balance Items Book balance Provision Book value Available-for-sale debt instrument Available-for-sale equity instrument 1,596,119,647.50 36,996,965.24 1,559,122,682.26 Including: Equity instrument at fair value 295,022,973.49 295,022,973.49 Equity instrument at cost 1,301,096,674.01 36,996,965.24 1,264,099,708.77 Total 1,596,119,647.50 36,996,965.24 1,559,122,682.26 Continued˖ Opening balance Items Book balance Provision Book value Available-for-sale debt instrument Available-for-sale equity instrument 1,036,699,813.84 36,996,965.24 999,702,848.60 Including: Equity instrument at fair value 207,657,872.16 207,657,872.16 Equity instrument at cost 829,041,941.68 36,996,965.24 792,044,976.44 Total 1,036,699,813.84 36,996,965.24 999,702,848.60 (2) Available-for-sale financial assets measured at fair value at the end of the period Available-for-sale Available-for-sale Categories Total equity instrument debt instrument Cost of equity instruments / 172,886,680.39 172,886,680.39 amortized cost of debt Page 74 (Total 141 pages)

− F-201 −

Available-for-sale Available-for-sale Categories Total equity instrument debt instrument instruments

Fair value 295,022,973.49 295,022,973.49

Fair value changes that are accumulated in the other 122,136,293.10 122,136,293.10 comprehensive income Accrued impairment (3) Available-for-sale financial assets measured at cost at the end of the period For equity investments are not quoted in an active market and whose fair value cannot be reliably measured, the Group shall measure them at the costs and has no disposal plan of the relevant equity investments in the foreseeable future. As at the end of the reporting period, the equity instruments measured at cost are as follows. Book balance Shareh olding Opening Closing Invested Company Increase Decrease ratio balance balance (%) Hainan Development 1.00 1.00 0.01 Chengdu Xinhuaxin Chemical Materials Co., 260.71 260.71 26.00 Ltd.

Chengdu New Space Property Development 2,550,000.00 2,550,000.00 85.00 Co., Ltd.

Chengdu Financial Holding Wealth Equity 1.00 1.00 Investment Fund

Huatian Group 1.00 1.00 0.30

Hainan Science Park 1.00 1.00 1.23

Chengdu Construction 4,522,224.75 4,522,224.75 10.87 Development Co., Ltd.

Chengdu Kowloon 2,013,982.98 2,013,982.98 0.45 Electric Power Co., Ltd.

Huaxi Taxi Company 1.00 1.00 0.01

Nanguang Machinery 1.00 1.00 2.94

Chengdu Ruida Real Estate Co., Ltd. 1.00 1.00 0.58

Chengdu Huacheng 1.00 1.00 6.97 Co., Ltd. Page 75 (Total 141 pages)

− F-202 −

Book balance Shareh olding Opening Closing Invested Company Increase Decrease ratio balance balance (%)

Chengdu Trust Investment Co., Ltd. 31,396,965.24 31,396,965.24 62.46

Xi Chang Jin Xin Rural 10,450,000.00 10,450,000.00 9.09 Bank

Chengdu Gongtou Hongtu Innovation 700,000.00 700,000.00 35.00 Investment Co., Ltd.

Chengdu Hutong Panji Yinke Equity Investment Fund 4,900,000.00 4,900,000.00 10.00 Partnership (Limited Partnership)

Chengdu Guoheng No. 1 Investment Partnership (Limited 18,693,600.00 10,293,600.00 8,400,000.00 10.00 Partnership)

Chengdu Innovation Venture Capital Co., 30,000,000.00 30,000,000.00 5.00 Ltd.

Sichuan Provincial Credit Re-guarantee 100,000,000.00 100,000,000.00 5.00 Co., Ltd.

Chengdu Financial 49,985,000.00 49,985,000.00 Holding Wealth Fund

Chengdu Wenlyu Longmen Mountain 20,000,000.00 20,000,000.00 9.09 Tourism Investment Co., Ltd.

Chengdu SME 3,359,900.00 3,359,900.00 0.24 Guarantee Company

Chengdu Xingzheng E-government operation 5,000,000.00 5,000,000.00 10.00 Service Co., Ltd.

Chengdu Feiran 14,470,000.00 14,470,000.00 25.00

Page 76 (Total 141 pages)

− F-203 −

Book balance Shareh olding Opening Closing Invested Company Increase Decrease ratio balance balance (%) Yuantong No.2 Equity Investment Fund Partnership (Limited Partnership)

Sichuan Province Zipingpu Development 330,000,000.00 330,000,000.00 15.00 Co., Ltd.

200,000,000.00 Tianfu (Sichuan) Credit 200,000,000.00 15.00 Enhancement Co., Ltd.

Chengdu Development Fund (Phase I) 1,000,000.00 333,333,333.33 334,333,333.33 1.11 Partnership (Limited Partnership)

Chengdu Jinchangying Airport New Town Construction 151,000,000.00 151,000,000.00 60.30 Investment Partnership (Limited Partnership)

Guoxinxin Equity Investment Fund (Chengdu) Partnership 12,000,000.00 12,000,000.00 13.33 (Limited Partnership)

Chengdu Ziguang Integrated Circuit Industry Equity Investment Fund 1,000,000.00 1,000,000.00 14.37 (Chengdu) Partnership (Limited Partnership)

Tianjin Shunlong Investment Center 35,000,000.00 35,000,000.00 99.99 (Limited Partnership) Total 829,041,941.68 532,333,333.33 60,278,601.00 1,301,096,674.01 ˄Continued˅ Provision Current Invested Company Opening Closing cash Increase Decrease balance balance dividend Chengdu Trust Investment 31,396,965.24 31,396,965.24 Co., Ltd. Chengdu Gongtou Hongtu 700,000.00 700,000.00 Innovation Investment Co.,

Page 77 (Total 141 pages)

− F-204 −

Provision Current Invested Company Opening Closing cash Increase Decrease balance balance dividend Ltd. Chengdu Hutong Panji Yinke 4,900,000.00 4,900,000.00 Equity Investment Fund Partnership (Limited Partnership) Total 36,996,965.24 36,996,965.24 (4) Changes in the impairment of available-for-sale financial assets during the reporting period Increase Decrease Including: Including: reversed due Opening Closing Categories transferred to increase in balance Amount from other Amount fair value balance comprehensive after the income reporting period Available-for-sale 36,996,965.24 36,996,965.24 equity instrument Total 36,996,965.24 36,996,965.24

12. Long-term receivables Closing balance Opening balance Range of Categories Book Book Book discou Provision Book value Provision nt balance balance value rates Finance 2,135,823,529.79 77,508,129.75 2,058,315,400.04 1,983,206,012.45 74,389,831.77 1,908,816,180.68 8.5-9.0 lease

Including˖ 961,643,659.23 77,508,129.75 884,135,529.48 680,445,494.45 74,389,831.77 606,055,662.68 Long-term receivables Non-curren t assets due 1,174,179,870.56 1,174,179,870.56 1,302,760,518.00 1,302,760,518.00 within one year Including˖ Unrealized 110,313,117.96 110,313,117.96 179,255,223.39 179,255,223.39 financing income Total 961,643,659.23 77,508,129.75 884,135,529.48 680,445,494.45 74,389,831.77 606,055,662.68 8.5-9.0

Page 78 (Total 141 pages)

− F-205 −

Note: The Company records the present value of the minimum lease receivables due within one year in the account of “non-current assets due within one year” and records the present value of the minimum lease receivables more than one year in the account of “long term receivables”.

Page 79 (Total 141 pages)

− F-206 −

13. Long-term equity investment Closing balance Opening balance Invested company Book balance Provision Book value Book balance Provision Book value

1. Joint ventures Deyang Rural Property Rights Trading Co., Ltd. of 3,347,076.74 3,347,076.74 Chengdu Agriculture Equity Exchange

3,001,943.96 3,001,943.96 Chengdu Weixin Jiaozi Digital Technology Co., Ltd. Subtotal 3,001,943.96 3,001,943.96 3,347,076.74 3,347,076.74

2. Associates − F-207 Bank of Chengdu 6,416,913,061.52 6,416,913,061.52 5,607,309,664.12 5,607,309,664.12

Chengdu Rural Commercial Bank Co., Ltd. 3,975,193,319.04 3,975,193,319.04 2,462,045,332.64 2,462,045,332.64 Jishi Equity Investment Fund Management 5,868,722.42 5,868,722.42 6,398,481.53 6,398,481.53 (Chengdu) Co., Ltd. Vanho Securities Co., Ltd. 171,025,975.21 171,025,975.21 166,673,391.11 166,673,391.11

Jintai Insurance Co., Ltd. 193,311,161.99 193,311,161.99 173,232,629.55 173,232,629.55

Chengdu Tianfu Tong Financial Services Co., Ltd. 152,607,144.94 152,607,144.94 159,760,123.93 159,760,123.93 Chengdu Institute of New Economic Development 3,126,247.79 3,126,247.79 3,059,155.46 3,059,155.46 Co., Ltd. Chengdu Jiaozi Commercial Factoring Co., Ltd. 196,000,000.00 196,000,000.00 Chengdu Financial Holding Human Resource 1,439,467.50 1,439,467.50 1,348,863.03 1,348,863.03 Management Co., Ltd. Chengdu Yinke Venture Capital Co., Ltd. 145,622,597.93 145,622,597.93 248,414,280.81 248,414,280.81

Page 80 (Total 141 pages)

Closing balance Opening balance Invested company Book balance Provision Book value Book balance Provision Book value Jinglian Chenghe Equity Investment Fund 2,053,607.56 2,053,607.56 Management (Chengdu) Co., Ltd. Chengdu Financial Holding Development Equity 6,945,933.18 6,945,933.18 6,421,607.41 6,421,607.41 Investment Fund Management Co., Ltd. Chengdu Yuehua Land Consolidation Co., Ltd. 4,905,184.26 4,905,184.26 5,029,900.12 5,029,900.12 Chengdu Chenghua Ronghua Land Consolidation 4,999,756.06 4,999,756.06 4,988,216.52 4,988,216.52 Co., Ltd. Chengdu Beicheng Construction Development Co., 4,978,101.50 4,978,101.50 4,969,624.87 4,969,624.87 Ltd. Sichuan Jinhong Xinzhan Equity Investment Fund − F-208 1,194,287.81 1,194,287.81 1,638,019.57 1,638,019.57 Management Co., Ltd. Chengdu Financial Holding Busi City Development 164,434.51 164,434.51 270,700.33 270,700.33 Equity Investment Fund Management Co., Ltd. Chengdu Financial Holding Culture & Tourism 5,007,305.05 5,007,305.05 4,955,354.39 4,955,354.39 Equity Investment Fund Management Co., Ltd. Chengdu Rong’ou Railway Port Equity Investment 908,732.40 908,732.40 897,766.92 897,766.92 Fund Management Co., Ltd. Sichuan Zhongsheng Zhengyin Tourism Investment 71,417,720.27 71,417,720.27 71,417,720.27 71,417,720.27 Management Co., Ltd. Chengdu Financial Holding Tongju Investment Co., 37,954,657.88 37,954,657.88 36,569,023.82 36,569,023.82 Ltd. Chengdu Rural Property Rights Collection and 15,791,638.59 15,791,638.59 11,828,396.23 11,828,396.23 Storage Co., Ltd. Chengdu Intellectual Property Financial Fintech Co., 4,117,582.27 4,117,582.27 Ltd. Chengdu Intellectual Property Exchange Co., Ltd. 149,865,462.38 149,865,462.38

Tianfu (Sichuan) United Equity Exchange Co., Ltd. 16,110,174.28 16,110,174.28 19,778,586.38 19,778,586.38

Page 81 (Total 141 pages)

Closing balance Opening balance Invested company Book balance Provision Book value Book balance Provision Book value

Southwest United Equity Exchange Co., Ltd. 46,166,260.00 46,166,260.00 44,026,320.00 44,026,320.00

Sichuan United Environment Exchange Co., Ltd. 21,247,503.56 21,247,503.56 23,880,166.33 23,880,166.33

Chengdu Depository and Clearing Co., Ltd. 9,548,162.28 9,548,162.28 10,206,942.01 10,206,942.01

Sichuan Financial Assets Exchange Co., Ltd. 31,911,365.18 31,911,365.18 33,010,961.74 33,010,961.74

Chengdu Financial Assets Exchange Co., Ltd. 14,240,639.14 14,240,639.14 12,274,503.23 12,274,503.23

Sichuan Xinyongtong Digital Technology Co., Ltd. 25,040,295.80 25,040,295.80 24,921,835.40 24,921,835.40 − F-209 Chengdu Digital City Operation Management Co., 4,082,730.59 4,082,730.59 4,569,363.30 4,569,363.30 Ltd. Guoxin Ronghui Equity Investment Fund 5,539,297.19 5,539,297.19 Management Co., Ltd. Chengdu Hi-tech Sanyi Yimin Comprehensive 2,037,931.02 2,037,931.02 2,271,850.49 2,271,850.49 Outpatient Department Co., Ltd. Chengdu Yihu Santai Financial Service Co., Ltd. 7,219,179.17 7,219,179.17 8,138,382.15 8,138,382.15 Sichuan Zhongsheng Zhengyin Tourism Investment 47,350,000.00 47,350,000.00 Management Co., Ltd. Subtotal 11,453,986,570.33 11,453,986,570.33 9,508,226,233.60 9,508,226,233.60

Total 11,456,988,514.29 11,456,988,514.29 9,511,573,310.34 9,511,573,310.34

(Continued)

Page 82 (Total 141 pages)

Increase and decrease in the current period Investment Other Declaration of Provisi profit and loss Invested company Increase in Decrease in comprehensi Changes in cash on for recognized Others investment investment ve income other equity dividends or impair under the adjustments profits ment equity method 1. Joint ventures Deyang Rural Property Rights Trading Co., Ltd. of Chengdu 3,347,076.74 Agriculture Equity Exchange

Chengdu Weixin Jiaozi Digital 3,000,000.00 1,943.96 Technology Co., Ltd. − F-210

Subtotal 3,000,000.00 3,347,076.74 1,943.96 2. Associates

Bank of Chengdu 1,009,732,064.57 18,694,086.60 9,523,546.23 228,346,300.00

Chengdu Rural Commercial Bank 390,000,000.00 465,310,059.53 -36,397,353.13 694,235,280.00 Co., Ltd.

Jishi Equity Investment Fund 6,398,481.53 10,000,000.00 -529,759.11 3,601,518.47 Management (Chengdu) Co., Ltd. Vanho Securities Co., Ltd. 3,786,572.05 566,012.05

Jintai Insurance Co., Ltd. 3,805,224.62 16,273,307.82

Chengdu Tianfu Tong Financial Services Co., Ltd. -7,152,978.99

Page 83 (Total 141 pages)

Increase and decrease in the current period Investment Other Declaration of Provisi profit and loss Invested company Increase in Decrease in comprehensi Changes in cash on for recognized Others investment investment ve income other equity dividends or impair under the adjustments profits ment equity method Chengdu Institution of New Economic Development Co., Ltd. 97,092.33 30,000.00

Chengdu Jiaozi Commercial Factoring Co., Ltd. 196,000,000.00

Chengdu Financial Holding

− F-211 Human Resource Management 90,604.47 Co., Ltd.

Chengdu Yinke Venture Capital Co., Ltd. 110,000,000.00 7,208,317.12

Jinglian Chenghe Equity Investment Fund Management 2,053,607.56 (Chengdu) Co., Ltd.

Chengdu Financial Holding Development Equity Investment 524,325.77 Fund Management Co., Ltd.

Chengdu Yuehua Land Consolidation Co., Ltd. -124,715.86

Chengdu Chenghua Ronghua 11,539.54 Land Consolidation Co., Ltd.

Page 84 (Total 141 pages)

Chengdu Beicheng Construction Development Co., Ltd. 8,476.63

Sichuan Jinhong Xinzhan Equity Investment Fund Management -443,731.76 Co., Ltd. − F-212

Chengdu Financial Holding Busi City Development Equity Investment Fund Management -106,265.82 Co., Ltd.

Chengdu Financial Holding Culture & Tourism Equity Investment Fund Management 51,950.66 Co., Ltd.

Chengdu Rong’ou Railway Port Equity Investment Fund 10,965.48 Management Co., Ltd.

Sichuan Zhongsheng Zhengyin Tourism Investment Management

Co., Ltd.

Page 85 (Total 141 pages)

Chengdu Financial Holding Tongju Investment Co., Ltd. 1,385,634.06

Chengdu Rural Property Rights Collection and Storage Co., Ltd. 4,000,000.00 -36,757.64

− F-213 Chengdu Intellectual Property Financial Fintech Co., Ltd. 4,900,000.00 -782,417.73

Chengdu Intellectual Property 149,946,184.95 80,722.57 Exchange Co., Ltd.

Tianfu (Sichuan) United Equity -3,668,412.10 Exchange Co., Ltd.

Southwest United Equity 11,729,940.00 9,590,000.00 Exchange Co., Ltd.

Sichuan United Environment -2,632,662.77 Exchange Co., Ltd.

Chengdu Depository and -658,779.73 Clearing Co., Ltd.

5,325,349.70 6,424,946.26 Sichuan Financial Assets Page 86 (Total 141 pages)

Chengdu Financial Assets 1,966,135.91 Exchange Co., Ltd.

Sichuan Xinyongtong Digital 118,460.40 Technology Co., Ltd. − F-214

Chengdu Digital City Operation -486,632.71 Management Co., Ltd.

Guoxin Ronghui Equity 3,600,000.00 1,939,297.19 Investment Fund Management Co., Ltd.

Chengdu Hi-tech SanYi Yimin -233,919.47 Comprehensive Outpatient Department Co., Ltd.

Chengdu Yihu Santai Financial 432,511.66 1,351,714.64 Service Co., Ltd.

Sichuan Zhongsheng Zhengyin 47,350,000.00 Tourism Investment Management Co., Ltd.

Page 87 (Total 141 pages)

Increase and decrease in the current period Investment Other Declaration of Provisi profit and loss Invested company Increase in Decrease in comprehensi Changes in cash on for recognized Others investment investment ve income other equity dividends or impair under the adjustments profits ment equity method Subtotal 408,898,481.53 467,999,792.51 1,496,677,488.00 -863,946.66 703,758,826.23 245,742,960.90 51,032,241.04 Total 411,898,481.53 471,346,869.25 1,496,679,431.96 -863,946.66 703,758,826.23 245,742,960.90 51,032,241.04 − F-215

Page 88 (Total 141 pages)

14. Investment property Items Housings and buildings Land use rights Total I. Original book value 1. Opening balance 911,861,426.21 20,901,059.29 932,762,485.50 2. Increase 274,161,840.13 274,161,840.13 (1) Purchase (2) Transferred from inventories/ fixed assets/ construction in progress 274,161,840.13 274,161,840.13 (3) Business combination 3ˊDecrease 10,505,000.00 10,505,000.00 (1) Disposal 10,505,000.00 10,505,000.00 4. Closing balance 1,175,518,266.34 20,901,059.29 1,196,419,325.63 II. Accumulated depreciation and amortization 1. Opening balance 202,887,679.80 6,117,627.51 209,005,307.31 2. Increase 23,016,754.51 23,016,754.51 (1) Depreciation / Amortization 23,016,754.51 23,016,754.51 3. Decrease 4,123,863.00 4,123,863.00 (1)Disposal 4,123,863.00 4,123,863.00 (2)Others 4. Closing balance 221,780,571.31 6,117,627.51 227,898,198.82 III. Impairment loss 1. Opening provisions 2. Increase (1) Provision 3. Decrease (1)Disposal (2)Other transferred our 4. Closing balance IV. Book value 1. At the end of the year 953,737,695.03 14,783,431.78 968,521,126.81 2. At the beginning of the year 708,973,746.41 14,783,431.78 723,757,178.19 Note: Investment properties whose certificate of title has not been issued

Reasons for not obtaining the Items Book value certificate of title The certificate of property Urban Smart Governance Center 71,439,242.77 rights can be issued after the final accounts are processed.

21F, Block B, Youyi Plaza 4,105,662.40 Free transfer, no certificate of title.

Zhougongshan Villa in Ya'an 1,455,150.00 Free transfer, no certificate of title.

No. 2-54, Tongyou Road 25.00 Free transfer, no certificate of title. Page 89 (Total 141 pages)

− F-216 −

Reasons for not obtaining the Items Book value certificate of title

2-8, No. 2 Caotang North Road 7.00 Free transfer, no certificate of title.

Free transfer, no certificate of No. 45-65 Jinghua South Road 10.00 title.

The real estate of Xiecheng No.38, Jule Road Crossing, West First Company was recorded and 11,782,900.00 Section of the First Ring Road transferred in December 2019. The certificate of title is still being processed.

No.70, Commercial Street, Qingyang 12,151,300.00 In progress District

No. 2, Zhanqi East Road, Qingyang 11,020,800.00 In progress District

No.38 Huaishu street, Qingyang District 18,179,100.00 In progress

No.1-2 , Unit 1, Business Room Unit 1, Building 4, Nanyuan Community, In progress 7,363,100.00 Yongchuan Road, South Section 4, Wuhou First Ring Road

No. 69, 71, 73, Jiulidi South Road, Jinniu District 8,121,900.00 In progress

1-33 Shuyuan West Street, Jinjiang District (Yatai Building) 41,598,700.00 In progress

No. 68 Zouma Street, Jinjiang District, In progress 5,682,500.00 Chengdu

No. 118-124 Xiangheli, Chenghua District 8,614,200.00 In progress

No. 75-77, No. 79-81, 1F, Shuanglin Zhongheng Road, Chenghua District 3,026,600.00 In progress

1-3, Building A, Jixiang building, 47 Shangnan Street, Jinjiang District 18,292,400.00 In progress

No. 234 Fuqin West Road, Jinniu District 20,135,500.00 In progress

The debt dispute between the Hongma Building, Chunxi Road 4,793,143.00 housing developers and the construction party leading to

Page 90 (Total 141 pages)

− F-217 −

Reasons for not obtaining the Items Book value certificate of title the property rights not yet being issued.

Total 247,762,240.17

Page 91 (Total 141 pages)

− F-218 −

15. Fixed assets (1) Information of fixed assets Electronic Items Land and buildings Machinery Motor vehicle Office equipment Other Total equipment I. Original book

value 1. Opening balance 1,263,731,789.06 16,020,231.86 320,046,071.76 13,023,578.23 101,089,985.42 897,145.12 1,714,808,801.45 2. Increase 302,320,319.81 5,513,104.79 39,913,677.57 3,633,175.29 6,310,090.47 357,690,367.93 (1)Purchase 102,563,689.40 5,513,104.79 39,913,677.57 3,633,175.29 6,310,090.47 157,933,737.52 (2)Transferred from construction 199,756,630.41 in progress 199,756,630.41 (3)Business − F-219 combination 3. Decrease 149,828,597.68 13,497,982.72 2,778.31 521,859.91 163,851,218.62 (1)Disposal / Scrap 149,828,597.68 13,497,982.72 2,778.31 521,859.91 163,851,218.62 (2)Business combination 4ˊClosing balance 1,416,223,511.19 21,533,336.65 346,461,766.61 16,653,975.21 106,878,215.98 897,145.12 1,908,647,950.76 II. Accumulated depreciation 1. Opening balance 30,959,187.25 4,512,022.37 263,071,894.71 9,022,019.36 86,388,923.99 336,375.49 394,290,423.17 2. Increase 31,625,675.76 2,324,790.40 27,171,829.79 2,203,977.78 6,235,197.37 50,979.87 69,612,450.97 (1)Charge 31,625,675.76 2,324,790.40 27,171,829.79 2,203,977.78 6,235,197.37 50,979.87 69,612,450.97 3. Decrease 12,301,972.54 448,867.26 12,750,839.80 (1) Disposal / Scrap 12,301,972.54 448,867.26 12,750,839.80 (2) Business combination 4. Closing balance 62,584,863.01 6,836,812.77 277,941,751.96 11,225,997.14 92,175,254.10 387,355.36 451,152,034.34 III. Impairment Page 92 (Total 141 pages)

Electronic Items Land and buildings Machinery Motor vehicle Office equipment Other Total equipment provisions 1. Opening balance 2,054,872.89 4,769,962.00 6,824,834.89 2. Increase (1) Provision 3. Decrease (1) Disposal / Scrap 4. Closing balance 2,054,872.89 4,769,962.00 6,824,834.89 IV. Book value 1. At the end of the year 1,351,583,775.29 14,696,523.88 68,520,014.65 5,427,978.07 9,932,999.88 509,789.76 1,450,671,081.53 − F-220 2. At the beginning of the year 1,230,717,728.92 11,508,209.49 56,974,177.05 4,001,558.87 9,931,099.43 560,769.63 1,313,693,543.39

Page 93 (Total 141 pages)

(2) Fixed assets whose certificate of title has not been issued (3) The book value of the liquidated fixed assets at the end of the period is RMB 31,993.68.

16. Construction in progress (1) General information of construction in progress Closing balance Projects Book balance Provision Net book value Huashui Bay Project 4,819,265.89 4,819,265.89

Chengdu Financial Cadre Training Center 23,654,679.95 23,654,679.95

Lingyan Hotel Hot Spring Project 1,011,741.69 1,011,741.69 Temporary Office Building

Construction Project of Chengdong 1,413,093.69 1,413,093.69 Office

Chengdu Financial City Cultural Center Project 1,169,999.97 1,169,999.97

Office Building 148,500,542.15 148,500,542.15

Sporadic projects 2,442,703.62 2,442,703.62

Total 183,012,026.96 23,654,679.95 159,357,347.01 Continued:

Opening balance Projects Book balance Provision Net book value Huashui Bay Project 4,589,605.97 4,589,605.97

Chengdu Financial Cadre Training Center 23,654,679.95 23,654,679.95

Lingyan Hotel Hot Spring Project 17,896,102.81 17,896,102.81

Temporary Office Building Construction Project of Chengdong Office 930,905.85 930,905.85

Jinri Rrunling Shop Decoration 4,649,329.52 4,649,329.52

Office Building of Qionglai Chamber of Commerce Building 1,357,500.00 1,357,500.00

Office Building 116,777,468.21 116,777,468.21

Project C04 (Financial Wheat Field) 174,891,582.26 174,891,582.26

Urban Smart Governance Center 38,069,969.36 38,069,969.36 Total 382,817,143.93 23,654,679.95 359,162,463.98

Page 94 (Total 141 pages)

− F-221 −

(2) Changes in significant constructions in progress

Opening Transferred Other Capitalization Closing rate of Project balance Increase to fixed decreases assets balance current interests (%)

Office Building 116,777,468.21 31,723,073.94 148,500,542.15

Project C04 (Financial 174,891,582.26 24,864,692.12 199,756,274.38 Wheat Field) Total 291,669,050.47 56,587,766.06 199,756,274.38 0.00 148,500,542.15 Continued: Proportion Accumulated Including: of project amount of capitalized cumulative Progress of capitalized amount of Project Budgets investment construction interest current Sources in the interest

of funds budget Project C04 (Financial 355,504,200.00 Borrowing 100 100 2,201,853.61 2,201,853.61 Wheat Field)

17. Intangible assets (1) Information of intangible assets Network Items Software Land use right platform Others Total construction I. Original book value 1. Opening 34,284,346.24 263,317,371.54 7,218,144.83 1,870,328.11 306,690,190.72 balance 2. Increase 13,389,104.43 112,343,153.61 8,218,272.67 133,950,530.71 (1)Purchase 13,389,104.43 112,343,153.61 4,671,210.86 130,403,468.90 (2)Internally 3,547,061.81 3,547,061.81 developed (3)Business combination 3. Decrease 910,552.38 910,552.38 (1) Disposal 910,552.38 910,552.38 (2) Business combination 4. Closing 46,762,898.29 375,660,525.15 15,436,417.50 1,870,328.11 439,730,169.05 balance II. Accumulated

Page 95 (Total 141 pages)

− F-222 −

Network Items Software Land use right platform Others Total construction amortization 1. Opening 13,673,296.11 19,091,274.16 660,593.66 92,578.17 33,517,742.10 balance 2. Increase 4,399,445.05 8,010,202.24 1,096,540.82 23,280.00 13,529,468.11 (1)Amortization 4,399,445.05 8,010,202.24 1,096,540.82 23,280.00 13,529,468.11 3. Decrease 414,940.47 414,940.47 (1) Disposal 414,940.47 414,940.47 (2) Business combination 4. Closing 17,657,800.69 27,101,476.40 1,757,134.48 115,858.17 46,632,269.74 balance III. Impairment losses 1. Opening balance 2. Increase (1) Provision 3. Decrease (1) Disposal 4. Closing balance IV. Book value 1. At the end of 29,105,097.60 348,559,048.75 13,679,283.02 1,754,469.94 393,097,899.31 the year 2. At the beginning of the 20,611,050.13 244,226,097.38 6,557,551.17 1,777,749.94 273,172,448.62 year

18. Development expenditure Increase Decrease Transferred Recognized Opening Internal to the Closing Projects as balance development current balance Other intangible Other expenditure profit or assets loss Healthy 11,095,561.19 11,095,561.19 Chengdu

Medical administration 3,414,186.53 2,227,675.14 5,641,861.67 and health supervision

Progress payment of 248,932.04 248,932.04 software Page 96 (Total 141 pages)

− F-223 −

Increase Decrease Transferred Recognized Opening Internal to the Closing Projects as balance development current balance Other intangible Other expenditure profit or assets loss upgrade and development cost

"Zhixin Products" 689,143.40 2,330.60 605,300.00 86,174.00 Project

Risk Control Service Gateway 51,000.00 51,000.00 102,000.00 Platform Project

"Nongdai 2,839,761.81 2,839,761.81 Tong" Project Total 15,249,891.12 5,120,767.55 248,932.04 3,547,061.81 86,174.00 16,986,354.90 ˄Continued˅ Research and Start point of The specific basis for Projects development progress capitalization capitalization by the end of period Project approval When development completed Healthy Chengdu started

Medical administration When development Project approval and health supervision started completed

Progress payment of software upgrade and When development Project approval development cost started completed

"Zhixin Products" Project When development Project approval

started completed

Risk Control Service When development Project approval Gateway Platform Project started completed

When development Project approval "Nongdai Tong" Project started completed Total

19. Goodwill

Page 97 (Total 141 pages)

− F-224 −

Invested Increase Decrease company or Opening Closing matters that Business balance Other Disposal Other balance formed the combination goodwill Chengdu Wanhe Plaza 6,300,000.00 6,300,000.00 Co., Ltd.

Chengdu Tertiary Industry 8,302,365.85 8,302,365.85 Development Company

Chengdu Financial Holding Wealth Equity Investment 3,012,147.21 3,012,147.21 Fund Partnership (Limited Partnership) Total 14,602,365.85 3,012,147.21 17,614,513.06 Note: There is no impairment for the goodwill at the end of the year.

20. Long-term deferred expenses

Opening Other Closing Increase Amortization Other Items balance decrease balance

Hotel upgrading and 3,061,322.95 2,301,443.55 714,822.81 1,160,488.79 3,487,454.90 renovation fees Office renovation fees 3,007,571.09 591,512.57 1,221,927.15 19,415.10 2,357,741.41

Trust file escrow fees 53,334.38 10,666.56 42,667.82 澳 IT operation and maintenance room 46,344.96 15,448.32 30,896.64 澳 construction outsourcing services Renovation project of 200,334.53 104,522.28 95,812.25 澳 central firearm room Security system maintenance and network alarm service 68,018.37 22,059.96 45,958.41 澳 fees of central firearm room

Electrical engineering fees of Sichuan 254,755.00 254,755.00 澳 Qiangguang Power Engineering Co., Ltd.

Page 98 (Total 141 pages)

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Opening Other Closing Increase Amortization Other Items balance decrease balance

Decoration fees of 澳 Chengdu Baile 32,184.66 32,184.66 Construction Co., Ltd.

Watchhouse construction 8,284.00 8,284.00 澳 fees of Chengdu Baile Construction Co., Ltd.

Roof waterproofing 澳 works of inspection line 16,108.00 16,108.00

Sichuan Yisha Xingrong Construction Engineering Co., Ltd.- Project of comprehensive 141,381.84 105,252.00 36,129.84 澳 performance testing on automobile and business transformation

Software upgrade and transformation of 263,430.00 197,568.00 65,862.00 澳 Chengdu Chengbao Development Co., Ltd.

Chengdu Chida Electronic Engineering Co., Ltd.-Maintenance 69,696.17 28,632.00 41,064.17 and upgrading fees for eight vehicle emission gas analyzers

Drainage system 13,349.42 5,340.00 8,009.42 澳 dredging

New steel plate maintenance fee of New 47,781.00 55,320.39 29,888.00 73,213.39 Legend Dragon Advertising Production Center in High-tech Zone

Installation cost of comprehensive performance testing 17,261.48 6,468.00 10,793.48 澳 system of Sichuan Qiusheng Technology Co., Ltd.

Page 99 (Total 141 pages)

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Opening Other Closing Increase Amortization Other Items balance decrease balance

Comprehensive inspection and qualification 44,088.64 7,896.00 36,192.64 澳 management fee of Chengdu Yijie Financial Consulting Co., Ltd

Conference room renovation fees of 澳 Sichuan Zhongda 22,982.20 3,190.00 19,792.20 Construction Engineering Co., Ltd.

Glass installation fee for conference room of 31,950.00 1,776.00 30,174.00 澳 Sichuan Zhaixi Home Furnishing Co., Ltd.

Isolation construction, reconstruction and 34,271.16 18,693.36 15,577.80 澳 maintenance of conference room on the 6th floor

Rental fee of Sichuan 11,242,549.32 3,592,972.73 7,649,576.59 澳 Daka Electric Appliance Co., Ltd.

Parking lot construction 1,270,244.17 147,989.52 1,122,254.65 澳 related costs

Cost of former Traffic 1,137,659.63 391,070.57 746,589.06 澳 Police Brigade

Security clothes 89,101.00 89,100.96 0.04 澳

Intermediary service fee 91,831.00 28,059.46 63,771.54 澳

澳 House rents 23,850.01 16,190.03 25,199.17 14,840.87

DreamWorks Phase II 35,416,455.52 4,964,778.60 6,057,185.12 34,324,049.00 澳 and Phase III Reconstruction Project Total 56,470,276.30 8,165,109.34 13,137,059.63 1,179,903.89 50,318,422.12

21. Deferred tax assets and deferred tax liabilities (1) Deferred income tax assets that have been recognized

Page 100 (Total 141 pages)

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Closing balance Opening balance Deductible Deductible Items Deferred tax Deferred tax temporary temporary assets assets differences differences Impairment provision for 204,402,171.70 40,699,656.28 208,021,701.60 38,043,299.16 assets Deductible loss 34,344,415.44 5,376,830.46 2,538,454.44 634,613.61 Provision for guarantee 834,543,781.03 125,181,567.16 868,210,043.10 130,231,506.47 compensation Provision for 22,269,730.00 3,800,459.50 26,589,688.12 4,448,453.22 consignment loan loss Gross profit of unearned 236,522.44 59,130.61 16,780,204.60 4,195,051.15 revenue Changes in fair value of available-for-sale financial assets that are 31,847,829.78 7,961,957.45 included in other comprehensive income Deferred income 1,931,600.00 482,900.00 1,281,600.00 482,900.00 Total 1,129,576,050.39 183,562,501.46 1,123,421,691.86 178,035,823.61 (2) Deferred income tax liabilities that have been recognized Closing balance Opening balance Taxable Taxable Items Deferred tax Deferred tax temporary temporary liabilities liabilities differences differences Changes in fair value of available-for-sale financial assets that 157,400,952.90 39,350,238.24 130,453,361.79 32,613,340.46 are included in other comprehensive income Total 157,400,952.90 39,350,238.24 130,453,361.79 32,613,340.46

22. Other non-current assets Items Closing balance Opening balance Money lending: Chengdu Xiecheng Asset Management Co., 525,277,000.00 525,277,000.00 Ltd.

Chengdu Modern Agriculture Development 447,655,000.00 447,655,000.00 Investment Co., Ltd.

972,932,000.00 972,932,000.00 Subtotal

Others˖ Debt-Offsetting Assets 148,922,123.49 56,126,174.84

Operating assets of Lingyan (Note 1) 43,926.63 48,074.79

220,011.00 220,011.00 Debt-offsetting Assets of Huayi Flower (Note 2) Advance payment of corporate income tax 1,398,730.04 1,398,730.04 Page 101 (Total 141 pages)

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Items Closing balance Opening balance

Purchase of non-performing assets of 184,879,146.00 186,967,900.00 Chengdu Rural Credit Cooperatives (Note 3)

Others 139,437,635.74 291,018,249.89

Infrastructure construction project of business 47,450,428.70 52,436,041.64 district of the financial headquarters

Jincheng Avenue underpass Tianfu Avenue 122,611,145.82 121,048,249.48 tunnel Supporting area (east area) project of phase III infrastructure construction project (10 161,837,290.32 149,824,575.63 roads)

Phase I and phase II of supporting area (Hexi 958,653,381.79 665,832,513.51 District) project of phase III infrastructure construction project

South extension of Hongxing Road 1,598,132,093.99 1,597,510,665.99

Relocation of sewage treatment plant 2,813,391,651.54 2,772,834,381.92

Phase III land of business district of the 3,360,840,539.85 3,049,754,518.80 financial headquarters

153,553,093.96 153,553,093.96 Power relocation project of Jinjiang Avenue

30,415,436.65 30,415,436.65 Jinquan Hotel of Huashui Bay

11,542,150.19 11,542,150.19 Assets to be disposed of Subtotal 9,733,328,785.71 9,140,530,768.33 Total 10,706,260,785.71 10,113,462,768.33 Note 1: Lingyan's operating assets are transferred from Chengdu Municipal Bureau of Land and Resources to Chengdu Dingli Asset Management Co., Ltd., the subsidiary, and the decrease in this year is mainly due to depreciation. Note 2: Huayi Flower's debt-offsetting assets are flowers, trees, structures, and low-value consumables located in No. 57 Caojia Alley (now is No. 24, Xinghui Middle Road). The No. 57 land of Caojia Alley has been auctioned, and the above-mentioned structures have also been demolished. At present, the other non-current assets are mainly flowers and plants transplanted in Chengdu Bihai Environmental Protection Technology Co., Ltd. Note 3: Chengdu Financial Holding Real Estate Co., Ltd. purchased the divested assets of Chengdu Rural Credit Cooperative, including 191 acres of land and above-ground buildings.

23. Assets whose ownership or use rights are restricted Items Closing balance Reasons for restrictions Cash and cash 149,228,883.04 Margin equivalents Accounts receivable 374,126,944.42 Factoring Inventory 1,649,650,156.43 Provides security for loans

Page 102 (Total 141 pages)

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Items Closing balance Reasons for restrictions Long -term receivables of financial Long-term receivables 1,728,760,593.51 leasing used for loan pledge Equity pledge of Chengdu Jiaozi Financial Holding Group Co., Ltd. worth of RMB 1,555,148,629.68 is used for Long-term equity loans. 1,655,148,629.68 investment Equity pledge of Chengdu Financial City Investment Development Co., Ltd. worth of RMB 100,000,000.00 is used for loans. Investment property of Chengdu Dingli Asset Management Co., Ltd. worth of RMB 47,584,519.42 is used for loans. Investment property 167,656,434.02 Investment property of Chengdu Financial City Investment Development Co., Ltd. worth of RMB 120,071,914.60 is used for loans. Total 5,724,571,641.10

24. Short-term borrowings

Items Closing balance Opening balance

Pledged loan 50,000,000.00

Mortgage loan 40,000,000.00

Guaranteed loan 500,000,000.00

Credit loan 3,376,515,900.00 745,000,000.00 Total 3,926,515,900.00 785,000,000.00

25. Financial liabilities at fair value through profit or loss Items Closing balance Opening balance Trading financial liabilities

Including: trading bonds issued

Designated as Financial liabilities at fair value through profit or loss Others 9,540,000.00 Total 9,540,000.00

26. Notes payable Items Closing balance Opening balance Bank acceptance bill

Page 103 (Total 141 pages)

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Items Closing balance Opening balance Commercial acceptance bill 29,882,023.30 Total 29,882,023.30

27. Accounts payables Items Closing balance Opening balance Within 1 year (including 1 year) 182,326,094.37 108,749,428.78 Over 1 year 128,762,055.11 149,486,278.11 Total 311,088,149.48 258,235,706.89

(2) Significant accounts payable over 1 year Creditor Closing balance Cause of overdue Chengdu Second Construction Quality assurance deposits 3,838,046.52 Engineering of CDCEG payable

Sinohydro Bureau 7 Co., Ltd. 2,937,568.02 Project payment payable

Audit of the project is still Chengdu Xiya Technology Development 2,813,728.12 ongoing, and the payment shall Co., Ltd. be made according to the audit results. China Railway 18th Bureau Group Co., 2,467,981.97 Project payment payable Ltd. Quality assurance deposits Sichuan No.1 Construction Co., Ltd. 2,437,717.69 payable Sichuan Jianke Engineering Construction 1,674,303.00 Project payment payable Management Co., Ltd. Project final payment that has Sichuan No.3 Construction Co., Ltd. 1,063,306.37 not been collected Total 17,232,651.69

28. Advance from customers (1) Breakdown Items Closing balance Opening balance

˄ ˅ Within 1 year including 1 year 109,647,682.15 52,845,719.68

Over 1 year 7,979,990.70 90,770,988.34 Total 117,627,672.85 143,616,708.02

(2) Significant advances over 1 year Creditor Closing balance Cause of overdue Prepaid housing funds, but the LIU Tao, CAI Yanyan, YANG 1,371,211.00 housing has not been Baoyong, XU Junhua transferred Sichuan Shanli Hexin Real Estate 500,000.00 Not settled yet Co., Ltd. Page 104 (Total 141 pages)

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Creditor Closing balance Cause of overdue Chengdu Iron Tower Factory 218,400.00 Advances LI Jiajun of Longyue Jindu 109,272.00 Advances Entertainment Company Chengdu Sida Zhixing Conference 54,800.00 Advances Services Co., Ltd. Sichuan Provincial Television 54,566.00 Advances Engineering Corporation Prepaid by the customer but Southwest Jiaotong University 54,357.00 not used Chengdu Chengfang Property 50,000.00 Advances Total 2,412,606.00

29. Payroll payable (1) Categories Opening Closing Items Increase Decrease balance balance 1. Short-term payroll 93,820,307.36 1,888,630,794.36 1,832,651,501.93 149,799,599.79 2. Post-employment benefits-defined contribution plans 3,487,911.69 276,767,711.91 279,620,702.98 634,920.62 3.Termination benefits 1,074,294.94 1,074,294.94 4.Other benefits due within one year 5.Other Total 97,308,219.05 2,166,472,801.21 2,113,346,499.85 150,434,520.41 (2) Short-term payroll Opening Closing Items Increase Decrease balance balance

1. Salary, bonus, allowance, and subsidy 83,224,710.85 1,654,852,030.94 1,599,343,537.88 138,733,203.91

2. Employee welfare 2,478,373.91 31,431,646.24 31,775,931.50 2,134,088.65

3. Social insurance 586,194.67 131,721,958.11 132,156,821.33 151,331.45

Including˖Medical insurance 519,776.17 115,773,999.31 116,173,036.76 120,738.72

Work injury insurance 10,694.00 4,260,509.51 4,266,640.70 4,562.81

Maternity insurance 55,724.50 11,687,449.29 11,717,143.87 26,029.92

Other

4. Housing funds 150,876.00 46,537,701.24 46,390,380.80 298,196.44

5. Union funds and employee education expenses 7,094,151.93 13,138,084.88 12,634,149.48 7,598,087.33 Page 105 (Total 141 pages)

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Opening Closing Items Increase Decrease balance balance

6. Short-term paid absence

7. Short-term profit-sharing plan

8. Other short-term payroll 286,000.00 10,949,372.95 10,350,680.94 884,692.01 93,820,307.36 1,888,630,794.36 1,832,651,501.93 149,799,599.79 Total (3) Defined contribution plans Opening Closing Items Increase Decrease balance balance

1. Basic endowment insurance 1,887,305.63 239,864,724.75 241,508,761.46 243,268.92

2. Unemployment insurance 53,894.67 9,013,708.27 9,050,210.31 17,392.63

3. Annuity payment 1,546,711.39 27,889,278.89 29,061,731.21 374,259.07

Total 3,487,911.69 276,767,711.91 279,620,702.98 634,920.62

30. Taxes payable Items Closing balance Opening balance VAT 14,621,575.24 5,935,028.31 Corporate income tax 93,096,378.44 83,426,308.34 Urban maintenance and 812,381.12 construction tax 1,754,735.44 Property tax 1,143,046.60 1,022,373.54 Land use tax 41,140.79 116.55 Personal income tax 3,905,780.80 1,892,041.80 Educational surcharge 1,266,263.12 451,218.81 Land-value increment tax 47,833,276.73 35,458,459.23 Other taxes and fees 3,044,154.15 3,200,376.79 Total 166,706,351.31 132,198,304.49

31. Other payables Items Closing balance Opening balance Interests payable 184,393,552.19 137,633,602.97 Dividends payable 23,712,083.33 15,405,000.00 Other payables 1,998,168,779.92 1,470,304,399.42 Total 2,206,274,415.44 1,623,343,002.39 (1) Interests payable Items Closing balance Opening balance Interests on long-term loans with interest paid in installments and principal repayable at 18,985,106.71 20,399,352.11 maturity Page 106 (Total 141 pages)

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Items Closing balance Opening balance Corporate bond interests 74,997,016.21 115,699,083.38 Interests payable on short term loans 67,767,083.08 1,245,150.00 Others 22,644,346.19 290,017.48 Total 184,393,552.19 137,633,602.97 (2) Dividends payable Reasons for not paying over Items Closing balance Opening balance 1 year Dividends payable that are not paid over 1 year at the Dividends of common 20,985,000.00 15,405,000.00 year-end are RMB shares 15,405,000.00 and shall not be paid after negotiation. Dividends of preferred share / perpetual bond 2,727,083.33 classified as equity instruments Total 23,712,083.33 15,405,000.00 (3) Other payables presented by nature Items Closing balance Opening balance Margin 177,440,033.23 146,190,986.80 Shareholders' proposed 565,520,000.00 459,520,000.00 investment Fund collected and paid on 11,333,843.24 10,623,212.21 behalf of others Index price of construction 516,023,697.00 191,016,036.00 land Special fund for talents 115,987.02 430,000.00 Insurance premium and 4,266,632.92 868,012.20 annuity Incomings and outgoings 61,576,904.27 66,391,166.55 Interests of special trust 16,866,621.20 16,852,178.52 funds Temporary collection 545,232,886.23 476,532,623.31 Others 99,792,174.81 101,880,183.83 Total 1,998,168,779.92 1,470,304,399.42

(1) Other significant payables over 1 year Creditors Closing balance Reason for overdue Chengdu Hi-tech Investment Capital increase is expected. Details are Group Co., Ltd. 565,520,000.00 in the notes.

Sichuan Meicheng Real Estate Co., Ltd. (Sichuan Meicheng Real 32,458,374.00 Temporary collection - unsettled Estate Limited Liability Company)

Page 107 (Total 141 pages)

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Creditors Closing balance Reason for overdue Chengdu Zhonghe Huatai Technology Development Co., Ltd. 20,245,230.00 Temporary collection - unsettled

Chengdu Huali Real Estate Construction land index price, Development Co., Ltd. 10,198,746.00 transaction process not completed

China Construction Sixth Engineering Burea Corp., Ltd. 7,733,888.00 Performance bond

Shanghai China Electronic Systems Technology Co., Ltd. 3,298,667.50 Performance bond

Construction land index price, CAO Xiong 3,249,738.00 transaction process not completed

Taxes collected and paid on behalf of Financial Office of Chengdu City 3,133,421.10 others Total 645,838,064.60 Note: On June 29, 2016, Chengdu Financial City Investment Development Co., Ltd., the subsidiary of the Company received RMB 300 million of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group Co., Ltd. (hereinafter referred to as “Chengdu Hi-tech Investment Group”). The investment was made according to the “Reply on capital increase in Chengdu Financial City Investment Development Co., Ltd. by Chengdu Hi-tech Investment Group” (Chenggao Caifa [2016] No. 110) issued by the Finance Bureau of Hi-tech Zone, Chengdu. On March 30, 2018, Chengdu Financial City Investment Development Co., Ltd. received RMB 53,520,000 of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group. The investment was made according to “Notice on capital increase in Chengdu Financial City Investment Development Co., Ltd.” (Chenggao Caifa [2018] No. 50) issued by the Finance Bureau of Hi-tech Zone, Chengdu. The document also states that Chengdu Hi-tech Investment Group will hold 34.15% of the equity in company after the above-mentioned capital increase. On November 27, 2018, Chengdu Financial City Investment Development Co., Ltd. received RMB 106 million of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group, which was made according to the “Notice on approving capital increase in Chengdu Financial City Investment Development Co., Ltd. by Chengdu Hi-tech Investment Group Co., Ltd.” (Chenggao Caifa [2018] No. 234) issued by the Finance Bureau of Hi-tech Zone, Chengdu. On April 18, 2019, Chengdu Financial City Investment Development Co., Ltd. received RMB 106 million of proposed new investment as the new registered capital from Chengdu Hi-tech Investment Group, which was made according to the “Notice on capital increase in Chengdu Financial City Investment Development Co., Ltd.” (Chenggao Caifa [2019] No. 66) issued by the Finance Bureau of Hi-tech Zone, Chengdu. The document also states that Chengdu Hi-tech Investment Group will hold 37.59% of the equity in company after the above-mentioned capital increase. The above increase of investment funds proposed by the shareholders has not been agreed by the shareholders' meeting of the Financial City Company, so they are presented as liabilities.

32. Non-current liabilities due within one year Category Closing balance Opening balance

Page 108 (Total 141 pages)

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Category Closing balance Opening balance Long-term borrowings due within one year 4,607,823,354.29 3,983,689,263.66 Bonds payable due within one year 499,983,333.34 1,597,910,857.49 Long-term payables due within one year 78,800,000.00 75,000,000.00 Total 5,186,606,687.63 5,656,600,121.15

33. Other current liabilities Items Closing balance Opening balance Customer guarantee deposits 35,702,710.83 105,056,691.59 Total 35,702,710.83 105,056,691.59

34. Reserves for insurance contract Items Opening balance Increase Decrease Closing balance Guarantee liability reserves 880,304,526.66 25,706,930.35 64,135,826.99 841,875,630.02 Undue guarantee liability reserves 12,351,181.27 6,445,500.27 5,905,681.00 Total 892,655,707.93 25,706,930.35 70,581,327.26 847,781,311.02 Note: According to Article 30 of the “Interim Measures for Administration of Financing Guarantee Companies in Sichuan Province”, Chengdu Financial Holding Financing Guarantee Co., Ltd., a subsidiary of the Group, makes reserves for guarantee compensation equivalent to 1% of the guarantee liability balance at the end of the year, and makes supplementary reserves for undue liability equivalent to 50% of the guarantee fee income of the current year. Supplementary reserves for guarantee liability shall be made for the compensation loss that could be formed and cannot be covered after reserves are made according to the above-mentioned measures.

35. Long-term borrowings Items Closing balance Opening balance

Pledged loans 2,268,712,218.15 2,416,560,577.44

Mortgage loans 2,858,000,000.00 2,690,500,000.00

Guaranteed loans 1,786,000,000.00 1,732,999,996.00

Credit loans 3,843,250,000.00 2,946,000,000.00

Total 10,755,962,218.15 9,786,060,573.44

36. Bonds payable (1) Categories Items Closing balance Opening balance Corporate bonds 7,316,458,423.50 5,292,769,929.39 Including˖Bonds payable due 499,983,333.34 1,597,910,857.49 within one year Total 7,316,458,423.50 5,292,769,929.39 Page 109 (Total 141 pages)

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(2) Increase and decrease of bonds payable Name of the Par value Issue date Maturity Total value Opening balance bonds 12 Rongtou 5 Controlled 1,600,000,000.00 September, 7 years 1,600,000,000.00 1,597,910,857.49 bond 2012

25 May, 16 Rongjin 1,500,000,000.00 5 years 1,500,000,000.00 1,499,030,431.90 2016 01 Bond

18 Chengdu 22 August, 1,500,000,000.00 5 years 1,500,000,000.00 1,499,609,663.60 Financial 2018 MTN001

18 Rongshu 3 January, 01 1,500,000,000.00 3 years 1,500,000,000.00 2019 Distress-relief Bond

CDJZ FIN 15 N2211 2,092,860,000.00 November, 3 years 2,092,860,000.00 (40061)300 2019 million USD notes

19Jiaozi 29 April, 180 500,000,000.00 500,000,000.00 Financial 2019 days SCP001

23 19 Jiaozi 180 500,000,000.00 October, 500,000,000.00 Financial days 2019 SCP002

Special bond of Chengdu Financial 23 City 700,000,000.00 October, 7 years 700,000,000.00 696,218,976.40 Investment 2018 Development Co., Ltd. in 2018 Total 9,892,860,000.00 9,892,860,000.00 5,292,769,929.39 Continued: Total amount Interests Amortizati Name of the of issue in the accrued at on of Repayment Closing balance bonds current period face value premium or for the year discount 12 Rongtou Controlled bond 100,800,000.00 -2,089,142.51 1,700,800,000.00

16 Rongjin 01 Bond 49,500,000.00 -969,568.10 509,285,000.00 1,040,215,000.00 Page 110 (Total 141 pages)

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Total amount Interests Amortizati Name of the of issue in the accrued at on of Repayment Closing balance bonds current period face value premium or for the year discount

18 Chengdu Financial MTN001 70,050,000.00 -152,901.51 70,050,000.00 1,499,762,565.11

18 Rongshu 01Distress-reli ef Bond 1,500,000,000.00 74,550,000.00 289,838.28 74,550,000.00 1,499,710,161.72

CDJZ FIN N2211 (40061) 300 million USD notes 2,092,860,000.00 731,887.65 13,759,248.90 2,079,832,638.75

19Jiaozi Financial SCP001 500,000,000.00 7,254,098.36 507,254,098.36

19 Jiaozi

Financial SCP002 500,000,000.00 16,666.66 499,983,333.34

18 Chengjin 01 700,000,000.00 -735,748.18 696,954,724.58 Total 5,292,860,000.00 302,885,986.01 10,118,393.54 2,861,939,098.36 7,316,458,423.50 The closing balance of bonds payable includes RMB 499,983,333.34 of bonds payable due within one year. Note 1: On 5 September, 2012, the Company successfully issued RMB 1.6 billion of “12 Rong Investment Controlled Bond”, which is a fixed simple interest rate bond with a maturity of 7 years. The bond gives the issuer the option to increase the coupon rate and gives the investor the option to sell the bond back. This means that at the end of the fifth year of the current bond’s duration, the issuer may choose to increase the original bond coupon rate by 0-100 basis points, which will remain unchanged for 2 years after the bond's duration. And the investor will have the right to sell some or all of the current bonds back to the issuer. Bond that has been fully repaid in the current period shall be reclassified to the "non-current liabilities due within one year" account at the beginning of the period. Note 2: On 25 May, 2016, the Company successfully issued RMB 1.5 billion of the “16 Rongjin 01 Bond”, which is a fixed simple interest rate bond with a maturity of 5 years. The bond gives the issuer the option to increase the coupon rate and gives the investor the option to sell the bond back. This means that at the end of the third year of the current bond’s duration, the issuer has the right to decide the coupon rate for two years after the rate is raised at the end of the third year of the duration, which will remain unchanged for 2 years after the bond's duration. And the investor will have the right to sell some or all of the current bonds back to the issuer. On 25 May, 2019, the investors who have been effectively registered sold the “16 Rongjin 01 Bond” back to Chengdu Jiaozi Financial Holding Group Co., Ltd. The number of registered sell-back within the validity period is 4,597,850, and the amount of sell-back is RMB 459,785,000. The issuer raises the coupon rate to 4.00% in two years after the duration.

Page 111 (Total 141 pages)

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Note 3: On 22 August, 2018, the Company successfully issued RMB 1.5 billion of “18 Chengdu Financial MTN001”, a medium-term note that adopts the fixed interest rate and simple interest calculation and has a maturity of 5 years. The bond gives the issuer the option to increase the coupon rate and gives the investor the option to sell the bond back. This means that at the end of the third year of the current bond’s duration, the issuer has the right to raise the coupon rate for two years after the end of the third year of the duration, which will remain unchanged for 2 years after the bond's duration. And the investor will have the right to sell some or all of the current bonds back to the issuer. Note 4: On 15 November, 2019, the Company successfully issued US $300 million of overseas bond " CDJZ FIN N2211 (40061)", which adopts fixed interest rate and simple interest calculation and has a maturity of 3 years. Note 5: On 3 January, 2019, the Company successfully issued RMB 1.5 billion of distress-relief bond “18 Rongshu 01”, which adopts fixed interest rate and simple interest calculation and has a maturity of 3 years. The bond was available in the market on 16 January, 2019. Note 6: On 26 April, 2019, the Company successfully issued RMB 500 million of short-term commercial paper "19 Jiaozi Financial SCP001", which has a maturity of 180 days, adopts fixed interest rate and simple interest calculation, and has been repaid at the end of the period. Note 7: On 22 October, 2019, the Company successfully issued RMB 500 million of short-term commercial paper "19 Jiaozi Financial SCP 002", which has a maturity of 180 days, adopts fixed interest rate and simple interest calculation, and is reclassified to the "current liabilities due within one year" account at the end of the period. Note 8: On 23 October, 2018, Chengdu Financial City Investment Development Co., Ltd., the subsidiary of the Group successfully issued "18 Chengjin 01" special bonds, to which the headquarters of the Company provides a full amount of unconditional and irreversible joint liability guarantee. The duration of the bond is 7 years, and adopts fixed interest rate and simple interest calculation.

37. Long-term payables Items Closing balance Opening balance Long-term payables 1,293,838,501.59 930,729,448.02 Special accounts payable 5,656,771,659.40 6,849,425,303.50 Total 6,950,610,160.99 7,780,154,751.52

(1) Long-term payables Long-term payables presented by nature Items Closing balance Opening balance Finance lease payables 67,085,000.00 94,700,000.00 Local government debt 1,210,274,053.57 821,000,000.00 Construction arrears 5,029,448.02 5,029,448.02 Government funds 11,450,000.00 10,000,000.00 Total 1,293,838,501.59 930,729,448.02 (2) Special accounts payable Items Opening balance Increase Decrease Closing balance Special funds of central 52,500,000.00 10,650,000.00 63,150,000.00 underground integrated pipes Chengdu Land and Resources 885,171,870.89 194,867,680.67 1,080,039,551.56 Bureau – appropriated funds Partial tax refunds 35,820,000.00 51,040,000.00 86,860,000.00 Page 112 (Total 141 pages)

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Items Opening balance Increase Decrease Closing balance of Jinjiang District Chengdu Development 4,887,934,983.22 60,733,410.83 2,051,783,635.92 2,896,884,758.13 Fund (1) Industry guidance 970,869,814.84 711,902,857.34 162,063,957.02 1,520,708,715.16 fund Capital construction 1,300,000.00 1,300,000.00 investment funds Government funds 6,400,040.99 6,400,040.99 Special fund for guiding the 8,000,000.00 8,000,000.00 development of service industry Others 1,428,593.56 1,428,593.56 Total 6,849,425,303.50 1,029,193,948.84 2,221,847,592.94 5,656,771,659.40

38. Deferred income Opening Items Increase Decrease Closing balance Disposal fee for the 1,281,600.00 1,281,600.00 administrative center Subsidy for steady operation 219.26 90.53 128.73 Municipal budgetary special funds for infrastructure 650,000.00 650,000.00 construction in 2018 Provincial special fund for intellectual property rights in 300,000.00 300,000.00 2019 Special fund for soft science research project of Chengdu 50,000.00 50,000.00 Science and Technology Bureau in 2019 Fixed assets 89,329.21 28,318.32 61,010.89 Total 2,021,148.47 350,000.00 28,408.85 2,342,739.62 Note: According to the “Meeting minutes on researching the assets disposal of the Municipal Administrative Office Center” (Chengjin Jianyue [2009] No. 2) of the Construction Leading Group of Chengdu Municipal Financial Headquarters Business District, RMB 30 million has been arranged as special work funds by the Chengdu Finance Bureau in revenues from disposing the assets of Chengdu Administrative Office Center. The Financial City Company recognizes the special work funds received as deferred income, which is carried forward to other business income in proportion to the proportion of assets that has been disposed of to the total assets to be disposed of.

39. Other non-current liabilities Items Closing balance Opening balance Principal of fixed assets financing lease (leaseback) 500,000.00 Total 500,000.00

40. Paid-in capital Page 113 (Total 141 pages)

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Chengdu Xie Cheng Asset Management 200,000.00 40.00 200,000.00 40.00 Co., Ltd. Total 500,000.00 100.00 500,000.00 100.00

41. Other equity instrument investment Increase Decrease Closing balance Outstanding Opening balance financial Book Book instruments Number Number Book value Number Number Book value value value Perpetual 1,500,000,000.00 1,500,000,000.00 bonds Total 1,500,000,000.00 1,500,000,000.00 Note: On 25 September, 2019, the Industrial and Commercial Bank of China Limited, the investor, and Chengdu Branch of the Industrial and Commercial Bank of China, the agent of financial planning and project manager, signed the Perpetual Bond Investment Agreement with the Company. The bond will exist for a long time. After the initial investment period of three years, the Company can choose to cash the bond in the current period or postpone the payment of the bond. The interests accrued on the bond can also be paid in the current period or be deferred, so it shall be classified as the equity instrument.

42. Capital reserve Opening Increase Decrease Closing balance Items balance Capital premium 225,392,193.67 195,955,730.08 225,392,193.67

Other capital reserve 4,501,407,568.82 1,313,744,410.02 6,011,107,708.92 Total 4,726,799,762.49 1,509,700,140.10 6,236,499,902.59 Note: The capital reserve increased in the current period is (1) Capital premium: the company's subsidiary, the Financial City Company introduced a strategic investor, CCB Financial Investment (Chengdu) Equity Investment Fund Partnership (Limited Partnership) in this period, with a capital investment of RMB 200 million and a shareholding ratio of 26.43%. The investment amount exceeding the corresponding owner's equity of the Financial City Company results in an increase in the company's capital reserve by RMB 195,955,730.08. (2) This year, the Company received RMB 110 million of state-owned capital operation budget funds allocated by Chengdu Finance Bureau. (3) This year, the Company received 3% of Chengdu Agricultural Commercial Bank's equity transferred by Chengdu Xingguanghua Urban Construction Co., Ltd., which is worth RMB 1,084,235,280.00.

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(4) On 15 August, 2019, Financial City Company, a subsidiary of the Company, received RMB 170 million of appropriated capital funds of infrastructure construction project in the Business District of financial headquarters of Chengdu Financial City Company from Chengdu Finance Bureau, according to the document of Chengcaitou No. 26 [2019]. The Company increased an investment of RMB 106,862,000.00 according to the investment proportion. (5) According to the Capital Increase and Share Expansion Agreement signed by Xinxing Company, a wholly-owned subsidiary of the Company with Chengdu Financial Holding Micro Credit Co., Ltd. (hereinafter referred to as the " Micro Credit Company") and the amended articles of association of the Micro Credit Company, Xinxing Company made an exclusive capital increase of RMB 200 million to the Micro Credit Company, increasing its shareholding ratio from 72.67% to 83.60%, and resulting in the dilution of minority shareholders' interests and increasing the capital reserve by RMB 3,123,583.79. The Company increased an investment by the same amount at the same time. (6) Changes in the other equity of Bank of Chengdu, the invested company lead to an increase of the other capital reserves by RMB 9,523,546.23.

43. Other comprehensive income

Page 115 (Total 141 pages)

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Current amount Amount Less: included in Less: The The incurred other income tax after-tax after-tax before comprehensive expenses portion portion Opening Closing Items income tax income the attributable attributabl balance balance for the previous period to the e to the current and transferred to parent minority period the current profit company shareholde and loss rs (1) Other comprehensive income that cannot be subsequently reclassified into profit and loss Including: Changes in net liability or net asset − F-243 arising from re-measurement of the defined benefit plan Not reclassified to profit or loss for the invested entity under the equity method (2) Other comprehensive income that can be subsequently reclassified into profit and loss 306,860,243.89 -9,506,748.54 -1,306,492.97 -8,200,255.57 298,659,988.32 Including˖Reclassified to profit or loss for the invested entity under the equity method 208,275,694.79 -863,946.66 -863,946.66 207,411,748.13 Changes in fair value of available-for-sale financial assets 98,584,549.10 -8,642,801.88 -1,306,492.97 -7,336,308.91 91,248,240.19 Profit or loss from reclassification of held-to-maturity investment to available-for-sale financial assets Effective portion of profit or loss from cash flow hedging Exchange difference on translating foreign currency statements Total 306,860,243.89 -9,506,748.54 -1,306,492.97 -8,200,255.57 298,659,988.32

Page 116 (Total 141 pages)

44. Surplus reserve Items Opening balance Increase Decrease Closing balance Statutory surplus reserve 451,938,506.25 86,443,672.44 538,382,178.69 Discretionary surplus reserve Total 451,938,506.25 86,443,672.44 538,382,178.69

45. Retained earnings Items Amount of the current year Amount of the previous year

Opening balance 2,940,138,961.38 2,195,538,730.28

Increase 1,006,216,857.89 879,620,533.68 Including: Transferred from current year's net profit 1,006,216,857.89 879,620,533.68

Other adjustment factors

Decrease 181,100,691.16 135,020,302.58 Including: The amount of surplus reserve provided for this year 86,443,672.44 66,803,602.58 The amount of general risk provisions made for this year 40,361,185.39 Distribution of cash dividends for the current year 54,295,833.33 68,216,700.00

Increased capital

Other decrease Closing balance 3,765,255,128.11 2,940,138,961.38

46. Operating revenue and costs Amount of the current year Amount of the previous year Items Revenue Cost Revenue Cost 1. Finance lease 158,577,239.03 130,224,953.65 income 2. Premium income 10,665,135.61 24,702,362.56 3. Interest income on 49,496,517.37 32,686,050.81 micro loans 4. Interest income of 2,550,909.25 5,590,472.96 guarantee company 5. Impawn interest 2,761,323.15 10,498,010.16 income 6. Interest income 94,388,287.81 7. AMC business 48,780,250.69 4,274,578.83 39,631,660.63 6,288,785.97 interest income 8. Income from sales of commercial 360,665,391.47 271,834,245.44 849,537,133.52 638,486,892.70 housing

Page 117 (Total 141 pages)

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Amount of the current year Amount of the previous year Items Revenue Cost Revenue Cost 9. Income from escort 2,141,900,398.35 1,801,180,586.68 2,033,288,992.72 1,706,801,758.53 and security services 10. Income from asset 43,432,085.69 28,296,357.09 12,799,305.75 485,524.99 management 11. Income from debt 53,215,010.00 30,330,437.04 12,765,445.36 10,259,349.69 settlement 12. Income from operation and disposal 378,541,240.39 of non-performing assets 13. Income from Tianfu Tong card sales, industry access 150,265.48 31,640.00 54,017,287.64 10,926,140.78 fees, handling charges, etc.

14. Other income 276,303,378.20 132,475,178.10 156,812,935.10 62,629,274.62

Including˖Income related to consulting 297,524.29 4,839,959.84 3,084,912.83 service Medical service 37,198,416.64 27,283,712.16 10,594,639.58 9,534,026.31 income Interest income of 9,827,254.03 1,189,619.92 entrusted loan Rental income 42,381,294.91 52,682,796.89 25,813,494.07 20,944,491.88 Income from comprehensive land 5,109,020.89 1,973,000.69 consolidation project Income from technology 6,342,313.62 591,550.59 6,492,452.42 463,708.40 development services

Consulting fee income 29,868,155.11

Revenue from catering, lodging, and 12,274,121.27 8,712,741.05 9,879,603.76 7,618,724.97 parking Income from agricultural and 23,724,191.62 17,166,366.92 forestry rights trading services Income from transaction service of trading use right of 2,684,737.81 2,275,897.28 collective operating construction land Other business 106,596,348.01 43,204,377.41 76,587,900.62 20,983,410.23 Subtotal 3,621,427,432.49 2,268,423,023.18 3,362,554,610.86 2,435,877,727.28 Handling fee and 21,678.43 21,081.78

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Amount of the current year Amount of the previous year Items Revenue Cost Revenue Cost commission fee expenditure Total 3,621,427,432.49 2,268,444,701.61 3,362,554,610.86 2,435,898,809.06

Information of major real estate sales projects Amount of the current Amount of the Project year previous year Financial Holding Financial Backstage 205,808,000.00 621,955,119.04 Service Center Backstage Building 4 86,611,237.85 Rong Jin City 1,910,383.80 178,449,629.75 Financial Holding Times Square (CSRC 38,389,269.49 Building) Total 294,329,621.65 838,794,018.28

47. Net amount of withdrawal of insurance contract reserve Amount of the current Amount of the Item year previous year Net amount of withdrawal of insurance 19,261,429.68 144,226,725.02 contract reserve

48. Finance costs Amount of the current Amount of the Item year previous year

Interest expense 890,875,457.18 508,733,860.05

Less: Interest income 111,061,822.72 73,340,462.81

Exchange loss 2,158,705.70

Less: Exchange gain 9,794,877.46

Other 10,086,262.98 8,660,031.22 Total 782,263,725.68 444,053,428.46

49. Other income Amount of the current Amount of the Item year previous year Subsidy for steady operation 5,791,170.05 8,628,304.34 Government subsidized transaction funds 18,099,500.00 6,106,881.65 Special fund for Nongdaitong 4,150,000.00 VAT deduction and exemption 1,909.83 Government subsidies for depreciation of fixed assets 28,318.32 28,284.92 Government subsidies for start-up funds 800,000.00 Page 119 (Total 141 pages)

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Amount of the current Amount of the Item year previous year Special funds for municipal financial industry development 46,808,000.65 400,000.00 Chengdu SME Loan Guarantee Compensation Subsidy Fund Project 3,000,000.00 Chengdu Finance Bureau Development Special Fund 2,000,000.00 300,000.00 Chengdu Treasury Bureau Special Fund Subsidy 1,000,000.00 Refund of three commission fees 165,522.20 99,117.19 Chengdu Transportation Committee Subsidy 2,999,570.00 Tax deduction and exemption for veterans 12,431,925.90 Special fund for municipal science and technology carrier 200,000.00 Municipal Commission of Economy and Information Technology guaranteed fee reduction subsidy 4,860,000.00 Other 38,073.86 Small and micro enterprises of training schools are exempt from VAT if their taxable sales are less than RMB 100,000 in April 2,310.26 Compensation subsidy for guarantee of Jinjiang District Economic and Information Commission in previous years 3,000,000.00 Return of personal tax commission fees 16,975.12 Development Award of Finance and Treasury Bureau of High- tech Zone 480,000.00 Promotion awards of financial industry development 37,458,863.49 Total 93,921,796.36 64,972,931.42

50. Investment income Amount of the previous Source of investment income Amount of the current year year Long-term equity investment income under the equity method 1,496,679,431.96 1,182,798,671.47 Investment income arising from the disposal of long-term equity investment 10,555.61 32,744,819.55 Investment income arising from the period of holding financial assets at fair value 9,993,420.83 through profit or loss Investment income arising from the period of holding held-to-maturity investment Investment income arising from the period 22,027,422.82 9,314,524.05 of holding available-for-sale financial assets Investment income arising from the disposal 5,177,901.51 of financial assets at fair value through profit or loss

Page 120 (Total 141 pages)

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Amount of the previous Source of investment income Amount of the current year year Investment income arising from the disposal of held-to-maturity investment Investment income arising from the disposal of available-for-sale financial assets Other -2,060,895.29 31,852,168.01 Total 1,516,656,515.10 1,271,881,505.42

51. Gains from changes in fair value Amount of Amount of the current the previous year Source of gains from changes in fair value year Financial assets at fair value through profit or loss -9,540,000.00 Other Total -9,540,000.00

52. Impairment loss of assets Amount of the previous Item Amount of the current year year

1. Bad debt losses -10,475,511.39 -17,994,145.36

2. Impairment losses of inventories -364,763.20 3. Impairment losses of available-for-sale financial assets

4. Other impairment losses -41,129,271.84 -18,686,395.65 Total -51,969,546.43 -36,680,541.01

53. Gains from disposal of assets Amount of the current Amount of the previous Item year year Losses from disposal of non-current 35,565.70 -3,580.29 assets Total 35,565.70 -3,580.29

54. Non-operating income (1) Classification The amount included in the Amount of the Amount of the Item current current year previous year non-recurring profit and loss Gains from discarding of non-current assets 303,467.76 4,423.75 303,467.76 Government subsidies not related to the daily activities of enterprises 41,319.52 41,319.52

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The amount included in the Amount of the Amount of the Item current current year previous year non-recurring profit and loss Income from compensation of breach of contract 537,333.61 1,515,378.55 537,333.61 Preferential tax relief 10,323.93 10,323.93 Other income 458,767.01 1,874,033.33 458,767.01 Total 1,351,211.83 3,393,835.63 1,351,211.83 (2) Government subsidies not related to the daily activities of enterprises that are included in the current profit and loss Amount of the Amount of the Item current year previous year

Subsidy for steady operation 18,319.52 1,385,316.73

Industrial Support Fund of Qingyang District, Chengdu 23,000.00 Total 41,319.52 1,385,316.73

55. Non-operating expenses The amount included in the Amount of the Amount of the Item current non-recurring profit current year previous year and loss Losses of discarding of non-current assets 197,284.74 20,384.71 197,284.74 External donation expenditure 725,000.00 987,952.90 725,000.00

Overdue fine 3,566.48 3,566.48

Compensation 1,464,964.35 526,029.13

Penalty 35,691.51 35,691.51

Other 1,339,986.21 1,430,900.98 2,278,921.43 Total 3,766,493.29 2,439,238.59 3,766,493.29

56. Income tax expenses (1) Table of income tax expenses Amount of the current Amount of the previous Item year year Current income tax calculated according to 176,005,012.68 99,466,376.43 the tax law and relevant regulations Add: Deferred income tax expense ( "-" 2,435,279.60 -29,739,416.99 means income) Income tax expenses 178,440,292.28 69,726,959.44 (2) Accounting profit and income tax adjustment process

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Amount of the Item current year Total profit 1,461,468,868.98

Income tax expense calculated at the appropriate/applicable rate 365,367,217.25

Impact of applying different tax rates to subsidiaries 23,591,600.13

Adjustment of income tax effects of previous periods 8,330,585.95

Impact of non-taxable income -20,491,220.12

Impact of non-deductible costs, expenses and losses 16,682,407.27 Impact of using the deductible losses of deferred income tax assets not -217,021,239.48 previously recognized

Impact of not recognizing deductible temporary difference or deductible 2,709,911.05 loss of deferred income tax assets in the current period Other -728,969.77

Income tax expenses 178,440,292.28

57. Supplementary information to the Statement of Cashflows (1) Adjusting net profit to information such as cash flow from operating activities Amount of the Amount of the Item current year previous year 1.Adjust net profit to cash flow from operating activities: Net profit 1,283,028,576.70 1,020,215,855.88 Add: Asset impairment provision 51,969,546.43 36,680,541.01 Depreciation of fixed assets, depletion of oil and gas assets, depreciation of productive biological assets 92,629,205.48 64,539,412.57 Amortization of intangible assets 13,529,468.11 22,801,781.65 Amortization of long-term deferred expenses 13,137,059.63 8,161,988.50 Loss on disposal of fixed assets, intangible assets and other long-term assets ("-" means profit) -35,565.70 38,212.80 Loss on scrapping of fixed assets ("-" means profit) 197,284.74 2,451.20 Loss due to changes in fair value ("-" means profit) 9,540,000.00 Finance expenses ("-" means profit) 890,875,457.18 508,733,860.05 Investment losses ("-" means profit) -1,516,656,515.10 -1,271,881,505.42 Decrease in deferred tax assets ("-" means increase) -5,526,677.85 -26,083,309.39 Increase in deferred income tax liabilities ("-" means decrease) 6,736,897.78 -952,806.80 Decrease in inventory ("-" means increase) -432,498,148.09 -1,008,380,305.79 Decrease in operating receivables ("-" means increase) -947,664,868.66 -875,158,582.90 Increase in operating payables ("-" means decrease) 1,184,610,803.05 4,366,088,361.50 Other 168,473,795.54 Net cash flow from operating activities 643,872,523.70 3,013,279,750.40 2. Major investing and financing activities that do not involve cash receipts and payments: Debt transferred to capital Convertible corporate bonds due within one year Financing leasing of fixed assets 3. Net changes in cash and cash equivalents: Page 123 (Total 141 pages)

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Amount of the Amount of the Item current year previous year Closing balance of cash 15,758,957,294.82 12,366,642,939.43 Less: Opening balance of cash 12,366,642,939.43 9,146,500,873.56 Add˖Closing balance of cash equivalents Less˖Opening balance of cash equivalents Net increase in cash and cash equivalents 3,392,314,355.39 3,220,142,065.87 (2) Composition of cash and cash equivalents Amount of the Amount of the Item current year previous year 1. Cash 15,758,957,294.82 12,366,642,939.43 Including: Cash on hand 518,258.94 535,511.28 Bank deposits that can be used for payment at any time 15,349,715,292.74 12,365,871,280.76 Other currency funds that can be used for payment at 408,723,743.14 236,147.39 any time 2. Cash equivalents Including: Bond investment due within three months 3. Closing balance of cash and cash equivalents 15,758,957,294.82 12,366,642,939.43 Including: Use of restricted cash and cash equivalents by the parent company or subsidiaries within the Group

IX. Contingencies 1. Pending litigation/arbitration (1) On December 20, 2016, the subsidiary of the Company, Tourism Fund, and Sichuan Zhongsheng Zhengyin Tourism Investment Management Co., Ltd. (hereinafter referred to as "Zhongsheng Zhenyin Company”) filed a lawsuit on the entrusted loan contract炷the entrusted loan principal is RMB100 million炸to Chengdu Intermediate People's Court for. Tourism Fund applied for preservation measures within the property value range of RMB 148 million. Jintai Insurance Company provided guarantee for this application for preservation measures. On 29 March, 2017, the Court made a ruling on (2017) Chuan 01 Zhibao No.118 as follows. ķ To suspend land receivables payments of RMB 118 million to the respondent Zhongsheng Zhenyin Company in the Dujiangyan Land Reserve Center. ĸ To freeze the 30% equity (capital contribution of RMB 15 million) of Sichuan Ruikun Zhengyin Travel Investment Co., Ltd. held by the respondent Zhongsheng Zhenyin Company.,the 40% equity (capital contribution of RMB 20 million) of Sichuan Ruikun Zhengyin Travel Investment Co., Ltd., the 55% equity (capital contribution of RMB 11 million) of Sichuan Zhongsheng Chuanxin Real Estate Co., Ltd., and the 40% equity (capital contribution of RMB 8 million) of Sichuan Zhongshenghong Investment Co., Ltd. held by the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. To freeze the 100% equity (capital contribution of RMB 3 million) of Chengdu Zhongyan Cultural Development Co., Ltd. held by the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. The freezing period lasts for three years, from 12 April, 2017 to 11 April, 2020. Ĺ To freeze the 100% equity (capital contribution of RMB 5 million) of Sichuan Huaxiong Education Investment Co., Ltd. held by the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. The freezing period lasts for three years, from 29 March, 2017 to 28 March, 2020. Now the case has been judged and decided by the Civil Judgment of Chengdu Intermediate People's Court of Sichuan Province ((2017) Chuan 01 Min Chu No. 185), and Zhongsheng Zhengyin Company must pay an entrusted loan of RMB 100 million and overdue interests, which is now in the process of enforcement. (2) On 20 December, 2016, the Group’s subsidiary, Tourism Fund filed a lawsuit to the Sichuan Higher People's Court against the non-fulfilment of commitments by Sichuan Zhengyin Investment Co., Ltd., Zhongsheng Wanji Culture Investment Group Co., Ltd., Poly Longma Asset Management Co., Ltd., and Chengdu Xinyi Investment Co., Ltd. regarding their obligations of Page 124 (Total 141 pages)

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profit distribution, difference offsetting, and equity repurchase according to the investment agreement. The Court made the rulings on (2017) Chuan Min Chu No.2 as follows: to freeze the land consolidation fund of RMB 170 million of the respondent Zhongsheng Wanji Culture Investment Group Co., Ltd. within the value range of RMB 240 million in the Dujiangyan Land Reserve Center, the corresponding rights and the bank deposit account of the fund in Chengdu Wucheng Sub-branch of China CITIC Bank (account number: 7412010182600096113). The freezing period of the bank account is one year, and the freezing period of other property rights is three years. The second instance of the case was judged by the Supreme People's Court Civil Judgment ((2018) Supreme Faculty No. 764). Sichuan Zhengyin Investment Co., Ltd. and Zhongsheng Wanji Culture Investment Group Co., Ltd. must pay for the equity repurchase’s amount and overdue interests. An application for enforcement is being made. (3) On 15 November, 2013, the Group's controlling subsidiary (shareholding ratio of 51.43%) Chengdu Financial Holding Financial Leasing Co., Ltd. (hereinafter referred to as “Financial Holding Leasing”) and Zigong City Huaran Natural Gas Co., Ltd. (hereinafter referred to as “Zigong Huaran”") signed the Financial Holding [2013] Rent No. 041 "Financial Lease Contract", Zigong Huaran applied for direct lease financing of RMB 60 million to Financial Holding Leasing to purchase LNG gas distribution station equipment and urban gas pipeline network equipment. Later, due to difficulties in the operation of Zigong Huaran, the rent was overdue. On 20 September, 2018, Financial Holding Leasing submitted the application for pre-litigation preservation to the Chengdu Intermediate People's Court, and it was accepted on the same day. The assets to be preserved mainly include the equities of 10 natural gas companies in Yunnan Province and Hunan Province held by Zigong Huaran and Shaanxi Ranchao Energy Technology Co., Ltd., and two bank accounts under the name of DENG Chao, the actual controller of Zigong Huaran. The above assets have been preserved. On 8 November, 2018, Financial Holding Leasing filed a lawsuit to the Chengdu Intermediate People's Court and received the (2018) Chuan 01 Min Chu No. 5104 notice of case acceptance from the Court on the same day. According to the ruling of the Court, the defendant Zigong Huaran shall pay for the rent, liquidated damages, lawyer's fees, insurance premiums of litigation preservation and other expenses to the plaintiff Financial Holding Lease within 10 days from the legal effect date of this judgment. The plaintiff Financial Holding Lease has the pledge of equity rights recorded in the registration notice of equity pledge, and has the mortgage right over the mortgage recorded in the certificate of other rights and the registration of chattel mortgage. There is no adverse impact on the company's production, operation, solvency and financial status.

X. Events after the balance sheet date The Group has no events after the balance sheet date that need to be disclosed.

XI. Relationship between the related parties and the transactions 1. Parent company of the Group

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Voting Shareholding Nature Registered rights Registered ratio (%) in Name of the company of capital percentage address the business (%) in the Group Group Chengdu State-owned Assets Supervision and Administration Chengdu 60.00 60.00 Commission

2. Subsidiaries of the Group Please refer to note (IX) 1.

3. Associates and joint ventures of the Group

1. Equity in the associates or joint ventures (1) Basic information of significant associates and joint ventures Main Shareholding Name of the invested Nature of business ratio (%) Accounting company Address business treatment location Direct Indirect 1.Associates Chengdu Weixin Jiaozi Digital Chengdu Chengdu Scientific 30.00 Equity Technology Co., Ltd. research method and technolog y services 2. Joint ventures Bank of Chengdu Co., Ltd. Chengdu Chengdu Monetary 18.06 Equity and method financial services

Chengdu Rural Commercial Chengdu Chengdu Monetary 9.81 Equity Bank Co., Ltd. and method financial services

Vanho Securities Co., Ltd. Haikou Haikou Capital 3.22 Equity market method services

Jintai Insurance Co., Ltd. Chengdu Chengdu Insurance 20.00 Equity business method

Chengdu Yinke Venture Chengdu Chengdu Business 20.00 Equity Capital Co., Ltd. services method

Southwest United Equity Chengdu Chengdu Business 27.40 Equity Exchange Co., Ltd. services method

Page 126 (Total 141 pages)

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(2) Main financial information of significant associates Amount of the current year Chengdu Chengdu Southwest Bank of Rural Vanho Jintai Yinke United Item Chengdu Commercial Securities Insurance Venture Equity Co., Ltd. Bank Co., Co., Ltd. Co., Ltd. Capital Co., Exchange Ltd. Ltd. Co., Ltd. Current assets 147,109,653.88 606,190,000 Non-current 662,625,531.93 104,970,000 assets Total assets 558,075,000,000 483,591,709,000 15,113,558,643.72 3,208,906,394.59 809,735,185.81 711,160,000 Current 81,622,196.14 540,280,000 liabilities Non-current 2,390,000.00 liabilities Total 522,524,000,000 441,911,696,000 9,804,453,368.76 2,242,350,584.68 81,622,196.14 542,670,000 liabilities Net assets 35,551,000,000.00 41,680,013,000.00 5,309,105,274.96 966,555,809.91 728,112,989.67 168,490,000 Share of net assets calculated by 6,413,620,535.00 4,089,767,915.60 171,025,975.21 193,311,161.99 145,622,597.93 46,166,260.00 shareholding ratio Adjusting 3,292,526.52 -114,574,596.56 events Book value of equity 6,416,913,061.52 3,975,193,319.04 171,025,975.21 193,311,161.99 145,622,597.93 46,166,260.00 investment in associates Fair value of equity investment 5,917,431,260.00 with public quotations Operating 12,731,000,000.00 12,187,884,000.00 569,926,367.78 2,324,030,478.75 52,225,324.28 138,060,000 revenues Net profit 5,551,000,000.00 5,227,462,000.00 123,588,185.43 20,383,667.00 37,304,539.98 43,700,000.00 Other comprehensive 94,052,000.00 12,773,383.47 80,037,438.40 income Total comprehensive 5,321,514,000.00 136,361,568.90 100,421,105.40 43,700,000.00 income Dividends received from associates in 228,346,300.00 9,590,000.00 the current period Continued˖

Page 127 (Total 141 pages)

− F-254 −

Amount of the previous year Chengdu Chengdu Southwest Bank of Rural Vanho Jintai Yinke Item United Chengdu Co., Commercial Securities Insurance Venture Equity Ltd. Bank Co., Co., Ltd. Co., Ltd. Capital Exchange Ltd. Co., Ltd. Co., Ltd. Current 11,362,619,470.00 1,143,652,208.38 248,876,251.91 492,760,000.00 assets Non-current 1,324,944,939.01 1,827,380,499.97 761,542,508.70 100,110,000.00 assets Total assets 492,085,000,000.00 623,544,826,000.00 12,687,564,409.01 2,971,032,708.35 1,010,418,760.61 592,870,000.00 Current 7,513,575,026.18 209,675,528.65 67,155,497.98 430,250,000.00 liabilities Non-current 1,895,194,031.98 1,940,000.00 liabilities Total 460,886,000,000.00 584,005,855,000.00 7,513,575,026.18 2,104,869,560.63 67,155,497.98 432,190,000.00 liabilities Net assets 31,199,000,000.00 39,538,971,000.00 5,173,989,382.83 866,163,147.72 943,263,262.63 160,680,000.00 Share of net assets calculated 5,604,017,137.60 2,462,045,332.64 166,673,391.11 173,232,629.55 248,414,280.81 44,026,320.00 by shareholdin g ratio Adjusting 3,292,526.52 events Book value of equity investment 5,607,309,664.12 2,462,045,332.64 166,673,391.11 173,232,629.55 248,414,280.81 44,026,320.00 in associates Fair value of equity investment 5,251,964,900.00 with public quotations Operating 11,518,000,000.00 11,433,780,000.00 495,602,255.52 178,724,639.85 76,379,485.46 154,130,000.00 revenues Net profit 4,649,000,000.00 4,656,727,000.00 93,326,729.98 77,167,690.85 69,430,734.38 38,600,000.00 Other comprehens 786,506,000.00 -37,808,423.18 ive income Total comprehens 5,443,291,000.00 39,359,267.67 69,430,734.38 38,600,000.00 ive income Dividends received from associates 182,677,040.00 149,003.76 8,768,000.00 in the current period

Page 128 (Total 141 pages)

− F-255 − Note: The Group holds 9.81% of the shares in Chengdu Rural Commercial Bank Co., Ltd. and 9.81% of the voting rights. Although the ratio of voting rights is less than 20%, the Group is still able to exert significant influence on Chengdu Rural Commercial Bank Co., Ltd. through appointing representatives to the Board of Directors of the company and participating in the decision-making on financial and operating policies. The Group holds 3.22% of the shares in Vanho Securities Co., Ltd. and 3.22% of the voting rights. Although the ratio of voting rights is less than 20%, the Group is able to exert significant influence on Vanho Securities Co., Ltd. through appointing representatives to the Board of Directors of the company and participating in the decision-making on financial and operating policies. (3)Significant financial information of significant joint ventures Amount of the current Amount of the previous year year Item Chengdu Weixin Jiaozi Chengdu Weixin Jiaozi Digital Technology Co., Digital Technology Co., Ltd. Ltd. Current assets 10,006,521.49 Non-current assets Total assets 10,006,521.49 Current liabilities 365.63 Non-current liabilities Total liabilities 365.63 Net assets 10,006,155.86 Share of net assets calculated by 3,001,846.76 shareholding ratio Adjusting events Book value of equity investment in joint 3,001,943.96 ventures Fair value of equity investments with public quotations Operating income Net profit 6,155.86 Other comprehensive income Total comprehensive income 6,155.86 Dividends received from associates by in the current period

4. Other related parties Company Relationship with the Group Note Chengdu Xie Cheng Asset Management Co., Ltd. Shareholder of the Group Chengdu Xin Tian Yi Investment Co., Ltd. Enterprises controlled by the controlling shareholders of the Company Da Yi Financial Holding Real Estate Co., Ltd. Subsidiary of an associate

5. Related party transactions (1) Related transactions Nature of Amount of the Amount of the Name of the related party transactions current year previous year Chengdu Xie Cheng Asset Rental fees 367,314.28 301,379.43 Management Co., Ltd. Chengdu Xin Tian Yi Investment Rental fees 275,483.44 226,026.29 Co., Ltd. page 129 (Total 141 pages)

− F-256 −

Nature of Amount of the Amount of the Name of the related party transactions current year previous year Chengdu Tianfu Tong Financial Rental fees 4,711,508.58 164,571.43 Services Co., Ltd. Chengdu Tianfu Tong Financial Service fees 87,134.91 Services Co., Ltd. Chengdu Development Fund (phase Management 11,526,794.79 3,904,480.93 1) Partnership (Limited Partnership) fees (2) Usage of funds Amount of the Amount of the Name of the related party current year previous year

Da Yi Financial Holding Real Estate Co., Ltd. -19,455,066.20 -11,351,581.76

Chengdu Xie Cheng Asset Management Co., Ltd. -70,316,532.35 -54,885,815.39

Chengdu Xin Tian Yi Investment Co., Ltd. -65,681,504.14 -44,537,595.55

Chengdu Xingpu Investment Co., Ltd -9,446,547.97 -11,257,136.01 Total -164,899,650.66 -122,032,128.71 Note: Interest expense is a positive number and interest income is a negative number.

Page 130(Total 141 pages)

− F-257 − (3) Related guarantee

Method of Increased Whether the Method of Type of Actual guarantee The guarantor The principal counter-guara guarantee amount guarantee has been guarantee guarantee amount ntee during the year fulfilled Total 4,232,999,995.00 1,880,000,000.00 Chengdu Dingli Chengdu Jiaozi Financial Joint liability Loan Asset Management None 100,000,000.00 No Co., Ltd. Holding Group Co., Ltd. guarantee guarantee Chengdu Dingli Chengdu Jiaozi Financial Joint liability Loan Asset Management guarantee guarantee None 200,000,000.00 No Co., Ltd. Holding Group Co., Ltd. Chengdu Jiaozi Chengdu Financial City Joint liability Loan Financial Holding guarantee guarantee None 78,000,000.00 No − F-258 Group Co., Ltd. Real Estate Co., Ltd. Chengdu Financial City Joint liability Chengdu Jiaozi Bond Financial Holding Investment Development guarantee None 700,000,000.00 No guarantee Group Co., Ltd. Co., Ltd. Chengdu Jiaozi Chengdu Financial City Joint liability Loan Financial Holding Investment Development guarantee guarantee None 380,000,000.00 380,000,000.00 No Group Co., Ltd. Co., Ltd Chengdu Jiaozi Chengdu Dingli Asset Joint liability Loan Financial Holding guarantee guarantee None 200,000,000.00 200,000,000.00 No Group Co., Ltd. Management Co., Ltd. Chengdu Jiaozi Chengdu Dingli Asset Joint liability Loan Financial Holding guarantee guarantee None 200,000,000.00 200,000,000.00 No Group Co., Ltd. Management Co., Ltd. Chengdu Jiaozi Chengdu Financial Joint liability Loan Financial Holding Holding Real Estate Co., guarantee guarantee None 100,000,000.00 100,000,000.00 No Group Co., Ltd. Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 500,000,000.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., 25,000,000.00 No Holding Group Co., Ltd. guarantee guarantee None Ltd. Page 131 (Total 141 pages)

Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 99,999,999.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 49,999,999.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 99,999,999.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 299,999,999.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 199,999,999.00 No Ltd. Holding Group Co., Ltd.

− F-259 Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 300,000,000.00 300,000,000.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee guarantee None 300,000,000.00 300,000,000.00 No Ltd. Holding Group Co., Ltd. Chengdu Xin Tian Chengdu Jiaozi Financial Joint liability Loan Yi Investment Co., guarantee None 400,000,000.00 400,000,000.00 No Ltd. Holding Group Co., Ltd. guarantee

Page 132(Total 141 pages)

6. Related party balances (1) Accounts receivable Related parties˄item˅ Closing balance Opening balance Jintai Insurance Co., Ltd. 11,404,738.50 11,404,738.50 Chengdu Xin Tian Yi Investment Co., Ltd. 72,314.40 Chengdu Xie Cheng Asset Management Co., Ltd. 96,420.00

(2) Interests receivable Related parties˄item˅ Closing balance Opening balance

Da Yi Financial Holding Real Estate Co., Ltd. 2,972,856.17 8,972,856.17

(3) Other receivables Related parties˄item˅ Closing balance Opening balance Chengdu Xie Cheng Asset Management Co., Ltd. 1,188,685,750.14 1,180,170,892.19 Chengdu Xin Tian Yi Investment Co., Ltd. 1,504,087,575.54 1,354,087,575.54 Da Yi Financial Holding Real Estate Co., Ltd. 18,623,651.02 17,625,854.90 Total 2,711,396,976.70 2,551,884,322.63

(4) Advances from customers Related parties˄item˅ Closing balance Opening balance Bank of Chengdu Co., Ltd. 81,847,619.77 Total 81,847,619.77

(5) Other current assets Related parties˄item˅ Closing balance Opening balance

Da Yi Financial Holding Real Estate Co., Ltd. 125,762,996.92

(6) Other non-current assets Related parties˄item˅ Closing balance Opening balance

Chengdu Xie Cheng Asset Management Co., Ltd. 525,277,000.00 525,277,000.00

(7) Other payables Related parties˄item˅ Closing balance Opening balance

Chengdu Hi-tech Investment Group Co., Ltd. 565,520,000.00 459,520,000.00

XII. Notes to main items of financial statements of the parent company 1. Other receivables (1) Other receivables disclosed by categories

Page 133(Total 141 pages)

− F-260 −

Item Closing balance Opening balance

Interests receivable 9,945,270.72 Dividends receivable 232,100,000.00 17,100,000.00 Other receivables 4,511,294,471.88 5,134,416,081.52 Total 4,753,339,742.60 5,151,516,081.52 Below are the notes to interest receivables Item Closing balance Opening balance

Other 9,945,270.72 Total 9,945,270.72 Below are the notes to dividends receivable Item Closing balance Opening balance

Chengdu Dingli Asset Management Co., Ltd. 25,000,000.00 Chengdu Rongxing Venture Capital Co., Ltd. 15,000,000.00 Chengdu Financial Holding Real Estate Co., Ltd. 31,000,000.00 Zhong Rong Security Service Co. Ltd. 144,000,000.00 Chengdu Financial Holding Micro Credit Co., Ltd. 17,100,000.00 17,100,000.00 Total 232,100,000.00 17,100,000.00 Below are the notes to other receivables Closing balance

Category Book balance Provisions Percentage Percentage Book value Amount Amount (%) (%) Other receivables that are individually significant in amount and provided for bad debt separately Other receivables provided for bad debt 4,510,664,831.08 99.99 4,510,664,831.08 according to portfolio of credit risk characteristics Other receivables that are individually insignificant in amount 629,640.80 0.01 629,640.80 but provided for bad debt separately Total 4,511,294,471.88 100.00 4,511,294,471.88 Continued˖ Opening balance

Category Book balance Provisions Percentage Percentage Book balance Amount Amount (%) (%)

Page 134(Total 141 pages)

− F-261 −

Opening balance

Category Book balance Provisions Percentage Percentage Book balance Amount Amount (%) (%) Other receivables that are individually significant in amount and provided for bad debt separately Other receivables 5,134,416,081.52 100.00 5,134,416,081.52 provided for bad debt according to portfolio of credit risk characteristics Other receivables that are individually insignificant in amount but provided for bad debt separately Total 5,134,416,081.52 100.00 5,134,416,081.52

(2) Bad debts provided for, recovered or reversed in the current period: The amount of bad debts provided for, recovered or reversed in the current period is RMB 0. (3) Other receivables provided for bad debt according to portfolio of credit risk characteristics: Other receivables provided for bad debt according to the aging analysis method in the portfolio are as follows. Closing balance Aging Provision Percentage of Book balance for bad debt provision (%) Within 1 year 287,877,082.51 (including 1 year) Total 287,877,082.51

Opening balance Aging Book balance Provision for bad debt Book balance Within 1 year 98,134,839.11 (including 1 year) Total 98,134,839.11 Please refer to note (IV) 6 for the basis of determining the portfolio. Other receivables in the portfolio whose bad debt provisions are made by other methods: Closing balance Opening balance

Portfolio Book balance Book balance Provisions Provisions Percentage Percentage Amount Amount (%) (%) Related 4,223,407,489.37 99.9998 5,036,271,342.41 99.9998 portfolio Margin 9,900.00 0.0002 9,900.00 0.0002 portfolio Total 4,223,417,389.37 100.00 5,036,281,242.41 100.00

Page 135(Total 141 pages)

− F-262 −

(4) The top 5 debtors based on the closing balance of the other receivables Percentage in the closing Provisio Nature of balance of the ns for Name of the debtors Book balance Aging fund total other bad receivables debts ˄%˅ Chengdu Xin Tian Yi Related Less than 1 1,501,625,967.54 33.29 Investment Co., Ltd. transactions year Chengdu Financial Related Less than 1 Holding Real Estate transactions 1,416,982,260.25 year 31.41 Co., Ltd. Chengdu Xie Cheng Related Less than 1 Asset Management transactions 644,186,211.23 year 14.28 Co., Ltd. Chengdu Dingli Asset Related Less than 1 Management Co., transactions 631,647,193.59 year 14.00 Ltd. Temporary Beijing Registration receipt of Less than 1 286,920,495.73 6.36 &Clearing Co., Ltd. transferred year funds Total 4,481,362,128.34 99.34

2. Long-term equity investment Closing balance Item Impairment Book balance Book value provisions Investment in subsidiaries 10,630,890,154.59 10,500,000.00 10,620,390,154.59 Investment in associates and joint ventures 11,003,112,636.96 11,003,112,636.96 Total 21,634,002,791.55 10,500,000.00 21,623,502,791.55 Continued˖ Opening balance Item Impairment Book balance Book value provisions Investment in subsidiaries 8,358,533,307.19 10,500,000.00 8,348,033,307.19 Investment in associates and joint ventures 8,864,398,055.77 8,864,398,055.77 Total 17,222,931,362.96 10,500,000.00 17,212,431,362.96 (1) Investment in subsidiaries Impairment Closing provisions balance of Invested company Opening balance Increase Decrease Closing balance made in the impairment current provisions period Chengdu Financial Holding Financial 244,784,628.80 244,784,628.80 Leasing Co., Ltd. Chengdu Medical Health Network 1,243,523.80 1,243,523.80 Management Co., Ltd. Page 136(Total 141 pages)

− F-263 −

Impairment Closing provisions balance of Invested company Opening balance Increase Decrease Closing balance made in the impairment current provisions period

Chengdu Dingli Asset Management Co., Ltd. 1,089,593,410.30 1,089,593,410.30 Chengdu Rongxing Venture Capital Co., 499,996,060.99 499,996,060.99 Ltd.

Chengdu Financial Holding Financial 50,000,000.00 50,000,000.00 Service Co., Ltd.

Chengdu Financial Holding Real Estate Co., Ltd. 475,000,000.00 700,000,000.00 1,175,000,000.00 Chengdu Financial Holding Tourism Development Equity 427,500,000.00 427,500,000.00 Investment Fund Co., Ltd.

Chengdu Financial Holding Financial Development Equity 427,500,000.00 427,500,000.00 Investment Fund Co., Ltd.

Chengdu Exchange Investment Group Co., 237,690,251.56 237,690,251.56 Ltd.

Chengdu Jiaozi Xinxing Financial 4,750,000.00 995,000,000.00 999,750,000.00 Investment Group Co., Ltd. Chengdu Financial Holding Data Service 97,200,000.00 5,400,000.00 102,600,000.00 Co., Ltd.

Chengdu City Card Co., Ltd. 10,500,000.00 10,500,000.00 10,500,000.00

Chengdu Agriculture 30,000,000.00 30,000,000.00 Equity Exchange Co., Ltd.

Chengdu Western Cultural Tourism Equity Investment Fund 134,640,000.00 134,640,000.00 Partnership (Limited Partnership)

Chengdu Financial City Investment 2,336,442,382.41 2,336,442,382.41 Development Co., Ltd.

Chengdu Financial Holding Credit Reference Co., Ltd. 20,000,000.00 20,000,000.00

Zhong Rong Security 611,693,049.33 611,693,049.33 Service Co. Ltd.

Page 137(Total 141 pages)

− F-264 −

Impairment Closing provisions balance of Invested company Opening balance Increase Decrease Closing balance made in the impairment current provisions period Chengdu Financial Holding Industry Leading Equity 10,000,000.00 10,000,000.00 Investment Fund Management Co., Ltd.

Chengdu Financial City Construction and Development Investment 150,000,000.00 150,000,000.00 Management Center (Limited Partnership)

Chengdu Yihang Asset Management Co., Ltd. 1,500,000,000.00 1,500,000,000.00

Chengdu Financial Dreamwork Investment 380,000,000.00 380,000,000.00 Management Co., Ltd.

Chengdu Smart Car City Development Co., 65,000,000.00 65,000,000.00 Ltd.

Chengdu Jiaozi Supply Chain Financial 45,000,000.00 45,000,000.00 Services Co., Ltd.

Chengdu Jiaozi Industry Fund 10,000,000.00 10,000,000.00 Management Co., Ltd.

Chengdu Financial Holding Wealth Fund 49,985,000.00 49,985,000.00

Chengdu Jiaozi Commercial Factoring 268,000,000.00 268,000,000.00 Co., Ltd. Total 8,358,533,307.19 2,518,385,000.00 246,028,152.60 10,630,890,154.59 10,500,000.00 (2) Investment in associates and joint ventures Closing balance Opening balance

Invested company Impairme Impairme nt nt Book balance Book value Book balance Book value provision provision s s 1. Associates 2.Joint ventures Bank of Chengdu Co., Ltd. 6,416,913,061.52 6,416,913,061.52 5,607,309,664.12 5,607,309,664.12 Chengdu Rural Commercial 3,975,193,319.04 3,975,193,319.04 2,462,045,332.64 2,462,045,332.64 Bank Co., Ltd. Jishi Equity Investment Fund Management 6,398,481.53 6,398,481.53 (Chengdu) Co., Ltd. Vanho Securities Co., Ltd. 171,025,975.21 171,025,975.21 166,673,391.11 166,673,391.11 Jintai Insurance Co., Ltd. 193,311,161.99 193,311,161.99 173,232,629.55 173,232,629.55

Page 138(Total 141 pages)

− F-265 −

Closing balance Opening balance

Invested company Impairme Impairme nt nt Book balance Book value Book balance Book value provision provision s s Chengdu Institution of New Economic 3,126,247.79 3,126,247.79 3,059,155.46 3,059,155.46 Development Co., Ltd. Chengdu Tianfu Tong Financial 152,607,144.94 152,607,144.94 159,760,123.93 159,760,123.93 Services Co., Ltd. Chengdu Intellectual Property 90,935,726.47 90,935,726.47 89,919,277.43 89,919,277.43 Exchange Co.,Ltd. Chengdu Jiaozi Commercial Factoring Co., Ltd. 196,000,000.00 196,000,000.00 Subtotal 11,003,112,636.96 11,003,112,636.96 8,864,398,055.77 8,864,398,055.77 Total 11,003,112,636.96 11,003,112,636.96 8,864,398,055.77 8,864,398,055.77 (Continued) Increase and decrease of investment in the current period Other Invested Investment comprehe company Incr Decr loss under the nsive Changes in Declaration of Provis Other ease ease equity income other equity cash ion for method adjustmen dividends or impair ts profits ment 1.Associat es Subtotal

2.Joint ventures Bank of

Chengdu 1,009,732,064.57 18,694,086.60 9,523,546.23 228,346,300.00 Chengdu Rural Commerci al Bank -36,397,353.1 Co., Ltd. 465,310,059.53 3 694,235,280.00 Vanho Securities Co., Ltd. 3,786,572.05 566,012.05 Jintai Insurance Co., Ltd. 3,805,224.62 16,273,307.82 Chengdu Tianfu Tong

Financial Services Co., Ltd. -7,152,978.99 Chengdu Institution of New Economic 97,092.33 30,000.00

Page 139(Total 141 pages)

− F-266 −

Increase and decrease of investment in the current period Other Invested Investment comprehe company Incr Decr loss under the nsive Changes in Declaration of Provis Other ease ease equity income other equity cash ion for method adjustmen dividends or impair ts profits ment Developm ent Co., Ltd. Chengdu Intellectua l Property Exchange Co., Ltd. 1,016,449.04 Jishi Equity Investmen t Fund 6,398,481.53 Managem ent (Chengdu) Co., Ltd. Chengdu Jiaozi Commerci al Factoring Co., Ltd. Subtotal 1,476,594,483.15 -863,946.66 703,758,826.23 228,376,300.00 6,398,481.53 Total 1,476,594,483.15 -863,946.66 703,758,826.23 228,376,300.00 6,398,481.53 Note: The Company transferred 20.00% share of Jishi Equity Investment Fund Management (Chengdu) Co., Ltd. to the subsidiary, Chengdu Financial Holding Financial Development Equity Investment Fund Co., Ltd. for free in the current period.

3. Investment income Amount in the Amount in the previous Source of investment income current year year Long-term equity investment income calculated 1,476,594,483.15 1,154,295,669.17 under the equity method Investment income arising from the disposal of -648,321.61 long-term equity investment Investment income arising from the period of holding financial assets at fair value through profit or loss Investment income arising from the disposal of financial assets at fair value through profit or loss Investment income arising from the period of holding held-to-maturity investment Investment income arising from the disposal of held-to-maturity investment

Page 140(Total 141 pages)

− F-267 − − F-268 − − F-269 − − F-270 − − F-271 − − F-272 − − F-273 − − F-274 − − F-275 − − F-276 − − F-277 − − F-278 − − F-279 − − F-280 − − F-281 − − F-282 − − F-283 − Notes to the Financial Statements (31 December 2018)

1. Company profile

Chengdu Jiaozi Financial Holding Group Co., Ltd. (hereinafter referred to as “the Company”

or “Company”) formerly known as “Chengdu Investment Holding Group Co., Ltd.” or

“Chengdu Finance Holdings Group Co., Ltd.” was the state-owned holding company limited

incorporated in the Chengdu Administration for Industry and Commerce and approved by

Chengfu Letter [2008] No. 75 document of Chengdu Municipal People's Government on 3

September 2008. The Company obtained the business license of the unified social credit code

of 915101006796561013 issued by the Chengdu Administration for Industry and Commerce on

8 January 2019.

As of 31 December 2018, the registered capital of the Company is RMB5 billion and the actual amount and shareholding ratio of shareholders are: Shareholders Amount (RMB’000) Percentage (%)

Chengdu State-owned Assets Supervision and 3,000,000.00 60.00 Administration Commission

Chengdu Xiecheng Asset Management Co., Ltd. 2,000,000.00 40.00 Total 5,000,000.00 100.00 (1) Organizational form and registered address of the Company Form of organization: limited liability company (state-owned holding company) The Company's registered address: No. 3 Building, Tianfu International Financial Center, No. 966NorthSection of Tianfu Avenue, Chengdu

(2) Main business activities and operating period of the Company The main business activities of the Company and its subsidiaries (hereinafter collectively referred to as "the Company") are investment financial institutions and non-financial institutions, capital management, venture capital, asset management, investment and socio- economic consulting, financial research and innovation. The operating period is from 3 September 2008 to permanent.

(3) Name of the ultimate controller The ultimate controller of the Company is the Chengdu State-owned Assets Supervision and Administration Commission.

Page 13(Total 169 pages)

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Chengdu Jiaozi Financial Holding Group Co., Ltd. (成都交子金融控股集團有限公司) 3/F, Tianfu International Financial Center 966 Tianfu Avenue (North) Chengdu, Sichuan Province PRC

TRUSTEE PRINCIPAL PAYING AGENT, REGISTRAR AND TRANSFER AGENT

China Construction Bank (Asia) China Construction Bank (Asia) Corporation Limited Corporation Limited (中國建設銀行(亞洲)股份有限公司) (中國建設銀行(亞洲)股份有限公司) 28/F, CCB Tower 28/F, CCB Tower 3 Connaught Road Central 3 Connaught Road Central Central, Hong Kong Central, Hong Kong

LEGAL ADVISORS

To the Issuer as to English law To the Issuer as to PRC law

Linklaters Dentons 11th Floor, Alexandra House 14/F, 18/F Tower J China Overseas Chater Road International Center Central, Hong Kong No. 575 Jiaozi Avenue High-tech Zone 610041 Chengdu City, Sichuan Province PRC

To the Joint Lead Managers as to English law To the Joint Lead Managers as to PRC law

Clifford Chance Jingtian & Gongcheng 27th Floor, Jardine House 31/F, One Aerospace Center One Connaught Place No.7, Xin Guang Hua Street Central, Hong Kong Jinjiang District, Chengdu, Sichuan Province PRC

To the Trustee as to English law

Fangda Partners 26/F, One Exchange Square 8 Connaught Place Central Hong Kong

INDEPENDENT AUDITOR OF THE GROUP

Mazars Certified Public Accountants LLP Zhongshen Zhonghuan Building No. 169 Donghu Road Wuchang District, Wuhan PRC