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. 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.

THIS OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY US 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. 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 Citigroup Global Markets Limited, Guotai Junan Securities (Hong Kong) Limited, BOCI Asia Limited and Orient Securities (Hong Kong) Limited (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. The attached document is being furnished in connection with an offering in offshore transactions outside the United States in compliance with Regulation S under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities described herein.

The communication of the attached document and any other document or materials relating to the issue of the securities offered hereby is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes ofsection21oftheUnitedKingdom’s Financial Services and Markets Act 2000, as amended. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the ‘‘Financial Promotion Order’’), or within Article 49(2)(a) to (d) of the Financial Promotion Order, or to any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order (all such persons together being referred to as ‘‘relevant persons’’). In the United Kingdom, the securities offered hereby are only available to, and any investment or investment activity to which the attached document relates will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on the attached document or any of its contents. 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. Nothing in this electronic transmission constitutes an offer or an invitation by or on behalf of either the Issuer, the Guarantor, 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 neither the Issuer, the Guarantor, 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.

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. Actions that you may not take: If you receive this document by e-mail, you should not reply by e-mail to this announcement, 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. Preliminary Offering Circular Dated 22 June 2016 STRICTLY CONFIDENTIAL Subject to Completion

CAIYUN INTERNATIONAL INVESTMENT LIMITED (incorporated in Hong Kong with limited liability)

US$@@ @@ PER CENT. GUARANTEED BONDS DUE 20@@ unconditionally and irrevocably guaranteed by

YUNNAN METROPOLITAN CONSTRUCTION INVESTMENT GROUP CO., LTD. (incorporated in the People’s Republic of China with limited liability)

ISSUE PRICE: @@ PER CENT. s document, to purchase or subscribe for any Bonds.

The @@ per cent. guaranteed bonds due 20@@ (the ‘‘Bonds’’) will be issued in the aggregate principal amount of US$@@ by Caiyun International Investment Limited (the nary Offering Circular is not an offer to sell any Bonds nor is it us for the purposes of EU Directive 2003/71/EC or Part‘‘ VIIssuer of the ’’). The Bonds will be unconditionally and irrevocably guaranteed (the ‘‘Guarantee of the Bonds’’) by Yunnan Metropolitan Construction Investment Group Co., Ltd. (the ‘‘Guarantor’’). The Issuer is a wholly-owned subsidiary of the Guarantor. The Bonds will bear interest from and including @@ 2016 at the rate of @@ per cent. per annum. Interest on the Bonds is payable semi-annually in arrear on @@ and @@ each year, commencing on @@ 20@@. Unless previously redeemed or purchased and cancelled, the Bonds will mature at their principal amount on @@ 20@@. The Bonds will constitute direct, general, unconditional, unsubordinated and, subject to Condition 3(a) of the Terms and Conditions of the Bonds, unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves, and shall at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, other than those preferred by applicable law. Payments on the Bonds will be made without deduction for or on account of taxes of Hong Kong, the PRC or any jurisdiction through which payments are made to the extent described in ‘‘Terms and Conditions of the Bonds – Taxation’’. The Guarantee of the Bonds constitutes direct, general, unconditional, unsubordinated and (subject to Condition 3(a)) unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsubordinated and unsecured obligations of the Guarantor, other than those preferred by applicable law. The Guarantee of the Bonds will be contained in the Deed of Guarantee (the ‘‘Deed of Guarantee’’), which will be entered into between and among the Issuer, the Guarantor and The Bank of New York Mellon, London Branch as trustee of the Bondholders (in that capacity, the ‘‘Trustee’’)onoraround@@ 2016 (the ‘‘Issue Date’’). The Guarantor will file or cause to be filed with the Yunnan Branch of the State Administration of Foreign Exchange (‘‘SAFE’’) of the PRC the Guarantee of the Bonds within 15 PRC business days of the Issue Date in accordance with the Provisions on the Foreign Exchange Administration Rules on Cross-Border Guarantees（跨境擔保外匯管理規定）

ering Circular is not a prospect promulgated by SAFE. The Guarantor intends to complete the registration of the Guarantee of the Bonds with SAFE as soon as practicable. The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time at their principal amount together with interest accrued to, but excluding, the date fixed for redemption in the event of certain changes affecting taxes of Hong Kong or the PRC. At any time following the occurrence of a Change of Control (as defined in the Terms and Conditions of the Bonds), the holder of any Bond will have the right, at such holder’s option, to require the Issuer to redeem all, but not some only, of that holder’s Bonds on the Put Settlement Date (as defined in the Terms and Conditions of the Bonds) at 101 per cent. of their principal amount, together with accrued interest to such Put Settlement Date. Upon the occurrence of a Non-Registration Event (as defined in the Terms and Conditions of the Bonds), the holder of any Bond will have the right, at such holder’s option, to require the Issuer to redeem on the Non-Registration Event Redemption Date (as defined in the Terms and Conditions of the Bonds) all, but not some only, of that holder’s Bonds at 100 per cent. of their principal amount together with accrued interest up to, but excluding, the Non-Registration Event Redemption Date. See ‘‘Terms and Conditions of the Bonds – Redemption and Purchase’’. Investing in the Bonds involves certain risks. See ‘‘Risk Factors’’ beginning on page 14 for a discussion of certain risk factors to be considered in connection with an investment in the Bonds. The Bonds and the Guarantee of the Bonds 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 other jurisdiction, 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 offshore transactions in compliance with Regulation S under the Securities Act (‘‘Regulation S’’). For a description of these and certain restrictions on offers and sales of the Bonds and the Guarantee of the Bonds and the distribution of this Offering Circular, see ‘‘Subscription and Sale’’. ot permitted. This Preliminary Off The denomination of the Bonds shall be US$200,000 each and integral multiples of US$1,000 in excess thereof. Application has been made to The Stock Exchange of Hong Kong Limited (the ‘‘Hong Kong Stock Exchange’’) for listing of, and permission to deal in, the Bonds by way of debt issues to professional investors (as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the ‘‘SFO’’) only. This Offering Circular is for distribution in Hong Kong to professional investors only. Investors should not purchase the Bonds in the primary or secondary markets unless they are professional investors and understand the risks involved. The Bonds are not suitable for retail investors. The Hong Kong Stock Exchange 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 Bonds on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Bonds or the Issuer and Guarantor or quality of disclosure in this Offering Circular. Hong Kong Exchanges and Clearing Limited and The Hong Kong Stock Exchange 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. Fitch Ratings Inc. (‘‘Fitch’’) has assigned a corporate rating of BBB+ with a stable outlook to the Guarantor. The Bonds are expected to be rated BBB+ by Fitch. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. The Bonds will be represented initially by beneficial interests in a global certificate (the ‘‘Global Certificate’’) in registered form which will be registered in the name of a nominee of, and shall be deposited on the Issue Date with, a common depositary for Euroclear Bank S.A./N.V. (‘‘Euroclear’’) and Clearstream Banking S.A. ction where such offer or sale is n (‘‘Clearstream’’). Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream. Except as described herein, certificates for Bonds will not be issued in exchange for interests in the Global Certificate.

Joint Global Coordinators Citigroup Guotai Junan International

Joint Bookrunners and Joint Lead Managers

Citigroup Guotai Junan BOC International Orient Securities International (Hong Kong)

Offering Circular dated @@ 2016 soliciting an offer toFinancial buy Services any and Bonds Markets in Act any 2000, jurisdi as amended. No offer or invitation shall be made or received, and no agreement shall be made, on the basis of thi The information contained in this Preliminary Offering Circular is subject to completion and amendment in the final Offering Circular. This Prelimi IMPORTANT NOTICE

This Offering Circular contains particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer. The Issuer and the Guarantor accept full responsibility for the accuracy of the information contained in this Offering Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. Hong Kong Exchanges and Clearing Limited and Hong Kong Stock Exchange 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.

This Offering Circular has been prepared by the Issuer and the Guarantor solely for use in connection with the proposed offering of the Bonds described in this Offering Circular. The distribution of this Offering Circular and the offering of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer, the Guarantor and the Joint Lead Managers to inform themselves about and to observe any such restrictions. No action is being taken to permit a public offering of the Bonds or the possession or distribution of this Offering Circular or any offering or publicity material relating to the Bonds in any jurisdiction where action would be required for such purposes. There are restrictions on the offer and sale of the Bonds and the circulation of documents relating thereto, in certain jurisdictions and to persons connected therewith. For a description of certain further restrictions on offers, sales and resales of the Bonds and the distribution of this Offering Circular, see ‘‘Subscription and Sale’’. This Offering Circular does not constitute an offer of, or an invitation to purchase, any of the Bonds in any jurisdiction in which such offer or invitation would be unlawful. By purchasing the Bonds, investors represent and agree to all of those provisions contained in that section of this Offering Circular.

No person has been or is authorised in connection with the issue, offer or sale of the Bonds to give any information or to make any representation concerning the Issuer, the Guarantor, the Bonds or the Guarantee of the Bonds, other than as contained herein and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents (as defined in the Terms and Conditions of the Bonds) or any of their respective affiliates. Neither the delivery of this Offering Circular nor any offering, sale or delivery made in connection with the issue of the Bonds shall, under any circumstances, constitute a representation that there has been no change or development reasonably likely to involve a change in the affairs of the Issuer or the Guarantor, 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 Guarantor, the Joint Lead Managers, the Trustee or the Agents or any of their respective affiliates to subscribe for or purchase any of the Bonds and may not be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or is unlawful.

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

i This Offering Circular is not a prospectus for the purposes of the European Union’s Directive 2003/71/EC (and any amendments thereto) as implemented in member states of the European Economic Area (the ‘‘Prospectus Directive’’). This Offering Circular has been prepared on the basis that all offers of the Bonds offered hereby made to persons in the European Economic Area will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus in connection with offers of such Bonds.

The communication of this Offering Circular and any other document or materials relating to the issue of the Bonds offered hereby is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the United Kingdom’s Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the ‘‘Financial Promotion Order’’), or within Article 49(2)(a) to (d) of the Financial Promotion Order, or to any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order (all such persons together being referred to as ‘‘relevant persons’’). In the United Kingdom, the Bonds offered hereby are only available to, and any investment or investment activity to which this offering memorandum relates will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this Offering Circular or any of its contents.

No representation or warranty, express or implied, is made or given by the Joint Lead Managers, the Trustee or the Agents or any of their respective affiliates, directors, 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 Bonds or the Guarantee of the Bonds and nothing contained in this Offering Circular is, or shall be relied upon as, a promise, representation or warranty by the Joint Lead Managers, the Trustee or the Agents or any of their respective affiliates. The Joint Lead Managers, the Trustee and the Agents and their respective affiliates have not independently verified any of the information contained in this Offering Circular and can give no assurance that this information is accurate, truthful or complete.

To the fullest extent permitted by law, none of the Joint Lead Managers, the Trustee, the Agents or any of their respective affiliates, 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 Guarantor, the issue and offering of the Bonds or the giving of the Guarantee of the Bonds. Each of the Joint Lead Managers, the Trustee, the Agents and their respective affiliates, 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 of their respective affiliates, directors, employees, agents or advisers undertakes to review the financial condition or affairs of the Issuer or the Guarantor for so long as the Bonds remain outstanding nor to advise any investor or potential investor of the Bonds of any information coming to the attention of any of the Joint Lead Managers, the Trustee, the Agents or their respective affiliates.

This Offering Circular should not be considered as a recommendation by the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents that any recipient of this Offering Circular should purchase the Bonds. Each potential purchaser of the Bonds should determine for itself the relevance of the information contained in this Offering Circular and its purchase of the Bonds should be based upon such investigations with its own tax, legal and business advisors as it deems necessary.

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

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

IN CONNECTION WITH THE ISSUE OF THE BONDS, EACH OF THE JOINT LEAD MANAGERS AS STABILISING MANAGER (THE ‘‘STABILISING MANAGER’’) (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) MAY, TO THE EXTENT PERMITTED BY APPLICABLE LAWS AND DIRECTIVES, OVER-ALLOT THE BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT ANY STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF ANY STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE BONDS IS MADE AND SUCH STABILISING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME AND MUST BE BROUGHT TO AN END AFTER A LIMITED PERIOD.

Listing of the Bonds on the Hong Kong Stock Exchange is not to be taken as an indication of the merits of the Issuer, the Guarantor or the Bonds. In making an investment decision, investors must rely on their own examination of the Issuer, the Guarantor and the terms of the offering of the Bonds, including the merits and risks involved. See ‘‘Risk Factors’’ for a discussion of certain factors to be considered in connection with an investment in the Bonds. The Issuer, the Guarantor, the Joint Lead Managers, the Trustee and the Agents and their respective directors, advisers, employees, agents and affiliates are not making any representation to any purchaser of the Bonds regarding the legality of any investment in the Bonds 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 of their respective directors, advisers, employees, agents and affiliates in connection with its investigation of the accuracy of such information or its investment decision.

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 and the Guarantor believe this information to be reliable, this information has not been independently verified by the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents or their respective affiliates, directors, employees, agents or advisers, and none of the Issuer, the Guarantor, the Joint Lead Managers, the Trustee or the Agents or their respective affiliates, 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.

iii 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

This Offering Circular contains the audited consolidated financial statements of the Guarantor as at and for the years ended 2013, 2014 and 2015, which were prepared in accordance with PRC GAAP and have been audited by ShineWing Certified Public Accountants, Certified Public Accountants.

This Offering Circular contains the audited consolidated financial statements of the Issuer as at 31 December 2015 and for the period from 8 July 2015 (the date of incorporation) to 31 December 2015 and have been audited by SHINEWING (HK) CPA Limited.

ROUNDING

In this Offering Circular, where information has been presented in thousands or millions of units, amounts may have been rounded up or down. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. References to information in billions of units are to the equivalent of a thousand million units.

CERTAIN DEFINITIONS AND CONVENTIONS

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

• the ‘‘Group’’,the‘‘Guarantor’’ and words of similar import refers to Yunnan Metropolitan Construction Investment Group Co., Ltd.（雲南省城市建設投資集團有限公司）itself, or to Yunnan Metropolitan Construction Investment Group Co., Ltd. and its consolidated subsidiaries, as the context requires;

• the ‘‘Issuer’’ refers to Caiyun International Investment Limited（彩雲國際投資有限公司）,a wholly-owned subsidiary of the Guarantor;

•‘‘China’’ or the ‘‘PRC’’ refers to the People’s Republic of China, excluding, for purposes of this Offering Circular only, Taiwan, Hong Kong and the Macau Special Administrative Region;

•‘‘Hong Kong’’ refers to Hong Kong Special Administrative Region of the PRC;

•‘‘IFRS’’ refers to the International Financial Reporting Standards;

•‘‘MOFCOM’’ refers to the Ministry of Commerce of the PRC;

•‘‘NDRC’’ refers to the National Development and Reform Commission of the PRC;

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

•‘‘PRC GAAP’’ refers to the generally accepted accounting principles in the People’s Republic of China;

• the ‘‘PRC government’’ refers 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;

iv •‘‘SAFE’’ refers to the State Administration of Foreign Exchange of the PRC or its competent local counterpart;

•‘‘SASAC’’ refers to the State-owned Assets Supervision and Administration Commission of the PRC;

•‘‘SAT’’ refers to the State Administration of Taxation of the PRC;

•‘‘CNY’’, ‘‘RMB’’ or ‘‘Renminbi’’ refers to the legal currency of the PRC; and

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

The Issuer and the Guarantor record and publish their financial statements in Renminbi. Unless otherwise stated in this Offering Circular, all translations from Renminbi into U.S. dollars were made at the rate of RMB6.4778 to US$1.00, the noon buying rate in New York City for cable transfers payable in Renminbi as certified for customs purposes by the Federal Reserve Bank of New York on 31 December 2015. All such translations in this Offering Circular are provided solely for your convenience and no representation is made that the Renminbi amounts referred to herein have been, could have been or could be converted into U.S. dollars, or vice versa, at any particular rate, or at all. For further information relating to the exchange rates, see ‘‘Exchange Rate Information’’.

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 Guarantor 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.

v FORWARD-LOOKING STATEMENTS

This Offering Circular contains certain forward-looking statements. All statements other than statements of historical facts contained in this Offering Circular constitute ‘‘forward-looking statements’’.Someof these statements can be identified by forward-looking terms, such as ‘‘anticipate’’, ‘‘target’’, ‘‘believe’’, ‘‘can’’, ‘‘would’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘aim’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘will’’, ‘‘would’’ or similar words. However, these words are not the exclusive means of identifying forward-looking statements. All statements regarding expected financial condition and results of operations, business plans and prospects are forward-looking statements. These forward-looking statements include but are not limited to statements as to the business strategy, revenue and profitability, planned projects and other matters as they relate to our company discussed in this Offering Circular regarding matters that are not historical fact. These forward-looking statements and any other projections contained in this Offering Circular (whether made by us or by any third party) involve known and unknown risks, including those disclosed under the caption ‘‘Risk Factors’’, assumptions, uncertainties and other factors that may cause the actual results, performance or achievements of our company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections.

These forward-looking statements speak only as at the date of this Offering Circular. The Issuer and the Guarantor expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change of events, conditions or circumstances, on which any such statement was based.

The factors that could cause our actual results, performance and achievements of to be materially different include, among others:

• risks associated with our business activities;

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

• our ability to implement our business strategy and plan of operation;

• our ability to expand and manage our growth;

• our financial condition and results of operations;

• fluctuations in foreign currency exchange rates; and

• those other risks identified in the ‘‘Risk Factors’’ section of this Offering Circular.

Neither the Issuer or the Guarantor undertake any obligation to update or revise publicly any of the opinions or forward-looking statements expressed in this Offering Circular as a result of any new information, future events or otherwise.

vi TABLE OF CONTENTS

Page

SUMMARY ...... 1

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP ...... 5

SUMMARY FINANCIAL INFORMATION OF THE ISSUER ...... 10

SUMMARY OF THE OFFERING ...... 11

RISK FACTORS ...... 14

TERMS AND CONDITIONS OF THE BONDS ...... 52

SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM ...... 70

USE OF PROCEEDS ...... 72

EXCHANGE RATE INFORMATION ...... 73

CAPITALISATION AND INDEBTEDNESS ...... 74

DESCRIPTION OF THE ISSUER ...... 75

DESCRIPTION OF THE GROUP ...... 77

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT ...... 101

PRC LAWS AND REGULATIONS ...... 104

TAXATION ...... 108

DESCRIPTION OF CERTAIN MATERIAL DIFFERENCES BETWEEN PRC GAAP AND IFRS ...... 112

SUBSCRIPTION AND SALE ...... 114

GENERAL INFORMATION ...... 119

INDEX TO FINANCIAL INFORMATION ...... F-1

vii SUMMARY

The summary below is only intended to provide a limited overview of information described in more detail elsewhere in this Offering Circular. As it is a summary, it does not contain all of the information that may be important to investors and terms defined elsewhere in this Offering Circular shall have the same meanings when used in this summary. Prospective investors should, therefore, read this Offering Circular in its entirety.

Overview The Group is the sole investment and financing platform for urban development under the Yunnan SASAC and is wholly owned, directly and indirectly, by the Yunnan SASAC. Since its establishment in 2005, the Group has played an important role in implementing the Yunnan provincial government’s blueprint for urban planning and municipal construction, and has received strong financial and operational support from the Yunnan provincial government. The Group focuses on urban development as well as urban environment; urban development includes property development, development of exhibition centres, primary land development and development of affordable housing and redevelopment of shantytowns; urban environment includes construction and operation of wastewater treatment and water supply facilities. Over the years, the Group has diversified its business portfolio to include leisure and tourism, healthcare, and other businesses. Set forth below is an overview of the principal business segments of the Group:

Urban development • Property development. The Group conducts its property development business primarily through its subsidiary, Yunnan Metropolitan Real Estate Development Co., Ltd. (‘‘YMCI Real Estate’’), which has been listed on the Shanghai Stock Exchange (600239.SH) since 2007. YMCI Real Estate focuses on developing high quality residential properties in the PRC, including Kunming, Xi’an, Dali, Xishuangbanna, Beijing, Chongqing, Chengdu and Lanzhou. Over the years, the Group has developed, exclusively and cooperatively, more than 20 urban residential complex projects and tourism property projects in the PRC. For the year ended 31 December 2015, contracted property sales was RMB3,991.0 million.

• Development of exhibition centres. Capitalizing on the Group’s strong experience in urban development, the Group engages in the construction and management of exhibition centres. The Group is responsible for operating the Kunming Dianchi International Convention and Exhibition Centre, the Haigeng Convention Centre and the Kunming International Convention and Exhibition Centre.

• Primary land development. Primary land development is one of the important businesses of the Group. The Group is designated to assist the Yunnan provincial government in its urbanisation goals and projects. The Group also acts as the sole provincial land reserve supplier in Yunnan province, authorised by the Yunnan provincial government to engage in the relocation compensation services and early-stage development of the urbanisation projects. Since 2005, the Group has undertaken eight primary land development projects. As at 31 December 2015, the Group has developed approximately 3,200,000 sq.m. of land as primary development on behalf of the Yunnan provincial government.

• Development of affordable housing and redevelopment of shantytowns. The Group is a key force of the Yunnan provincial government to implement its housing policies and improve the housing conditions for low-income households in Yunnan province. It has engaged in development of subsidised and low-rent housing and redevelopment of shantytowns. Some of the affordable housing development and shantytown redevelopment are engaged simultaneously on the same parcel under a master development plan. As at 31 December 2015, the Group had several affordable housing projects and five shantytown projects with a total of 3,865 apartments in Kunming, Qujing, Dali and Jinghong.

1 • Property management, construction and installation. The Group engages in providing services ancillary to the primary components of its urban development business, including property management, construction and installation services. The Group manages certain of the properties that it develops post-sales, and provides construction and installation services for home buyers with respect to home refurbishment and decoration as well as installation of equipment necessities. Such ancillary services have been key in facilitating the development of the Group’scoreurban development business, as the Group has maintained competitive edge from providing full-spectrum and post-sale services desired by home buyers.

In 2013, 2014 and 2015, operating income from the urban development segment was RMB4,089.2 million, RMB5,036.2 million and RMB5,616.6 million, respectively, representing 48.1 per cent., 44.1 per cent. and 41.0 per cent., respectively, of the Group’s total operating income.

Urban environment. The Group has historically been the exclusive developer and operator of wastewater treatment and water supply facilities in Yunnan province under the directives of the Yunnan provincial government. The Group has later expanded its operations to include solid waste treatment, building- transfer projects (‘‘BT’’) and engineering-procurement-construction (‘‘EPC’’) projects. It currently owns 129 and two projects in its urban environment business in the PRC and Thailand, respectively. The Group also provides services ancillary to its core urban environment business, including construction, installation and sales services, in which the Group constructs as well as sources and installs equipment for the projects. In 2013, 2014 and 2015, operating income from this business segment was RMB544.8 million, RMB747.3 million and RMB986.3 million, respectively, representing 6.4 per cent., 6.6 per cent. and 7.1 per cent., respectively, of the Group’s total operating income.

Leisure and tourism. The Group invests in and operates travel services in Yunnan province, which consist primarily of tourist attraction and national park operations and cultural, festival and exhibition organisation. The Group also constructs and operates hotels in Yunnan. In total, the Group operates seven hotels in China. By integrating a number of quality tourism assets and resources, the Group intends to further expand its travel service business and develop Yunnan into an international and modern tourist destination. In 2013, 2014 and 2015, operating income from this business segment was RMB285.0 million, RMB958.0 million and RMB1,160 million, respectively, representing 3.4 per cent., 8.4 per cent. and 8.5 per cent., respectively, of the Group’s total operating income.

Healthcare. The Group is a vertically-integrated healthcare product and service provider. The Group’s healthcare services provided include the construction and expansion of hospital buildings, managing public hospitals on behalf of local governments, as well as the manufacturing of Chinese medicine and biopharmaceutical products. In 2013, 2014 and 2015, operating income from this business segment was RMB220.9 million, RMB891.6 million and RMB944.6 million, respectively, representing 2.6 per cent., 7.8 per cent. and 6.9 per cent., respectively, of the Group’s total operating income.

Other businesses. The Group is engaged in other business operations including, among others, education and financial services. In 2013, 2014 and 2015, operating income from other businesses was RMB3,363.6 million, RMB3,775.3 million and RMB4,994.5 million, respectively, representing 39.6 per cent., 33.1 per cent. and 36.5 per cent., respectively, of the Group’s total operating income.

• Education. The Group is a leading operator of schools in Yunnan province. As at 31 December, 2015, approximately 22,000 students were enrolled at the Group’s schools in Yunnan province, including kindergartens, vocational schools, a college and a driving school. In 2013, 2014 and 2015, this business generated operating income of RMB198.0 million, RMB432.0 million and RMB489.0 million, respectively, representing 2.3 per cent., 3.8 per cent. and 3.6 per cent., respectively, of the Group’s total operating income.

2 • Financial services. The Group currently engages in credit guarantee, small loan and finance leasing services, focusing on state-owned enterprise customers, through its wholly owned or controlled subsidiaries. It intends to further develop its financial service business to capture the opportunities presented by the rapid growth of the PRC financial industry.

In 2013, 2014 and 2015, the Group’s total operating income was RMB8,504.0 million, RMB11,408.5 million, and RMB13,701.8 million, respectively, and the Group had a net profit of RMB547.1 million, RMB457.2 million and RMB1,220.1 million, respectively. As at 31 December 2015, the Group’stotal assets totalled RMB123,458.2 million.

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

• The sole investment and financing platform for urban development under the Yunnan SASAC, with strong support from the Yunnan provincial government

• Stable growth from urban development and urban environment businesses and closely aligned with the general social and economic development of Yunnan province

• Diversified business portfolio with new growth engine

• Diversified funding channels

• Experienced management and operational teams with sound corporate governance

Business Strategies The Group’s goal is to continue to grow its asset base, optimise its capital structure and enhance operational efficiency. The Group intends to focus on the following strategies:

• Further enhance the Group’s core competitive advantage in the urban development business by leveraging on the integration of other business segments as well as support from governmental authorities

• Continue to operate the Group’s core businesses focusing on its urban development business

• Integrate tourism resources in Yunnan province and develop into a comprehensive leisure and tourism group

• Leverage Yunnan province’s unique advantages from national development policies to expand the Group’s business to Southeast Asia

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

• Strengthen management and internal control systems

Recent Developments In May 2016, the Group signed a share purchase and capital increase agreement to acquire a 51 per cent. equity interest in Chengdu Century City New International Convention and Exhibition Centre Co., Ltd. (‘‘Chengdu Century City’’) through share transfers and capital injection (the ‘‘Acquisition’’). Chengdu Century City was founded in 2003 and engages in the tourism development, property management, real estate development and convention centre businesses. Chengdu Century City New International Convention and Exhibition Centre is a landmark building in Chengdu, Sichuan Province.

3 Chengdu Century City New International Convention and Exhibition Centre is strategically located in Chengdu, a fast growing manufacturing and economic centre with well-developed transportation networks. Chengdu, which is one of China’s important transportation hubs, situated at the intersection of China’s major railway lines, with ready access to major highways and airports. In addition, Sichuan province borders Yunnan province, where the majority of the Group’s businesses are located. The Acquisition is expected to create synergy between the Group’s other businesses.

Chengdu Century City New International Convention and Exhibition Centre provides a venue for buyers to meet their purchasing needs for a wide range of products. Sellers are able to streamline their business operations by taking advantage of the full range of services and trade solutions available on-site. In addition, both hotel and restaurant facilities are available at Chengdu Century City New International Convention and Exhibition Centre for the convenience of the exhibitors and their customers. Its wholly integrated one-stop services for both buyers and sellers set Chengdu Century City New International Convention and Exhibition Centre apart from its competitors.

Chengdu Century City New International Convention and Exhibition Centre covers a total GFA of approximately 1,730,000 sq.m. It has nine exhibition halls, comprising a GFA of approximately 120,000 sq.m. and can hold a maximum of 5,500 booths. Each exhibition hall is equipped with video surveillance system, broadcasting system, broadband Internet and wireless Internet. Chengdu Century City New International Convention and Exhibition Centre also has 28 multifunction rooms, comprising a GFA of approximately 100,000 sq.m. The largest multifunction room takes up approximately 2,800 sq.m. and can accommodate up to 2,800 persons. The exhibition halls and multifunction rooms can be utilised for industry exhibitions, conferences, conventions, meetings and banquets.

Chengdu Century City New International Convention and Exhibition Centre holds two luxurious hotels offering accommodation, food and beverage and general recreational services. The hotels, named the Holiday Inn Chengdu Century City and InterContinental Century City Chengdu, have a total of 1,525 guest rooms. The hotels have seven restaurants, two bars, and also have entertainment facilities.

The Group expects that the acquisition of Chengdu Century City will provide an opportunity to expand the Group’s convention centre business into other geographic areas in the PRC and add another growth point for the Group.

According to the share purchase and capital increase agreement, the Group will pay total consideration of RMB5.9 billion to acquire 34.23% of the total shares outstanding from Chengdu Century City’s existing shareholders and inject additional capital of RMB5.9 billion into Chengdu Century City. The Group will finance the acquisition with internal funds and external financing. Subsequent to the closing of the relevant transactions, the Group will own 51 per cent. of the equity interest of Chengdu Century City. As at the date of this Offering Circular, the Acquisition has not yet closed. Closing will be subject to customary closing conditions.

In addition, subsequent to 31 December 2015, the Group has established ventures and entered into strategic cooperation framework agreements with various other business partners. See ‘‘– History and Development’’ for detailed discussions.

4 SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP

The following tables set forth the Group’s selected financial information as at and for the periods indicated.

The selected financial information as at and for the years ended 31 December 2013, 2014 and 2015 set forthbelowisderivedfromandshouldbereadinconjunction with the financial statements of the Group as at and for the years ended 31 December 2013, 2014 and 2015, including the notes thereto, and the auditor’s report in respect of the years ended 31 December 2013, 2014 and 2015 which have been audited by ShineWing Certified Public Accountants and which are included elsewhere in this Offering Circular.

The Group’s financial information has 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. For a summary of the material differences, see ‘‘Description of Certain Material Differences between PRC GAAP and IFRS’’.

Summary Consolidated IncomeStatementoftheGroup Year Ended 31 December 2013 2014 2015 (Audited) (Audited) (Audited) (RMB in millions) I. Total revenue...... 8,504.0 11,408.5 13,701.8 Including: Operating revenue ...... 8,504.0 11,408.5 13,701.8 Including: Revenue from main operation ...... 8,229.3 10,520.2 12,916.3 Revenuefromotheroperations...... 274.8 888.3 785.5 II. Total operating costs ...... 8,245.2 11,124.1 12,636.6 Including:Operatingcosts...... 5,655.2 7,252.2 8,056.9 Including: Costofmainoperation...... 5,471.8 6,896.0 7,845.0 Costofotheroperations...... 183.4 356.2 212.0 Businesstaxesandsurcharges...... 368.2 563.9 664.8 Salesexpenses...... 248.2 379.7 511.8 Administrativeexpenses...... 783.4 999.8 1,168.0 Including: Entertainment...... 31.2 23.7 26.2 Researchanddevelopmentexpenses...... 4.6 1.3 6.1 Financialexpenses...... 1,178.7 1,905.5 2,063.5 Including: Interestexpenses...... 1,458.3 1,948.4 2,119.8 Interestincome...... 328.3 89.4 131.8 Exchangeloss/(gain),net...... 0.7 (3.1) 33.3 Lossonimpairmentofassets...... 11.6 23.0 171.5 Others Add: Gainsfromchangesinfairvalues...... ––0.9 Investmentincome/(loss)...... 364.6 268.5 200.2 Including: Income from investments in associates and joint ventures . . . . (16.2) 35.9 109.3 III. Operating profit ...... 623.5 552.9 1,266.3 Add: Non-operating income ...... 221.3 304.9 485.0 Including: Gainfromdisposalofnon-currentassets...... 1.0 54.1 0.3 Governmentgrants...... 194.9 138.8 129.1 Gainfromdebtsrestructuring...... 4.4 20.7 0.2 Less:Non-operatingexpenses...... 25.6 49.9 28.9 Including: Losses from disposal of non-current assets ...... 2.5 5.2 7.4 IV. Profit before tax (or less: total loss) ...... 819.2 808.0 1,722.4 Less:Incometax...... 272.1 350.8 502.2

5 Year Ended 31 December 2013 2014 2015 (Audited) (Audited) (Audited) (RMB in millions) V. Net profit...... 547.1 457.2 1,220.1 NetprofitattributabletoownersoftheGuarantor...... 61.9 36.1 493.4 Profit or loss attributable to minority interests...... 485.3 421.1 726.7 VI. Earnings per share Basicearningspershare...... ––– Dilutedearningspershare...... ––– VII. Other comprehensive income/(loss) (net of tax) ...... (15.8) 1,505.1 (64.2) Net OCI attributable to Owners of the Guarantor ...... (15.8) 1,505.1 (109.7) OCI that will not be reclassified to profit and loss ...... ––– OCI that will be reclassified to profit and loss...... (15.8) 1,505.1 (109.7) Including: Shares of OCI by equity method that will be reclassified to profitandloss...... ––(107.9) Gain/loss on fair value of available-for-sale financial assets. (15.8) 151.2 (27.0) Foreigncurrencyexchange...... – 00.8 Inventories reclassified to investment properties measured at fairvalue...... – 1,354.0 24.4 Net other comprehensive income attribute to minority shareholders ––45.5 VIII. Consolidated income ...... 531.3 1,962.3 1,156.0 Consolidated income attributable to equity holders of the Guarantor...... 46.1 1,541.2 383.7 Consolidated income attributable to minority interests...... 485.3 421.1 772.3

6 Summary Consolidated Balance Sheet of the Group As at 31 December 2013 2014 2015 (Audited) (Audited) (Audited) (RMB in millions) Current Assets: Cashandcashequivalents...... 7,961.8 8,496.1 15,569.9 Financialassetatfairvaluethroughprofitorloss...... ––19.3 Derivative financial assets Notesreceivable...... 4.9 12.8 4.7 Accountsreceivable...... 1,338.2 4,443.5 3,192.6 Prepayments...... 2,384.8 3,308.4 3,545.2 Interestreceivables...... 75.5 172.2 378.8 Dividend receivables Otherreceivables...... 6,153.0 6,124.3 9,403.1 Inventories...... 18,610.6 25,447.5 35,123.5 Non-currentassetsduewithinoneyear...... – 0.0 2,576.3 Othercurrentassets...... 4,477.7 1,786.9 394.1 Total Current Assets ...... 41,006.5 49,791.8 70,207.5 Non-current Assets: Financialassetsavailable-for-sale...... 320.0 1,247.1 6,790.8 Held-to-maturityinvestments...... 33.0 33.0 33.0 Long-termreceivables...... 2,111.5 3,029.0 5,302.2 Long-termequityinvestments...... 2,578.7 2,587.3 4,681.5 Investmentproperties...... 103.5 5,004.0 6,460.1 Costoffixedassets...... 7,131.9 9,414.1 9,631.5 Less:Accumulateddepreciation...... 914.8 1,494.2 1,742.7 Netcarryingamountoffixedassets...... 6,217.1 7,919.9 7,888.8 Less:Provisionforimpairmentoffixedassets...... 14.9 11.7 11.6 Netcarryingvalueoffixedassets...... 6,202.2 7,908.1 7,877.2 Constructionsinprocess...... 6,517.8 8,229.5 12,180.9 Constructionmaterials...... 23.9 13.0 92.7 Fixedassetsondisposal...... 8.3 0.0 0.0 Productivebiologicalassets...... 8.2 8.0 7.7 Intangibleassets...... 2,591.6 3,267.9 4,333.9 Developmentexpenditure...... 4.9 15.5 15.7 Goodwill...... 439.1 501.7 467.1 Long-termdeferredexpenses...... 202.1 416.5 502.4 Deferredtaxassets...... 176.6 230.0 377.5 Othernon-currentassets...... 2,886.3 2,815.6 4,128.0 Total Non-current Assets ...... 24,207.8 35,306.2 53,250.8 TOTAL ASSETS ...... 65,214.3 85,097.9 123,458.2 Current Liabilities: Short-termLoans...... 3,871.5 2,088.1 7,832.6 Financial liability at fair value through profit or loss Derivative financial liabilities NotesPayable...... 215.8 382.0 212.3 AccountsPayable...... 4,913.9 5,614.5 6,935.4 Receiptsinadvance...... 2,682.2 2,539.0 4,486.6 Employeebenefitspayable...... 88.6 116.8 132.8 Taxespayables...... 375.2 701.5 983.8 Interestpayable...... 352.9 602.0 624.5 Dividendspayable...... 7.2 28.5 291.3 Otherpayables...... 5,154.3 5,161.8 8,243.0 Non-current liabilities due within one year ...... 5,639.9 13,410.3 13,122.5 Other current liabilities...... 26.1 4.3 8.7 Total Current Liabilities...... 23,327.6 30,648.8 42,873.4

7 As at 31 December 2013 2014 2015 (Audited) (Audited) (Audited) (RMB in millions) Non-current Liabilities: Long-termborrowings...... 19,602.2 26,648.0 34,987.4 Bondspayable...... 6,025.0 9,253.4 15,224.0 Long-termpayables...... 578.7 81.9 1,645.6 Specialpayables...... 620.4 642.7 260.5 Provisions...... 33.9 38.9 50.5 Deferredincome...... 19.9 161.2 162.7 Deferred tax liabilities ...... 111.1 551.3 1,123.2 Othernon-currentliabilities...... 13.8 17.5 25.6 Total Non-current Liabilities ...... 27,005.1 37,394.8 53,479.4 TOTAL LIABILITIES ...... 50,332.7 68,043.7 96,352.7 OWNERS’ EQUITY Paid-upcapital...... 4,142.2 4,142.2 4,142.2 Nationalcapital...... 4,142.2 4,142.2 4,142.2 Netcarryingamountofpaid-upcapital...... 4,142.2 4,142.2 4,142.2 Otherequityinstruments...... ––2,000.0 Including: Perpetualcapitalsecurities...... ––2,000.0 Capitalreserves...... 3,765.3 3,977.0 4,086.8 Less: Treasury shares Other comprehensive income/(loss) ...... (142.1) 1,363.1 1,253.4 Including: Translation differences arising on translation of financial statementsdenominatedinforeigncurrencies...... – 0.0 0.8 Surplusreserves...... 29.1 48.0 76.0 Including: statutory surplus reserve ...... 29.1 48.0 76.0 Retainedprofits...... 578.4 590.7 1,037.3 Total equity attributable to equity holders of the Guarantor ...... 8,373.0 10,120.9 12,595.6 Minorityinterests...... 6,508.6 6,933.4 14,509.9 TOTAL OWNERS’ EQUITY ...... 14,881.6 17,054.3 27,105.5 TOTAL LIABILITIES AND OWNERS’ EQUITY ...... 65,214.3 85,097.9 123,458.2

8 EBITDA Data of the Group Year Ended 31 December 2013 2014 2015 (RMB in millions, except percentages) EBITDA(1) ...... 2,027.0 2,859.0 3,851.0 EBITDA margin(2) ...... 23.8% 25.1% 28.1% EBITDA tototalinterestexpenseratio...... 1.4x 1.5x 1.8x RatiooftotaldebttoEBITDA...... 17.3x 18.0x 19.0x

(1) EBITDA for any period is calculated as net profit, adding back interest expenses, exchange loss, depreciation and amortization. EBITDA is not a standard measure under PRC GAAP or IFRS. EBITDA is a widely used financial indicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolation or construed as an alternative to cash flows, profit or any other measure of performance or as an indicator of the Group’soperating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA does not account for taxes, interest expense or other non-operating cash expenses. In evaluating EBITDA, the Group believes that investors should consider, among other things, the components of EBITDA such as selling and distribution costs and the amount by which EBITDA exceeds capital expenditures and other charges. The Group has included EBITDA because the Group believes it is a useful supplement to cash flow data as a measure of the Group’s performance and the Group’sability to generate cash flow from operations to service debt and pay taxes. EBITDA presented in this offering circular may not be comparable to similarly titled measures presented by other companies. You should not compare the Group’sEBITDAto EBITDA presented by other companies because not all companies use the same definition. The following table reconciles the Group’s EBITDA to the Group’s operating profit, which is the most directly comparable IFRS measure:

Year Ended 31 December 2013 2014 2015 (Audited) (Audited) (Audited) (RMB in millions) Operating Profit ...... 623.0 553.0 1,266.0 Adjustments: Add: InterestExpenses,Net...... 1,130.0 1,859.0 1,988.0 ExchangeLoss,Net...... 1.0 (3.0) 33.0 Depreciation...... 205.0 333.0 368.0 Amortization...... 68.0 117.0 195.0 EBITDA ...... 2,027.0 2,859.0 3,851.0

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

9 SUMMARY FINANCIAL INFORMATION OF THE ISSUER

The following tables set forth the selected financial information of the Issuer as at and for the periods indicated. The financial information of the Issuer as at 31 December 2015 and for the period from 8 July 2015 (the date of incorporation) to 31 December 2015 set forth below has been extracted from the Issuer’s audited financial statements as at 31 December 2015 and for the period from 8 July 2015 (the date of incorporation) to 31 December 2015, which have been audited by SHINEWING (HK) CPA Limited and are included elsewhere in this Offering Circular.

The Issuer’s Financial Statements have been prepared in accordance with HKFRS. Consolidated Income Statement of the Issuer For the Period from8July2015to 31 December 2015 (Audited) (RMB in millions) Turnover...... – OtherIncome...... 15.8 Changesinfairvalueoffinancialassetsatfairvaluethroughprofitorloss...... 3.1 Administrativeexpenses...... (59.9) Financecosts...... (6.5) Shareofresultofanassociate...... 191.0 Profitbeforetaxation...... 143.5 Taxation...... – Profitfortheperiod...... 143.5 Profit for the period attributable to: OwneroftheCompany...... 147.1 Non-controlling interest ...... (3.6) 143.5

Consolidated Statement of Financial Position of the Issuer As at 31 December 2015 (Audited) (RMB in millions) Non-current assets Officeequipment...... 0.0 Interestinanassociate...... 1,070.1 1,070.1 Current Assets Financialassetsatfairvaluethroughprofitorloss...... 11.3 Depositsforlanduserightforpropertydevelopment...... 359.4 Prepaymentsandotherreceivables...... 1.6 Pledgedbankdeposits...... 988.9 Bankbalancesandcash...... 37.4 1,398.6 Current liabilities Borrowings...... 391.8 Otherpayablesandaccruals...... 8.8 400.6 Netcurrentassets...... 998.0 Total assets less current liabilities ...... 2,068.1 Capital and reserves Sharecapital...... 1,550.0 Reserves...... 38.4 Capitalandreservesattributabletoequityholderofthecompany...... 1,588.4 Non-controllinginterest...... 19.9 Totalequity...... 1,608.3 Non-current liability Bankborrowings...... 459.7 2,068.0

10 SUMMARY OF THE OFFERING

The following is a brief summary of the terms of the offering of the Bonds and is qualified in its entirety by the remainder of this Offering Circular. For a more complete description of the Terms and Conditions of the Bonds, see ‘‘Terms and Conditions of the Bonds’’ and ‘‘Summary of Provisions Relating to the Bonds in Global Form’’. Some of the terms described below are subject to important limitations and exceptions. Defined terms used in this summary shall have the meanings given to them in ‘‘Terms and Conditions of the Bonds’’.

Issuer ...... CaiyunInternationalInvestmentLimited.

Guarantor ...... YunnanMetropolitan Construction Investment Group Co., Ltd.

Guarantee of the Bonds . The Guarantor will unconditionally and irrevocably guarantee the due and punctual payment of all sums from time to time payable by the Issuer in respect of the Bonds. Such Guarantee of the Bonds will be contained in the Deed of Guarantee (and any supplement thereto).

Issue ...... US$ @@ in aggregate principal amount of @@ per cent. Guaranteed Bonds due 20 @@.

Issue Price...... @@ per cent. of the principal amount of the Bonds.

Form and Denomination. The Bonds will be issued in registered form in the denomination of US$200,000 each and integral multiples of US$1,000 in excess thereof.

Interest ...... TheBondswillbearinterestfromandincluding@@ 20 @@ at the rate of @@ per cent. per annum, payable semi-annually in arrear on @@ and @@ in each year, commencing @@,20@@.

Issue Date ...... @@ 2016.

Maturity Date ...... @@ 20 @@.

Status of the Bonds . . . . The Bonds will constitute direct, general, unconditional, unsubordinated and (subject to Condition 3(a)) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves, and shall at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, other than those preferred by applicable law.

Status of the Guarantee of the Bonds ...... TheGuaranteeoftheBondsconstitutes direct, general, unconditional, unsubordinated and (subject to Condition 3(a)) unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsubordinated and unsecured obligations of the Guarantor, other than those preferred by applicable law.

Negative Pledge ...... TheBondscontaina negativepledgeprovisionasfurtherdescribedin Condition 3(a).

Events of Default ...... The Bonds contain certain events of default provisions as further described in Condition 8.

11 Taxation ...... Allpayments under or in respect of the Bonds, the Guarantee of the Bonds, the Trust Deed or the Agency Agreement by or on behalf of the Issuer or, as the case may be, the Guarantor 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 Hong Kong or the PRC or any jurisdiction through which payments are made 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, as further described in Condition 7. In such event, the Issuer or, as the case may be, the Guarantor shall, subject to the limited exceptions specified in the Terms and Conditions of the Bonds, pay such additional amounts as will result in the receipt by the Bondholders after such withholding or deduction of such amount as would have been received by them had no such withholding or deduction been required.

Final Redemption...... Unlesspreviouslyredeemedorpurchasedandcancelled,theBondswill be redeemed at their principal amount together with unpaid accrued interest on the Interest Payment Date falling on, or nearest to, @@ 20@@.

Redemption for Tax Reasons ...... TheBonds 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 Bondholders and the Trustee at their principal amount (together with interest accrued to, but excluding the date fixed for redemption), in the event of certain changes affecting taxes of Hong Kong or the PRC or any political subdivision or any authority thereof or therein having power to tax, any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), as further described in Condition 5(b).

Redemption for Change of Control ...... AtanytimefollowingtheoccurrenceofaChangeofControl,theholder of any Bond will have the right, at such holder’s option, to require the Issuer to redeem all, but not some only, of that holder’s Bonds on the Put Settlement Date at 101 per cent. of their principal amount, together with accrued interest to such Put Settlement Date, as further described in Condition 5(c).

Optional Redemption for Non-Registration..... UpontheoccurrenceofaNon-RegistrationEvent,theholderofanyBond will have the right, at such holder’s option, to require the Issuer to redeem on the Non-Registration Event Redemption Date all, but not some only, of that holder’s Bonds at 100 per cent. of their principal amount together with accrued interest up to, but excluding, the Non-Registration Event Redemption Date.

12 Clearing Systems ...... TheBondswillbeissuedinregisteredformandrepresentedinitially by beneficial interests in the Global Certificate, which will be registered in the name of a nominee of, and deposited on the Issue Date with, a common depositary for Euroclear and Clearstream. Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream. Except as described in the Global Certificate, certificates for the Bonds will not be issued in exchange for beneficial interests in the Global Certificate.

Clearance and Settlement The Bonds have been accepted for clearance by Euroclear and Clearstream under the International Securities Identification Number (‘‘ISIN’’) of XS1436193624. The Common Code of the Bonds is 143619362.

Governing Law ...... Englishlaw.

Rating...... FitchhasassignedacorporateratingofBBB+withastableoutlooktothe Guarantor. The Bonds are expected to be rated BBB+ by Fitch. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency.

Trustee and Principal Paying Agent ...... TheBankofNewYorkMellon,LondonBranch.

Registrar and Transfer Agent...... TheBankofNewYorkMellon(Luxembourg)S.A.

Listing ...... ApplicationhasbeenmadetotheHongKongStockExchangeforthe listing of, and permission to deal in, the Bonds by way of debt issues to professional investors only.

Further Issues ...... TheIssuermayfromtimetotime,withouttheconsentoftheBondholders and in accordance with the Trust Deed, create and issue further bonds having the same terms and conditions as the Bonds in all respects (or in all respects except for the first payment of interest) so as to be consolidated and form a single series with the Bonds.

Use of Proceeds ...... See‘‘Use of Proceeds’’.

Risk Factors ...... Fora discussionofcertainriskfactorsthatshould be considered in evaluating an investment in the Bonds, see ‘‘Risk Factors’’.

13 RISK FACTORS

An investment in the Bonds is subject to a number of risks. Investors should carefully consider all of the information in this Offering Circular and, in particular, the risks described below, before deciding to invest in the Bonds. The following describes some of the significant risks that could affect the Group and the value of the Bonds. Some risks may be unknown to the Group 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 and prospects of the Group. The market price of the Bonds could decline due to any of these risks and investors may lose part or all of their investment. 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.

RisksRelatingtotheGroup The Group’s performance is largely dependent on fiscal policies and public spending on infrastructure of the Yunnan government. The Group is the sole investment and financing platform for urban development under the State-owned Assets Supervision and Administration Commission of Yunnan Provincial People’s Government (the ‘‘Yunnan SASAC’’). Since its establishment in 2005, the Group has played an important role in implementing the Yunnan provincial government’s blueprint for urban planning and municipal construction, and has received strong financial and operational support from the Yunnan provincial government. The Group focuses on urban development as well as urban environment. Governmental agencies and state-owned enterprises are among the Group’s major customers. Due to the nature of the Group’s businesses, its business and financial performance may be materially affected by changes in public budgets of the Yunnan government, especially by any significant reduction in the Yunnan government’s public spending.

The nature, scale, location and timing of the Yunnan government’s public investment plans in urban development and other public infrastructure are affected by a number of factors. These factors include the PRC government’s policies and priorities concerning the development of different regions of China, the Yunnan government’s fiscal and monetary policies, including the availability of credit and funding for projects, and the Yunnan government’s public investment plans in urban development and other public infrastructure. These factors may be directly affected by changes in the economic conditions in the PRC generally and in Yunnan province particularly. While the PRC economy has demonstrated rapid growth in the past 30 years, development of the Chinese economy since the global financial crisis in 2008 has been uneven. The growth rate of China’s GDP has decreased in recent years and remained relatively slow. Any sustained slowdown or material deterioration in China’s overall economic conditions may increase the vulnerability of the economic conditions of Yunnan province and the fiscal conditions of the Yunnan government, which could in turn materially and adversely affect the Yunnan government’s public investment plans in urban development and other public infrastructure. If the Yunnan government decreases or intends to decrease public spending on urban development and other public infrastructure, the Group’s business, financial condition, results of operations and prospects may be materially and adversely affected.

Any adverse change in the economic development, social conditions, government policies or natural conditions of Yunnan province could materially and adversely affect the Group’s business, financial condition, results of operations and prospects. For 2013, 2014 and 2015, revenue derived from the Group’s subsidiaries registered in Yunnan province accounted for substantially all of the Group’s revenue. While the Group will continue to grow its operations outside Yunnan province through both organic growth and investments, a substantial portion of the Group’s revenue will likely be derived from the Group’s operations in Yunnan province in the near future. In light of the concentration of the Group’s businesses in Yunnan province, the Group is

14 exposed to risks associated with such concentration. Any economic slowdown in Yunnan province could reduce the demand for the Group’s urban development projects, urban environmental planning facilities and the services rendered by the Group’s leisure and tourism business and all-around healthcare business. Furthermore, while the Yunnan government has adopted preferential policies for a number of industries in which the Group conducts a significant part of its business and has granted governmental support to the Group in various forms, there can be no assurance that the Yunnan government will not change or terminate such preferential policies or governmental support. Any adverse change in the economic development, social conditions or government policies in Yunnan province could materially and adversely affect the Group’s business, financial conditions, results of operations and prospects.

The Yunnan provincial government can exert significant influence on the Group, and could cause the Group to make decisions or modify the scope of its activities, or impose new obligations on the Group, that may not be in the Group’s best interests. The Group is, directly and indirectly, wholly-owned by Yunnan SASAC and, accordingly, the Yunnan provincial government is able to significantly influence the Group’s major business decisions and strategies, including the scope of its activities, investment decisions and dividend policy. There can be no assurance that Yunnan SASAC would always take actions that are in the Group’s best interests or that aim to maximise the Group’s profits. For example, Yunnan SASAC could use its ability to influence the Group’s business and strategy in a manner beneficial to Yunnan province as a whole, which may not necessarily be in the Group’s best interests. The Yunnan provincial government could also change its policies, plans, preferences, views, expectations, projections, forecasts and opinions, as a result of changes in the PRC’s economic, political and social environment, its projections of population and employment growth and any such change may have a material effect on the Group’sbusinessand prospects. Any amendment, modification or repeal of existing policies of the Yunnan provincial 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.

The Group’s business is subject to general economic and business cycles and difficult conditions in the global economy could adversely affect the Group’sbusiness. The Group’s activities and results are substantially affected by general global economic conditions. The outlook for the global economy and financial markets remains uncertain. In Asia and other emerging markets, some countries are expecting increased inflationary pressure as a result of liberal monetary policy or excessive foreign fund inflow, or both. Economic conditions in the PRC are sensitive to global economic conditions. It is impossible to predict the future development of the PRC economy and whether any global crisis could lead to an economic downturn or financial crisis in the PRC.

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

The Group faces risks associated with contracting with public bodies. As the sole investment and financing platform for urban development under the Yunnan SASAC, the Group collaborates with various governmental authorities and their controlled entities in Yunnan province and other regions in the PRC. Although the Group believes that the Group currently maintains close working relationships with those governmental authorities and entities relevant to its businesses, there can be no assurance that these relationships will continue to be maintained on good terms in the future. Local governments and the government-controlled entities with which the Group collaborates may (i) have economic or business interests or consideration that are inconsistent with the Group’s; (ii) take actions contrary to the Group’s requests, policies or objectives; (iii) be unable or unwilling to fulfil their obligations; (iv) have financial difficulties; or (v) have disputes with the Group as to the

15 contractual terms or other matters. If there are any material disagreements between the Group and any local government or any of the government-controlled entities, there can be no assurance that the Group is able to successfully resolve them in a timely manner.

In addition, disputes with public bodies may last for considerably longer periods of time than for those with private sector counterparties, and payments from public bodies may be delayed as a result. Any of these could materially and adversely affect the business relationships between the Group and the local governments and the governmental entities, which may in turn materially and adversely affect the Group’s business, financial condition, results of operations and prospects.

The Group’s business operations are subject to extensive regulation at various levels of government, and any failure to comply with applicable laws, rules and regulations, including obtaining any necessary qualifications, permits or approvals for its operations could adversely affect the Group. The Group’s business activities are extensively regulated by zoning policies and other laws and regulations of the PRC government at various levels. Primary land development, infrastructure development, property development, construction of wastewater treatment facilities and certain other businesses of the Group require approvals, licences and permits from a number of governmental authorities. Below are a few examples of approvals, permits and licences needed for the major business segments of the Group:

• For its urban development business, the Group needs to obtain construction enterprise qualification certificates and real estate development enterprise qualification certificates in order to engage in real estate development activities. In addition, for each primary development or real estate development project, the Group is required to first obtain a project approval and environmental assessment approval. It subsequently needs to apply for and receive a construction land planning permit, construction project planning permit, and construction permit at different stages of development.

• For its healthcare business, the Group needs certificates of production permit and Good Manufacture Practices as well as relevant pharmaceutical registration, among others, to produce and distribute its core medicine, as well as various other licences and approvals to operate its hospitals and healthcare facilities, including registration of all practicing doctors.

• For its education business, the Group needs various certificates and qualifications to operate its schools, including approvals from relevant local education bureaus or departments.

• In addition, the Group must obtain all necessary capitalisation and shareholding registration certificates relating to the registered capital and shareholder capital contribution of its subsidiaries and of itself to avoid any penalties or interruptions of its operations.

Failure to obtain any of the necessary approvals, licences or permits in a timely manner could result in delay or suspension of the relevant business activities, and operations without these necessary approvals, licences or permits may subject the relevant member companies of the Group to regulatory or administrative penalties. There is no assurance that the Group may be able to obtain all required approvals, licences or permits in a timely manner, or at all, or remain in compliance with relevant laws and regulations at all times. As of the date of this Offering Circular, the Guarantor and certain subsidiaries of the Group are in the process of obtaining certain approvals, licenses or permits required for their operations, or have experienced lapses in obtaining such approvals, registration, licenses or permits, or in performing certain procedures relating to complying with applicable laws and regulations such as obtaining certificates of land use rights and completing shareholder capital contribution. As a result of these lapses or other noncompliance events, the Group may be subject to fines and other penalties, or certain activities currently undertaken by the Group may be suspended by governmental

16 authorities until the relevant noncompliance event is remedied and/or fines as assessed by authorities are paid in full, which may adversely affect the business, financial conditions and results of operations of the relevant member company of the Group.

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

Changes in government grants or other incentives currently received by the Group from local governments may adversely affect the Group’s business, results of operations and financial conditions. Certain of the Group’s operations projects are currently entitled to government grants or other incentives from local governments. In 2013, 2014 and 2015, the Group received RMB194.9 million, RMB138.8 million and RMB129.1 million, respectively, from various local governments in Yunnan province and other regions in the PRC. There can be no assurance that such government grants or incentives will not be reduced or revoked, or that these projects of the Group, upon the expiration of the current preferential treatment or grant periods, will be entitled to other government grants or incentives. A reduction or discontinuance of such government subsidies may materially and adversely affect the Group’s financial condition and results of operations.

PRC regulations on the administration of fiscal debts of local governments may materially and adversely affect the Group’s financing condition, results of operation and business prospect. In September 2014, the State Council of the PRC released the Opinion on Enhancing the Administration of Fiscal Debts of Local Governments (‘‘Circular 43’’), pursuant to which the financing platform of local governments no longer serve the fiscal financing functions or incur new government debts.

Since the Group is the sole investment and financing platform for urban development under the Yunnan SASAC, the Yunnan government funds the repayment of the government debts of the Group with public funds, which are incurred in connection with the development of public interest projects. In accordance with Circular 43 and the Implementation Opinion on Circular 43, financing platform companies no longer carry out fiscal financing functions or incur new government debts. Public interest projects may be funded by the government through issuing government bonds. Public interest projects that generate income, 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 special purpose companies may invest in accordance with market-oriented principles and their investments may be funded by, among other market-oriented approaches, bank loans, enterprise bonds, project revenue bonds and asset-backed securitisation. Furthermore, such social investors or special purpose companies shall bear the obligation to pay off their debts and the government are not liable for any of the social investors’ or the special purpose companies’ debts. There have been a few cases where certain debts of the local financing platforms were classified as nongovernment debts since the release of Circular 43. However, whether the factual basis for such individual cases are comparable or relevant to other local governments’ financing platforms is unclear and different local government interpretations and application of Circular 43 may vary. The impact of Circular 43 and Implementation Opinion on Circular 43 on existing government debts of the local financing platforms in the PRC remains unclear.

In addition, Circular 43 and the Implementation Opinion on Circular 43 set forth general principles for dealing with existing debts of financing platforms. Based on the audit results of such debts run by the local governments, the existing debts that should be repaid by the local governments must be identified, reported to State Council for approval, and then included in the budget plan of local governments. In

17 response to this requirement, the Group has submitted to the Yunnan government a list of existing debts that are to be repaid with public fiscal funding. As at the date of this Offering Circular, RMB1,609.7 million of the Group’s debt has been approved by the government as Type I government debt (fully supported by the government), and RMB619.4 million of the Group’s debt has been approved as Type II government debt (partially supported by the government). If the Yunnan government or State Council revokes such approvals, the Group’s financial condition and debt-repayment ability may be adversely affected. Circular 43 aims to transform local financing platforms into market-oriented entities. Therefore, the Group’s financing mode, business mode and business scope may change significantly. However, due to the recent promulgation of Circular 43 and the Implementation Opinion on Circular 43, there is substantial uncertainty as to how the Yunnan government will implement these regulations and how they will impact the Group’s financing and repayment ability.

The Group’s business operations are restricted by the terms of other debt arrangements, which could limit the Group’s ability to plan for or to react to market conditions or meet its capital needs. The Group’s debt documents include a number of significant restrictive covenants. These covenants may restrict, among other things, the Group’s ability and the ability of its subsidiaries to:

• incur or guarantee additional indebtedness;

• declare dividends on capital stock or purchase or redeem capital stock;

• make investments;

• guarantee indebtedness of certain of the Group’s subsidiaries;

• sell assets;

• create liens;

• transfer assets;

• enter into transactions with shareholders or affiliates; and

• effect a consolidation or merger.

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

The Group’s business operations require substantial capital and failure to raise such capital may materially and adversely affect the Group’s business, financial conditions, results of operations and prospects. The Group’s business operations and investment plans require substantial capital. A portion of the capital demand of the Group is satisfied with fiscal funding from the Yunnan government. The Group generally formulates and updates its capital expenditure and investment plans on an annual basis and reports its plans to the Yunnan government. The Yunnan government takes into consideration these plans when determining the government budget for the subsequent financial year. There can be no assurance, however, that the capital expenditure and investment plans submitted by the Group will be approved. The Group may need to adjust its plans to align with the overall urban strategies and plans of the Yunnan government. Otherwise, it will need to resort to alternative funding to meet its capital needs.

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

As at 31 December 2015, the Group had total credit facilities of RMB77.5 billion, of which RMB31.4 billion had not been utilised. The Group’s ability to access and raise sufficient capital through different sources depends upon a number of factors, such as China’s economic condition, prevailing conditions in capital markets, regulatory requirements, the Group’s financial condition, and costs of financing, including changes in interest rates. Some of these factors may be beyond the Group’s control. Further, the promulgation of Circular 43 and the Implementation Opinion on Circular 43 may adversely affect the Group’s ability to raise funds. If the Group fails to raise sufficient funds in a timely manner or fails to obtain external financing on commercially acceptable terms, it may not be able to fund in full the capital expenditure necessary to expand its production facilities, upgrade or purchase additional facilities and equipment or implement its business strategies,whichmayinturnhaveamaterialandadverse impact on the Group’s business, financial condition, results of operations and prospects.

Significant indebtedness may restrict the Group’s business activities and increase the Group’s exposure to various operational risks. The Group relies on external borrowings to satisfy a portion of its capital requirements and, therefore, the Group has significant outstanding indebtedness. As at 31 December 2015, the Group had total long- term indebtedness of RMB34,987.4 million, representing 36.3 per cent. of its total liabilities. Substantial indebtedness could significantly impact the Group’s businesses. For example, it could:

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

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

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

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

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

In 2013, 2014 and 2015, finance costs of the Group, which primarily consist of the Group’sinterest expenses, totalled RMB1,458.3 million, RMB1,948.4 million and RMB2,119.8 million, respectively. Some of the Group’s borrowings are secured by encumbrances created over a number of its assets such as mortgages over land use rights and buildings, and pledges over the equity stocks of the Group’s subsidiaries, designated accounts and/or account receivables. As at 31 December 2015, the Group’stotal secured indebtedness totalled RMB16,017.8 million. These third-party security rights may limit the Group’s use of these assets and adversely affect its operational efficiency. In the future, as the Group’s operations continue to expand and its capital requirements continue to grow, the Group will face increasing pressure to control its borrowing. As a result, the Group may from time to time incur substantial indebtedness, which may, in turn, intensify the risks that the Group faces because of its already significant outstanding indebtedness. In the event that the Group fails to keep its indebtedness under a certain level, the funds available for various other business purposes may be limited, and its business, financial condition and results of operations may be materially and adversely affected.

19 In addition, the Group enters into guarantee arrangements for the benefit of its subsidiaries and third parties from time to time and incurs contingent liabilities as a result. As of 31 March 2016, the total guaranteed indebtedness for the benefit of the Group’s subsidiaries amounted to RMB36.9 billion. As of 31 December 2015 and the total guaranteed indebtedness for the benefit of third parties amounted to RMB6.7 billion. Such contingent liabilities may materially and adversely affect the Group’s business, financial condition and results of operations if the creditors for a material part of such liabilities demand payment from the Group, straining the Group’s cash flow and resulting in deterioration of the Group’s liquidity. Furthermore, under certain of these guarantee arrangements, the Group may exert pressure on primary obligors to repay the relevant indebtedness when due and makes payment upon receipt of demand from the creditors. This is consistent with customary practice but there are no explicit grace periods in the guarantee agreements. As of the date of this Offering Circular, the Group has not received any notice from creditors under these guarantee arrangements declaring any default or demanding acceleration of payments under such guarantees due to this practice. However, there is no assurance that the Group will not receive such declarations or demands in the future. Should such declarations or demands take place, the Group’s business, financial condition and results of operations may be materially and adversely affected.

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

The Group’s business and results of operations may be susceptible to the material fluctuations of interest rates. The Group has significant outstanding indebtedness. The interest of much of the indebtedness accrues based on interest rates that benchmark the one-year lending rate published by the People’sBankof China (‘‘PBOC’’). Any material fluctuation in the benchmark lending rate could have a material impact on the Group’s interest payables under its bank loans and in turn affect its results of operations. In recent years, the PRC government from time to time adjusted interest rates to control the level of liquidity in the market and the PRC economy.

Since the outbreak of the global financial crisis in 2008, the PRC government has lowered the benchmark lending rate to encourage borrowings and steam the recovery of the country’s economy. This easing policy was changed in 2012 in light of the overheating property market in the PRC. The one-year benchmark interest rate decreased by 25 basis points in June 2012 and again by 31 basis points in July 2012. In November 2014, the PBOC further decreased the benchmark one-year lending rate by 40 basis points to 5.6 per cent. and decreased the benchmark one-year saving rate by 25 basis points to 2.75 per cent.

20 The Group has historically experienced negative net operating cash flow. The Group has historically placed a significant relianceoncashflowprovidedbybankborrowings, proceeds from debt securities offering on the PRC capital markets and the fiscal funding by the Yunnan government. In 2013 and 2014, the Group had a net operating cash outflow of RMB1,510.6 million and RMB4,345.2 million, respectively. The Group’s negative operating cash flow was largely attributable to the fact that a number of the projects were either not for profit by nature, such as the Group’s infrastructure projects, or had yet to yield significant cash flow. With the Group’s continued efforts to optimize its operations and asset composition, the Group had net operating inflow of RMB1,159.2 million in 2015. Although the Group believes that its operating cash flow will continue to improve, particularly due to the completion of some of the Group’s projects that are expected to generate cash inflow after sales begin, there can be no assurance that its historical negative operating cash flow will not continue in the near future. Consequently, the Group will continue to rely on external financing to satisfy its working capital and capital expenditure, thus increasing its financial vulnerability, which could adversely affect its financial condition and results of operations.

There are risks associated with any material acquisitions by the Group. The Group expands its business by both organic growth and acquiring or investing in other companies. For example, in May 2016 the Group signed a share purchase and capital increase agreement to acquire a 51 per cent. equity interest in Chengdu Century City New International Convention and Exhibition Centre Co., Ltd., in order to expand its convention and exhibition centre business to other geographic areas in the PRC. During the course of these acquisition and investment transactions, the Group conducts due diligence investigations with respect to the target companies, but the due diligence with respect to any acquisition or investment opportunity may not reveal all relevant facts that are necessary or useful in evaluating such opportunity, which could subject the Group to unknown financial and legal liabilities. When determining the price for any acquisition or investment, the Group considers various factors, including the quality of the target business, estimated costs associated with the acquisition or investment, and the management of the target business, prevailing market conditions and intensity of competition in the local markets. There is no assurance that the Group’s assessment of acquisition price based on such consideration may be accurate or complete in facilitating the Group’s acquisition decision. If the proposed acquisition is not completed, the Group’s ongoing businesses may be adversely affected and it may be subject to certain risks and consequences, including, among others, the following: execution of the proposed acquisition will require significant time and attention from management, which may distract management from the operation of the Group’s businesses and the execution of other initiatives that may be beneficial to the Group; the Group could be required to pay certain costs and expenses relating to the spinoff, such as legal, accounting and other professional fees, whether or not the acquisition is completed; and the Group may experience negative reactions from the financial markets if it fails to complete the acquisition. The Group also faces various post-completion issues arising from the acquisition or the investment, such as integration of the business into its operations and allocation of internal resources to successfully operate the acquired business. There can be no assurance that the Group will be able to address these issues effectively. In addition, any major acquisition or investment transaction may require significant management attention and financial resources of the Group or even result in significant indebtedness for the Group, depending on the relevant financing plan for the transaction. Any material decrease in its financial resources may limit the Group’s ordinary operating activities and increase pressure on its liquidity, and in turn could adversely affect its business, financial condition and results of operations.

As at the date of this Offering Circular, the Group had acquired or invested in a number of significant businesses and assets, some of which had not started to generate an optimal level of income for the Group. There can be no assurance that the Group will realize the expected benefits of these acquisitions. In addition, the Group is unable to predict whether a suitable acquisition target or opportunities could arise. If the Group enters into any letter of intent or agreement for any material acquisition after the issue of the Bonds, the market price and the trading volume of the Bonds may be adversely affected.

21 The Group’s investment properties may be illiquid and a substantial amount of such investment properties may be difficult to be converted for purposes other than leisure and tourism, which could limit the Group’s ability to respond to adverse changes in the value of its investment properties. The Group holds some of its properties for investment purpose, which primarily include hotels and convention and exhibition centres. Investments in these properties, in general, are illiquid compared to many other types of investments. Therefore, the Group may not be able to dispose of these investments in a timely manner if it needs to respond to any unexpected material changes in economic, financial and investment conditions. It is difficult to predict the time needed to identify a purchaser and to complete the sale of a property held or planned to be held for investment purposes if necessary. Moreover, the sale of a property over which there is a tenancy may require consent from or payment of termination fees to tenants. Furthermore, the sale of such properties may require approvals, valuations and other procedures for the sale of state-owned assets, which may cause additional delay. In addition, investment properties may not be readily convertible to alternative uses if they become unprofitable due to competition, age, decreased demand or other factors. The conversion of investment properties to alternative uses generally requires substantial capital expenditures. These factors may impede the Group’s ability to respond to adverse changes in the performance of its investment properties and thus materially and adversely affect its business, financial condition and results of operations.

Delays or defaults in progress payments by customers to the Group may affect its working capital and cash flow. Some of the Group’s construction projects involve long completion time. As a result, contracts with respect to the Group’s urban development as well as urban environment business generally require the Group’s customers to make payments in stages upon the Group achieving certain project milestones. However, the Group incurs costs associated with projects, primarily material, equipment and labour costs, on an ongoing basis, at the beginning of the project or before achieving the relevant project milestones, and thus bears the risk of pre-paying costs and expenditures relating to projects.

Delays in progress payments from customers may increase the Group’s working capital needs. The Group’s customers of its construction projects are primarily local governments, some of which have been spending and borrowing heavily over the recent years, and there is risk that these customers may delay their payments. Defaults in making payments to the Group on projects for which it has already incurred significant costs and expenditures could materially and adversely affect the Group’s operational results and reduce its financial resources which would otherwise be available to fund other projects. The Group may file a claim for compensation of the loss that it incurred pursuant to its contracts but settlement of disputes generally takes time and financial and other resources, and the outcome is often uncertain, especially when the counterparties are local governments. There can be no assurance that the progress payments will be made by customers to the Group on a timely basis, or at all, or that the Group will be able to efficiently manage the level of bad debts arising from such payment practice.

The Group may not be able to successfully manage its growth. The Group is comprised of a large number of companies operating in a variety of industries. As the Group continues to grow, its operations will become more widespread and complex. For example, the water supply business and the hospital management and pharmaceutical businesses are relatively new businesses undertaken by the Group. It might become increasingly challenging for the Group to direct and monitor the day-to-day operations of its different business segments, to prevent and detect fraud and to protect its assets. The Group must continue to improve its managerial, technical, operational and other resources, and to implement an effective management and internal control system that emphasises proper authorisations, reliability and accountability of financial reporting, imposes financial and internal control disciplines on subsidiary and associate companies, and creates value-focused incentives for the management.

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

In particular, the Group has historically been focused on primary land development, city infrastructure construction, development of affordable housing and commodity properties and wastewater treatment. Over the years it has diversified its businesses into leisure and tourism, all-around healthcare as well as education and financial leasing industries. The Group intends to continue to develop these new businesses while maintaining sustainable growth of its core businesses as one of its future strategies. Whether the Group could successfully implement this strategy, to some extent, depends on the Group’s ability to identify attractive projects, obtain required approvals from relevant regulatory authorities in the PRC, access financing options on commercially acceptable terms and ability to maintain close relationship with various governmental authorities and agencies. There can be no assurance that the Group can successfully handle the foregoing matters with respect to any particular project. There can be no assurance that the Group will be able to successfully implement this strategy, manage or integrate newly-acquired operations with its existing operations. Failure to implement the Group’sgrowthstrategy could have a material adverse impact on its business, financial condition and results of operations.

The Group faces operational risks and may not successfully expand its business into new geographical regions or cities in the PRC and other countries. Historically, the Group has focused on its business on its core market in Yunnan province. As part of the Group’s business strategy, the Group plans to expand into new markets in the PRC and certain other overseas markets. For example, the Group has entered into the leisure and tourism market in certain other provinces in the PRC and has acquired waste treatment facilities in Thailand and a property developer in Australia. The Group plans to expand its operations in these new markets. The new markets in other regions of the PRC and other countries may differ from the Group’s core market in Yunnan province in terms of competitive environment as well as customer tastes, behaviour and preferences. The Group has limited ability to leverage its established brand and reputation in the new markets in the way that the Group has done or currently does in Yunnan province. Furthermore, the administrative procedures, regulatory schemes and tax regimes in the new markets may differ significantly from those in the Group’s core market. The Group may face additional expenses or difficulties in adapting to such procedures and complying with such regimes. In addition, as the Group enters new markets, it may not have the same level of familiarity with local contractors, suppliers and other business partners, business practices and customs as it does in its core market. Therefore, the Group may not be successful in conducting operations in new markets.

Furthermore, as the Group expands into new markets, it may face intense competition from established local players with experience in those markets. As a relatively new player in such markets, the Group may need to recruit additional personnel with local knowledge, for which the Group may incur additional costs and face difficulties in management and operations. Any failure to successfully expand into new markets may adversely affect the Group’s business, results of operations, financial condition and prospects.

23 The Group depends on key management members and qualified personnel in a competitive market for skilled personnel, and the Group’s inability to attract and retain key personnel as well as Yunnan SASAC’s approval and removal rights could adversely affect the Group’s ability to manage its business. The Group depends on the expertise of the principal members of its management team. The loss of key management personnel would adversely affect the Group’s ability to manage its business. The Group also relies on its ability to identify, hire and retain qualified personnel for its different business lines.

The Group faces intense competition for qualified personnel from large state-owned enterprises, private local companies and international companies. While the Group attempts to provide competitive compensation packages to attract and retain key management members and qualified personnel, many of its competitors are likely to have greater resources and more experience than the Group, making it difficult for the Group to compete successfully for personnel retention and new hires. In addition, all key management personnel appointments are subject to approval by Yunnan SASAC, and Yunnan SASAC has the right to remove the Group’s key personnel at its discretion.

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

The Group faces competition in all the markets in which it operates, which may adversely affect its financial condition, results of operations and business prospects. The Group believes that the urban development, the urban environment, the leisure and tourism and the healthcare industries in China are generally market-oriented. The Group’s competition comes from various sources, including large state-owned enterprises of the PRC, privately-owned domestic companies, and leading international companies that operate in Yunnan province. As a result of the PRC’s accession to the World Trade Organisation, the PRC government has opened up domestic markets to foreign competition, and foreign invested companies are now allowed to develop commodity housing projects, participate in various types of infrastructure projects, operate tourism projects and invest in healthcare facilities. The Group also competes with both local and international companies in capturing new business opportunities in the PRC. Some of these companies have significant financial resources, marketing and other capabilities. In the PRC, local companies may have extensive local knowledge and business relationships and a longer operational track record in the relevant local markets than the Group. International companies are able to capitalise on their overseas experience to compete in the PRC markets. The Group’s market position depends on its ability to anticipate and respond to various competitive factors, including pricing strategies adopted by competitors, changes in customer preferences, availability of capital and financing resources and the introduction of new or improved products and services. There can be no assurance that the Group’s current or potential competitors will not offer services or products comparable or superior to those that it offers at the same or lower prices or adapt more quickly than the Group does to evolving industry trends or changing market conditions. The Group may lose its customers to its competitors if, among other things, it fails to keep its prices at competitive levels or to sustain and upgrade its capacity and technology. Increased competition may result in price reductions, reduced profit margins and loss of market share.

If the Group fails to maintain effective internal controls and sound corporate governance, its business, financial condition, results of operations and reputation could be materially and adversely affected. The Group has implemented various measures to improve and optimize its internal controls and corporate governance. The Group has a supervisory committee consisting of five members, most of whom are appointed by Yunnan SASAC. The Group established an internal system to enhance protection of confidential information and education of employees. However, there can be no assurance that all such measures will prove effective or that material deficiencies in the Group’s internal controls will not be discovered. The Group’s efforts to improve and optimize its internal controls have required,

24 and in the future may require, increased costs and significant management time and commitment. If the Group fails to maintain effective internal controls, its business, financial condition, results of operations or reputation could be materially and adversely affected.

The Group may have difficulties in implementing and monitoring corporate policies across its subsidiaries and affiliated companies. The Group strives to implement its corporate governance and operational and safety standards across each of its subsidiaries and affiliated companies in a uniform manner. Due to the large number of the Group’s subsidiaries, implementing and monitoring these standards may prove difficult and a failure to do so may result in violations of local regulations or the Group’s own internal policies. There can be no assurance that the Group can effectively monitor each subsidiary and affiliated company and prevent non-compliance. This may result in violations that could adversely affect the Group’s reputation and business prospects, which could materially and adversely affect its business, financial condition and results of operations.

The Group’s insurance coverage may not adequately protect it against all operating risks. The Group faces various operational risks in connection with its business, including but not limited to:

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

• operating limitations imposed by environmental or other regulatory requirements;

• defective quality of real estate properties it develops;

• work-related personal injuries;

• on-site production accidents;

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

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

• loss on investments;

• environmental or industrial accidents; and

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

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

The Group’s operations are subject to hazards customary to various industries in which the Group operates and the Group’s insurance policies may not be adequate and do not cover damage and losses arising from acts of terrorism and related events. The Group participates in operations in various industries through its subsidiaries, and its operations involve many potential risks, including breakdown, equipment failures, substandard performance of equipment, improper installation or operation of equipment, natural disasters, environmental or industrial

25 accidents, labour disturbances, disputes with contractors and other business interruptions. The occurrence of any of the above may materially and adversely affect the Group’s business or results of operations.

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

The Group is subject to various environmental, safety and health regulations in China and any failure to comply with such regulations may result in penalties, fines, governmental sanctions, proceedings or suspension or revocation of its licences or permits. The Group is required to comply with extensive environmental, safety and health regulations in China, including obtaining all required approvals, licences and permits from competent governmental authorities on a timely basis. Failure to comply with such regulations, including failure to obtain any required approvals, licences or permits, may result in fines or suspension or revocation of the Group’s licences or permits to conduct its business. Given the volume and complexity of these regulations, compliance may be difficult or involve significant financial and other resources to establish efficient compliance and monitoring systems. There is no assurance that the Group will be able to comply with all applicable requirements or obtain these approvals and permits on a timely basis or at all. In addition, PRC laws and regulations are constantly evolving. There can be no assurance that the PRC government or the local government will not impose additional or stricter laws or regulations, which may increase compliance costs of the Group.

Labour shortages, labour disputes or increases in labour costs of the third-party contractors that engage in the Group’s projects could materially and adversely affect the Group’s business and results of operations. The Group relies on third-party contractors to carry out primary land development, infrastructure development and construction of affordable housing and commodity properties. Labour shortages, labour disputes or increases in labour costs of the third-party contractors that engage in the Group’s projects could materially and adversely affect the Group’s business and results of operations.

The Group’s contractors employ a large workforce. Industrial action or other labour unrest could directly or indirectly prevent or hinder normal operating activities, and, if not resolved in a timely manner, could lead to delays in completing the Group’s projects and affecting the Group’s businesses. These actions are beyond the Group’s foreseeability or control. There can be no assurance that labour unrest will not affect general labour market conditions or result in changes to labour laws. In recent years, work stoppages, employee suicide and other similar events in certain cities in the PRC have caused the PRC government to amend labour laws to enhance protection of employees’ rights. Increasing awareness of labour protection as well as increasing minimum wages may also increase labour costs afforded by PRC enterprises in general, including the contractors participating in the Group’s projects. There can be no assurance that the Group will be able to pass on such increases to its customers, because the price it receives for undertaking certain of its projects are subject to the control of the local governments, such as primary land development.

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

The Group is subject to litigation risks and may face significant liabilities as a result. The Group may from time to time be involved in disputes with its governmental entities, incumbent residents, contractors, suppliers, employees and other third party service providers during the course of its daily operations. Claims may be brought against the Group companies for defective or incomplete work, personal injuries, damage to or destruction of property, breaches of warranty, delay in delivery and late completion of the project. If the Group companies were found to be liable for any of the project claims against it, its business, financial condition and results of operations could be negatively impacted to the extent the claims were not sufficiently covered by its insurance coverage.

Claims brought by the Group against project contractors may include claims for additional costs incurred in excess of current contract provisions arising out of project delays and changes in the initial scope of work. In addition, both claims brought against the Group and by it, if not resolved through negotiation, may be subject to lengthy and expensive litigation or arbitration proceedings. Amounts ultimately realised from claims by the Group could differ materially from the balances included in its financial statements, resulting in a charge against earnings to the extent profit has already been accrued on a project contract. Charges associated with claims brought against the Group and write downs associated with claims brought by the Group could have a material adverse impact on its financial condition, results of operations and cash flow.

The Group’s businesses may be affected by an outbreak, or threatened outbreak, of any severe contagious disease and occurrence of natural disasters which may in turn significantly reduce demand for the Group’s services and have an adverse effect on its financial condition and results of operations. The Group’s business is subject to general economic and social conditions in the PRC. Natural disasters, epidemics and other acts of God which are beyond the Group’s control may adversely affect the economy, infrastructure and livelihood of the people in the PRC. Some regions in the PRC are under the threat of earthquake, sandstorm, snowstorm, fire, drought, or epidemics such as Severe Acute Respiratory Syndrome (SARS), H5N1 avian flu, human swine flu (also known as Influenza A (H1N1)) or the recent cases of H7N9. For instance, two serious earthquakes hit Sichuan Province in May 2008 and April 2013 and resulted in significant loss of lives and destruction of assets in the region. In addition, past occurrences of epidemics, depending on their scale, have caused different degrees of damage to the national and local economies in the PRC. A recurrence of SARS or an outbreak of any other epidemics in the PRC, such as the H5N1 or the H7N9 avian flu, especially in the cities where the Group has operations, may result in material influence of the Group’s related business, which in turn may adversely affect its financial condition and results of operations.

In particular, natural disasters, such as earthquakes, snowstorms, floods, volcanic eruptions or tsunami may disrupt or seriously affect air travel activity, hotel business and tourism industries. In 2014, an earthquake struck Ludian County in Yunnan with a moment magnitude of 6.1. Natural disasters such as the Ludian earthquake may adversely affect the leisure and tourism industries by reducing traveller volume. Any period of sustained disruption to the hotels and tourism industry may have an adverse effect on the Group’s business, financial condition and results of operations.

27 The Group may not be able to adequately protect its intellectual property and brand, which could adversely affect its business operations. The Group relies on a combination of patents, trademarks and contractual rights to protect its intellectual property and brand. There can be no assurance that these measures will be sufficient to prevent any misappropriation of the Group’s intellectual property or brand, or that the Group’s competitors will not independently develop alternative technology that are equivalent or superior to technology based on 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 or brand, the Group could suffer losses due to the sales of competing products that exploit its intellectual property or brand. In addition, the Group may experience lapses or other noncompliance events with respect to registration or certification of its intellectual property rights, and any such noncompliance event may materially and adversely affect the Group’s business, financial condition and results of operations.

There can be no assurance of the accuracy or comparability of facts, forecasts and statistics contained in this Offering Circular with respect to the PRC, its economy or the relevant industry. Facts, forecasts and other statistics in this offering relating to the PRC, its economy or the industries in which the Group operates have been directly or indirectly derived from official government publications and certain other public industry sources and the Group can guarantee neither the quality nor the reliability of such source materials. They have not been prepared or independently verified by the Issuer, the Group, the Trustee, the Agents or any of its or their respective affiliates, employees, directors, agents or advisors, and, therefore, the Issuer, the Group, the Trustee, the Agents or any of its or their respective affiliates, employees, directors, agents or advisors makes no representation as to the completeness, accuracy or fairness of such facts, forecasts or other statistics, which may not be consistent with other information compiled within or outside the PRC. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice and other problems, the statistics herein may be incomplete, inaccurate or unfair or may not be comparable to statistics produced for other economies or the same or similar industries in other countries and should not be unduly relied upon. Furthermore, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy as may be the case elsewhere. In all cases, investors should give consideration as to how much weight or importance they should attach to or place on such facts, forecasts or other statistics.

RisksRelatingtotheGroup’s Urban Development Business The PRC property market, particularly the Yunnan property market, is cyclical and the Group’s commodity housing development activities are susceptible to significant fluctuations. The Group engages in commodity housing development business under its urban development business segment, and is therefore exposed to the cyclical nature of the PRC property market and particularly the Yunnan property market. These markets are expected to continue to be, cyclical as a result of changes in market supply and demand. Prices of residential properties in major the PRC cities such as Shanghai and Beijing have experienced rapid and significant growth since the 1990s. In recent years, however, risk of property oversupply is increasing in certain parts of China, where property investment, trading and speculation have become overly active. In the event of actual or perceived oversupply, together with the effect of the PRC government policies to curtail the overheating of the property market, property prices may fall significantly and property sales and results of operations of the Group could be adversely affected. The growth of the property market in the PRC has become relatively flat in the last twelve months. Similarly, the growth of the Yunnan property market has also been relatively weak in the last twelve month. It is uncertain what the effect of the lifting of the various government regulations on the property market will be as ultimately property prices are driven by demand and supply. There can be no assurance that the problems of oversupply and property prices crash will not recur in the PRC property

28 market. To the extent that supply in the overall property market significantly exceeds demand, the Group may be affected by significant market downturns, and its sales of commodity properties, financial condition and results of operations could be materially and adversely affected.

The PRC government may adopt measures aimed at slowing down growth in the real property sector, whichinturnmayaffecttheprimary land development industry. Since 2005, the PRC government has from time to time introduced various measures to curtail property speculation in response to concerns over, among other things, the increases in property investments and property prices and the overheating of the property market. For example, according to the Notice of the State Council on Issues Relating to Further Well Managing the Central Control of the Real Estate Market issued by the General Office of the State Council on 26 January 2011 and the Notice of the State Council on Continuity to Well Manage the Central Control Work of the Real Estate Market promulgated by the General Office of the State Council on 26 February 2013, the government would firmly restrain speculative demands and strengthen market supervision to better control the overheating of the PRC real estate market. Such measures may limit property developers’ access to capital resources, reduce market demand for their properties and increase their operating costs in complying with these measures, which in turn could have an adverse impact on the demand for land developed by the Group. In addition, the PRC government has introduced a series of policies, rules and regulations aiming at regulating the cost of mortgage financing, and in turn controlling the overheating of the property market from the demand side. There can be no assurance that the PRC government will not adopt additional and more stringent measures to further dampen the growth of the property sector, which could slow down property development in China. This may have a material adverse effect on the Group’s business, financial condition and results of operations.

Government auctions of land use rights for land prepared by the Group may not attract interest or competitive bids from prospective buyers, and winning bids may not yield any profit. For the Group’s primary land development business, the respective land use rights are sold through public bidding, auction and sale-by-listing by the relevant departments of land and resources at county- level (or above county-level) governments to property developers. The Group receives a portion of the proceeds of these sales of land use rights. When the departments of land and resources decide to sell land use rights for land developed by the Group, announcements regarding the timing of the sale and the parcels to be sold are disseminated publicly. The Group generally incurs significant costs in connection with the primary land development projects prior to the sale of the corresponding land use rights. Because public auctions, tenders and sales-by-listing are driven by market forces, there is no assurance that sales of the land use rights will attract interest from prospective investors or that prospective investors will submit competitive bids.

There may not be sufficient demand for the land use rights to the Group’s primary land development projects and the number of qualified bidders may be limited as the relevant government authorities require certain qualifications before they may participate in land use rights tenders. If the public auctions, tenders or sale-by-listing for the land use rights to the Group’s primary land development projects fail to attract interest or competitive bids from prospective investors, the land use rights may be sold at prices below profit expectations, below the break-even point, or may not be sold at all. There can be no assurance that construction costs will not exceed expected revenue or that the Group will not suffer a loss. Any future sales of land use rights at prices that result in the Group’s portion of the net sales proceeds being insufficient to cover the Group’s costs could hamper its profitability and result in a material adverse effect on the Group’s business, financial condition and results of operations.

In addition, there can be no assurance about the exact timing of the sale of land use rights or the final price at which land use rights are sold. Failure or material delays in selling land may have a seasonal and material adverse impact upon the business, financial condition and results of operations of the Group’s primary land development business.

29 Although the Group may have creditor’s rights with respect to local governments for costs incurred for the clearing and levelling land as well as the construction of ancillary public facilities, if for any reason the local government does not sell a certain piece of land developed by the Group, there can be no assurance that the Group can bring a successful claim against the local government. In some of the primary land development projects of the Group where local governments agree to purchase the land developed by the Group with respect to the consideration for the costs of levelling land, constructing ancillary public facilities and purchasing land use rights, the local governments pay the Group only after the relevant land use rights are sold by them to third party property developers through public auction, tender or sales-by-listing. The Group believes that it may have creditor’s rights with respect to the local governments, such that if for any reason the local government does not sell a certain piece of land developed by the Group, it will have a claim against the local government for the costs it has incurred in the clearing and levelling of the saleable land as well as for the construction of ancillary public facilities. However, there can be no assurance that such a claim can be successfully made, or that any compensation so obtained would cover the Group’s costs. Failure to successfully make such claims may materially affect the Group’s financial condition and results of operations.

If mortgage financing becomes more costly, less attractive or less available for purchasers, the Group’s commodity property business may be materially and adversely affected. Most of the purchasers of the residential properties the Group develops and sells rely on mortgages provided by PRC commercial banks. Mortgage financing relating to property purchase has been heavily regulated in PRC. In the past few years, the PRC government at different levels has introduced a number of policies and measures to control property prices and curtail the overheating property market in PRC, including:

• limiting the monthly mortgage payment to 50 per cent. of an individual borrower’s monthly income and limiting all monthly debt service payments of an individual borrower to 55 per cent. of his or her monthly income;

• requiring all first-time home owner to make a down-payment of no less than 30 per cent. of the purchase price of the underlying property, except where the family of an employee who contributes to the housing provident fund uses an entrusted housing provident fund loan to purchase its first ordinary housing unit for its own use, in which case the minimum down-payment ratio shall be 20%;

• requiring any second-time home buyer to make a down-payment of no less than 50 per cent. of the purchase price of the underlying property and to pay at a mortgage loan interest rate of no less than 110 per cent. of the relevant PBOC benchmark one-year bank lending interest rate, except for certain circumstances where home buyers qualify for less stringent requirements.

• for a commercial property buyer, (i) requiring banks not to finance any purchase of pre-sold properties; (ii) increasing the minimum down-payment to 50 per cent. of the purchase price of the underlying property; (iii) increasing the minimum mortgage loan interest rate to 110 per cent. of the relevant PBOC benchmark one-year bank lending interest rate and (iv) limiting the terms of such bank borrowings to no more than 10 years, while allowing commercial banks flexibility based on their risk assessment;

• for a buyer of commercial/residential dual-purpose properties, increasing the minimum down- payment to 45 per cent. of the purchase price of the underlying property, with the other terms similar to those of commercial properties; and

• requiring commercial banks to suspend mortgage loans to customers for purchase of a third or further residential property in certain cities.

30 PRC government has also sought to control the development of PRC property market by adjusting the benchmark lending interest rate. See ‘‘Risks Relating to PRC – Economic, political and social conditions in PRC and government policies could affect the Group’s business and prospects’’. A material increase in the interest rate could significantly increase the cost of mortgage financing and may affect the affordability of the Group’s commodity properties. All of these policies and measures have had a material impact on the property sales and prices of property in PRC, including in Yunnan province. Continued controls over mortgage financing for property purchase will reduce the availability and attractiveness of mortgage financing and many of the prospective customers may not be able to purchase the commodity properties the Group develops. Accordingly, the Group’s commodity property business and its related financial condition and results of operations may be materially and adversely affected.

Changes in government policies, zoning and design plans and land use rights sales plans with respect to primary land development in Yunnan province may adversely affect the Group, the Yunnan government’s development plans and the proceeds the Group is entitled to receive from sales of land use rights. Government authorities may, without prior notice or consent from the Group, implement changes to existing policies and plans for primary land development in Yunnan or implement new policies or plans, which may adversely affect the Group’s operations and/or require the Group to adjust its development plans.

The relevant departments of land and resources at county-level (or above county-level) governments prepare an annual sales plan which sets out a schedule of expected land parcel auctions for that year. However, such departments of land and resources may adjust the timing of the land use rights sales, the number of the land parcels designated for sale and the land parcels to be prioritised for sale without consulting the Group or obtaining the Group’s consent.

Demand for the Group’s convention and exhibition centres may continue to be negatively affected by the recent financial market and economic crisis, which would have a material adverse effect on the Group’s business, results of operations and financial condition. The Group engages in the development and operation of mega convention and exhibition centres, primarily in Yunnan province. The Group has recently entered into agreement to acquire 51 per cent. equity interest in the entity that owns and operates the landmark convention and exhibition centre in Chengdu, Sichuan Province. See ‘‘Description of the Group – Recent Developments’’. The convention and exhibition centre business has historically been sensitive to the macroeconomic environment, and the recent slowdown of the PRC economy has negatively affected the industry. Although the PRC Government has adopted increasingly flexible macroeconomic policies aimed at further propelling growths of the PRC economy in the past few years, there is no assurance that such policies will be successful. Current and potential tenants and purchasers of the Group’s convention and exhibition centre units may continue to be affected by the economic slowdown and, as a result, may be unable to make agreed upon rental or purchase payments for convention and exhibition centre units, all of which could lead to a reduced demand for the Group’s convention and exhibition centre units, reduce its profit margins and delay its receipt of rentals and purchase payments.

The timing and nature of any recovery of the economy remain uncertain, and there can be no assurance that market conditions will improve in the near future or that the Group’s results will not continue to be adversely affected.

The relocation of incumbent residents and local businesses on the sites where the Group’s projects are located may result in delays in its development and/or increase its development costs. Some of the projects that the Group has developed involve relocation of incumbent residents and local businesses, and the Group believes that similar situations may recur when it develops future projects. If any incumbent resident or business is dissatisfied with the relocation compensation and refuses to move, the relevant entity of the township government may seek to resolve the dispute by negotiating with the

31 relevant resident or business to reach a mutually acceptable relocation compensation arrangement, or apply to the relevant land authority for its determination on whether the relocation compensation and relocation timetable is compliant with PRC law. The relevant land authority will then make a decision as to the proper relocation compensation and timetable. There can be no assurance that the relocation of incumbent residents or businesses will proceed smoothlyorthattheywillagreetothecompensation.In addition, the amount of compensation to be paid is subject to PRC governmental regulation and can be changed at any time. Accordingly, any delays in effecting such relocations of these incumbent residents or businesses may result in delays in the Group’s development schedules and/or increase its development costs, any of which could have a material adverse effect on its business, financial condition and results of operations.

The Group may be adversely affected by the performance of third-party contractors. The Group engages third-party contractors for infrastructure projects undertaken by the Group. The Group generally selects independent contractors through an open tender process. However, there can be no assurance that the services rendered by any of these independent contractors or subcontractors will always be satisfactory or meet its quality and safety standards. If the performance of any independent contractor is not satisfactory, the Group may need to replace such contractor or take other actions to remedy the situation, which could adversely affect the cost and construction progress of its projects.

Furthermore, the completion of its infrastructure projects may be delayed, and the Group may incur additional costs due to a contractor’s financial or other difficulties. In addition, the Group undertakes additional infrastructure development projects, and there may be a shortage of contractors that meet its quality requirements. Contractors may undertake projects for other companies and developers, engage in risky or unsound practices or encounter financial or other difficulties, which may affect their ability to complete their work for the Group on time or within budget. Any of these factors could have a material adverse effect on the Group’s infrastructure business, financial condition and results of operations.

The Group faces contractual and legal risks relating to the pre-sale of properties. The Group faces contractual risks relating to the pre-sale of the commercial properties that it develops. For example, if the Group fails to meet the completion time as stated in the pre-sale contracts, purchasers of pre-sold units have the right to claim damages under the pre-sale contracts. If the Group still fails to deliver the properties to the purchasers within the grace period stipulated in the pre-sale contracts, the purchasers have the right of termination. If the actual development of a property differs from the approved development plan, or if the total ground floor areas (‘‘GFA’’) of the property development differs from the original authorised area, or if the services rendered by of the third-party contractors engaged by the Group are unsatisfactory or not within the originally tendered budget, the Group may become involved in disputes. For example, if the actual GFA of a completed property delivered to purchasers deviates by more than three per cent. from the GFA originally stated in the pre- sale contracts, purchasers have the right of termination or the right to claim damages. There can be no assurance that the Group will not experience delays in the completion and delivery of its projects, nor that the GFA for a delivered unit will not deviate more than three per cent. from the GFA set out in the relevant contract. Any termination of the purchase contract as a result of the Group’s late delivery of properties will have a material and adverse effect on its business, financial condition and results of operations.

Proceeds from pre-sales of the Group’s properties are an important source of funds from the Group’s property developments. In the last few years, the PRC central government has urged local governments to enact regulations on developers to sell residential properties when they are completed. There can be no assurance that the PRC government authorities will not ban or impose material limitations on the restrictions on the Group’s ability to pre-sell properties, including any requirements to increase the amount of up-front expenditures the Group must incur prior to obtaining the pre-sale permit, extend the

32 time required for recovery of its capital outlay and force it to seek alternative means to finance the various stages of its property developments. This, in turn, could have a material and adverse effect on the business, cash flow, financial condition and results of operations of the Group.

The Group may not be able to acquire land reserves in desirable locations that are suitable for development at commercially acceptable prices in the future. The growth of the Group’s commodity housing and convention and exhibition centre development business depends on its ability to continue identifying and acquiring suitable land reserves located in desirable locations at commercially reasonable prices. The Group historically acquired the land for developing its commodity housing and convention and exhibition centre projects in land auctions held by the relevant departments of land and resources at county-level (or above county-level) governments. Some of the land offered for bidding was associated with the Group’s primary land development projects and was part of the land developed in those projects. For this reason, the Group may be able to acquire more information about the planned use and particular of the target land compared to its competing bidders. Because of its relationship with local governments, in some cases the Group can purchase lands at a discounted price from the relevant departments of land and resources in exchange for promises to develop such land in certain ways, such as erecting convention and exhibition centres on the land. However, the Group’s ability to succeed in the auctions and acquire land also depends on a variety of other factors, such as the credentials and operating history of the bidders. As the Group from time to time competes with other commodity property developers who may have more established track record, stronger execution capability, more extensive experience or abundant financial resources than the Group, there can be no assurance that the Group is able to acquire the target land as it anticipates.

In addition, the availability and price of land sold at auctions may be affected by many factors, such as government land policies and cost of financing. In the past ten years, the purchase cost of land reserves has significantly increased in the PRC, both in the primary and secondary markets. In recent years, the PRC government has adopted a number of initiatives to slow the rapid growth of China’s residential property sector and to promote the development of affordable housing. The PRC government also controls land supply through zoning, land usage regulations and other means. See ‘‘– Changes in government policies, zoning and design plans and land use rights sales plans with respect to primary land development in Yunnan province may adversely affect the Group, the Yunnan government’s development plans and the proceeds the Group is entitled to receive from sales of land use rights’’.All of these measures further increase competition for land among property developers in the PRC. If the Group is unable to acquire sufficient land reserves in a timely manner and at acceptable prices, its commodity property development business and related financial condition and results of operations may be materially and adversely affected.

The Group may not be able to complete its projects according to schedule or on budget. A commodity housing or convention and exhibition centre development project requires substantial capital expenditures prior to and during the construction period, and it may be several years before a development generates positive cash flow through pre-sales or sales. The progress of, and costs for, a development project can be adversely affected by many factors, including:

• changes in market conditions, an economic downturn or a decline in consumer confidence;

• delays in obtaining necessary licences, permits or approvals from governmental agencies or authorities;

• relocation of existing residents and demolition of existing structures;

• increases in the market prices of raw materials if the Group cannot pass on the increased costs to customers;

• shortages of materials, equipment, contractors and skilled labour;

33 • latent soil or subsurface conditions and latent environmental damage requiring remediation;

• unforeseen engineering, design, environmental or geographical problems;

• labour disputes;

• construction accidents;

• natural disasters;

• adverse weather conditions;

• changes in governmental practices and policies, including reclamation of land for public works or facilities; and

• other unforeseen problems or circumstances.

The rising cost of construction in the PRC may also have a material and adverse effect on the Group’s business, results of operation and financial condition. The Group’s property projects are at risk from earthquakes, floods and other natural disasters in the regions where we operate. Damage to any of our properties or impact on the markets, whether by natural disasters or otherwise, may either delay or preclude our ability to develop and sell our properties or adversely affect our budget for the projects. Construction delays or failure to complete construction of a project according to its planned specifications, schedule or budget may materially and adversely affect the Group’s reputation, business, results of operations and financial condition.

The Group may have to compensate its commodity housing project customers if it fails to meet all requirements for the delivery of completed properties and the issuance of property certificates. According to applicable PRC laws, commodity housing property developers must meet various requirements within 90 days after the delivery of property (or such other time period that may be provided in the relevant sales and purchase agreement) to assist a purchaser of its property to obtain the individual property ownership certificate. The application for individual property ownership certificates requires submission of the relevant sales and purchase agreement, identification documentation for the purchaser, evidence of payment of deed tax and a copy of the general property ownership certificate issued to the developer. Under PRC laws and regulations and according to the contracts relating to the sales and purchase of the properties, the Group is required to compensate its customers for delays in delivery caused by it of individual property ownership certificates.

The commodity housing property development business is subject to claims under statutory quality warranties. Under the Regulations on Administration of Development and Operation of Urban Real Estate enacted by the State Council, and Regulations for the Administration of Sale of Commodity Building, all property developers in the PRC must provide certain quality warranties for the properties they develop or sell. The Group is required to provide these warranties to the purchases of the properties it develops and sells. Generally, the Group receives quality warranties from its third-party contractors with respect to its property projects. If a significant number of claims were brought against the Group under its warranties and if the Group was unable to obtain compensation for such claims from third-party contractors in a timely manner or at all, the Group could incur significant expenses to resolve such claims or face delays in remedying the related defects, which could in turn harm its reputation, and materially adversely affect its commodity property business and related financial condition and results of operations.

34 The Group’s infrastructure projects are primarily public interest projects which may have a material and adverse effect on the Group’s financial condition and results of operations. The Group is wholly-owned, directly and indirectly, by Yunnan SASAC. As a state-owned enterprise, it from time to time may be required to engage and participate in the projects which are motivated by public interests and social welfare development. As such, the Group has historically participated in developing infrastructure projects, primarily in Yunnan province. The Group has received financial allocation or asset injection, in the form of land use rights, cash or other assets, and may receive other financial support from the Yunnan government for such government-sponsored projects. However, such financial support may not always be available due to the government’s liquidity, budgeting priority and other considerations. Further, relevant governmental authorities may change the initial planning for such projects and cause increase the total investment amount and government budgetary concern for the Group after the construction work begins. Additionally, it is uncertain whether the government will be able to provide such financial support as a result of the promulgation of Circular 43 and the Implementation Opinion on Circular 43. The Group has limited resources and engagement in such projects may reduce its ability to participate in other profit-generating projects. As at the date of this Offering Circular, the Group has been involved in various government projects and may continue be required to participate in such projects from time to time. There can be no assurance that the Group’s business, financial condition and results of operations will not be adversely affected as a result.

The Group’s engagement in affordable housing development may affect its overall results of operations. The Group may be required by the Yunnan government to develop affordable housing projects which mainly serve to increase housing supplies and improve housing conditions for low-income households in Yunnan province. Unlike ordinary commodity housing projects, affordable housing development aims to serve the government’s public function and, therefore, is not a highly profitable business by nature. Investment in developing affordable housing projects will affect the Group’s cash flow and might limit its capital to fund its normal business operations. Especially for those commodity housing projects where parts of the land are designated for the development of affordable housing, the overall profits margin of such projects will be lower than those commercial housing projects without affordable housing. In the event that the commercial housing part of such mixed projects is underperforming, the Group’s initial investment in such projects may not be fully recovered or at all, and the Group’soverall results of operations may be materially and adversely affected.

Revenue generated from the sale of the Group’spropertiesissubjectto land appreciation tax Revenue generated from the sale of the Group’s properties is subject to land appreciation tax (‘‘LAT’’) in the PRC. In addition, revenue generated from the sale of residential properties in the Group’s projects planned for future development may be subject to land appreciation tax. Land appreciation tax is payable on the gain, representing the balance of the proceeds received on such sale, after deducting various prescribed items, including sums paid for the acquisition of land use rights, direct costs of land development and construction of buildings and supplementary facilities.

The Group has made tax provision for LAT according to the requirements set forth in the relevant PRC tax laws and regulations. The actual LAT liabilities are subject to the determination by the tax authorities upon completion of the property development projects, and the tax authorities may disagree with the basis on which the provision for LAT is calculated. If so, the Group’s cash flows and financial condition will be affected. In addition, making provisions for LAT requires the Group’s management to make significant judgment with respect to the appreciation of land value and the inclusion of deductible items for LAT purposes. If the LAT provisions the Group has made are substantially lower than the actual LAT assessed by the tax authorities, its results of operations and cash flows will be materially and adversely affected.

35 RisksRelatingtotheGroup’s Urban Environment Business The Group may incur significant costs or liability relating to its environmental responsibilities. The Group is subject to extensive and increasingly stringent environmental protection laws, regulations and decrees that impose fines for violation of such laws, regulations or decrees and provide for the suspension of any wastewater treatment facilities that fail to satisfy certain regulatory requirements. There is growing awareness of environmental issues and the Group may sometimes be expected to meet a standard which is higher than the requirement under the prevailing environmental laws and regulations. The Group may incur significant expense in order to comply with existing or future environmental laws and regulations.

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

The Group’s business operations involve inherent industrial risk and occupational hazards. The Group’s wastewater treatment business is exposed to inherent industrial risks as its operations involve the operation of heavy machinery and hazardous chemical substances that could lead to industrial accidents and personal injuries.

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

The Group’s wastewater treatment and water supply projects require significant investments but may not generate expected returns. A significant portion of the revenue from the Group’s urban and environmental business is derived from the Group’s wastewater and water supply projects, which are subject to the risk of cost overruns during the project construction phase. Many of the factors causing cost overruns are beyond the control of the Group, such as increases in raw material prices or the failure of equipment vendors to perform their contractual obligations. If the actual costs are significantly higher than the Group’s estimates and if the Group is not able to obtain sufficient compensation from its customers to offset the cost overruns, the Group’s financial condition, results of operation and business prospects could be materially and adversely affected.

With respect to the construction wastewater treatment and water supply projects, the Group primarily uses the percentage of completion method to recognise and account for revenue from construction in progress and estimate the amount of construction costs for the entire construction phase based on its assessment of various factors, including the conditions and costs of project contractors and equipment and other relevant costs. Inaccuracies or flaws in the Group’s measurements, the timing of completion or estimate for any given projects or in the estimation methodology as a whole, could have a material and adverse effect on the timing of the Group’s recognition of revenue from its wastewater treatment and water supply projects.

36 In addition, the Group decides to undertake a certain wastewater treatment or water supply project partly based on its estimates of the demand for wastewater treatment and water supply services in the region where such project is located and the utilisation rates of its facilities. However, there can be no assurance that its estimates will always accurately reflect the actual demand for wastewater treatment and water supply services or the utilisation rates of its facilities.

Moreover, while the Group’s wastewater treatment projects and certain other water projects are operated on the basis of a guaranteed minimum volume and guaranteed minimum tariffs, there can be no assurance that these projects will operate profitably during their respective concession periods, as the profitability of its facilities could be affected by many factors beyond its control. Such factors may include government policies and increasing operational or maintenance costs which cannot be timely offset by increasing tariffs. In addition, the concession agreements for the Group’s tap water supply projects do not provide for a guaranteed minimum volume or guaranteed minimum tariff. As a result, the Group’s tap water supply projects are also subject to additional risks associated with insufficient incoming raw water and reduced tariffs. Furthermore, wastewater and water supply projects are also subject to operational risks given their long concession terms, as the Group is responsible for all repairs and maintenance of the facilities. However, if the facilities fail to function as long or as efficiently as estimated, the Group may need to pay more for replacement parts or repairs and maintenance of the facilities or may experience longer shut-down periods than it originally anticipated.

There cannot be any assurance that the revenue derived from the construction and operation of its wastewater treatment and water supply projects will cover its initial investment and/or generate the expected profits. As a result, the Group may experience reduced profitability or losses with respect to its wastewater and water supply projects.

RisksRelatingtotheGroup’s Leisure and Tourism Business General declines or disruptions in the travel industry may materially and adversely affect the Group’s leisure and tourism business and results of operations. The Group’s leisure and tourism businesses may be subject to cyclical fluctuations. The Group’sleisure and tourism businesses typically experience larger sales during festive and holiday seasons, including the Chinese New Year, Labour Day, the Mid-Autumn festival and the National Day. As a result of seasonal fluctuations, the results of operations of the Group’s leisure and tourism business during one period may not be comparable with that of any other period of the year. In addition, there can be no assurance that the Group has sufficient resources to capture business opportunities during peak seasons, or that the Group will be able to effectively respond to a decline in market demand during the slow season. Failure to do so may materially and adversely affect the Group’s leisure and tourism business.

The Group’s leisure and tourism business depends significantly on the Group’s successful operation of its existing attractions and hotels, and the overall growth of the leisure and tourism industries in the PRC. The Group’s leisure and tourism business complements the Group’s urban development business as well as urban environment business, and involves the development, construction and operation of national parks, cultural attractions and hotels and various other urban operations projects of the Group in Yunnan province. The business prospects of the Group’s leisure and tourism business are subject to the successful operation of the Group’s existing attractions and hotels and any further expansions, as well as the overall growth of the culture, media and tourism industries in the PRC.

As the leisure and tourism industry in the PRC is still in its growth phase, any changes to its growth trajectories, whether or not resulted from changes in the macroeconomic trend of the PRC, may adversely affect the Group’s performance its leisure and tourism business. In addition, given the importance of the leisure and tourism business to the Group’s overall operation, any material adverse

37 developments, such as changes in government policies or the general economic conditions in Yunnan province, with respect to the leisure and tourism industries in the PRC could have a material adverse effect on the Group’s business, financial condition and results of operations.

The Group’s tourism business is subject to changes in consumer behaviours and preferences. In recent years, customers have been increasingly booking holidays nearer to the time of travel than has traditionally been the case. This type of booking behaviour makes it considerably more difficult for tourism companies to engage in seasonal planning and could make the Group more vulnerable to short- term changes in customer demand. For example, bad weather at any of its destinations, or unseasonably warm weather in any of the Group’s source markets, could reduce demand for travel to some of the destinations offered by the Group. Successful execution of the Group’s strategy will depend, among other things, upon its ability to anticipate changes in consumer preferences for leisure travel products across a number of source markets and destinations.

Over the recent years, the Internet has allowed and continues to allow travel customers to easily compare the costs of each component of their holiday, which could lead to increasing price pressure across the travel industry and in turn, could adversely affect the Group’s financial performance and results of operations.

The Group’s business is sensitive to adverse weather and environmental conditions. Adverse weather conditions, such as extreme cold weather, snow, typhoons, flooding and heavy or sustained rainfall and natural disasters such as earthquakes, landslides or mudslides, may prevent the Group from conducting its construction activities or otherwise affect its productivity, preventing the Group from completing its construction projects on schedule, delaying its receipt of payment and possibly causing the Group to incur increased operating expenses. Climatic conditions that are unusually severe or intense and occur at abnormal times or last longer than usual could therefore have a material adverse effect on the Group’s business, financial condition and results of operations. During periods of curtailed activity due to adverse weather conditions, the Group may continue to incur operating expenses, but its operating income may be delayed or reduced. In China, these adverse weather conditions are more likely to take place during summer or winter, and as a result, the Group’s business has a certain degree of seasonality.

The Group’s hotel business is subject to various operational risks, which may adversely affect the Group’s operations. The Group’s results of operations relating to its hotel business are affected by occupancy and room rates achieved by its hotels, its ability to manage costs (including increases in labour costs), seasonality, the success of its food and beverage operations and the change in the number of available hotel rooms through acquisition, development and disposition. Additionally, the Group’s ability to manage costs could be adversely impacted by increases in energy, healthcare, insurance and other operating expenses, resulting in lower operating margins. The Group’s properties use significant amounts of electricity and other forms of energy. While no shortages of energy have been experienced, substantial increases in the cost of energy in the markets in which the Group operates could negatively impact the Group’s operating results. Similarly, the Group is dependent on its IT information systems and electronic booking/reservation systems which, were they to fail, could adversely affect occupancy levels.

Relations with employees could deteriorate due to disputes related to, among other things, wage or benefit levels. The Group’s operations rely heavily on employees and on the employees’ ability to provide high-quality personal service to guests. Shortage of skilled labour or industrial action by employees, trade or other unions could adversely affect the Group’s ability to provide these services and could lead to reduced occupancy or potentially damage the reputation of the Group. In addition, the Group relies heavily on certain key employees. If these particular employees should cease to be employed by the Group, this could adversely affect the Group’s operations.

38 RisksRelatingtotheGroup’s Healthcare Business In the course of providing medical services with respect to its healthcare business, the Group needs to keep abreast with rapid technological changes, frequent new equipment and product introductions, changes in patients’ needs and evolving industry standards. A substantial portion of the revenue from the Group’s healthcare business is derived from medical services at the public hospitals in Yunnan province that the Group owns. As a result, success of the Group’s healthcare business partly depends on the successful operation of these public hospitals, which requires the Group to keep abreast with rapid technological changes in medical equipment. The market for healthcare equipment and products is characterised by frequent entries of new healthcare equipment and products as well as technology enhancements, changing patient needs and evolving industry standards. New equipment and products based on new or improved technologies or new industry standards can render existing equipment and products obsolete. To effectively compete with other healthcare providers, the Group has to continually enhance and develop its equipment and facilities on a timely basis. Furthermore, as industry standards evolve, the Group may be required to enhance and develop its internal processes and procedures, as well as equipment, in order to comply with such standards and to maintain the accreditations that its hospitals have received. There can be no assurance that the Group will have sufficient funds to continually invest in such equipment and facilities on a timely basis, or at all. In the event that the Group is unable to keep abreast with the current trends and needs of the healthcare industry or that the Group loses any of its accreditations, its healthcare facilities may lose their competitiveness and market share, which may adversely affect the amount of revenue received by the Group from its healthcare business and adversely affect such business.

Success of the Group’s healthcare business partly depends on the Group’s ability to market its core medicine to hospitals and win government-administered requests for tenders. Success of the Group’s healthcare business partly depends on the Group’s ability to market its core medicine to hospitals, primarily Sanqi Pill, a Chinese traditional medicine, as well as related products. Each year, requests for tenders for pharmaceutical products sold to public hospitals are organized at the provincial and municipal levels. Whether a manufacturer is invited to participate in requests for tenders depends on the level of interest that hospitals have in purchasing the manufacturer’s products. A hospital indicates its interest in a medicine by (i) including the medicine in the hospital’sformulary,which establishes the medicine physicians may prescribe to their patients and (ii) having the hospital’s physicians prescribe the medicine to patients.

The Group believes that its marketing and sales efforts are critical in keeping hospitals interested in purchasing its medicine. If the Group’s marketing and sales efforts are not effective, hospital administrators may not include the Group’s medicine in their formularies, or physicians may not prescribe them to their patients. Should this happen, the Group might not be invited to participate in government-administered requests for tenders. Even if the Group is invited to do so, its core medicine may not be selected, and if not selected through government-administered requests for tenders, the Group’s core medicine may not be allowed to be purchased by public hospitals, which may materially and adversely affect the Group’s healthcare business.

RisksRelatingtotheGroup’sOtherBusinesses If the Group is not able to continue to attract students to enrol in its education institutions without a significant decrease in admission or course fees, revenues derived from the Group’seducation business may decline significantly. The success of the Group’s education business depends primarily on the number of student enrolments in its education institutions and the amount of admission or course fees that the students are willing to pay. Therefore, the Group’s ability to continue to attract students to enrol in its education institutions without a significant decrease in admission or course fees is critical to the continued success and growth of the Group’s education business. This in turn will depend on several factors, including the Group’s ability to develop new programs and enhance existing programs to respond to changes in student

39 demands, expand geographic reach, manage its education business’ growth while maintaining the consistency of its teaching quality, effectively market its programs to a broader base of prospective students, develop and licence additional high-quality educational content and respond to competitive pressures. If the Group is unable to continue to attract students to enrol in its education institutions without a significant decrease in admission or course fees, revenue derived from its education business may decline significantly.

The Group’s financial service business is subject to extensive regulation and supervision of the government authorities at various levels and failure to comply with applicable regulations may have a material adverse impact on the related business and results of operations. The Group expanded its businesses into financial service industry in 2014, primarily focusing on credit guarantee, loans to small- to medium- enterprises and finance leasing. These businesses are subject to extensive national, provincial and municipal laws, rules, regulations, policies and measures issued and enforced by the governmental authorities at different levels. Local authorities have broad discretion in implementing and enforcing the applicable rules and regulations. For this reason, there are significant uncertainties in the interpretation and implementation of such laws, rules, regulations, policies and measures. In certain occasions, verbal clarifications given by the government authorities may be inconsistent with the regulations concerned, increasing the Group’s compliance risk. If the Group fails to fully comply with the applicable laws, rules, regulations, policies and measures or fails to respond to any changes in the regulatory environment in a timely manner, non-compliance and any delay may result in sanctions by regulatory authorities, to monetary penalties, or to restrictions on its activities or revocation of licences, which could have a material adverse impact on its business and results of operations in the financial industry.

The Group faces intense competition in the financial services industry in the PRC. Market players in the financial service industry in the PRC face intense competition from both domestic and international companies. The Group competes on the basis of various factors, including price, products and services, innovation, transaction execution capability, reputation, experience and knowledge of the Group’s staff, employee compensation and geographic scope.

Some of the Group’s competitors may have certain competitive advantages over the Group, such as greater financial resources, stronger brand recognition, longer operational record, broader product and service offerings and more advanced information technology systems. They may also have more experience with a broader range of services and more complex financial products than the Group does. Many of the financial institutions that the Group competes with are larger in terms of asset size and customer base and have greater financial resources, more specialised capabilities or more extensive distribution capabilities. Some of the foreign financial institutions that the Group competes with have been expanding the operations in the PRC, either organically or through partnership with existing financial institutions in the PRC. The Group expects that it will face greater competition from the Group’s foreign competitors if these limitations and restrictions are lifted in the future.

The Group’s diversification into the financial service industry may increase its exposure to credit risks. The Group’s businesses in the financial industry involve many inherent risks, including the risk that the loans the Group guarantees or grants are not repaid on time or at all. The Group’s credit guarantee and small loan business currently focuses on state-owned enterprise customers in China. Many of its customers have limited financial resources or relatively weaker credit profile, making it difficult for them to obtain capitals from the large state-owned financial institutions. For the same reason, they are more vulnerable to adverse competitive, economic or regulatory conditions, and create greater credit risks relating to the Group’s loan and guarantee business than larger or more established businesses with longer operating histories.

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

RisksRelatingtothePRC Changes in the economic, political and social conditions in the PRC and government policies could affect the Group’s business and prospects. Substantially all of the Group’s assets are located in the PRC and substantially all of the Group’s revenue is sourced from the PRC. Accordingly, the Group’s results of operations, financial position and prospects are subject, to a significant degree, to economic, political and legal developments in the PRC. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, the level of development, growth rate, uniformity in the implementation and enforcement of laws in relation to control of foreign exchange and control over capital investment and allocation of resources.

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 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 industries and the economy through policy measures. The Group cannot predict whether changes in the PRC economic, political or social conditions and in the PRC laws, regulations and policies will adversely affect its business, financial condition or results 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 the 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 the PRC 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 regulation or the interpretation of laws and regulations;

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

• changes in the rate or method of taxation;

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

• a reduction in tariff protection and other important restrictions.

Furthermore, the growth of demand in China for infrastructure industry depends heavily on economic growth. The Group cannot assure that such growth will be sustained in the future. From time to time, the PRC Government has implemented certain measures in order to prevent the PRC economy from experiencing excessive inflation. Such governmental measures may cause a decrease in the level of

41 economic activity and have an adverse impact on economic growth in China. If China’seconomic growth slows down or if the Chinese economy experiences a recession, the growth of demand for urban rail transit construction may also decrease. Such events could have a material adverse effect on the Group’s business, results of operations and financial condition.

Uncertainty with respect to the PRC legal system could have a material adverse effect on the Group. As substantially all of the Group’s businesses are conducted, and substantially all of the Group’s assets are located, in the PRC, the Group’s operations are governed principally by the PRC laws and regulations. The PRC legal system is based on written statutes while prior court decisions can only be cited as reference. Since 1979, the PRC Government has promulgated laws and regulations in relation to economic matters such as foreign investment, corporate organisation and governance, commerce, taxation, foreign exchange and trade, with a view to developing a comprehensive system of commercial law. However, China has not developed a fully integrated legal system and recently enacted laws and regulations that may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. For example, the Group is required to file a post-issuance report with the NDRC within 10 working days in the PRC under the NDRC Notice. See ‘‘PRC Laws and Regulations-NDRC Filing’’ for more details. As the NDRC Notice is a new regulation, there are still uncertainties regarding its interpretation, implementation and enforcement by the NDRC. If the Group fails to complete such filing in accordance with the relevant requirements, there is no guarantee that the validity or enforceability of the Bonds will not be affected and that the Group will not be subjected to any penalties. In addition, the PRC legal system is based, in part, on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, the Group may not be aware of the Group’s violation of these policies and rules until sometime after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management’s attention.

Investors may experience difficulties in effecting service of legal process and enforcing judgments against the Group and its management. The Guarantor and most of its subsidiaries are incorporated in the PRC. A substantial portion of the Group’s assets are located in the PRC. In addition, most of the Group’s directors, supervisors and executive officers reside within the PRC and the assets of the Group’s directors and officers may be located within the PRC. As a result, it may not be possible to effect service of process outside the PRC upon most of the Group’s directors, supervisors and senior management, including for matters arising under applicable securities law. A judgment of a court of another jurisdiction may be reciprocally recognised or enforced if the jurisdiction has a treaty with China or if judgments of the PRC courts have been recognised before in that jurisdiction, subject to the satisfaction of other requirements. However, China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with many countries, including Japan, the United States and the United Kingdom. Therefore, it may be difficult for investors to enforce any judgments obtained from foreign courts against the Guarantor, its subsidiaries, any of their respective directors, supervisors or senior management in the PRC.

Government control of currency conversion may adversely affect the value of investors’ investments. Most of the Group’s operating income is denominated in Renminbi, which is also the reporting currency. Renminbi is not a freely convertible currency. A portion of the Group’s cash may be required to be converted into other currencies in order to meet the Group’s foreign currency needs, including cash payments on declared dividends, if any, on the Bonds. However, the PRC government may restrict future access to foreign currencies for current account transactions at its discretion. If this were to occur, the Group might not be able to pay dividends to the holders of the Bonds in foreign currencies. On the other hand, foreign exchange transactions under capital account in the PRC continue to be not freely convertible and require the approval of the SAFE. These limitations could affect the Group’s ability to

42 obtain foreign currencies through equity financing, or to obtain foreign currencies for capital expenditures. In addition, significant future cash flows in Renminbi may limit the Group’s ability to purchase goods outside the PRC or fund business activities outside the PRC.

Future fluctuations in the value of the Renminbi could have a material adverse effect on the Group’s financial condition and results of operations. A portion of the Group’s operating income, expenses and bank borrowings is denominated in Hong Kong dollars, U.S. dollars and other foreign currencies, although the Group’s functional currency is the Renminbi. As a result, fluctuations in exchange rates, particularly between the Renminbi, the Hong Kong dollar or the U.S. dollar, could affect the Group’s profitability and may result in foreign currency exchange losses of the Group’s foreign currency- denominated assets and liabilities.

The exchange rate of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by, among other things, changes in the PRC’s and international political and economic conditions and the PRC government’s fiscal and currency policies. Since 1994, the conversion of the Renminbi into foreign currencies, including the Hong Kong dollar and U.S. dollar, has been based on rates set daily by the PBOC based on the previous business day’s inter-bank foreign exchange market rates and exchange rates in global financial markets. From 1994 to 20 July 2005, the official exchange rate for the conversion of the Renminbi to U.S. dollars was generally stable. On 21 July 2005, the PRC government adopted a more flexible managed floating exchange rate system to allow the value of the 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 30 September 2011, the value of the Renminbi appreciated by approximately 30.2 per cent. against the U.S. dollar. On 19 June 2010, the PBOC announced that the PRC government would reform the Renminbi exchange rate regime and increase the flexibility of the exchange rate. The floating band for the trading prices in the inter-bank foreign exchange market of Renminbi against the U.S. dollar was widened to 2.0 per cent. on 17 March 2014. On July 21, 2005, the PRC government reformed the exchange rate regime by moving to a managed floating exchange regime based on market supply and demand with reference to a basket of currencies. As a result, the Renminbi appreciated against the Hong Kong and U.S. dollars by approximately 2% on the same date. Changes in currency policies resulted in the Renminbi appreciating against the U.S. dollar by approximately 33.5% from July 21, 2005 to June 30, 2015. Subsequently, the Renminbi depreciated 4.3% from June 30, 2015 to 31 December, 2015. The exchange rate between the Renminbi and the U.S. dollar experienced further fluctuation between 1 January 2016 and the date of this Offering Circular. There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in further and more significant appreciation of the Renminbi against the U.S. dollar. The Group cannot assure investors that the Renminbi will not experience significant appreciation against the U.S. dollar in the future.

Risks Relating to the Issuer Existing indebtedness may negatively affect repayment capability of the Issuer with respect to the Bonds. The Issuer relies on external borrowings to satisfy a portion of its capital requirements. As at the date of this Offering Circular, the Issuer has one term loan with a principal in the aggregate amount of RMB510.0 million (RMB1.0 million plus US$77.0 million), which matures in 60 months since the first drawdown date, as well as a non-committed credit line in the aggregate amount of HKD1,870.0 million from two PRC financial institutions. As at the date of this Offering Circular, the total outstanding amount under the term loan is US$77.0 million and the total outstanding amount as drawn down from the credit line is approximately HKD440.0 million. In the event that the Issuer fails to keep its indebtedness under a certain level, the funds available for various other business purposes may become limited, and its business, financial condition and results of operations may be materially and adversely affected.

43 In addition, the aforementioned term loan is guaranteed by the Group as well as another subsidiary of the Group, and the credit line is secured by an account charge. Therefore, the Bonds will be pari passu with the term loan whereas the Bondholders will not entitled to the benefit of the account charge afforded to the lending financial institution under the credit line. Therefore, the repayment capability of the Issuer under the Bonds may be negatively affected due to its existing indebtedness.

The Issuer may be treated as a PRC enterprise for PRC tax purposes, which may subject the Issuer to the PRC income taxes on its worldwide income and interest payable by the Issuer to foreign investors and gain on the sale of the Bonds may be subject to withholding taxes under the PRC tax law. Under the PRC Enterprise Income Tax Law (the ‘‘EIT Law’’) and the implementation rules which both took effect on 1 January 2008, enterprises established outside the PRC whose ‘‘de facto management bodies’’ are located in China are considered as ‘‘resident enterprises’’ for PRC tax purposes. The implementation rules define the term ‘‘de facto management body’’ as a management body that exercises full and substantial control and management over the business, personnel, accounts and properties of an enterprise. A circular issued by the State Administration of Taxation on 22 April 2009 (‘‘Circular 82’’) provides that a foreign enterprise controlled by a PRC company or a PRC company group will be treated as a ‘‘resident enterprise’’ with a ‘‘de facto management body’’ located within China if all of the following requirements are satisfied at the same time: (i) the senior management and core management departments in charge of daily operations are located mainly within China; (ii) financial and human resources decisions are subject to determination or approval by persons or bodies in China; (iii) major assets, accounting books, company seals and minutes and files of board and shareholders’ meetings are located or kept within China; and (iv) at least half of the enterprise’s directors with voting rights or senior management frequently reside within China. On 27 July 2011, the State Administration of Taxation issued Provisional Administrative Regulations of Enterprise Income Taxation of a Foreign Enterprise Controlled by a PRC Enterprise or a PRC Enterprise Group (‘‘Circular 45’’), to further prescribe the rules concerning the recognition, administration and taxation of a foreign enterprise ‘‘controlled by a PRC enterprise or PRC enterprise group’’. Circular 45 provides two ways for a foreign enterprise ‘‘controlled by a PRC enterprise or a PRC enterprise group’’ to be treated as a resident enterprise. First, the foreign enterprise may decide on its own whether its de facto management body is located in China based on the criteria set forth in Circular 82, and, if it makes such determination, it shall apply to the competent tax bureau to be treated as a resident enterprise. Second, the tax authority may determine that the foreign enterprise is a resident enterprise after its active investigation.

As at the date of this Offering Circular, the Issuer has not been notified or informed by the PRC tax authorities that it is considered as a PRC tax resident enterprise for the purpose of the EIT Law. If the Issuer is deemed to be a PRC resident enterprise for EIT purposes, the Issuer would be subject to the PRC enterprise income tax at the rate of 25 per cent. on its worldwide taxable income. Furthermore, the Issuer may be obligated to withhold the PRC income tax of up to 7 per cent. on payments of interest and certain other amounts on the Bonds to investors that are Hong Kong resident enterprises or 10 per cent. on payments of interest and other amounts on the Bonds to investors that are ‘‘non-resident enterprises’’ as defined under the EIT Law, or non-resident individuals, who are also not Hong Kong resident enterprises, provided that there are no tax treaties between China and those countries which exempt or reduce such withholding tax, because the interest and other amounts may be regarded as being derived from sources within the PRC. In addition, if the Issuer fails to do so, it may be subject to fines and other penalties. Similarly, any gain realised by such non-resident enterprise investors from the transfer of the Bonds may be regarded as being derived from sources within the PRC and may accordingly be subject to a 10 per cent. PRC withholding tax provided that there are no tax treaties between China and those countries which exempt or reduce such withholding tax. Moreover, if the Issuer is deemed to be a PRC resident enterprise for EIT purposes, the non-resident individual holders of the Bonds may be subject to the PRC withholding tax at the rate of 20 per cent. applicable to payment of interest and other amounts on the Bonds and any gains realised from transfer of the Bonds.

44 If the Issuer is required under the EIT Law to withhold PRC income tax from interest payments made to the Issuer’s foreign investors who are ‘‘non-resident enterprises’’, the Issuer will be required to pay such additional amounts as will result in receipt by a holder of the Bonds of such amounts as would have been received by the holder had no such withholding been required. The requirement to pay additional amounts will increase the cost of servicing interest payments on the Bonds, and could have a material adverse effect on the ability of the Issuer to pay interest on, and repay the principal amount of, the Bonds, as well as their profitability and cash flow. In addition, if holders of Bonds are required to pay the PRC income tax on the transfer of the Bonds, the value of investments in the Bonds may be materially and adversely affected. It is unclear whether, if the Issuer is considered a PRC ‘‘resident enterprise’’, the holders of the Bonds might be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.

Under Circular Caishui [2016] 36 (‘‘Circular 36’’) which introduced a new VAT from 1 May 2016 to replace business tax, VAT is applicable where the entities or individuals provide services within the PRC. The revenues generated from the provision of taxable sale of services by entities and individuals, such as financial services, shall be subject to PRC VAT if the seller or buyer of the services is within PRC. In the event that foreign entities or individuals do not have a business establishment in the PRC, the purchaser of services shall act as the withholding agent. According to the Explanatory Notes to Sale of Services, Intangible Assets and Real Property attached to Circular 36, financial services refer to the business activities of financial and insurance operation, including loan processing services, financial services of direct charges, insurance services and the transfer of financial instruments, and the VAT rate is 6%. Accordingly, the interest and other interest like earnings received by a non-PRC resident Bondholder from the Guarantor will be subject to PRC VAT at the rate of 6% in the event that the Guarantor is required to discharge its obligations under the Guarantee of the Bonds. The Guarantor will be obligated to withhold VAT of 6% and certain surcharges on payments of interest and certain other amounts on the Bonds paid by the Guarantor to Bondholders that are non-resident enterprises or individuals.

Circular 36 and laws and regulations pertaining to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve uncertainties, and 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.

Risks Relating to the Bonds and the Guarantee of the Bonds The Bonds and the Guarantee of the Bonds are unsecured obligations. The Bonds and the Guarantee of the Bonds are unsecured obligations of the Issuer and the Guarantor, respectively. The repayment of the Bonds and payment under the Guarantee of the Bonds may be adversely affected if:

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

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

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

If any of these events were to occur, the Issuer’s or the Guarantor’s assets may not be sufficient to pay amounts due on the Bonds.

45 The Bonds and the Guarantee of the Bonds will be structurally subordinated to the existing and future indebtedness and other liabilities of the Issuer’s and the Guarantor’s existing and future subsidiaries and effectively subordinated to the Issuer’s and the Guarantor’s secured debt to the extent of the value of the collateral securing such indebtedness. The Bonds and the Guarantee of the Bonds will be structurally subordinated to any debt and other liabilities and commitments, including trade payables and lease obligations, of the Issuer’sandthe Guarantor’s existing and future subsidiaries (in the case of the Guarantor’s subsidiaries, other than the Issuer), whether or not secured. The Bonds will not be guaranteed by any of the Issuer’sandthe Guarantor’s subsidiaries, and the Issuer and the Guarantor may not have direct access to the assets of such subsidiaries unless these assets are transferred by dividend or otherwise to the Issuer or the Guarantor. The ability of such subsidiaries to pay dividends or otherwise transfer assets to the Issuer and the Guarantor is subject to various restrictions under applicable laws and contracts to which they are a party. Each of the Issuer’s and the Guarantor’s subsidiaries are separate legal entities that have no obligation to pay any amounts due under the Bonds or the Guarantee of the Bonds or make any funds available therefore, whether by dividend, loans or other payments. The Issuer’s and the Guarantor’s right to receive assets of any of the Issuer’s and the Guarantor’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 or the Guarantor are creditors of that subsidiary). Consequently, the Bonds and the Guarantee will be effectively subordinated to all liabilities, including trade payables and lease obligations, of any of the Issuer’s and the Guarantor’s subsidiaries, other than the Issuer, and any subsidiaries that the Issuer or the Guarantor may in the future acquire or establish.

Third parties, including holders of the Bonds, may be hindered or prevented from enforcing their rights with respect to the assets of the Guarantor because of the doctrine of sovereign immunity or state secret privilege. As at the date of this Offering Circular, the Guarantor is controlled by the PRC government, directly and indirectly, through the Yunnan SASAC. All of the assets relating to the operation of the Guarantor’s business are either owned or controlled by the Guarantor itself or by companies wholly or majority owned by the Guarantor. Where a third party brings a legal action against the Guarantor, its subsidiaries or their assets based on a contract dispute with them, the legal proceeding, particularly the enforcement of judgments or any arbitral awards with respect to the assets of the Guarantor and its subsidiaries in China, may be subject to the law and legal systems and the jurisdiction of PRC courts or tribunal. While the Guarantor can be sued in its own capacity in a civil proceeding in a court or tribunal, there is no assurance that the assets of the Guarantor will not be immune from enforcement proceedings on the grounds of sovereign immunity or state secret privilege. If such immunity or privilege is invoked to dismiss judgments from the court or tribunal, it may be difficult for the third party plaintiffs (such as holders of the Bonds) to enforce their contractual rights against the Guarantor, its subsidiaries or their assets in China.

The Issuer has limited assets, which affects its ability to make payments under the Bonds. The Issuer has limited business operations. As at the date of this Offering Circular, the Issuer’s assets are mainly comprised of a 51 per cent. equity interest in Australia YMCI Pty Ltd., a property developer in Australia that has not generated any material income for the Issuer as at the date of this Offering Circular, and 27.62 per cent. equity interest in Top Spring International Holdings Limited, a Hong Kong listed property developer. The Issuer had consolidated net assets of RMB1,608.3 million as at 31 December 2015. The Issuer might not be able to meet its payment obligations under the Bonds due to the limited amount of assets that it holds.

46 The Issuer may not be able to redeem the Bonds upon the due date for redemption thereof. The Issuer, at maturity or at any time following the occurrence of a Change of Control or a Non- Registration Event (each defined in the Terms and Conditions of the Bonds), is or may be required to redeem all but not some only of the Bonds. If such an event occurs, the Issuer may not have sufficient cash in hand and may not be able to arrange financing to redeem the Bonds in time, or on acceptable terms, or at all. In addition, the Issuer had existing indebtedness as at 31 December 2015, some of which rank pari passu with the Bonds. The Issuer’s failure to repay, repurchase or redeem tendered Bonds could constitute an event of default under the Bonds, which may also constitute a default under the terms of the Group’s other indebtedness.

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 Bonds would need to be subject to the exclusive jurisdiction of the Hong Kong courts. There can also be 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 Bonds and the transaction documents to be executed in connection with the issue of the Bonds 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 certain additional procedures to be taken. Under the 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 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 Bonds 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 of Hong Kong will be limited.

The Issuer may elect to redeem the Bonds if it is required to pay additional tax amounts in respect of PRC withholding tax, and a Bondholder may not be able to reinvest the redemption proceeds in comparable securities at the same rate of return of the Bonds. As at the date of this Offering Circular, the Issuer has not been notified or informed by the PRC tax authorities that it is considered as a PRC tax resident enterprise for the purpose of the EIT Law. However, it is unclear whether the Issuer will be treated as a PRC tax resident enterprise for the purposes of the EIT Law. If the Issuer is treated as a PRC tax resident enterprise and is required to withhold tax from interest payments on the Bonds, the Issuer will, subject to certain exceptions, be required to pay such additional amounts as will result in receipt by the Bondholders of such amounts as would have been received by them had no such withholding been required. As described under Condition 5(b) of the Terms and Conditions of the Bonds, if the Issuer or the Guarantor is required to pay additional tax amounts as a result of any change in or amendment to, or any change in the application or official interpretation of, the laws or regulations of a relevant jurisdiction (including any change or amendment or change in the interpretation that requires the Issuer to withhold tax as a result of it being treated as a PRC tax resident enterprise), the Issuer may redeem the Bonds in whole, but not in part, at a redemption price equal to 100 per cent. of the principal amount together with interest accrued to the date fixed for redemption.

47 The date on which the Issuer may elect to redeem the Bonds may not accord with the preference of particular Bondholders. In addition, a Bondholder may not be able to reinvest the redemption proceeds in comparable securities at the same rate of return of the Bonds.

If the Guarantor or any of its subsidiaries, including the Issuer, is unable to comply with the restrictions and covenants in their respective debt agreements (if any), or the Bonds, as applicable, there could be a default under the terms of these agreements, or the Bonds, as applicable, which could cause repayment of the relevant debt to be accelerated. If the Guarantor or any of its subsidiaries, including the Issuer, is unable to comply with the restrictions and covenants in the Bonds or current or future debt obligations and other agreements, 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 Guarantor or any of its subsidiaries, including the Issuer, accelerate repayment of the debt, declare all amounts borrowed due and payable or terminate the agreements, as the case may be. Furthermore, those debt agreements and the Bonds contain or may contain cross-acceleration or cross-default provisions. As a result, the default by the Guarantor or any of its subsidiaries under one debt agreement may cause the acceleration of repayment of debt, including the Bonds, or result in a default under its other debt agreements, including the Bonds. If any of these events occur, there can be no assurance that there would be sufficient assets and cash flows of the Guarantor or any of its subsidiaries to repay in full all of their respective indebtedness, or that they would be able to find alternative financing. Even if the Guarantor 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 Guarantor and its subsidiaries. In addition, the Group guarantees certain indebtedness of third parties. See ‘‘Risks Relating to the Group – Significant indebtedness may restrict the Group’s business activities and increase the Group’s exposure to various operational risks’’. Under the Terms and Conditions of the Bonds, our non-payment under these guarantees upon the debtors’ default of such indebtedness would not constitute an Event of Default (and accordingly the Trustee and holders of the Bonds will not be entitled to accelerate payments under the Bonds) unless the Group fails to pay the amount payable under these guarantees after the relevant creditors have demanded payment from the Group and the relevant grace period has expired.

The ratings of the Bonds may be downgraded or withdrawn. The Bonds are expected to be rated ‘‘BBB+’’ by Fitch. The ratings represent the opinions of the rating agencies and their assessment of the ability of the Issuer and the Guarantor to perform their respective obligations under the Bonds and the Guarantee of the Bonds and credit risks in determining the likelihood that payments will be made when due under the Bonds. A rating is not a recommendation to buy, sell or hold securities. The ratings can be lowered or withdrawn at any time. Neither the Issuer nor the Guarantor is obligated to inform holders of the Bonds if the ratings are lowered or withdrawn. A reduction or withdrawal of the ratings may adversely affect the market price of the Bonds and the Guarantor’s ability to access the debt capital markets.

If the Guarantor fails to complete registration with SAFE in connection with the Guarantee of the Bonds, there may be logistical and practical hurdles for cross-border payments under the Guarantee of the Bonds. The Guarantor will unconditionally and irrevocably guarantee the due and punctual payment of all sums from time to time payable by the Issuer in respect of the Bonds. Such Guarantee of the Bonds will be contained in the Deed of Guarantee to be executed on the Issue Date. The Guarantor is required to submit the Guarantee of the Bonds to the Yunnan Branch of SAFE within 15 Yunnan business days upon the execution of the Deed of Guarantee for registration in accordance with the Foreign Exchange Administration Rules on Cross-Border Guarantees promulgated by SAFE. Although non-registration would not as a matter of PRC law render the Guarantee of the Bonds ineffective or invalid, SAFE may impose penalties on the Guarantor if registration is not carried out within the stipulated time frame. The Guarantor intends to register the Guarantee of the Bonds as soon as practicable. If the Guarantor fails to complete registration with SAFE, there may be logistical and practical hurdles at the time of remittance

48 of funds (if any cross-border payment is to be made by the Guarantor under the Guarantee of the Bonds) as domestic banks may require evidence of registration with SAFE in connection with the Guarantee of the Bonds prior to giving effect to any such remittance.

The liquidity and price of the Bonds following this offering may be volatile. The price and trading volume of the Bonds may be highly volatile. Factors such as variations in the revenues, earnings and cash flows of the Group and proposals of new investments, strategic alliances and/or acquisitions, interest rates and fluctuations in prices for comparable companies, any adverse change in the credit rating and results of operations could cause the price of the Bonds to change. Any such developments may result in large and sudden changes in the volume and price at which the Bonds will trade. There can be no assurance that these developments will not occur in the future.

A trading market for the Bonds may not develop. The Bonds are a new issue of securities for which there is currently no trading market. There can be no assurance as to the liquidity of the Bonds or that an active trading market will develop. If such a market were to develop, the Bonds could trade at prices that may be higher or lower than the initial issue price depending on many factors, including prevailing interest rates, the Group’s operations and the market for similar securities. Although application has been made for the listing of the Bonds on the Hong Kong Stock Exchange, no assurance can be given as to the liquidity of, or trading marked for, the Bonds. The Joint Lead Managers are not obligated to make a market in the Bonds and any such market making, if commenced, may be discontinued at any time at the sole discretion of the Joint Lead Managers. In addition, the Bonds are being offered pursuant to exemptions from registration under the Securities Act and, as a result, the holders of the Bonds will only be able to resell the Bonds in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act. It is investors’ obligation to ensure that offers and sales of the Bonds within the United States and other countries comply with applicable securities laws. Please see ‘‘Subscription and Sale’’. None of the Issuer or the Guarantor can predict whether an active trading market for the Bonds will develop or be sustained.

Gains on the transfer of the Bonds may be subject to income tax under PRC tax laws. Under the EIT Law and its implementation rules, any gains realised on the transfer of the Bonds 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 incomes derived from sources within the PRC. See ‘‘– Risk Factors Relating to the Issuer – The Issuer may be treated as a PRC enterprise for PRC tax purposes, which may subject the Issuer to PRC income tax on its worldwide income and interest payable by the Issuer to foreign investors and gain on the sale of the Bonds may be subject to withholding taxes under PRC tax law’’.

The insolvency laws of Hong Kong and the PRC may differ from those of another jurisdiction with which the holders of the Bonds are familiar. As the Issuer and the Guarantor are incorporated under the laws of Hong Kong and the PRC, any insolvency proceeding relating to the Issuer would likely involve Hong Kong or the PRC insolvency laws, as the case may be, 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 Bonds are familiar.

49 Investment in the Bonds is subject to exchange rate risks. The Bonds are denominated and payable in US dollars. If a Bondholder measures its investment returns by reference to a currency other than US dollars, an investment in the Bonds entails foreign exchange related risks, including changes in the value of US dollars relative to the currency by reference to which an investor measures its investment returns. Depreciation of the US dollars against such currency could cause a decrease in the effective yield of the Bonds below their stated coupon rates and could result in a loss when the return on the Bonds is translated into such currency. In addition, there may be tax consequences for Bondholders as a result of any foreign currency gains resulting from any investment in the Bonds.

The Trustee may request holders of the Bonds to provide an indemnity and/or security and/or prefunding to its satisfaction. In certain circumstances, including without limitation the giving of notice to the Issuer or the Guarantor and the taking of enforcement steps pursuant to Condition 13 of the Terms and Conditions of the Bonds, the Trustee may, at its sole discretion, request holders of the Bonds to provide an indemnity and/or security and/or pre-funding to its satisfaction before it takes actions on behalf of holders of the Bonds. The Trustee shall not be obliged to take any such actions if not indemnified and/or secured and/or pre- funded to its satisfaction. 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 to it, in breach of the terms of the Trust Deed or the Terms and Conditions of the Bonds and in such circumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to the extent permitted by the agreements and the applicable law, it will be for the holders of the Bonds to take such actions directly.

Modifications and waivers may be made in respect of the Terms and Conditions of the Bonds and the Trust Deed by the Trustee or less than all of the holders of the Bonds. The Terms and Conditions of the Bonds provide that the Trustee may, without the consent of Bondholders, agree to any modification of the Bonds and the Trust Deed (with certain exceptions) which in the opinion of the Trustee will not be materially prejudicial to the interests of Bondholders and to any modification of the Bonds and the Trust Deed (with certain exceptions) which in the opinion of the Trustee 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 Bondholders, authorise or waive any proposed breach or breach of the Bonds and the Trust Deed (with certain exceptions) if, in the opinion of the Trustee, the interests of the Bondholders will not be materially prejudiced thereby.

The Guarantor’s financial statements were prepared in conformity with PRC GAAP, which differs from IFRS in certain aspects, and investors may have less confidence in the reliability of the Group’s financial statements and adversely affect the market price of the Bonds. The audited consolidated financial statements of the Guarantor included elsewhere in this Offering Circular were prepared in conformity with PRC GAAP which differs in certain aspects from IFRS. See ‘‘Description of Certain Material Differences between PRC GAAP and IFRS’’. Investors may have less confidence in the audited consolidated financial statements of the Guarantor and the financial information of the Guarantor included elsewhere in this Offering Circular, which may adversely affect the market price of the Bonds. In addition, investors should consult their own professional advisers for an understanding of any difference and how they may affect the financial information contained herein.

50 The Bonds will initially be represented by the Global Certificate and holders of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System. Bonds will initially be represented by the Global Certificate. Such Global Certificate will be deposited with a common depositary for Euroclear and Clearstream (each a ‘‘Clearing System’’). Except in the circumstances described in the Global Certificate, investors will not be entitled to receive definitive Bonds. The relevant Clearing System will maintain records of the beneficial interests in the Global Certificate.

While the Bonds are represented by the Global Certificate, investors will be able to trade their beneficial interests only through the Clearing Systems. While the Bonds are represented by the Global Certificate the Issuer will discharge its payment obligations under the Bonds by making payments to the common depositary for Euroclear and Clearstream, for distribution to their account holders. A holder of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System to receive payments under the Bonds. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Certificate. Holders of beneficial interests in the Global Certificate will not have a direct right to vote in respect of the Bonds. 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.

51 TERMS AND CONDITIONS OF THE BONDS

The following is the text of the Terms and Conditions of the Bonds which (subject to modification and except for the paragraphs in italics) will be endorsed on the Bond Certificates issued in respect of the Bonds:

The US$@@ in aggregate principal amount of @@% guaranteed bonds due 20@@ (the ‘‘Bonds’’, which expression includes any further bonds issued pursuant to Condition 14 (Further issues)and forming a single series therewith) of Caiyun International Investment Limited (the ‘‘Issuer’’) are subject to, and have the benefit of, a trust deed dated on or about [•] 2016 (as amended or supplemented from time to time, the ‘‘Trust Deed’’) between the Issuer, Yunnan Metropolitan Construction Investment Group Co., Ltd.（雲南省城市建設投資集團有限公司）(the ‘‘Guarantor’’)andTheBankofNewYork Mellon, London Branch as trustee (in that capacity, the ‘‘Trustee’’, which expression includes all persons for the time being acting as trustee or trustees appointed under the Trust Deed) and are the subject of a deed of guarantee dated on or about [•] 2016 (as amended or supplemented from time to time, the ‘‘Deed of Guarantee’’) between the Guarantor and the Trustee and an agency agreement dated on or about [•] 2016 (as amended or supplemented from time to time, the ‘‘Agency Agreement’’) between the Issuer, The Bank of New York Mellon (Luxembourg) S.A. as registrar (in that capacity, the ‘‘Registrar’’, which expression includes any successor registrar appointed from time to time in connection with the Bonds) and as transfer agent (in that capacity and together with any successor or additional transfer agents appointed from time to time in connection with the Bonds, the ‘‘Transfer Agents’’), The Bank of New York Mellon, London Branch as principal paying agent (in that capacity, the ‘‘Principal Paying Agent’’, which expression includes any successor principal paying agent appointed from time to time in connection with the Bonds), 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 Bonds) and the Trustee. References herein to the ‘‘Agents’’ are to the Registrar, the Transfer Agents and the Paying Agents and any reference to an ‘‘Agent’’ is to any one of them. Certain provisions of these Conditions are summaries of the Trust Deed and the Agency Agreement and subject to their detailed provisions. The Bondholders (as defined below) are bound by, and are entitled to the benefit of, all the provisions of the Trust Deed, 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, the Deed of Guarantee and the Agency Agreement are available for inspection by Bondholders during normal office hours at the registered office for the time being of the Trustee and at the specified offices of each of the Paying Agents, the initial specified offices of which are set out below.

1 Form, Denomination, Status and Guarantee of the Bonds (a) Form and denomination: The Bonds will be issued in registered form in denominations of US$200,000 each and integral multiples of US$1,000 in excess thereof (an ‘‘Authorised Denomination’’).

(b) Status of the Bonds: The Bonds constitute direct, general, unconditional, unsubordinated and (subject to Condition 3(a) (Negative pledge)) unsecured obligations of the Issuer which will at all times rank pari passu without any preference or priority among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, other than those preferred by applicable law.

(c) Guarantee of the Bonds: The Guarantor has in the Deed of Guarantee unconditionally and irrevocably guaranteed the due and punctual payment of all sums from time to time payable by the Issuer in respect of the Bonds. This guarantee (the ‘‘Guarantee of the Bonds’’) constitutes direct, general, unconditional, unsubordinated and (subject to Condition 3(a) (Negative pledge)) unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsubordinated and unsecured obligations of the Guarantor, other than those preferred by applicable law.

52 Upon issue, the Bonds will be represented by a global certificate (the ‘‘Global Certificate’’) substantially in the form scheduled to the Trust Deed. The Global Certificate will be registered in the name of a nominee of, and deposited with, a common depositary for Euroclear Bank S.A./N.V. (‘‘Euroclear’’) and Clearstream Banking S.A. (‘‘Clearstream’’), and will be exchangeable for individual Bond Certificates (as defined below) only in the circumstances set out therein.

2 Register, Title and Transfers (a) Register: The Registrar will maintain a register (the ‘‘Register’’) in respect of the Bonds outside the United Kingdom in accordance with the provisions of the Agency Agreement. In these Conditions, the ‘‘Holder’’ of a Bond means the person in whose name such Bond is for the time being registered in the Register (or, in the case of a joint holding, the first named thereof) and ‘‘Bondholder’’ shall be construed accordingly. A certificate (each, a ‘‘Bond Certificate’’) will be issued to each Bondholder in respect of its registered holding. Each Bond Certificate will be numbered serially with an identifying number which will be recorded in the Register.

(b) Title: The Holder of each Bond shall (except as otherwise required by law) be treated as the absolute owner of such Bond 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 Bond Certificate relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft of such Bond Certificate) and no person shall be liable for so treating such Holder.

(c) Transfers: Subject to paragraphs (f) (Closed periods)and(g)(Regulations concerning transfers and registration) below, a Bond may be transferred upon surrender of the relevant Bond 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 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 Bond may not be transferred unless the principal amount of Bonds transferred and (where not all of the Bonds held by a Holder are being transferred) the principal amount of the balance of Bonds not transferred are Authorised Denominations. Where not all the Bonds represented by the surrendered Bond Certificate are the subject of the transfer, a new Bond Certificate in respect of the balance of the Bonds will be issued to the transferor.

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

(d) Registration and delivery of Bond Certificates: Within five business days of the surrender of a Bond Certificate in accordance with paragraph (c) (Transfers) above, the Registrar will register the transfer in question and deliver a new Bond Certificate of a like principal amount to the Bonds transferred to each transferee and, if appropriate, a new Bond Certificate in respect of the balance of its holding to the transferor 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 transferor but at the Issuer’s expense) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such transferor. In this paragraph, ‘‘business day’’ means a day on which commercial banks are open for general business (including dealings in foreign currencies) in the city where the Registraror(asthecasemaybe)therelevant Transfer Agent has its specified office.

Except in the limited circumstances described herein, owners of interests in the Bonds will not be entitled to receive physical delivery of Bond Certificates.

53 (e) No charge: The transfer of a Bond will be effected without charge by or on behalf of the Issuer, the Registrar or any Transfer Agent but against 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: Bondholders may not require transfers to be registered during the period of seven days ending on the due date for redemption or any payment of principal or interest in respect of the Bonds.

(g) Regulations concerning transfers and registration: All transfers of Bonds and entries on the Register are subject to the detailed regulations concerning the transfer of Bonds scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Trustee and the Registrar or by the Trustee with the prior written approval of the Registrar. A copy of the current regulations will be mailed (free of charge to the Holder) by the Registrar to any Bondholder who requests in writing a copy of such regulations.

3 Covenants (a) Negative pledge

So long as any Bond remains outstanding (as defined in the Trust Deed), neither the Issuer nor the Guarantor shall, and the Issuer and the Guarantor shall procure that none of 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 to secure any Relevant Indebtedness or Guarantee of Relevant Indebtedness without (i) at the same time or prior thereto securing or (as the case may be) providing a guarantee in respect of the Bonds equally and rateably therewith or (ii) providing such other security for the Bonds as (A) the Trustee may in its absolute discretion consider to be not materially less beneficial to the interests of the Bondholders or (B) as may be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

(b) Undertakings in relation to the Guarantee of the Bonds

The Guarantor undertakes to file or cause to be filed with the Yunnan Branch of the State Administration of Foreign Exchange (the ‘‘Yunnan SAFE’’) the Deed of Guarantee evidencing the Guarantee of the Bonds within 15 Yunnan Business Days after the execution of the Deed of Guarantee in accordance with the Provisions on the Foreign Exchange Administration of Cross-Border Guarantees 《跨境擔保外匯管理規定》 promulgated by the State Administration of Foreign Exchange of the People’s Republic of China on 19 May 2014, effective 1 June 2014, and to comply with all applicable PRC laws and regulations in relation to the Guarantee of the Bonds.

‘‘Yunnan Business Day’’ means a day other than a Saturday, Sunday or a day on which the Yunnan SAFE is authorised or obligated by law or executive order to remain closed.

‘‘PRC’’ means the People’s Republic of China (excluding the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan).

54 (c) Financial Statements

So long as any Bond remains outstanding (as defined in the Trust Deed), the Issuer and the Guarantor shall send to the Trustee:

(i) as soon as they are available and in any event not more than 180 calendar days after the end of each financial year, two copies of their audited consolidated annual financial statements (including balance sheet, income statement, statement of cash flows and statement of changes in shareholders’ equity) in English prepared in accordance with the accounting principles generally accepted in Hong Kong and the PRC, respectively, for the relevant financial year (in each case, together with any statement, reports including any directors’ and auditors’ reports and notes attached to or intended to be read with any of them);

(ii) as soon as they are available and in any event not more than 120 calendar days after the end of each semi-annual financial period, two copies of their unaudited semi-annual financial statements (including balance sheet, income statement, statement of cash flows and statement of changes in shareholders’ equity) prepared on a basis consistent with the respective audited financial statements for the relevant financial period (in each case, together with any statement, reports including any directors’ and auditors’ reports and notes attached to or intended to be read with any of them); and

(iii) within 14 calendar days of a written request by the Trustee and at the time of provision of the annual financial statements pursuant to paragraph (i) above, a Compliance Certificate.

(d) Post-Issuance Reporting Filing

The Guarantor undertakes to (i) report or cause to be reported the relevant information relating to the issue of the Bonds to the National Development and Reform Commission (the ‘‘NDRC’’) within 10 working days in the PRC after the Issue Date and in accordance with the Notice on Promoting the Reform of the Filing and Registration System for Issuance of ForeignDebtbyEnterprises（國家發展改革委關於推進企業發行外債備案登記制管理改革 的通知）promulgated by the NDRC and effective from 14 September 2015 (the ‘‘Post- Issuance Reporting Filing’’) and (ii) comply with all applicable PRC laws and regulations in relation to the Post-Issuance Reporting Filing.

In these Conditions:

‘‘Compliance Certificate’’ means a certificate signed by a director of the Issuer and a director of the Guarantor certifying that, having made due enquiries, to the best of the knowledge, information and belief of the Issuer and the Guarantor as at a date (the ‘‘Certification Date’’) not more than five calendar days before the date of the certificate:

(i) no Event of Default nor any 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 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 or circumstance had occurred, giving details of it; and

(ii) each of the Issuer and the Guarantor has complied with all its obligations under the Bonds, the Guarantee of the Bonds, the Trust Deed and the Agency Agreement;

55 ‘‘Guarantee’’ means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):

(i) any obligation to purchase such Indebtedness;

(ii) any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

(iii) any indemnity against the consequences of a default in the payment of such Indebtedness; and

(iv) any other agreement to be responsible for such Indebtedness;

‘‘Indebtedness’’ means any indebtedness of any Person for money borrowed or raised including

(without limitation) any indebtedness for or in respect of:

(i) amounts raised by acceptance under any acceptance credit facility;

(ii) amounts raised under any note purchase facility;

(iii) the amount of any liability in respect of leases or hire purchase contracts which would, in accordance with applicable law and generally accepted accounting principles, be treated as finance or capital leases;

(iv) the amount of any liability in respect of any purchase price for assets or services the payment of which is deferred for a period in excess of 60 calendar days; and

(v) amounts raised under any other transaction (including, without limitation, any forward sale or purchase agreement) having the commercial effect of a borrowing;

‘‘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;

‘‘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 securities 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);

‘‘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’’), (a) any other Person of which the first Person owns or controls (either directly or indirectly through one or more Subsidiaries) more than 50 per cent. of the issued share capital or other ownership interest having ordinary voting power to elect directors, managers or trustees of such other Person or (b) any other Person which at any time has its accounts consolidated with those of the first Person or which, under the law, regulations or generally accepted accounting principles of the jurisdiction of incorporation of such other Person from time to time, should have its accounts consolidated with those of the first Person.

56 4 Interest The Bonds bear interest from, and including, @@ 2016 (the ‘‘Issue Date’’)attherateof@@% per annum (the ‘‘Rate of Interest’’) of the principal amount of the Bonds, payable in arrear on @@ and @@ in each year (each, an ‘‘Interest Payment Date’’), subject as provided in Condition 6(Payments).

Each Bond will cease to bear interest from the due date for redemption or repayment thereof unless, upon due presentation thereof, payment of the full amount due is improperly withheld or refused or default is made in respect of any such payment, in which case it will continue to bear interest on the principal amount of the Bonds in respect of which payment is improperly withhold or default otherwise occurs at such rate (both before and after judgment) up to but excluding whichever is the earlier of (a) the day on which all sums due in respect of such Bond up to that day are received by or on behalf of the relevant Bondholder and (b) the day which is seven calendar days after the Principal Paying Agent or the Trustee has notified the Bondholders that it has received all sums due in respect of the Bonds up to such seventh day (except to the extent that there is any subsequent default in payment).

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

Interest in respect of any Bond shall be calculated per the Calculation Amount. The amount of interest payable per Calculation Amount for any period shall, save as provided above in relation to equal instalments, be equal to the product of the rate of interest specified above, the Calculation Amount and the day-count fraction for the relevant period, rounding the resulting figure to the nearest cent (half a cent being rounded upwards).

In these Conditions:

‘‘Calculation Amount’’ means US$1,000; and

‘‘Interest Period’’ means each period beginning on (and including) the Issue Date or any Interest Payment Date and ending on (and excluding) the next Interest Payment Date.

5 Redemption and Purchase (a) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their principal amount together with unpaid accrued interest on the Interest Payment Date falling on, or nearest to, @@ 20@@, subject as provided in Condition 6(Payments).

(b) Redemption for tax reasons: The Bonds may be redeemed at the option of the Issuer in whole, but not in part only, at any time, on giving not less than 30 nor more than 60 calendar days’ prior notice to the Bondholders in accordance with Condition 15 (Notices)(which notice shall be irrevocable), at their principal amount, together with interest accrued to, but excluding the date fixed for redemption, if, immediately before giving such notice, the Issuer satisfies the Trustee that:

(i) (A) the Issuer has or will become obliged to pay Additional Amounts as a result of any change in, or amendment to, the laws or regulations of Hong Kong or 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 Issue Date; and (B) such obligation cannot be avoided by the Issuer taking reasonable measures available to it; or

57 (ii) (A) (if a demand was made under the Guarantee of the Bonds) the Guarantor has or will become obliged to pay Additional 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 the Issue Date; and (B) such obligation cannot be avoided by the Guarantor taking reasonable measures available to it;

provided, however, that no such notice of redemption shall be given earlier than 90 calendar days prior to the earliest date on which the Issuer or the Guarantor (as the case may be) would be obliged to pay such Additional Amounts if a payment in respect of the Bonds (or the Guarantee of the Bonds, as the case may be) were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver or procure that there is delivered to the Trustee:

(A) a certificate signed by two directors of the Issuer or the Guarantor (as the case may be) 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 or the Guarantor (as the case may be) has or will become obliged to pay such additional amounts as a result of such change or amendment.

The Trustee shall be entitled to accept and rely upon such certificate and opinion as sufficient evidence of the satisfaction of the circumstances set out in (i)(A) and (i)(B) above (or as the case may be) (ii)(A) and (ii)(B) above, in which event such evidence shall be conclusive and binding on the Bondholders and the Trustee shall be protected and shall have no liability to any Bondholder or any other person for so accepting and relying on such certificate or opinion.

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

In this Condition 5(b) (Redemption for tax reasons):

‘‘Additional Amounts’’ means the additional amounts provided or referred to in Condition 7 (Taxation) which are in respect of any withholding or deduction (i) at a rate greater than the applicable withholding tax rate as a result of the Issuer or the Guarantor, as the case may be, being deemed by the tax authorities of the PRC to be a PRC tax resident in accordance with any applicable tax laws, treaties or regulations or (ii) by or within Hong Kong or any other jurisdiction through which payments on the Bonds are made or any authority thereof or therein having power to tax, other than the PRC.

(c) Redemption for Change of Control: At any time following the occurrence of a Change of Control, the Holder of any Bond will have the right, at such Holder’s option, to require the Issuer to redeem all, but not some only, of that Holder’s Bonds on the Put Settlement Date at 101% of their principal amount, together with accrued interest to such Put Settlement Date.

58 To exercise such right, the Holder of the relevant Bond must deposit at the specified office of any Paying Agent a duly completed and signed notice of redemption, in the form for the time being current, obtainable from the specified office of any Paying Agent (a ‘‘Put Exercise Notice’’), together with the Bond Certificates evidencing the Bonds to be redeemed, by not later than 30 calendar days following a Change of Control or, if later, 30 calendar days following the date upon which notice thereof is given to Bondholders by the Issuer in accordance with Condition 15 (Notices). The ‘‘Put Settlement Date’’ shall be the 14th calendar day after the expiry of such period of 30 calendar days as referred to above.

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

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

Neither the Trustee nor the Agents shall be required to monitor whether a Change of Control or any event which could lead to the occurrence of a Change of Control has occurred and shall not be responsible or liable to Bondholders or any other person for not doing so.

In this Condition 5(c) (Redemption for Change of Control): a ‘‘Change of Control’’ occurs when:

(i) Yunnan SASAC or any other agency as designated by Yunnan SASAC ceases to own or control (whether directly or indirectly or in combination) at least 80 per cent. of the Voting Rights of the issued share capital of the Guarantor; or

(ii) the Guarantor ceases to own or control (whether directly or indirectly or in combination) 100 per cent. of the Voting Rights of the issued share capital of the Issuer; or

(iii) the Guarantor consolidates with or merges into or sells or transfers all or substantially all of its assets to any other Person, provided that no Change of Control under this paragraph (iii) will occur if (x) the Guarantor is the surviving person after such consolidation or merger or (y) if Yunnan SASAC or any other agency as designated by Yunnan SASAC owns or controls (whether directly or indirectly or in combination) at least 80 per cent. of the Voting Rights of the issued share capital of such surviving person or such Person receiving such asset transfer (the ‘‘New Person’’)andsuchNew Person expressly assumes the obligations of the Guarantor under the Bonds, the Guarantee of the Bonds, the Trust Deed and the Agency Agreement.

‘‘Voting Rights’’ means the right generally to vote at a general meeting of shareholders of a person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency, and any such voting power shall therefore be excluded for the purpose of this definition); and

‘‘Yunnan SASAC’’ means the State-owned Assets Supervision and Administration Commission of Yunnan Provincial People’s Government or its successor.

59 (d) Optional Redemption for Non-Registration: Upon the occurrence of a Non-Registration Event, the Holder of any Bond will have the right, at such Holder’s option, to require the Issuer to redeem on the Non-Registration Event Redemption Date all, but not some only, of that Holder’s Bonds at 100% of their principal amount together with accrued interest up to, but excluding, the Non-Registration Event Redemption Date. The Issuer shall give notice to the Trustee and the Bondholders in accordance with Condition 15 (Notices) promptly after the Registration Deadline, such notice to state whether a Non-Registration Event has occurred and, if so, specify the procedure for exercise by Holders of their rights to require redemption of the Bonds pursuant to this Condition 5(d) (Optional Redemption for Non-Registration).

To exercise such right, the Holder of the relevant Bond must deposit at the specified office of any Paying Agent a duly completed and signed Put Exercise Notice (as defined in Condition 5(c)), together with the Bond Certificates evidencing the Bonds to be redeemed, by not later than 30 calendar days following the date upon which notice of the occurrence of a Non- Registration Event is given to Bondholders by the Issuer in accordance with Condition 15 (Notices). The ‘‘Non-Registration Event Redemption Date’’ shall be the seventh calendar day after the expiry of such period of 30 calendar days as referred to above.

The Trustee and the Agents shall not be required to take any steps to ascertain whether a Non-Registration Event has occurred and shall not be responsible or liable to Bondholders or any other person for not doing so.

In this Condition 5(d) (Optional Redemption for Non-Registration):

a ‘‘Non-Registration Event’’ occurs when the Release Condition has not been satisfied on or prior to the Registration Deadline;

‘‘Registration Deadline’’ means the day falling 90 calendar days after the Issue Date; and

‘‘Release Condition’’ means the receipt by the Trustee of:

(i) a certificate in substantially the form set out in the Trust Deed of any two directors or duly authorised officers of the Guarantor confirming (A) the completion of the registration of the Guarantee of the Bonds with the Yunnan SAFE as described in Condition 3(b) (Covenants) and (B) no Event of Default has occurred; and

(ii) a certified true copy of the relevant SAFE registration certificate and the particulars of registration.

(e) No other redemption: The Issuer shall not be entitled to redeem the Bonds otherwise than as provided in paragraphs (a) (Scheduled redemption) to (d) (Mandatory Redemption for Non- Registration) above.

(f) Purchase: The Issuer, the Guarantor or any of their respective Subsidiaries may at any time purchase Bonds in the open market or otherwise and at any price. The Bonds so purchased, while held by or on behalf of the Issuer, the Guarantor or any such Subsidiary, shall not entitle the Holder to attend and vote at any meetings of the Bondholders and shall not be deemed to be outstanding for the purposes of Conditions 8, 12 and 13.

(g) Cancellation: All Bonds so redeemed or purchased by the Issuer, the Guarantor or any of their respective Subsidiaries shall be cancelled and may not be reissued or resold.

60 6Payments (a) Principal: Payments of principal shall be made (subject to surrender of the relevant Bond Certificates at the specified office of the Principal Paying Agent or any other Paying Agent if no further payment falls to be made in respect of the Bonds represented by such Bond Certificates) in the manner provided in paragraph (b) below.

(b) Interest: Payments of interest shall be made by US dollar cheque mailed to the registered address of the Bondholder and drawn on, or upon application by a Holder of a Bond to the specified office of the Registrar not later than the fifteen day before the due date for such payment, by transfer to a US dollar account maintained by the payee with, a bank that processes payments in US dollars and (in the case of interest payable on redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Bond Certificates at the specified office of any Paying Agent.

(c) Payments subject to fiscal laws: All payments in respect of the Bonds are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment but without prejudice to the provisions of Condition 7 (Taxation). No commissions or expenses shall be charged to the Bondholders in respect of such payments.

(d) Partial payments: If a Paying Agent makes a partial payment in respect of any Bond, 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 Bond Certificate, that a statement indicating the amount and the date of such payment is endorsed on the relevant Bond Certificate.

(e) Record date: Each payment in respect of a Bond will be made to the person shown as the Holder in the Register at the opening of business in the place of the Registrar’sspecified office on the fifteenth day before the due date for such payment (the ‘‘Record Date’’). Where payment in respect of a Bond is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the opening of business on the relevant Record Date.

Notwithstanding the foregoing, so long as the Global Certificate is held on behalf of Euroclear, Clearstream or any other clearing system, each payment in respect of the Global 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.

(f) Non-Payment Business Days: If any date for payment in respect of any Bond is not a Payment Business Day, the Holder shall not be entitled to payment until the next following Payment Business Day nor to any interest or other sum in respect of such postponed payment.

In this Condition 6 (Payments):

‘‘Payment Business Day’’ means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the place in which the specified office of the Principal Paying Agent is located and on which banks and foreign exchange markets are open for business in New York City (if surrender of the relevant Bond Certificate is required).

61 7 Taxation All payments under or in respect of the Bonds, the Guarantee of the Bonds, the Trust Deed or the Agency Agreement by or on behalf of the Issuer or, as the case may be, the Guarantor 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 Hong Kong or the PRC or any jurisdiction through which payments are made 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. In that event the Issuer or, as the case may be, the Guarantor shall pay such additional amounts as will result in the receipt by the Bondholders 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 amounts shall be payable in respect of any Bond:

(i) by or on behalf of a Holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Bond by reason of its having some connection with the jurisdiction by which such taxes, duties, assessments or charges have been imposed, levied, collected, withheld or assessed other than the mere holding of the Bond; or

(ii) by or on behalf of a Holder who would not be liable for or subject to such withholding or deduction by making a declaration of identity, non-residence or other similar claim for exemption to the relevant tax authority if, after having been requested to make such a declaration or claim, such Holder, which is legally capable and competent of making such a declaration or claim, fails to do so within any applicable period prescribed by such relevant tax authority; or

(iii) (in the case of a payment in principal) in respect of which the Bond Certificate is surrendered (where required to be surrendered) more than 30 calendar days after the Relevant Date except to the extent that the relevant Bondholder would have been entitled to such additional amounts if it had presented such Bond for payment on the last day of such period of 30 calendar days.

‘‘Relevant Date’’ means whichever is the later of (a) the date on which the payment in question first becomes due, and (b) if the full amount payable has not been received by the Principal Paying Agent in accordance with the provision of the Agency Agreement on or prior to such due date, the date on which the full amount has been received and notice to that effect has been given to the Bondholders.

Any reference in these Conditions to principal 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 (Taxation) pursuant to the Trust Deed.

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

62 8Eventsofdefault If any of the following events occurs, then the Trustee at its sole discretion may and, if so requested in writing by Holders of at least 25% of the aggregate principal amount of the outstanding Bonds 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 Bonds to be immediately due and payable, whereupon they shall become immediately due and payable at their principal amount together with accrued and unpaid interest without further action or formality:

(a) Non-payment: the Issuer or the Guarantor fails to pay any amount of principal in respect of the Bonds or the Guarantee of the Bonds, as the case may be, on the due date for payment thereof or fails to pay any amount of interest in respect of the Bonds or the Guarantee of the Bonds, as the case may be, within 30 calendar days of the due date for payment thereof; or

(b) Breach of other obligations: the Issuer or the Guarantor defaults in the performance or observance of any of its other obligations under or in respect of the Bonds, the Trust Deed or the Deed of Guarantee and such default (i) is incapable of remedy or (ii) being a default which, in the sole opinion of the trustee, is capable of remedy remains unremedied for 30 calendar days after the Trustee has given written notice thereof to the Issuer or the Guarantor, as the case may be; or

(c) Cross-default of Issuer, Guarantor or Subsidiaries:

(i) any Indebtedness of the Issuer, the Guarantor or any of their respective 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, the Guarantor 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, the Guarantor or any of their respective Subsidiaries fails to pay when due (as extended by any applicable grace period) any amount payable by it as demanded by the relevant creditors under any Guarantee of any 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 (without duplication where any Guarantee referred to in sub-paragraph (iii) is a Guarantee on any such Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii)) exceeds US$30,000,000 (or its equivalent in any other currency or currencies); or

(d) Unsatisfied judgment and enforcement proceedings: one or more judgment(s) or order(s) for the payment of an aggregate amount in excess of US$30,000,000 (or its equivalent in any other currency or currencies) is rendered against the Issuer, the Guarantor or any of their respective Subsidiaries and continue(s) unsatisfied and unstayed for a period of 60 calendar days after the date(s) thereof or, if later, the date therein specified for payment, or a distress, attachment, execution or other legal process is levied, enforced or sued out on or against any substantial part of the property, assets or revenues of the Issuer, the Guarantor or any of their respective Subsidiaries and is not discharged or stayed within 60 days; or

63 (e) Security enforced: a secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any Principal Subsidiary and such action is not discharged within 60 days after the date thereof; or

(f) Insolvency, etc.: (i) the Issuer, the Guarantor or any Principal Subsidiary becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator of the Issuer, the Guarantor or any Principal Subsidiary or the whole or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any Principal Subsidiary is appointed, (iii) the Issuer, the Guarantor or any Principal Subsidiary makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness or any Guarantee of any Indebtedness given by it, provided, for the avoidance of doubt, this sub-clause (iii) shall not apply to an assignment, arrangement or composition with creditors entered into by the Issuer, the Guarantor or any Principal Subsidiary on a solvent basis with respect to the Indebtedness of any Principal Subsidiary (or any Guarantee thereof granted by the Issuer or the Guarantor) and on terms as notified to the Trustee through a notice to be delivered on or before the commencement of such assignment, arrangement or composition, which notice should confirm that such assignment, arrangement or composition is conducted on a solvent basis and will not affect the Issuer and the Guarantor’s ability to perform their obligations under the Bonds, the Trust Deed and the Deed of Guarantee, or (iv) the Issuer, the Guarantor or any of Principal Subsidiary ceases or threatens to cease to carry on all or any substantial part of its business, except (a) in the case of any Principal Subsidiary, where the cessation is for the purpose of and followed by a solvent winding up, dissolution, reconstruction, amalgamation, merger or consolidation whereby the business, undertaking and assets of such Principal Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor, and/or another Principal Subsidiary or (b) on terms approved by an Extraordinary Resolution of the Bondholders; 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, the GuarantororanyPrincipal Subsidiary, except (i) in the case of any Principal Subsidiary, for the purpose of and followed by a solvent winding up, dissolution, reconstruction, merger or consolidation whereby the business, undertaking and assets of such Principal Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor and/or another Principal Subsidiary or (ii) on terms approved by an Extraordinary Resolution of the Bondholders; or

(h) Government intervention: (i) all or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any Principal Subsidiary is condemned, seized or otherwise appropriated by any person acting under the authority of any national, regional or local government or (ii) the Issuer, the Guarantor or any Principal Subsidiary is prevented by any such person from exercising normal control over all or any part of its undertaking, assets and revenues; or

(i) Authorisation and consents: any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer and the Guarantor to lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under the Bonds, the Trust Deed, the Deed of Guarantee and the Agency Agreement, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make the Bonds, the Trust Deed, the Deed of Guarantee and the Agency Agreement admissible in evidence in the courts of Hong Kong is not taken, fulfilled or done; or

64 (j) Analogous event: any event occurs which has an analogous effect to any of the events referred to in paragraphs (d) (Unsatisfied judgment and enforcement proceedings)to(i) (Authorisation and consents) (inclusive) above; or

(k) Unlawfulness: it is or will become unlawful for the Issuer or the Guarantor to perform or comply with any of its obligations under or in respect of the Bonds, the Deed of Guarantee, the Trust Deed or the Agency Agreement; or

(l) Guarantee of the Bonds: the Guarantee of the Bonds is not (or is claimed by the Guarantor not to be) in full force and effect and enforceable.

In this Condition 8 (Events of Default):

‘‘Principal Subsidiary’’ means any Subsidiary of the Guarantor, together with its own Subsidiaries (if any):

(a) whose revenue or gross profit is at least 5 per cent. of the consolidated revenue or gross profit, as the case may be, of the Guarantor and its Subsidiaries as a whole as shown in the Guarantor’s latest published audited consolidated income statement; or

(b) whose total assets are at least 5 per cent. of the consolidated total assets of the Guarantor and its Subsidiaries as a whole as shown in the Guarantor’s latest published audited consolidated balance sheet;

provided that, in relation to paragraph (a) and (b):

(i) in the case of a corporation or other business entity becoming a Subsidiary of the Guarantor after the end of the financial period to which the latest consolidated audited accounts of the Guarantor relate, the reference to the then latest consolidated audited accounts of the Guarantor for the purposes of the calculation above shall, until consolidated audited accounts of the Guarantor for the financial period in which the relevant corporation or other business entity becomes a Subsidiary are published, be deemed to be a reference to the then latest consolidated audited accounts of the Guarantor adjusted to consolidate the latest audited accounts of such new Subsidiary in such accounts;

(ii) if, at any relevant time in relation to the Guarantor or any Subsidiary of the Guarantor that has its own Subsidiaries no consolidated accounts have been prepared and audited, revenue, gross profit and total assets of the Guarantor and/or such Subsidiary shall be determined on a pro forma calculation prepared for this purpose by the Guarantor; and

(iii) if, at any relevant time in relation to any Subsidiary of the Guarantor, no accounts have been audited, its revenue, gross profit and total assets shall be determined on a pro forma calculation prepared for this purpose by the Guarantor.

A certificate prepared by an authorised signatory of the Guarantor stating that, in his opinion, a Subsidiary of the Guarantor is or is not, or was or was not, a Principal Subsidiary shall, in the absence of manifest error, be conclusive and binding on the Bondholders and all parties. If there is a dispute as to whether any Subsidiary of the Guarantor is or is not a Principal Subsidiary, such certificate shall be accompanied by a report by an nationally recognised firm of public accountants addressed to the Guarantor as to proper extraction of the figures used by the Guarantor in determining the Principal Subsidiaries and mathematical accuracy of the calculation.

65 9 Prescription Claims for principal and interest on redemption shall become void unless the relevant Bond Certificates are presented for payment, in the case of principal, within ten years or, in the case of interest, five years after the appropriate Relevant Date.

10 Replacement of Bond Certificates If any Bond Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specifiedofficeoftheRegistrarortheTransferAgent, 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 or such Agent may require. Mutilated or defaced Bond Certificates must be surrendered before replacements will be issued.

11 Trustee and Agents Under the Trust Deed, the Trustee is entitled to be indemnified and/or secured and/or pre-funded and relieved from responsibility in certain circumstances and to be paid its costs and expenses in priority to the claims of the Bondholders. In addition, the Trustee is entitled to enter into business transactions with the Issuer and any entity relating to the Issuer without accounting for any profit.

In the exercise of its powers and discretions under these Conditions and the Trust Deed, the Trustee will have regard to the interests of the Bondholders as a class and will not be responsible for any consequence for individual Holders of Bonds as a result of such Holders being connected in any way with a particular territory or taxing jurisdiction.

In acting under the Agency Agreement and in connection with the Bonds, 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 Bondholders.

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 principal paying agent and additional or successor paying agents; provided, however, that the Issuer shall at all times maintain a principal paying agent and a registrar.

Notice of any change in any of the Agents or in their specified offices shall promptly be given to the Bondholders in accordance with Condition 15 (Notices).

12 Meetings of Bondholders; Modification and Waiver (a) Meetings of Bondholders: The Trust Deed contains provisions for convening meetings of Bondholders to consider matters relating to the Bonds, including the modification of any provision of these Conditions, the Trust Deed, the Deed of Guarantee or the Agency Agreement. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer, the Guarantor or the Trustee and shall be convened by the Trustee upon the request in writing of Bondholders holding not less than one-tenth of the aggregate principal amount of the outstanding Bonds 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 Bonds or, at any adjourned meeting, two or more persons being or representing Bondholders whatever the principal amount of the Bonds 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 Bonds, to reduce the amount of principal, premium (if any) or interest payable on any date in respect of the

66 Bonds, to alter the method of calculating the amount of any payment in respect of the Bonds or the date for any such payment, to change the currency of payments under the Bonds, to effect the exchange, conversion or substitution of the Bonds for other obligations or securities, to amend Condition 3 (Covenants), to amend the Deed of Guarantee or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution (each, a ‘‘Reserved Matter’’))mayonlybesanctionedbyan Extraordinary Resolution passed at a meeting of Bondholders at which two or more persons holding or representing not less than two-third or, at any adjourned meeting, one-third of the aggregate principal amount of the outstanding Bonds form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Bondholders, whether present or not.

In addition, a resolution in writing signed by or on behalf of Bondholders who for the time being are entitled to receive notice of a meeting of Bondholders under the Trust Deed and holding not less than 90% of the aggregate principal amount of the Bonds outstanding shall for purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Bondholders duly convened and held. Such a resolution in writing may be contained in one documentorseveraldocumentsinthesameform,eachsignedbyoronbehalfofoneormore Bondholders.

(b) Modification and waiver: The Trustee may (but shall not be obliged to) agree, without the consent of the Bondholders, to any modification of these Conditions, the Trust Deed, the Deed of Guarantee or the Agency Agreement (other than in respect of a Reserved Matter) which, in the opinion of the Trustee, will not be materially prejudicial to the interests of the Bondholders and to any modification of the Bonds, the Trust Deed, the Deed of Guarantee 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 Bondholders, authorise or waive any proposed breach or breach of the Bonds, the Trust Deed, the Deed of Guarantee 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 Bondholders will not be materially prejudiced thereby.

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

(c) Directions from Bondholders: Notwithstanding anything to the contrary in these Conditions, the Trust Deed, the Deed of Guarantee or the Agency Agreement, whenever the Trustee is required or entitled by the terms of these Conditions, the Trust Deed, the Deed of Guarantee 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 any such action, making any such decision, or giving any such direction or certification, to seek directions from the Bondholders by way of an Extraordinary Resolution and to require that it is 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 shall not be responsible for any loss or liability incurred by any person as a result of any delay in it exercising such discretion or power, taking such action, making such decision, or giving such direction or certification where the Trustee is seeking such directions.

67 (d) Certificates and Reports: The Trustee may rely without liability to Bondholders, the Issuer, the Guarantor or any other person on any report, confirmation or certificate or any advice of any lawyer, accountant, financial adviser, 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 on any such report, confirmation or certificate or advice and such report, confirmation or certificate or advice shall be binding on the Issuer, the Guarantor and the Bondholders.

13 Enforcement TheTrusteemayatanytimeaftertheBondshave become due and payable, at its absolute discretion and without notice, institute such proceedings, actions or steps as it thinks fit to enforce its rights under the Trust Deed in respect of the Bonds or the Guarantee of the Bonds, but it shall not be bound to do so unless:

(a) it has been so requested in writing by the Holders of at least 25% of the aggregate principal amount of the outstanding Bonds 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 Bondholder may proceed directly against the Issuer or the Guarantor 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 Bondholders and in accordance with the Trust Deed, create and issue further bonds having the same terms and conditions as the Bonds in all respects (or in all respects except for the first payment of interest) so as to be consolidated and form a single series with the Bonds.

15 Notices Notices to the Bondholders will be validly given if sent to them 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 being sent.

So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear or Clearstream or any other clearing system, notices to Bondholders may be given by delivery of the relevant notice to Euroclear or Clearstream or that other clearing system, for communication by it to entitled accountholders in substitution for notification as required by the Conditions.

16 Currency Indemnity If any sum due from the Issuer or the Guarantor in respect of the Bonds 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 or the Guarantor, (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 Bonds, the Issuer and the Guarantor shall indemnify the Trustee and each Bondholder, on the written demand of the Trustee or such Bondholder addressed to the Issuer and the Guarantor and delivered to the Issuer and the Guarantor, 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

68 currency and (ii) the rate or rates of exchange at which the Trustee or such Bondholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sumpaidtoitinsatisfaction,inwholeorinpart,ofanysuchorder,judgment,claimorproof.

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

17 Governing Law and Jurisdiction (a) Governing law: The Bonds, the Trust Deed, the Deed of Guarantee and the Agency Agreement, and any non-contractual obligations arising out of or in connection with them, are governed by and shall be construed in accordance with English law.

(b) Jurisdiction: Each of the Issuer and the Guarantor has in the Trust Deed and the Deed of Guarantee (i) agreed for the benefit of the Trustee and the Bondholders that the courts of Hong Kong shall have jurisdiction to settle any dispute (a ‘‘Dispute’’) arising out of or in connection with the Bonds or the Guarantee of the Bonds; (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 to accept service of any process on its behalf. The Guarantor has irrevocably agreed to receive service of process at the registered office of the Issuer, which is currently at Suite 1702-04, 17th Floor, Shui On Centre, 6-8 Harbour Road, Wan Chai, Hong Kong, in any related legal action or proceeding in Hong Kong and the Issuer has accepted such arrangement.

(c) Waiver of immunity: To the extent that the Issuer or the Guarantor may in any jurisdiction claim for itself or its assets or revenues immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that such immunity (whether or not claimed) may be attributed in any such jurisdiction to the Issuer or the Guarantor or their respective assets or revenues, each of the Issuer and the Guarantor agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

69 SUMMARY OF PROVISIONS RELATING TO THE BONDS IN GLOBAL FORM

The Global Certificate contains provisions which apply to the Bonds in respect of which the Global Certificate is issued, some of which modify the effect of the terms and conditions of the Bonds (the ‘‘Conditions’’ or the ‘‘Terms and Conditions’’) set out in this Offering Circular. Terms defined in the Terms and Conditions of the Bonds have the same meaning in the paragraphs below. The following is a summary of those provisions:

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

Under the Global Certificate, the Issuer, for value received, promises to pay such principal and interest on the Bonds to the holder of the Bonds on such date or dates as the same may become payable in accordance with the Conditions.

Owners of interests in the Bonds in respect of which the Global Certificate is issued will be entitled to have title to the Bonds registered in their names and to receive individual definitive certificates if (a) an Event of Default (as described in Condition 8 in ‘‘Terms and Conditions of the Bonds’’)occursin respect of any Bonds or (b) either Euroclear or Clearstream or any other clearing system (an ‘‘Alternative Clearing System’’) is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so. In such circumstances, the Issuer will cause sufficient individual definitive certificates to be executed and delivered to the Registrar for completion, authentication and despatch to the relevant holders of the Bonds.

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

Trustee’sPowers In considering the interests of the Bondholders whilst the Global Certificate is registered in the name of a nominee for a clearing system, the Trustee may, to the extent it considers it appropriate to do so in the circumstances, but without being obliged to do so, (a) have regard to any information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of the Bonds and (b) consider such interests on the basis that such accountholders were the holder of the Bonds in respect of which such Global Certificate is issued.

Notices So long as the Bonds are represented by the Global Certificate and the Global Certificate is held on behalf of Euroclear or Clearstream or any Alternative Clearing System, notices to Bondholders may be given by delivery of the relevant notice to Euroclear or Clearstream or such Alternative Clearing System, for communication by it to the entitled accountholders in substitution for notification as required by the Conditions.

Bondholder’sRedemption The Bondholder’s redemption options in Conditions 5(c) and 5(d) of the Terms and Conditions may be exercised by the holder of the Global Certificate giving notice to any Paying Agent of the principal amount of Bonds in respect of which the option is exercised within the time limits specified in the Terms and Conditions.

70 Issuer’sRedemption The option of the Issuer provided for in Conditions 5(b) shall be exercised by the Issuer giving notice to the Bondholders within the time limits set out in and containing the information required by the Conditions of the Bonds.

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

Cancellation Cancellation of any Bond by the Issuer following its redemption or purchase by the Issuer will be effected by reduction in the principal amount of the Bonds in the register of the Bondholders.

Meetings For the purposes of any meeting of Bondholders, the holder of the Bonds represented by the Global Certificate shall (unless the Global Certificate represents only one Bond) be treated as two persons for the purposes of any quorum requirements of a meeting of Bondholders and as being entitled to one vote in respect of each US$1,000 of the Bonds.

71 USE OF PROCEEDS

The Issuer estimates that the net proceeds from this offering, after deducting commissions to be charged by the Joint Lead Managers in connection with the offering of the Bonds, will be approximately @@. The Group intends to use the net proceeds for general corporate purposes.

72 EXCHANGE RATE INFORMATION

Renminbi The PBOC sets and publishes daily a base exchange 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. 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. On the same day, the value of the Renminbi appreciated by 2 per cent. against the U.S. dollar. The PRC government has since made and in the future may make further adjustments to the exchange rate system. On 18 May 2007, the PBOC enlarged, effective on 21 May 2007, the floating band for the trading prices in the inter-bank spot exchange market of Renminbi against the U.S. dollar from 0.3 per cent. to 0.5 per cent. around the central parity rate. This allows the Renminbi to fluctuate against the U.S. dollar by up to 0.5 per cent. above or below the central parity rate published by the PBOC. The floating band was further widened to 1.0 per cent. on 16 April 2012. These changes in currency policy resulted in the Renminbi appreciating against the U.S. dollar by approximately 26.9 per cent. from 21 July 2005 to 31 December 2013. On 14 March 2014, the PBOC further widened the floating band against the U.S. dollar to 2.0 per cent. On 11 August 2015, the PBOC announced to improve the central parity quotations of Renminbi against the U.S. dollar by authorizing market-makers to provide central parity quotations to the China Foreign Exchange Trading Centre daily before the opening of the interbank foreign exchange market with reference to the interbank foreign exchange market closing rate of the previous day, the supply and demand for foreign exchange as well as changes in major international currency exchange rates. Following the announcement by the PBOC on 11 August 2015, Renminbi depreciated significantly against the U.S. dollar. From January till May 2016, Renminbi experienced further fluctuation in value against the U.S. dollar. The PRC government may adopt further reforms of its exchange rate system, including making the Renminbi freely convertible in the future.

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

Renminbi per U.S. Dollar Noon Buying Rate(1) Period End Average(2) High Low (RMB per U.S.$1.00) 2010 ...... 6.6000 6.7603 6.8330 6.6000 2011 ...... 6.2939 6.4475 6.6364 6.2939 2012 ...... 6.2301 6.2990 6.3879 6.2221 2013 ...... 6.0537 6.1412 6.2438 6.0537 2014 ...... 6.2046 6.1704 6.2591 6.0402 2015 ...... 6.4778 6.2869 6.4896 6.1870 December...... 6.4778 6.4491 6.4896 6.3883 2016 January ...... 6.5752 6.5726 6.5932 6.5219 February ...... 6.5525 6.5501 6.5795 6.5154 March ...... 6.4450 6.5027 6.5500 6.4480 April ...... 6.4738 6.4754 6.5004 6.4571 May ...... 6.5798 6.5259 6.5798 6.4738 June (through 10 June)...... 6.5590 6.5663 6.5815 6.5590

Notes:

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

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

73 CAPITALISATION AND INDEBTEDNESS

CAPITALISATION AND INDEBTEDNESS OF THE GROUP

The following table sets forth the consolidated capitalisation and indebtedness of the Group as at 31 December 2015 and adjusted to give effect to the issue of the Bonds before deducting the fees and commissions and other estimated expenses payable in connection with this offering:

As at 31 December 2015 Actual As adjusted (RMB in (US$ in (RMB in (US$ in millions) millions)(1) millions) millions)(1) Short-term borrowings – Short-termloans...... 7,832.6 1,209.1 7,832.6 1,209.1 – Notespayable...... 212.3 32.8 212.3 32.8 – Non-current liabilities due within one year . . . . . 13,122.5 2,025.8 13,122.5 2,025.8 Long-term borrowings – Long-termborrowings...... 34,987.4 5,401.1 34,987.4 5,401.1 – Bondspayable...... 15,224.0 2,350.2 15,224.0 2,350.2 – Bondstobeissued...... ––@@ @@ Total long-term borrowings ...... 50,211.4 7,751.3 @@ @@ Total Equity ...... 27,105.5 4,184.4 27,105.5 4,184.4 Total Capitalisation(2)...... 77,316.9 11,935.7 @@ @@

Notes:

(1) The translation of U.S. dollar amounts into Renminbi, for convenience purpose, at a rate of U.S.$1.00 to RMB6.4778.

(2) Total capitalisation represents total long-term borrowings and total equity.

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

CAPITALISATION AND INDEBTEDNESS OF THE ISSUER

The following table sets forth the consolidated capitalisation and indebtedness of the Issuer as at 31 December 2015 and adjusted to give effect to the issue of the Bonds before deducting the fees and commissions and other estimated expenses payable in connection with this offering:

For the Period from 8 July 2015 to 31 December 2015 Actual As adjusted (RMB in (US$ in (RMB in (US$ in millions) millions)(1) millions) millions)(1) Short-term borrowings – Borrowings...... 391.8 60.5 391.8 60.5 Long-term borrowings – Bankborrowings...... 459.7 71.0 459.7 71.0 – Bondstobeissued...... ––@@ @@ Total long-term borrowings ...... 459.7 71.0 @@ @@ Total Equity ...... 1,608.3 248.3 1,608.3 248.3 Total Capitalisation(2)...... 2068.0 319.2 @@ @@

Notes:

(1) The translation of U.S. dollar amounts into Renminbi, for convenience purpose, at a rate of U.S.$ 1.00 to RMB 6.4778.

(2) Total capitalisation represents total long-term borrowings and total equity.

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

74 DESCRIPTION OF THE ISSUER

Formation The Issuer, Caiyun International Investment Limited, was incorporated in Hong Kong on 8 July 2015 as a company with limited liability under the Companies Ordinance (Chapter 622 of the laws of Hong Kong) with company number 2260295. The Issuer is a wholly-owned subsidiary of the Guarantor. The registered office of the Issuer is located at Suite 1702-04, 17th Floor, Shui On Centre, 6-8 Harbour Road, Wan Chai, Hong Kong. As at the date of this Offering Circular, the telephone number of the Issuer is 3192 3900.

Business Activity The Issuer was established for the purpose of the investment of the Guarantor’soverseasprojectsand transactions. In July 2015, the Issuer acquired 27.62 per cent. of the issued share capital and became the second largest shareholder of Top Spring International Holdings Limited, a property developer publicly listed on the Hong Kong Stock Exchange. In July 2015, the Issuer co-founded Australia YMCI Pty Ltd., a property developer in Australia, in which the Issuer holds a 51 per cent. equity interest. As at the date of this Offering Circular, the Issuer does not have any other projects.

As at the date of this Offering Circular, the Issuer has three employees and one subsidiary, Australia YMCI Pty Ltd. This subsidiary was established in 2015 and has not generated any revenue at of the date of this Offering Circular.

Save as disclosed above, the Issuer has not engaged, since the date of its incorporation, in any other material activities other than the proposed issue of the Bonds and the lending of the proceeds thereof to the Guarantor or its subsidiaries, and the authorisation of documents and agreements referred to in this Offering Circular to which it is or will be a party to. In the future, the Issuer may, either itself or through its direct and indirect subsidiaries and associated companies, issue further bonds or engage in business activities related to the businesses of the Guarantor and may incur substantial liabilities and indebtedness.

The Issuer has full power and authority to carry out any activities which are not prohibited by the laws of Hong Kong. The Issuer’s articles of association is described in ‘‘General Information.’’

Indebtedness As at the date of this Offering Circular, the Issuer has one term loan with a principal in the aggregate amount of RMB510.0 million, which matures in 60 months since the first drawdown date, as well as a non-committed credit line in the aggregate amount of HKD1,870.0 million from PRC financial institutions. As at the date of this Offering Circular, the total outstanding amount under the term loan is US$77.0 million and the total outstanding amount drawn down from the credit line is approximately RMB440.0 million. See ‘‘Risk Factors – Risks Relating to the Issuer – Existing indebtedness may negatively affect repayment capability of the Issuer with respect to the Bonds.’’

Financial Statements Under Hong Kong law, the Issuer is required to file with the Hong Kong Companies Registry its audited financial statements with its annual return for corresponding financial year. In addition, the Issuer is required to keep proper books of account as they are necessary to give a true and fair view of the state of the Issuer’s affairs and to explain its transactions. The Issuer is also required to prepare its audited financial reports and its unaudited consolidated accounts in accordance with the Terms and Conditions of the Bonds.

75 Directors The directors of the Issuer are Mr. Xu Lei, Ms. Zhang Ping and Mr. Wang Xingquan. The directors of the Issuer do not hold any shares or options to acquire shares of the Issuer. There are no potential conflicts of interest between any duties of the Issuer’s directors to the Issuer and their private interests and/or other duties.

Share Capital As at the date of this Offering Circular, the Issuer’s share capital is RMB1,550 million divided into 1,550 million ordinary shares of RMB1.0 each and is fully paid. None of the equity securities of the Issuer is listed or dealt on any stock exchange and no listing or permission to deal in such securities is being or is proposed to be sought as at the date of this Offering Circular.

76 DESCRIPTION OF THE GROUP

Overview The Group is the sole investment and financing platform for urban development under the Yunnan SASAC and is wholly owned, directly and indirectly, by the Yunnan SASAC. Since its establishment in 2005, the Group has played an important role in implementing the Yunnan provincial government’s blueprint for urban planning and municipal construction, and has received strong financial and operational support from the Yunnan provincial government. The Group focuses on urban development as well as urban environment; urban development includes property development, development of exhibition centres, primary land development and development of affordable housing and redevelopment of shantytowns; urban environment includes construction and operation of wastewater treatment and water supply facilities. Over the years, the Group has diversified its business portfolio to include leisure and tourism, healthcare, and other businesses. Set forth below is an overview of the principal business segments of the Group:

Urban development • Property development. The Group conducts its property development business primarily through its subsidiary, Yunnan Metropolitan Real Estate Development Co., Ltd. (‘‘YMCI Real Estate’’), which has been listed on the Shanghai Stock Exchange (600239.SH) since 2007. YMCI Real Estate focuses on developing high quality residential properties in the PRC, including Kunming, Xi’an, Dali, Xishuangbanna, Beijing, Chongqing, Chengdu and Lanzhou. Over the years, the Group has developed, exclusively and cooperatively, more than 20 urban residential complex projects and tourism property projects in the PRC. For the year ended 31 December 2015, contracted property sales was RMB3,991.0 million.

• Development of exhibition centres. Capitalizing on the Group’s strong experience in urban development, the Group engages in the construction and management of exhibition centres. The Group is responsible for operating the Kunming Dianchi International Convention and Exhibition Centre, the Haigeng Convention Centre and the Kunming International Convention and Exhibition Centre.

• Primary land development. Primary land development is one of the important businesses of the Group. The Group is designated to assist the Yunnan provincial government in its urbanisation goals and projects. The Group also acts as the sole provincial land reserve supplier in Yunnan province, authorised by the Yunnan provincial government to engage in the relocation compensation services and early-stage development of the urbanisation projects. Since 2005, the Group has undertaken eight primary land development projects. As at 31 December 2015, the Group has developed approximately 3,200,000 sq.m. of land as primary development on behalf of the Yunnan provincial government.

• Development of affordable housing and redevelopment of shantytowns. The Group is a key force of the Yunnan provincial government to implement its housing policies and improve the housing conditions for low-income households in Yunnan province. It has engaged in development of subsidised and low-rent housing and redevelopment of shantytowns. Some of the affordable housing development and shantytown redevelopment are engaged simultaneously on the same parcel under a master development plan. As at 31 December 2015, the Group had several affordable housing projects and five shantytown projects with a total of 3,865 apartments in Kunming, Qujing, Dali and Jinghong.

• Property management, construction and installation. The Group engages in providing services ancillary to the primary components of its urban development business, including property management, construction and installation services. The Group manages certain of the properties that it develops post-sales, and provides construction and installation services for home buyers with respect to home refurbishment and decoration as well as installation of equipment necessities.

77 Such ancillary services have been key in facilitating the development of the Group’scoreurban development business, as the Group has maintained competitive edge from providing full-spectrum and post-sale services desired by home buyers.

In 2013, 2014 and 2015, operating income from the urban development segment was RMB4,089.2 million, RMB5,036.2 million and RMB5,616.6 million, respectively, representing 48.1 per cent., 44.1 per cent. and 41.0 per cent., respectively, of the Group’s total operating income.

Urban environment. The Group has historically been the exclusive developer and operator of wastewater treatment and water supply facilities in Yunnan province under the directives of the Yunnan provincial government. The Group has later expanded its operations to include solid waste treatment, building- transfer projects (‘‘BT’’) and engineering-procurement-construction (‘‘EPC’’) projects. It currently owns 129 and two projects in its urban environment business in the PRC and Thailand, respectively. The Group also provides services ancillary to its core urban environment business, including construction, installation and sales services, in which the Group constructs as well as sources and installs equipment for the projects. In 2013, 2014 and 2015, operating income from this business segment was RMB544.8 million, RMB747.3 million and RMB986.3 million, respectively, representing 6.4 per cent., 6.6 per cent. and 7.1 per cent., respectively, of the Group’s total operating income.

Leisure and tourism. The Group invests in and operates travel services in Yunnan province, which consist primarily of tourist attraction and national park operations and cultural, festival and exhibition organisation. The Group also constructs and operates hotels in Yunnan. In total, the Group operates seven hotels in China. By integrating a number of quality tourism assets and resources, the Group intends to further expand its travel service business and develop Yunnan into an international and modern tourist destination. In 2013, 2014 and 2015, operating income from this business segment was RMB285.0 million, RMB958.0 million and RMB1,160 million, respectively, representing 3.4 per cent., 8.4 per cent. and 8.5 per cent., respectively, of the Group’s total operating income.

Healthcare. The Group is a vertically-integrated healthcare product and service provider. The Group’s healthcare services provided include the construction and expansion of hospital buildings, managing public hospitals on behalf of local governments, as well as the manufacturing of Chinese medicine and biopharmaceutical products. In 2013, 2014 and 2015, operating income from this business segment was RMB220.9 million, RMB891.6 million and RMB944.6 million, respectively, representing 2.6 per cent., 7.8 per cent. and 6.9 per cent., respectively, of the Group’s total operating income.

Other businesses. The Group is engaged in other business operations including, among others, education and financial services. In 2013, 2014 and 2015, operating income from other businesses was RMB3,363.6 million, RMB3,775.3 million and RMB4,994.5 million, respectively, representing 39.6 per cent., 33.1 per cent. and 36.5 per cent., respectively, of the Group’s total operating income.

• Education. The Group is a leading operator of schools in Yunnan province. As at 31 December, 2015, approximately 22,000 students were enrolled at the Group’s schools in Yunnan province, including kindergartens, vocational schools, a college and a driving school. In 2013, 2014 and 2015, this business generated operating income of RMB198.0 million, RMB432.0 million and RMB489.0 million, respectively, representing 2.3 per cent., 3.8 per cent. and 3.6 per cent., respectively, of the Group’s total operating income.

• Financial services. The Group currently engages in credit guarantee, small loan and finance leasing services, focusing on state-owned enterprise customers, through its wholly owned or controlled subsidiaries. It intends to further develop its financial service business to capture the opportunities presented by the rapid growth of the PRC financial industry.

In 2013, 2014 and 2015, the Group’s total operating income was RMB8,504.0 million, RMB11,408.5 million, and RMB13,701.8 million, respectively, and the Group had a net profit of RMB547.1 million, RMB457.2 million and RMB1,220.1 million, respectively. As at 31 December 2015, the Group’stotal assets totalled RMB123,458.2 million.

78 Corporate Structure The chart below shows the corporate structure of the Group, its major subsidiaries and the beneficial interests therein directly or indirectly held by the Guarantor as at the date of this Offering Circular:

Yunnan SASAC

100%

Yunnan Construction Engineering Group Co., Ltd. 100% 暚⋿⺢ⶍ普⛀㚱旸℔⎠

96.21%1 3.79%

Guarantor

Yunnan Metropolitan Construction Real Estate Shanghai Eastern Airlines Hotel Co., Ltd. Development Co., Ltd.2 ᶲ㴟㜙㕡凒䨢屻棐㚱旸℔⎠ 暚⋿❶㈽伖㤕偉ấ㚱旸℔⎠ (100.00%) (34.87%) (600239.SH)

Yunnan Water Investment Co., Limited2, 3 Yunnan Sustainable Economy Investment Co., Ltd. 暚⋿㯜⊁㈽屯偉ấ㚱旸℔⎠ 暚⋿⽒䑘䴻㾇㈽屯㚱旸℔⎠ (30.07%) (6839.HK) (70.00%)

Yunnan Inter-City Logistics Co., Ltd. Yunnan New Century Dianchi International Cultural Tourism Convention Investment Co., Ltd. 暚⋿❶晃䈑㳩㚱旸℔⎠ 暚⋿㕘ᶾ䲨㹯㰈⚳晃㔯⊾㕭㷠㚫⯽㈽屯㚱旸℔⎠ (95.00%) (53.88%)

Yunnan Yunyao Technology Co., Ltd. Yunnan Yicheng Driving Training Co., Ltd. 暚⋿暚喍䥹㈨偉ấ㚱旸℔⎠ 暚⋿ᶨḀ楽榃➡妻偉ấ㚱旸℔⎠ (80.00%) (51.00%)

Yunnan Sanqi Technology Co., Ltd. Yunnan Ethnic Cultural Tourism Industry Co., Ltd. 暚⋿ᶱᶫ䥹㈨㚱旸℔⎠ 暚⋿㮹㕷㔯⊾㕭㷠䓋㤕㚱旸℔⎠ (49.16%) (99.00%)

Yunnan Metropolitan Construction Investment Calmette Yunnan Haigeng Hotel Management Co., Ltd. Medical Investment Management Co., Ltd. 暚⋿㴟❪惺⸿䭉䎮㚱旸℔⎠ 暚⋿❶㈽䓀伶慓䗪㈽屯䭉䎮㚱旸℔⎠ (100.00%) (65.00%)

Yunnan Metropolitan Construction Investment Medical Shanghai Xincheng Commercial Factoring Co., Ltd. Industry Development Co., Ltd. ᶲ㴟搓❶⓮㤕ᾅ䎮㚱旸℔⎠ 暚⋿❶㈽慓䗪䓋㤕攳䘤㚱旸℔⎠ (100.00%) (60.00%)

Yunnan Metropolitan Construction Investment Health Chongqing Liangjiang Caiyunzhinan Investment Co., Industry Co., Ltd. Ltd. 暚⋿❶㈽‍⹟䓋㤕㚱旸℔⎠ 慵ㄞℑ㰇㕘⋨⼑暚ᷳ⋿㈽屯㚱旸℔⎠ (100.00%) (100.00%)

Kunming Future City Development Co., Ltd. Chongqing Liangjiang Caiyunzhinan Urbanization Development Fund Partners Co., Ltd. 㖮㖶㛒Ἦ❶攳䘤㚱旸℔⎠ 慵ㄞℑ㰇㕘⋨⼑暚ᷳ⋿❶捖⊾䘤⯽➢慹⎰⣍ẩ㤕 (100.00%) (24.75%)

Tengchong Mayugu Hot Springs Investment Co., Ltd. Yunnan Rongzhi Capital Management Co., Ltd. 様㰾䐒⽉察㹓㱱㈽屯㚱旸℔⎠ 暚⋿圵㘢屯㛔䭉䎮㚱旸℔⎠ (92.00%) (70.00%)

Yunnan Chengyi Co., Ltd. Yunnan Mengzhinan Investment Management Co., Ltd. 暚⋿❶⼅⮎㤕㚱旸℔⎠ 暚⋿⣊ᷳ⋿㈽屯䭉䎮㚱旸℔⎠ (51.00%) (50.00%)

Ruidian Investment Management Co., Ltd. Yunnan Mengzhinan Hotel Industry Investment Centre (Limited Partnership) 䐆㹯㈽屯䭉䎮㚱旸℔⎠ 暚⋿⣊ᷳ⋿惺⸿䓋㤕㈽屯ᷕ⽫炷㚱旸⎰⣍炸 (100.00%) (0.44%)

Yunnan Metropolitan Construction Investment Education Caiyun International Investment Ltd. Investment Management Co., Ltd. ⼑暚⚳晃㈽屯㚱旸℔⎠ 暚⋿❶㈽㔁做㈽屯䭉䎮㚱旸℔⎠ (100.00%) (100.00%)

Yunnan Metropolitan Construction Investment Project Management Co., Ltd. 暚⋿❶㈽枭䚖䭉䎮㚱旸℔⎠ (100.00%)

Notes:

1. In December 2015, Yunnan SASAC announced its intention to transfer a 40 per cent. equity interest in the Guarantor held by Yunnan SASAC to Yunnan Shengyi Investment Co Ltd.（雲南聖乙投資有限公司）(‘‘Shengyi’’). Shengyi is the main investment vehicle of Yunnan’s state capital wholly-owned and administered by Yunnan SASAC. The Guarantor is expected to remain wholly-owned by Yunnan SASAC subsequent to the intended equity transfer. As of the date of the Offering Circular, the intended equity transfer has not yet been completed. 2. Subsidiaries publicly listed on stock exchanges.

3. Held indirectly through Yunnan Province Water Industry Investment Co., Ltd.（雲南省水務產業投資有限公司）.

79 History and Development The following sets out a number of the key events occurred in the business and corporate development of the Group:

2005 • The Guarantor was established with the approval of the Yunnan provincial government

2006 • Identified the ‘‘one pillar, three carriages’’ strategy, took up the urban development as the core business with urban environment, healthcare and education as its important components

2007 • YMCI Real Estate listed on the Shanghai Stock Exchange through listing by introduction (600239.SH)

2009 • Officially become a provincial enterprise directly controlled and managed by Yunnan SASAC

• Established its water supply and wastewater treatment business

2010 • Established YMCI Calmette Medical Investment & Management Co., Ltd. in cooperation with Kunming Municipal Department of Health

2011 • Initiated and established the first local corporate insurance company in Yunnan province, named Champion Property & Casualty Insurance Co., Ltd., achieving a breakthrough for the province’s local insurance market

2014 • As one of the provincial construction entities for shantytown upgrade in Yunnan province, Kunming Future City Development Co., Ltd. undertook 20 shantytown upgrade projects and organized the preparation of the feasibility report for shantytown upgrade in 2013-2017 for China Development Bank

2015 • Yunnan Water Investment Co., Ltd. (‘‘Yunnan Water Investment’’) listed on the Stock Exchange of Hong Kong (6839.HK)

• Yunnan Yicheng Driving Training Co., Ltd. listed on National Equities Exchange and Quotations (834592)

• Caiyun International acquired 27.62 per cent. of the issued share capital of Top Spring International Holdings Limited (3688.HK), becoming its second largest shareholder

• Established China’s first hotel real estate investment trust

• Issued China’s first securitized product with the right of collecting tuition and accommodation fees as the underlying assets

• Yunnan SASAC announced its intention to transfer a 40.0 per cent. equity interests in the Guarantor held by Yunnan SASAC to Shengyi. The Guarantor is expected to remain wholly-owned by Yunnan SASAC subsequent to the intended equity transfer

80 2016 • Set up Yunnan Land Reserve Operation Co., Ltd. with the Yunnan Provincial Department of Finance as the investment and financing platform and operation entity of the provincial land reserve development in the province

• Signed a strategic cooperation framework agreement with Xishuangbanna government worth RMB50.0 billion in value to build Xishuangbanna into a national demonstration district of ecological civilization and an important cultural hub for Southeast Asia

Awards The Group has received numerous awards and recognition in each of its core business segments as set forth below.

The Group • In 2011, Chairman Xu Lei received the title of ‘‘Leader of China Tourism & Resort Property Investment’’

Urban Development • In 2015, Kunming Dianchi International Convention and Exhibition Centre received 2015 Top 50 Brand Exhibition Halls of China Exhibition Industry Gold Finger Award and the 2015 China Exhibition Best City Image Hall Award; rated as China’s Most Eye-catching Convention & Exhibition Centres 2015 and recognised as 2014-2015 China Exhibition Iconic Hall

• In 2015, YMCI Real Estate received the 2015 Yunnan province Annual Corporate Brand Award

• In 2014, YMCI Real Estate received the title of ‘‘2014 China’s Most Valuable Listed Real Estate Companies’’

• In 2014, Haigeng Garden received the National Quality Engineering Award and Haigeng Huitang received the title of the 100 Classical Projects during 35 Years of Reform and Opening-up

• In 2013, Kunming Dianchi Lake Eastern Road Development Project received First Prize of Yunnan Quality Engineering Projects 2013

• In 2012, the ‘‘Dream Yunnan Yulin Lanshan’’ received 2011-2012 Best Ecological Tourism Property Award

• In 2011, Haigeng Convention Centre received the Luban Award, top award for quality in China’s construction field

• In 2010, YMCI Real Estate was selected as an constituent of CSI 300, ranked No.1 in 2010 China Top 10 Real Estate Enterprises by Growth Capability, jointly announced by China Real Estate Rating Centre and E-House R&D Institute, and was recognised as one of the Top 50 Chinese Listed Real Estate Companies

Urban Environment • In 2015, Yunnan Water Investment was named as PRC Water Enterprise with the Most Investment Value and received the Green Award for its competitiveness as an environmental friendly enterprise

• In 2012, Yunnan Water Investment was rated as 2012 Engineering Enterprise with Highest Growth Potential in China’s Water Industry

81 Leisure and Tourism • InterContinental Kunming received:

• 2015 Best Hotel by Comprehensive Income

• 2014 Best New Luxury Hotel in Kunming, Hurun Best of the Best Awards, 2014 China Best Resort Hotel, 2014 Best City Resort Hotel and 2014 Best Appearance Design Hotel

• InterContinental Xishuangbanna Resort received:

• Best Experience Award 2015 of InterContinental Hotel Group in Greater China

• Best Resort Hotel in 2015 from the Tourism + Leisure, a top-class global travel magazine

• In 2014 and 2015, Certificate of Excellence from TripAdvisor, a top-class global tourism community

• In 2015, Kalachakra Altar set a Guinness World Record for being the largest 3D altar and set a Guinness World Record for hosting the single largest Thangka exhibition

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

The sole investment and financing platform for urban development under the Yunnan SASAC, with strong support from the Yunnan provincial government The Group is the sole investment and financing platform for urban development under the Yunnan SASAC and is wholly owned, directly and indirectly, by the Yunnan SASAC. Since its establishment in 2005, the Group has played an important role in implementing the Yunnan provincial government’s blueprint for urban planning and municipal construction, and has received strong financial and operational support from the Yunnan provincial government.

Project Support • The Group has completed numerous construction and relocation projects on behalf of the Yunnan provincial government, including the construction and relocation of four universities as well as the government agencies

• The Group has signed an entrustment contract for development of Dianchi Lake eastern road with the Kunming Municipal Government to perform land readjustment and sewage treatment work for the lands along the Dianchi Lake Eastern Road. The Kunming Municipal Government guaranteed a minimum yield of 5 per cent. of the development cost

• The Yunnan provincial government hosted major events in the Kunming Dianchi International Convention and Exhibition Centre, such as the China Import & Export Fair, Kunming and China- South Asia Expo; the Yunnan Provincial Department of Finance has guaranteed to employ services of the Kunming Dianchi International Convention and Exhibition Centre with a RMB200.0 million annual budget

• The Yunnan provincial government authorised Yunnan Water Investment to integrate water business resources and coordinate water projects in all cities and counties in Yunnan province except Kunming. The Yunnan provincial government aims to develop Yunnan Water Investment into the water business investment and financing platform for Yunnan province

82 Land Support • The Yunnan provincial government injected 1.29 million sq.m. of land to the Group through share capital transfer, including eight plots of land for Haigeng Convention Centre project and three plots of land for the development of Yangzong Lake Huaqiao City

• The Group is able to obtain land at preferential prices from the Yunnan provincial government

Fiscal Subsidies and Asset Injection • The Group has received capital and asset injections of over RMB12.0 billion, including fiscal subsidies of RMB2.0 billion, since its incorporation from the Yunnan provincial government

Tax Benefits • Jinghong Municipal Investment and Development, Diqing Tourism Group and Yunnan Sanqi Technology Co., Ltd. (‘‘Sanqi Technology’’) benefit from favourable policies for Western Development, with enterprise income tax levied at the 15% rate

• Yunnan Water Investment and its subsidiaries benefit from favourable policies for Western Development, wastewater and solid waste treatment projects enjoy ‘‘Three Free Three Halved’’ tax benefits; wastewater and solid waste treatment projects enjoy 70% rebate for its VAT

• The Group’s hospitals and the Kunming University of Science and Technology Oxbridge College enjoy tax exemptions

In addition, as the ultimate controlling shareholder of the Group, Yunnan SASAC closely participates in and affects the decision-making of key investments and appointment of directors, supervisors and senior management of the Group. The Group and Yunnan SASAC normally conduct detailed discussions and follow requisite appraisal procedures to ensure that informed and viable investment decisions are made. Major share transfer transactions are required to be conducted through public bidding and auction sales based on terms and conditions approved by Yunnan SASAC. As Yunnan SASAC will continue to be the ultimate controlling shareholder of the Group, the Group believes that the role of Yunnan SASAC and its participation in the Group’s operations distinguish the Group from other companies in the industries where it operates and will provide effective assurance for achieving its missions.

Stable growth from urban development and urban environment businesses and closely aligned with the general social and economic development of Yunnan province Since the commencement of the Group’s business operations in Yunnan province, the Group’s business operations have been closely aligned with the general social and economic development of Yunnan province. In November 2014, the PRC government announced that it would set up an infrastructure fund and work with the newly founded Asian Infrastructure Investment Bank to promote the ‘‘One Belt, One Road’’ strategy. On land, the ‘‘One Belt, One Road’’ strategy focuses on jointly building a new Eurasian land bridge which stretches from Xi’an to Venice and includes Istanbul, Moscow and Rotterdam and developing the PRC – Mongolia – Russia, PRC – Central Asia – West Asia and PRC – Indochina Peninsula economic corridors. At sea, the ‘‘OneBelt,OneRoad’’ strategy focuses on jointly building smooth, secure and efficient transport routes connecting major sea ports along the ‘‘One Belt, One Road’’ route from Fuzhou to Venice, including Jakarta, Colombo and Nairobi. The Group believes that the ‘‘OneBelt,OneRoad’’ strategy will bring significant growth opportunities for the Group as the strategy is expected to increase trade among and investment to countries involved in this strategy, which mayinturnincreasedemandfortheGroup’s products and services.

83 According to the 12th Five-year Plan of the PRC and the development strategy of Western China, Yunnan province is expected to complete the construction of the railway network system of ‘‘Eight In, Four Out’’ by 2020, meaning that there will be eight inbound lines into Yunnan province and four international outbound lines originated from Yunnan province. The Group has collaborated with the State Railways Administration of the PRC to commence construction on some of these projects.

In addition, Yunnan province is rich in natural resources, beautiful landscapes and diverse ethnic minorities, which makes it one of PRC’s major tourist destinations. Tourist centres in Yunnan province include Dali, Nanzhao Kingdom, Yuanmou Ruins, Chuxiong, Lijiang (a UNESCO World Heritage Site since 1997), Shangri-La, Shilin and Xishuangbanna. The Group operates a number of tourist attractions in Yunnan province such as Triple Pagodas, Jizu Mountain of Binchuan, Wild Elephant Valley, Kylin Hot Spring and Menglun Tourist Town. The Group believes that the Yunnan provincial government will favour it in selecting companies to invest in the key tourism investment projects in Yunnan province.

As the Group’s primary business is the urban development business in Yunnan province, the Group’s businesses have benefited, and will continue to benefit, from the development and growth of Yunnan province.

Diversified business portfolio with new growth engine The Group has historically focused on certain key areas of municipal construction, primarily including urban development and urban environment, and has been dedicated to expanding its businesses into leisure and tourism, healthcare and other business segments. Its business portfolio provides diversified sources of income for the Group. In 2015, operating income from urban development and urban environment accounted for 41.0 per cent. and 7.1 per cent., respectively, of the Group’s total operating income. In addition, some of the Group’s investments involve projects that have generated and are expected to continue to generate long-term recurring income.

While undertaking its primary mission to develop cities and towns in Yunnan province, the Group has diversified its business portfolio to include leisure and tourism, healthcare and other businesses. The Group believes that its diversified business portfolio, as well as the diversified financing channels available to the Group, will continue to enable the Group to prepare itself for future growth and capture potential opportunities.

Diversified funding channels The Group has access to various funding channels and the ability to tap these sources of funding depending on market conditions, thereby increasing its ability to secure favourable financing terms and enhancing its funding efficiency. In addition to cash generated from its operations, the Group continues to diversify its financing channels to seek low-cost external funds:

• Banks. The Group has maintained long-term relationships with a number of domestic banks, including The Export-Import Bank of China, China Development Bank, Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Development Bank of China, Bank of Communications, China Minsheng Bank and China Merchants Bank, with a total unused credit line of RMB34.2 billion as at 31 March 2016.

• Bond Financing. The Group has issued nine private placement debt financing instruments, three corporate bonds, three medium-term notes, two perpetual bonds and three short-term commercial papers via National Association of Financial Market Institutional Investors. The Group also issued via stock exchanges two asset-backed securities, two private placement corporate bonds, two private placement small and medium-sized enterprise bonds and a private placement bond.

84 • Funds. The Group created various funds, including an urban fund for the amount of RMB15.0 billion with China Construction Bank, a hotel fund of RMB4.5 billion with Huaxia Bank, the Ansheng Chuangxiang fund of RMB3.1 billion with Huaxia Bank, an affordable housing fund of RMB800.0 million with China Jiantou Trust Co., Ltd., and a social security fund of RMB1.6 billion obtained via trust financing for construction of low-cost housing in Fangwang of Guandu District and the Chengjiang Taiyangshan Resort.

• Industrial Finance. The Group established Hengtai Haorui Caiyun Zhinan Hotel’s RMB5.8 billion asset-backed securities, the largest corporate asset-backed securities and the first hotel-oriented Real Estate Investment Trusts in China. The Group also created the first securitized product in China with charging right of tuition and accommodation as underlying assets.

• Insurance Credit and Others. The Group obtained 20% equity interest in Champion Property & Casualty Insurance Co., Ltd., the first national property insurance company based in Yunnan, which was founded by the Group as the lead sponsor. The Group, through the Kunming Dianchi International Convention and Exhibition Centre, obtained an insurance fund credit management program of RMB4.0 billion. The Group also participated in the equity offering of Qujing City Commercial Bank and Rural Bank.

The Group believes that its ability to obtain financing gives it a comparative advantage over competitors with only access to limited funding sources. As such, the Group believes that it has a robust liquidity position with access to diversified funding sources. As at 31 December 2015, the Group had cash and cash equivalents of approximately RMB15.6 billion as compared to long-term loans and short-term borrowing of approximately RMB42.9 billion. The Group actively manages its cash flow and capital commitments to ensure that it has sufficient funds to meet its existing and future cash flow requirements.

The Group’s strong financing capability has enabled it to capitalise on various business opportunities to purchase or construct new production facilities and equipment in each of the industries in which it operates, which could be highly capital-intensive.

Experienced management and operational teams with sound corporate governance The Group’s management team has extensive experience in the various business of the Group, including urban operations, infrastructure construction, property development and financial services. The management team has an average of over 15 years of management experience in either the Group or other large corporations. Many members of the Group’s management team also serve, or have served, in various positions of Yunnan provincial government. The Group believes that its management team’s extensive experience in a broad range of industries and strong execution capabilities will continue to be instrumental in executing its business strategies and capturing market opportunities as they arise, and contribute to the sustainable growth of the Group.

In addition, the Group’s operational teams in all of the Group’s business are led by professionals with extensive experience in operation and management of the relevant industries and supported by a highly skilled and well-trained workforce. Throughout its years of operation and management of its various businesses, the Group has been able to maintain effective and efficient management and operational control over its key subsidiaries. The Group has adopted a commercially driven approach to managing its business operations while leveraging on its established relationship with governmental authorities with a view to maximising its growth potential.

85 Business Strategies The Group’s goal is to continue to grow its asset base, optimise its capital structure and enhance operational efficiency. The Group intends to focus on the following strategies:

Further enhance the Group’s core competitive advantage in the urban development business by leveraging on the integration of other business segments as well as support from governmental authorities The Group recognises the significant opportunities presented by the integration among its business segments. The Group believes that the existing urban planning and development policies by the Yunnan provincial government will lead to further growth opportunities in the Group’s urban environment and leisure and tourism business. The Group will continue to focus on the various urban development projects in Yunnan province and supplement such projects with its experience in urban environment and leisure and tourism. The Group believes the successful integration of its core businesses will help improve its competitive advantage in the urban development business and establish itself as one of the leading developers of urban development projects in the PRC as it increases its scale of operations. The Group also aims to continue to leverage on its existing close working relationship with the Yunnan provincial government with a view to undertaking major urban development projects which are capable of generating stable revenue upon completion of those projects, such as the Kunming Dianchi International Convention and Exhibition Centre. By utilising its existing competitive strengths alongside with the future development policies of Yunnan province, the Group will continue to seek for business opportunities and further enhance its core competitive advantage in the urban development business.

Continue to operate the Group’s core businesses focusing on its urban development business The Group will continue to operate its core businesses focused on urban development. In recent years, the Group has become one of the leading real estate developers in China with operations across the broad ‘‘housing, land, property’’ spectrum. The Group believes that it will gradually transform into a leader in health service and leisure property development in China. The Group strives to diversify its businesses and to create synergies between its two major business segments: urban development and urban environment. For example, the Group’s urban residential complexes will provide customer base and cash flow for its tourism properties, and its convention and exhibition centres will bring customers to its tourism businesses. The Group anticipates that the revenue generated from the urban development business will be able to provide a portion of the capital resources to fund the growth of other business segments.

Integrate tourism resources in Yunnan province and develop into a comprehensive leisure and tourism group The Group has endeavoured to leverage the tourism resources in Yunnan province and aims to develop into a comprehensive leisure and tourism group. The Group intends to further integrate the tourism resources in Yunnan province through asset acquisition and asset injection by local governments, and to build a comprehensive travel service platform that offers a variety of travel services such as scenic spot sightseeing, hotels and resorts and etc. The Group also intends to increase its strategic partnerships with major international hotel chain groups to strengthen its hotel operations. The Group aims to develop its leisure and tourism business into a large-scale and comprehensive network that is able to increase the awareness of Yunnan as an international tourism destination in the global community.

Leverage Yunnan province’s unique advantages from national development policies to expand the Group’s business to Southeast Asia Leveraging Yunnan province’s unique advantages, the Group will continue to expand its business into Southeast Asia. Yunnan province is experiencing rapid growth under favourable regional development strategies by the PRC government, including ‘‘One Belt One Road’’（一帶一路）, ‘‘Bridgehead’’（橋頭 堡）, ‘‘Economic Corridor of Bangladesh, China, India Myanmar’’（中印孟緬經濟走廊）, Energy Route in Southwest China（中國西南線能源通道）and Along-Border Financial Reform Pilot Zones（沿邊金融綜

86 合改革試驗區）. In addition, Yunnan province has been designed by the PRC government to become an international hub in the southwest region. In recent years, the Group has gradually expanded its presence in Southeast Asia. For example, the Kunming Dianchi International Convention and Exhibition Centre hosted numerous international events and exhibitions; the Group acquired PJT Technology in Thailand, a power plant powered by municipal waste; and the Calmette International Hospital is an international health centre catering to patients from Southeast Asia. The Group will pay close attention to the Southeast Asian market with an aim to continue to expand overseas.

Continue to adopt centralised management of the Group’s capital and a prudent financial policy to control cost and improve profitability The Group will continue to adopt a centralised management system to manage the Group’s capital to achieve efficient deployment of the Group’s capital. The Group will also continue to adopt a prudent financial and risk management policy and further improve its financial control system to control costs and improve profitability. The Group believes that these measures will further enhance its competitive advantage and help achieve sustainable growth.

Strengthen management and internal control systems The Group will continue to improve and streamline its management structure and internal control systems, so as to increase its capability in terms of safety and quality control. In addition, the Group considers effective project management to be critical to enhancing its overall operational efficiency. Mechanisms will be put in place to gradually implement the coordination of tendering and bidding management among various operational units, for example, to avoid multiple subsidiaries competing against each other for the same project. The Group will also allocate more resources to the Group’s research and development for construction, new technologies and products, resource integration, brand name, and project and operation management, while gradually implementing a centralised management system over its fixed assets, such as key technical equipment.

Recent Developments In May 2016, the Group signed a share purchase and capital increase agreement to acquire a 51 per cent. equity interest in Chengdu Century City New International Convention and Exhibition Centre Co., Ltd. (‘‘Chengdu Century City’’) through share transfers and capital injection (the ‘‘Acquisition’’). Chengdu Century City was founded in 2003 and engages in the tourism development, property management, real estate development and convention centre businesses. Chengdu Century City New International Convention and Exhibition Centre is a landmark building in Chengdu, Sichuan Province.

Chengdu Century City New International Convention and Exhibition Centre is strategically located in Chengdu, a fast growing manufacturing and economic centre with well-developed transportation networks. Chengdu, which is one of China’s important transportation hubs, situated at the intersection of China’s major railway lines, with ready access to major highways and airports. In addition, Sichuan province borders Yunnan province, where the majority of the Group’s businesses are located. The Acquisition is expected to create synergy between the Group’s other businesses.

Chengdu Century City New International Convention and Exhibition Centre provides a venue for buyers to meet their purchasing needs for a wide range of products. Sellers are able to streamline their business operations by taking advantage of the full range of services and trade solutions available on-site. In addition, both hotel and restaurant facilities are available at Chengdu Century City New International Convention and Exhibition Centre for the convenience of the exhibitors and their customers. Its wholly integrated one-stop services for both buyers and sellers set Chengdu Century City New International Convention and Exhibition Centre apart from its competitors.

87 Chengdu Century City New International Convention and Exhibition Centre covers a total GFA of approximately 1,730,000 sq.m. It has nine exhibition halls, comprising a GFA of approximately 120,000 sq.m. and can hold a maximum of 5,500 booths. Each exhibition hall is equipped with video surveillance system, broadcasting system, broadband Internet and wireless Internet. Chengdu Century City New International Convention and Exhibition Centre also has 28 multifunction rooms, comprising a GFA of approximately 100,000 sq.m. The largest multifunction room takes up approximately 2,800 sq.m. and can accommodate up to 2,800 persons. The exhibition halls and multifunction rooms can be utilised for industry exhibitions, conferences, conventions, meetings and banquets.

Chengdu Century City New International Convention and Exhibition Centre holds two luxurious hotels offering accommodation, food and beverage and general recreational services. The hotels, named the Holiday Inn Chengdu Century City and InterContinental Century City Chengdu, have a total of 1,525 guest rooms. The hotels have seven restaurants, two bars, and also have entertainment facilities.

The Group expects that the acquisition of Chengdu Century City will provide an opportunity to expand the Group’s convention centre business into other geographic areas in the PRC and add another growth point for the Group.

According to the share purchase and capital increase agreement, the Group will pay total consideration of RMB5.9 billion to acquire 34.23% of the total shares outstanding from Chengdu Century City’s existing shareholders and inject additional capital of RMB5.9 billion into Chengdu Century City. The Group will finance the acquisition with internal funds and external financing. Subsequent to the closing of the relevant transactions, the Group will own 51 per cent. of the equity interest of Chengdu Century City. As at the date of this Offering Circular, the Acquisition has not yet closed. Closing will be subject to customary closing conditions.

In addition, subsequent to 31 December 2015, the Group has established ventures and entered into strategic cooperation framework agreements with various other business partners. See ‘‘– History and Development’’ for detailed discussions.

Description of the Group’s Businesses The Group’s operations and investments focus on the development of cities and towns and promoting tourism in Yunnan province. Over the years, the Group has diversified its business portfolio to primarily include urban development, urban environment, leisure and tourism, healthcare, and other businesses. The following table sets out a breakdown of the Group’s total operating income by business segment for the periods indicated:

Year ended 31 December 2013 2014 2015 Amount % of total Amount % of total Amount % of total (in RMB (in RMB (in RMB millions) millions) millions) (audited) (audited) (audited) Business segment Urbandevelopment...... 4,089.2 48.1 5,036.2 44.1 5,616.6 41.0 Urbanenvironment...... 544.8 6.4 747.3 6.5 986.3 7.1 Leisureandtourism...... 285.0 3.4 958.0 8.4 1,160.0 8.5 Healthcare...... 220.9 2.6 891.6 7.8 944.6 6.9 Otherbusinesses...... 3,363.6 39.6 3,775.3 33.1 4,994.5 36.5 Total Operating Income ...... 8,504.0 100.0 11,408.5 100.0 13,701.8 100.0

88 Urban development The Group’s urban development projects are driven by the urban planning and design policies of the Yunnan provincial government. Depending on the specific project and its nature, the economic benefits received by the Group may vary. The Group may be granted the right to operate certain public facilities after their completion and receive on-going revenue on such basis, or in the case of certain urban development projects, the Group may be granted land development rights and be allocated a portion of the land use rights sale premium derived from the land. The Group’s urban development segment consists of property development, development of exhibition centres, development of affordable housing and redevelopment of shantytowns and primary land development. In 2013, 2014 and 2015, the urban development segment had operating income of RMB4,089.2 million, RMB5,036.2 million and RMB5,616.6 million, representing 48.1 per cent., 44.1 per cent. and 41.0 per cent., respectively, of the total operating income of the Group.

Property Development The Group conducts its property development business primarily through its subsidiary, YMCI Real Estate, which has been listed on the Shanghai Stock Exchange (600239.SH) since 2007. YMCI Real Estate focuses on developing urban residential complex projects and tourism property projects in the PRC.

YMCI Real Estate generally classifies its property development projects into:

• land held for future development. Land held for future development is where YMCI Real Estate has obtained land use rights certificate for some or all of the development, but where project development has not commenced;

• properties under development. Properties under development are in general those where a land use rights certificate has been obtained for some or all of the development and where project development has commenced; and

• properties held for sale. Properties held for sale are those property development projects which are suitable for occupancy and delivery to purchasers, with all necessary occupation permits or completion certificates obtained and the relevant utilities, access and other related infrastructure being in place.

YMCI Real Estate’s property development mostly comprised high quality residential properties targeting the mid- to high-end retail market in the PRC. YMCI Real Estate acquires land in the PRC to support its growth in property development while striving to achieve a balanced property portfolio across different regions in the PRC.

89 The map below shows the Group’s major property development projects in the PRC as at 31 December 2015:

Rongcheng Jinjie

The project is a residential and commercial development. It is located in the Guandu District of Kunming and occupies a site area of approximately 48,000 sq.m. with a GFA of approximately 313,000 sq.m. The land for this project was acquired by YMCI Real Estate in December 2012 for an aggregate amount of RMB581.3 million.

Construction of the project commenced in May 2012 and was completed in December 2013.

Rongcheng Youjun

The project is a residential and commercial development. It is located in the Xishan District of Kunming and occupies a site area of approximately 36,000 sq.m. with a GFA of approximately 253,000 sq.m. The land for this project was acquired by YMCI Real Estate in December 2012 for an aggregate amount of RMB386.3 million.

Construction of the project commenced in July 2012 and was completed in December 2013.

90 Rongcheng Donghai

The project is a residential and commercial development. It is located in the Gaoxin District of Xi’an and occupies a site area of approximately 109,000 sq.m. with a GFA of approximately 109,000 sq.m. The land for this project was acquired by YMCI Real Estate in 2012 for an aggregate amount of RMB71.0 million.

Construction of the project commenced in 2012 and was completed in 2016.

Rongcheng Yungu

The project is a residential and commercial development. It is located in the Haidongxin District of Xi’an and occupies a site area of approximately 15,000 sq.m. with a GFA of approximately 135,000 sq.m. The land for this project was acquired by YMCI Real Estate in 2013 for an aggregate amount of RMB176.0 million.

Construction of the project commenced in 2013 and is ongoing as at the date of this Offering Circular.

Dali Haidongfang

The project is a residential development comprised of low rise residential villas located in on the lakefront of Erhai Lake in the Haidongxin District of Dali. The project occupies a site area of approximately 917,000 sq.m. with a GFA of approximately 113,000 sq.m. The land for this project was acquired by YMCI Real Estate in 2011 for an aggregate amount of RMB711.2 million.

Construction of the project commenced in 2012 and is ongoing as at the date of this Offering Circular.

Xishuangbanna Yulinlanshan

The project is a residential development comprised of high rise residential villas, low rise residential villas and hotels located in the Mannongfeng resort area in Xishuangbanna. The project occupies a site area of approximately 574,000 sq.m. with a GFA of approximately 511,000 sq.m. The land for this project was acquired by YMCI Real Estate in 2011 for an aggregate amount of RMB265.1 million.

Construction of the project commenced in 2012 and was completed in 2017.

Yuxi Taiyangshan

The project is a residential development comprised of low rise residential villas located in on the lakefront of Fuxian Lake in Yuxi. The project occupies a site area of approximately 4,408,000 sq.m. with a GFA of approximately 957,400 sq.m. The land for this project was acquired by YMCI Real Estate in stages between 2011 to 2015 for an aggregate amount of RMB391.9 million.

The Group acquired the project in 2011.

In addition to the major property development projects outlined above, the Group also has property projects in Beijing, Chongqing, Chengdu and Lanzhou.

Development of Exhibition Centres The Group engages in the construction and management of exhibition centres, primarily for development projects operated by the Group’s urban development business. The Group is responsible for operating the Kunming Dianchi International Convention and Exhibition Centre, the Haigeng Convention Centre and the Kunming International Convention and Exhibition Centre.

91 Kunming Dianchi International Convention and Exhibition Centre

Kunming Dianchi International Convention and Exhibition Centre commenced operation in 2012. The centre is located on the lakefront of Dianchi Lake in Kunming. The centre has a site area of approximately 1,500,000 sq.m. and a total GFA of over 4,900,000 sq.m. Kunming Dianchi International Convention and Exhibition Centre has a five-star hotel and commercial areas for shops and offices and it is also equipped to provide catering and banquet services for its guests. It is the largest convention and exhibition centre of its kind in the PRC.

Kunming Dianchi International Convention and Exhibition Centre is the designated exhibition venue for the China-South Asia Expo held jointly by the Ministry of Finance of the PRC and the Yunnan provincial government. The centre is the centrepiece of the Yunnan provincial government’splanto expand international presence and to become a financial centre in Southeast Asia. The Kunming Dianchi International Convention and Exhibition Centre receives full support from the Yunnan provincial government. For example, the Yunnan Provincial Department of Finance has guaranteed to budgeted RMB200.0 million annually to employ services of the centre; and in 2015, the centre has received commendation from the China National Tourism Administration for its planning and operations.

Haigeng Convention Centre

Haigeng Convention Centre is located on the lakefront of Dianchi Lake in Kunming. The centre commenced operation in 2010. It has been the venue of various official conferences and meetings by the Yunnan provincial government, as well as the annual plenary sessions of the People’s Congress and Chinese People’s Political Consultative Conference in Yunnan. It is one of the largest convention centres in Southeast Asia.

Kunming International Convention and Exhibition Centre

The Group acquired the Kunming International Convention and Exhibition Centre in 2016. The centre has been the venue for various international exhibitions and conventions, such as China-South Asia Expo, China Import and Export Fair (Kunming), China International Travel Mart, China International Agricultural Expo, National Medical Devices Exhibition, China Pharmaceutical Exhibition, China Kunming Pan-Asia Stone Expo and China Yunnan Puer Tea International Exhibition.

Development of Affordable Housing and Redevelopment of Shantytowns The Group is a key force of the Yunnan provincial government to implement housing policies and improve the housing conditions for low-income households in Yunnan province. Affordable housing is provided by the Yunnan provincial government to low-income families which include low-rent apartments and other public housing. Typically, the local government imposes specific construction standards on affordable housing projects and controls the selling and rental prices.

Through the authorisation of the Yunnan provincial government, the Group engages in the construction of affordable housing projects and redevelopment of older properties in Yunnan province which are structurally unsound. As at 31 December 2015, the Group had undertaken several affordable housing projects, including, among others, the Renhexinju, Fangwang and Longmaxinju affordable housing projects. The Group has also engaged in the development of 5 shantytown projects with a total of 3,865 apartments in Kunming, Qujing, Dali and Jinghong.

The Group generally follows the following steps to develop its affordable housing properties:

• Land acquisition: similar to private real property developers, the Group normally acquires the land use rights in the public bidding, auction and sale-by-listing process. Whether or not the Group is able to acquire the target depends on various factors including the credentials of bidders, costs of development and other details of the bids. In cases where affordable housing properties are

92 developed on the same parcel of land with normal projects according to an integrated development plan, the Group acquires the land use rights with respect to both projects at the same time. For certain other affordable housing projects which do not involve transfer of land use rights by the government, the Group does not acquire the land use rights and only undertakes the development and construction of the properties for the government.

• Project planning and design: The Group is responsible for forming the development plan of each project and for communicating with the third-party designers who the Group engages to design its affordable housing projects.

• Construction: Similar to most private real estate developers in the PRC, the Group outsources its project construction work to independent third parties to construct affordable housing properties, such as Yunnan Fourteen Metallurgical Construction Group. Selection of the third-party contractors is customarily conducted through public tender and bidding process as required by national and local regulations. The Group considers bidders’ track record performance, work quality, proposed delivery schedules and costs in its selection process and seek to maintain its construction costs at a reasonable level without sacrificing quality.

• Financing: The Group finances the development of its property development projects primarily with internal cash flow, loans extended by PRC commercial banks and policy banks as well as governmental grants.

• Sales: Due to the unique nature of affordable housing and specific standards of applicable PRC laws and regulations, affordable housing properties are sold only to qualified purchasers who are usually people with low to moderate incomes. Low-rent housing is typically not for sale on the market. Therefore, the Group directly delivers the low-rent housing properties to the local governments that commission it for the project upon completion and acceptance.

In 2014, the Yunnan provincial government assigned the Group’s subsidiary, Kunming Future City Development Co., Ltd., as one of the two shantytown renovation platforms at the provincial level, bringing in a shift of the Group’s business focus from affordable housing construction to shantytown renovation project. The Group receives financial support from the Yunnan provincial government for its affordable housing construction and shantytown renovation. The Group also obtained a loan of RMB6.7 billion from China Development Bank to carry out some of its shantytown development projects.

Primary Land Development The Group is a primary land developer in Yunnan province, designated to assist the Yunnan provincial government in city infrastructure investment and operation. As at 31 December 2015, land use rights of approximately 3,200,000 sq.m. of land developed by the Group had been sold by the Yunnan provincial government through public bidding, auction and sale-by-listing processes.

The Group normally carries out primary land development in accordance with a master agreement entered into with the Yunnan provincial government, which sets out details of the key aspects of the relevant projects, such as allocation of responsibilities between the Group and the government, financing arrangement, consideration and payment and any profit sharing arrangement. The key terms may vary in one project from another, depending on the negotiation and definitive arrangements agreed upon with the Yunnan provincial government.

In addition, the Group acts as the sole provincial land reserve supplier in Yunnan province, authorised by the Yunnan provincial government to engage in the relocation compensation services and early-stage development of the urbanisation projects. The Group conducts its land reserve operation through its affiliated company, Yunnan Land Reserve Operation Company, which is 50 per cent. owned directly by Yunnan Provincial Department of Finance and 50 per cent. owned by the Group and YMCI Real Estate. Yunnan Land Reserve Operation Company engages in provincial-level land reserve and development,

93 project investing and financing and management, demolition and relocation and resettlement housing and infrastructure construction. The funds needed by Yunnan Land Reserve Operation Company for new reserve will be included in the government fund budget and paid by the Yunnan provincial government.

The Group conducts its land development mainly through YMCI Real Estate. Up to the date of this Offering Circular, the YMCI Real Estate’s total operating income from primary land development totalled RMB8,150.0 million.

Property management, construction and installation The Group engages in providing services ancillary to the primary components of its urban development business, including property management, construction and installation services. The Group manages certain of the properties that it develops post-sales, and provides construction and installation services for home buyers with respect to home refurbishment and decoration as well as installation of equipment necessities. Such ancillary services have been key in facilitating the development of the Group’score urban development business, as the Group has maintained competitive edge from providing full- spectrum and post-sale services desired by home buyers. In 2013, 2014 and 2015, operating income from the provision of construction and installation services amounted to RMB1,020.5 million, RMB1,615.2 million and RMB1,123.9 million, respectively, and the operating income from the provision of property management services amounted to RMB13.4 million, RMB7.6 million and RMB49.5 million, respectively.

Urban Environment The Group is one of the leading integrated service providers in the municipal wastewater treatment and water supply industries in Yunnan province. As at the date of this Offering Circular, the Group owns 52 wastewater treatment plants and 23 water supply plants in Yunnan province. In addition, the Group has gradually expanded its urban environment business to include solid waste treatment, BT and EPC and expanded its presence into Xinjiang, Shandong, Jiangsu and Guizhou. The Group has also expanded its urban environment business into Thailand in 2016.

The Group mainly engages in project design, investment, construction, operation and maintenance, provision of turnkey solutions, equipment sourcing and installation as well as system integration services of core technologies with a view to providing safe, convenient and environmentally friendly wastewater treatment, water supply and solid waste treatment services to residents and enterprises in the PRC. The Group also operates a hazardous waste management business through one of its subsidiaries.

Operating income from this business segment is mainly derived from the payments by the local governments in where certain wastewater treatment, water supply and solid waste treatment plants are located. In 2013, 2014 and 2015, the urban environment segment had operating income of RMB544.8 million, RMB747.3 million and RMB986.3 million, representing 6.4 per cent., 6.6 per cent. and 7.1 per cent., respectively, of the total operating income of the Group.

Wastewater Treatment Plants As at 31 December 2015, the Group had a total of 52 wastewater treatment plants either in operation or under construction. The total designed daily processing capacity of the 44 plants in operation reaches 1,023,500 cubic metres. As of the same date, 44 of the 52 wastewater treatment plants use or will use the conventional procedures for treating wastewater whereas three plants will use the advanced treatment procedures.

94 The following table sets forth details regarding the Group’s major wastewater treatment plants as at 31 December 2015:

Designed yearly Total processing investment (in capacity (in Project Name RMB millions) Areas covered 10,000 tonnes) DaliWastewaterTreatmentPlant...... 81.0 Dali 1,971.0 WuxiXishanXibeiWastewaterTreatmentPlant...... 59.5 Wuxi 821.3 YunnanMengziWastewaterTreatmentPlant...... 61.2 Honghe 1,460.0 YunnanGejiuWastewaterTreatmentPlant...... 75.5 Honghe 1,825.0 YunnanKaiyuanWastewaterTreatmentPlant...... 75.0 Honghe 2,190.0 JinanLinggangWastewaterTreatmentPlant(FirstPhase)...... 83.0 Jinan 912.5 Tengchong Wastewater Treatment Plant ...... 42.0 Tengchong 912.5 JinningWastewaterTreatmentPlant...... 7.0 Jinning 547.5 Wenshan Wastewater Treatment Plant (Second Phase) ...... 45.0 Wenshan 1,095.0 Total...... 529.2 11,734.8

Water Supply Plants As at 31 December 2015, the Group had a total of 23 water supply plants either in operation or under construction. The designed daily processing capacity is expected to reach 646,000 tonnes.

The following table sets forth details regarding the Group’s major water supply plants in operation as at 31 December 2015:

Designed yearly Total processing investment (in capacity (in Project Name RMB millions) Areas covered 10,000 tonnes) DaliSecondWaterSupplyPlant(SecondPhase)...... 87.3 Dali 1,460.0 DaliFirstWaterSupplyPlant...... 37.5 Dali 1,460.0 Jinghong Jiangnan Water Supply Plant ...... 127.3 Jinghong 2,190.0 LiukuFirstWaterSupplyPlant...... 53.5 Lushui 730.0 JinanNewMaterialIndustrialParkWaterSupplyPlant...... 83.0 Jinan 2,555.0 Total...... 388.6 8,395.0

Solid Waste Treatment Plants To complement its role as a comprehensive urban environment planning operator, the Group has expanded its business from wastewater treatment to solid waste treatment. As at 31 December 2015, the Group had a total of four solid waste treatment plants in operation. The solid waste treatment business is expected to become a new source of growing revenue for the Group.

The following table sets forth details regarding the Group’s solid waste treatment plants as at 31 December 2015:

Designed yearly Total processing investment (in capacity (in Project Name RMB millions) Areas covered 10,000 tonnes) Jinan Environmental Protection Solid Waste Management Centre (Jiyang Project(FirstPhase))...... 416.3 Jinan 3.5 Thailand Phuket Waste IncinerationElectricityProject...... 443.7 Phuket,Thailand 25.6 KunmingMedicalWasteManagementCentre...... 300.0 Kunming 1.1 Yunan Tianyuan Environmental Protection Technologies Co., Ltd . . . . 39.0 Jinan 7.3 Total...... 1,199.0 37.5

95 Leisure and Tourism The Group’s leisure and tourism business complements the Group’s urban development business. It involves the investment and operation of national parks and tourist attractions and the construction and operation of hotels in Yunnan province.

In 2013, 2014 and 2015, the leisure and tourism segment had operating income of RMB285.0 million, RMB958.0 million and RMB1,160.0 million, representing 3.4 per cent., 8.4 per cent. and 8.5 per cent., respectively, of the total operating income of the Group.

National Parks and Tourist Attractions The Group plans to proactively explore investment and cooperation opportunities in tourism projects and consolidate its current resources to establish a leading position in the tourism sector in Yunnan province.

Potatso National Park

Located in the Shangri-La county, Yunnan province, the Potatso National Park is the sixth national 5-A class tourist attraction in Yunnan province, and is the core area of the Sanjiang Binliu natural heritage. Potatso was the first national park approved by the Forestry Administration of the PRC.

Meili Snow Mountain National Park

Located between the borders of the Yunnan, Sichuan and Tibet, the Meili Snow Mountain National Park is a national 4-A class tourist attraction and a World Heritage site. Attractions in the park include Yubeng Village, Mingyong Village, Feilai Temple, Taizi Temple and Yubengshen Waterfalls. The Meili Snow Mountain National Park has been widely recognised as a ‘‘heaven for hikers.’’

Diqing Shambhala Kalachakra Altar

Located in the Shangri-La county, Yunnan province, the Diqing Shambhala Kalachakra Altar showcases the Tibetan heritage and culture. The Kalachakra Mandala is a landmark building of Shangri-La and it houses a collection of traditional Tibetan weaponry. In 2015, the Diqing Shambhala Kalachakra Altar set a Guinness World Record for being the largest 3D altar and a Guinness World Record for hosting the single largest Thangka exhibition.

Yunnan Golden Monkey National Park

Located in Weixi County, Diqing Tibetan Autonomous Region, the Yunnan Golden Monkey National Park is a national 4-A class tourist attraction and it occupies approximately 334,000,000 sq. m in space.

Tiger Leaping Gorge National Park

Located in Hutiaoxia (the Tiger Leaping Gorge) Town, Shangri-La City, the Tiger Leaping Gorge National Park is a national 4-A class tourist attraction. The Tiger Leaping Gorge is 17 kilometres in length and it is one of the deepest gorges in China. The Tiger Leap Gorge trail is widely recognised as one of the top hiking trails of the world.

Manting Park

Located in Jinghong City, Yunnan province, the Manting Park is a national 4-A class tourist attraction. The park was an imperial garden of the Dai King in medieval times. The Manting Park is an important part of the Xishuangbanna tourist attractions and focuses on displaying Dai culture and Buddhism culture.

96 Dai Nationality Garden

Located in Xishuangbanna, Yunnan province, the Dai Nationality Garden is a national 4-A class tourist attraction built in 1999. The garden occupies approximately 3,360,000 sq.m in space and it displays history, culture, religion, architecture and customs of the Dai ethic group. The garden is also an ecotourism destination that integrates clothes, food, production and living of the local Dai people.

Xishuangbanna Wangtianshu

Located in Xishuangbanna, Yunnan province, the Xishuangbanna Wangtianshu is a national 4-A class tourist attraction. It is the only oasis at the latitude of 21°N and China’s only tropical rainforest.

Hotel Operations The Group operates seven hotels in China and derives operating income from these hotels. The Group cooperates with certain international hotel management groups that are experienced in managing luxurious hotels, including InterContinental, Crowne Plaza, Hilton and Banyan Tree to bring value to the Group’s property development projects and tourism projects.

In 2013, 2014 and 2015, the hotel operations segment had operating income of RMB270.0 million, RMB453.0 million and RMB528.0 million, representing 3.2 per cent., 4.0 per cent. and 3.9 per cent., respectively, of the total operating income of the Group.

The table below sets forth the Group’s hotel portfolio as at the date of this offering circular, including hotels that the Group operates but owns minority interest in:

Total GFA Number of Hotel Location Opening date (‘000 sq.m.) guest rooms InterContinentalKunming...... Kunming Aug2013 100.0 548 InterContinental Xishuangbanna Resort...... Xishuangbanna Apr 2013 105.2 512 Crowne Plaza Beijing Sun Palace ...... Beijing Jul 2008 95.4 519 Holiday Inn Express Shanghai Zhenping...... Shanghai Dec 2015 26 267 TianyuDaliErhaiLakeHotel...... Dali Jan2016 38.5 259 Hilton Yuxi Fuxian Lake ...... Fuxian Lake May 2015 96.2 346 Angsana Tengchong Hot Spring Village ...... Tengchong Aug 2013 19.0 37 Total...... 480.3 2,488

Healthcare The Group is a vertically-integrated healthcare product and service provider. The Group’s healthcare services provided include the construction and expansion of hospitals, managing public hospitals on behalf of local governments, as well as the manufacturing of Chinese medicine and biopharmaceutical products. The Group combines traditional Chinese medicines with western medicine theories to build a full-service comprehensive international healthcare company to cater to the patients and customers.

As part of the Group’s strategy to further develop its healthcare business, within the next three years, the Group intends to add another 3,000 registered beds by acquiring management rights of various hospitals. The Group expects to operate a total of 7,000 registered beds within three years from the date of this Offering Circular.

In 2013, 2014 and 2015, the healthcare segment had operating income of RMB220.9 million, RMB891.6 million and RMB944.6 million, representing 2.6 per cent., 7.8 per cent. and 6.9 per cent., respectively, of the total operating income of the Group.

97 Hospital Operation The Group operates four hospitals in the PRC. These hospitals collectively provide a full range of medical services, such as diagnosis and non-surgical treatment of diseases, general surgery, cardiology, neurosurgery, orthopaedics and emergency services. They also provide outpatient and ancillary healthcare services, such as outpatient surgery, cardiology and physiotherapy. As at 31 December 2015, the Group’s hospital network had approximately 4,247 full-time employees.

Kunming First People’s Hospital

Kunming First People’s Hospital is located in Kunming and commenced operations in 1963. The Group’s acquisition of the Kunming First People’s Hospital was the first acquisition of Level III Grade I public hospital in the PRC. The hotel focuses on providing general medical services, emergency services, education, research and development and other ancillary medical services. The hospital houses two provincial-level research institutions, namely the Yunnan Liver Transplant Research Centre and the Yunnan Clinical Disease Molecular Biology Laboratory. As at 31 December 2015, Kunming First People’s Hospital had a total of approximately 1,105 registered beds.

Calmette International Hospital

Calmette International Hospital was established in 2013 by the Group and Kunming Municipal Department of Health. The Group owns a 60 per cent. equity interest in Calmette International Hospital. As at 31 December 2015, Calmette International Hospital had a total of approximately 900 registered beds and approximately 1,070 employees, about 400 of which are doctors.

Kunming No.1 People’s Hospital Dongchuan District Hospital

The Group acquired Kunming No.1 People’s Hospital Dongchuan District Hospital in 2014. As at 31 December 2015, the hospital had a total of approximately 886 registered beds.

Kunming No.1 People’s Hospital Xingyao Community Hospital

The Group acquired Kunming No.1 People’s Hospital Xingyao Community Hospital in 2010. As at 31 December 2015, the hospital had a total of approximately 360 registered beds.

Chinese Medicine and Biopharmaceutical Products The Group owns majority voting rights with respect to the issued share capital of Sanqi Technology which focuses on the manufacture and distribution of pharmaceutical products, including building its own distribution channels. Sanqi Technology has two production plants in use and one plant under construction. Total production capacity is expected to reach approximately 660 tonnes per year when all plants are complete. As at 31 December 2015, it has approximately 603 employees and 75 products, including its flagship product, Sanqi Zongzaogan Products, Xuesaitong and Yunsanqi Granules. Since 2014, Sanqi Technology has begun to transform from a single product company to a vertically-integrated pharmaceutical company. As at the date of this Offering Circular, Sanqi Technology is the only company in the PRC that utilises Sanqi traditional Chinese medicine at the core of business and also the only vertically-integrated company that operates in every stage of the Sanqi’s production chain. Furthermore, Sanqi Technology has expanded the sale of its products consider deleting or changing to ‘‘overseas’’ as calling Taiwan international may not look good politically overseas into Taiwan and Japan.

98 Other Businesses The Group is engaged in other business operations including, among others, education and financial services. In 2013, 2014 and 2015, operating income from other businesses was RMB3,363.6 million, RMB3,775.3 million and 4,994.5 million, respectively, representing 39.6 per cent., 33.1 per cent. and 36.5 per cent., respectively, of the Group’s total operating income.

Education The Group’s education business involves the development, construction and operation of education institutions. As at 31 December, 2015, approximately 22,000 students were enrolled at its education institutions in Yunnan province, including kindergartens, vocational schools, a college and a driving school. In 2001, the Group entered into a partnership programme with Kunming University of Science and Technology to establish the Kunming University of Science and Technology Oxbridge College to offer engineering degrees as well as degrees in business, literature and science. The Kunming University of Science and Technology Oxbridge College offers classes in both English and Chinese. As at 31 December 2015, the Kunming University of Science and Technology Oxbridge College had approximately 9,000 full-time students, 20 professors and 400 administration staff. In 2013, 2014 and 2015, the education segment generated operating income of RMB198.0 million, RMB432.0 million and RMB489.0 million, respectively, representing 2.3 per cent., 3.8 per cent and 3.6 per cent. of the Group’s total operating income. The Group also operates the Yicheng Driving Training School. The Group aspires to develop Yicheng into a modern driving school with the latest information technologies.

Financial Services The Group engages in financial services primarily through its subsidiaries, Yunnan Rongzhi Capital Management Co., Ltd and Shanghai Xincheng Commercial Factoring Co., Ltd. The Group currently engages in credit guarantee, small loan and finance leasing services, primarily providing service to state- owned enterprise customers.

Competition The Group has advantages as a state-owned business. The Group is the sole investment and financing platform for urban development under the Yunnan SASAC and enjoys advantages in its urban development and urban environment businesses. However, it faces greater competition in its other businesses, as these markets in China have been opened up to both foreign and domestic participants.

The Group faces competition in all of its business segments from various sources, including large state- owned enterprises of the PRC, privately-owned domestic companies, and leading international companies that operate in Yunnan province. For its urban development and urban environment business segments, the Group believes its competitors are domestic state-owned and private companies. The PRC government has issued certain regulations in recent years to encourage market participation in these areas.

The principal competitive factors influencing the urban development and urban environment business segments generally include, among others, pricing strategies adopted by competitors, availability of capital and financing resources, and the planning, design, quality and workmanship of the projects. Large international companies may have advantages in terms of scale, capital and experience.

Quality, Safety and Environmental Protection The Group has established and implemented a group-wide quality, safety and environmental protection control management system pursuant to the requirements of ISO9001 standards. The management system specifies the standards to be met in terms of quality, safety and environmental protection control, clarifies the responsibility of various departments and personnel, identifies procedures, materials and other factors that are subject to the control of management, and provides for measures to be undertaken to ensure that various standards are met.

99 The Group imposes safety and anti-pollution measures, as well as regular internal safety and environmental inspections at all stages of its operational process to minimise the possibility of work- related accidents and injuries, occupational illness and environmental contamination. The Group also monitors the safety and environmental protection aspects of its sub-contractors’ operations. In addition, it provides safety education to employees and has established safety standards in relation to matters such as purchasing, installing and operating new equipment, constructing new facilities and improving existing facilities. The Group believes that its safety control systems, environmental protection systems and facilities are adequate to comply with applicable national and local regulations. As at the date of this Offering Circular, the Group is not aware of any penalties associated with any material breach of or noncompliance with any safety and environmental laws and regulations.

Intellectual Property The Group places priority on the invention, application, management and protection of intellectual property rights. In its ordinary course of business, the Group has obtained patents, trademarks and other contractual rights. As at the date of this Offering Circular, there has not been any material legal proceedings or disputes regarding the Group’s intellectual property rights.

Employees As at 31 December 2015, the Group had approximately 15,868 employees.

In accordance with the applicable regulations of local governments of the regions in which the Group has business operations, the Group makes contributions to the pension contribution plan, medical insurance, unemployment insurance, maternity insurance and personal injury insurance. The amount of contributions is based on the specified percentages of employees’ aggregate salaries as required by relevant PRC authorities. The Group also makes contributions to an employee housing fund according to applicable PRC regulations. In addition to statutory contributions, the Group provides annual bonuses and supplemental commercial insurance policies to employees.

The Group enters into an employment contract with each of its employees in accordance with applicable laws. Such contracts include provisions on wages, vacation, employee benefits, training programmes, health and safety, confidentiality obligations and grounds for termination.

Insurance The Group is required to obtain contractors all-risk and third-party liability insurance for most of the projects it undertakes. Such policies generally extend for the entire contract period, including the maintenance period following completion of the project. The Group also purchases pension insurance, unemployment insurance and medical insurance for its employees according to the relevant PRC laws and regulations. The Group maintains insurance coverage in accordance with applicable laws and practice customary in the industry.

Consistent with what the Group believes to be customary practice in the PRC, it does not carry any business interruption insurance, key-man insurance or insurance covering potential environmental damage claims.

Legal Proceedings and Regulatory Compliance The Group is from time to time involved in disputes and legal proceedings arising in the ordinary course of its business. To the best of its knowledge, there are no current litigation or arbitration proceedings against the Group or any of its directors as at the date of this Offering Circular that could have a material adverse effect on its financial condition or results of operations.

100 DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Directors The board of directors (the ‘‘Board’’) of the Guarantor is comprised of six directors. The principal focus of the Board is on overall strategic development, internal control system and risk management system. The Board provides guidance on business plans and monitors the results of such plans implemented by the management and reviews and approves its financial objectives and major financial activities.

The members of the Board as at the date of this Offering Circular are as follows:

Name Age Title XULei...... 50 ChairmanandDeputySecretaryofPartyCommittee YANG Tao...... 41 Deputy Chairman and Secretary of Party Committee LIJianmei...... 59 Director,Deputy Secretary of Party Committee and Secretary of Disciplinary Committee FENG Xuelan . . . . 54 Deputy Chairman and Director CAI Jiaming . . . . . 56 Director and Vice President YUZhiming..... 56 Director

Mr. XU Lei（許雷）has served as the Chairman of the Board since 2011 and the deputy secretary of party committee of the Guarantor since 2005. Prior to joining the Group, Mr. XU served as deputy chief operating officer of Yunnan Construction and Engineering Group Co., Ltd. and deputy chief operating officer of Yunnan Provincial Investment Holdings Group Co., Ltd. Mr. XU obtained an executive master’s degree in business administration from Peking University Guanghua School of Management as well as a doctor’s degree from Wuhan Science and Technology University. Mr. XU is also a certified senior engineer.

Mr. YANG Tao（楊濤）has served as deputy chairman of the Board and secretary of the party committee since 2014. Prior to joining the Group, Mr. YANG served as deputy chief operating officer of Yunnan Construction and Engineering Group Co., Ltd. as well as member of the standing committee of the party committee, secretary-general and head of united front work department of Xishuangbanna Dai Autonomous Prefecture of Yunnan province. Mr. YANG obtained a master’s degree in business management from Peking University.

Ms. LI Jianmei（李建美）has served as a director of the Board since 2011 and the deputy secretary of party committee since 2007. Prior to joining the Group, Ms. LI served as secretary-general of the party committee of Yunnan Provincial Investment Holdings Group Co., Ltd. Ms. LI obtained an Executive Master of Business Administration degree from Dalian University of Technology and is a certified senior economist.

Mr. FENG Xuelan（馮學蘭）has served as deputy chairman of the Board since 2014. Prior to joining the Group, Mr. FENG served as deputy secretary of party committee of Yanjin County, Zhaotong City, Yunnan province, secretary of party committee of Zhenxiong County, Zhaotong City, Yunnan province and secretary of party committee of Yiliang County, Zhaotong City, Yunnan province. Mr. FENG obtained a master’s degree in business management from Shanghai Pudong Managerial Talent School.

Mr. CAI Jiaming（蔡嘉明）has served as a director of the Board and vice president since 2011. Prior to joining the Group, Mr. CAI served as head of construction management department of Yunnan Provincial Department of Construction and chief engineer of Yunnan Provincial Department of Housing and Urban and Rural Development. Mr. CAI obtained a post-graduate degree in Public Administration from Yunnan Administration College and is a certified senior engineer.

Mr. YU Zhiming（俞志明） has served as a director of the Board since 2011. Prior to joining the Group,Mr.YuservedaschairmanoftheYunnanFourthConstructionCo.,Ltd.andchiefexecutive officer of Yunnan Third Construction Co., Ltd. Mr. Yu obtained an Executive Master of Business Administration degree from Tsinghua University and is a certified senior engineer.

101 Supervisors The supervisors of the Guarantor as at the date of this Offering Circular are as follows:

Name Age Title FU Xia ...... 54 Chairman of the Supervisor Committee LIYunfei...... 54 Supervisor LUO Zhongze . . . . 45 Supervisor QI Fengli ...... 48 Employee Supervisor MOU Xiaoling . . . 46 Supervisor

Ms. FU Xia（付霞）has served as the Chairman of the Supervisor Committee since 2016. Prior to joining the Group, Ms. FU served as the deputy director of Cadres Training Center of the Yunnan Provincial Commission for Discipline Inspection, a deputy secretary-general and the secretary-general of the Committee of Malong County, the secretary-general of the committee for discipline inspection of Yunnan Expo Group Co., Ltd., a deputy secretary-general of the party committee, the secretary-general of the committee for discipline inspection and the chairman of the trade union of Kunming Iron & Steel Holding Co., Ltd. (Kunming Iron & Steel Group Ltd.). Ms. FU has served as the chairman of the supervisory committee of the state-owned enterprise under the Yunnan Provincial People’s Government in December 2015.

Mr. LI Yunfei（李雲飛）has served as a supervisor since 2014. Prior to joining the Group, Mr. LI served as the deputy chief of Benggu Town in charge of technology for poverty alleviation, Xichou County, Wenshan, Yunnan Province, the head of the treasury bonds division of the Office of Finance in Yunnan Province, a full-time supervisor (at the section chief level) and a full-time supervisor (at the deputy director level) of the fifth session of the supervisory committee of the state-owned enterprise of Yunnan Province, the chairman of the first session of the supervisory committee of the state-owned enterprise of Yunnan Province, a full-time supervisor (at the director level) of the supervisory committee of the state-owned enterprise under the provincial government, the representative dispatched to serve as the chairman of the supervisory committee of the Yunnan Construction Group and the Fourteen Metallurgical Construction Group, the vice chairman of the supervisory committee of Yunnan Investment Group and the representative dispatched to serve as the chairman of the supervisory committee of Yunnan Provincial Energy Investment Group. Mr. LI has been a full-time supervisor (at the director level) of the supervisory committee of the state-owned enterprise under the provincial government since 2014. Mr. LI obtained a bachelor’s degree in accounting from Shanghai University of Finance and Economics.

Mr. LUO Zhongze（羅忠澤）has served as a supervisor since 2014. Prior to joining the Group, Mr. LUO served as the senior staff member of the working department for the board of directors and the supervisory committee of Yunnan State-owned Assets Supervision and Administration Commission, the principal staff member of the working department for the board of directors and the supervisory committee of Yunnan State-owned Assets Supervision and Administration Commission, the principal staff member of the supervisory committee of the state-owned enterprise under the Yunnan provincial government, the representative dispatched to serve as a supervisor of the supervisory committee of Yunnan Tin Group, the representative dispatched to serve as a supervisor of the supervisory committee of Yunnan Industry Investment Group. Mr. LUO has been the principal staff member of the supervisory committee of the state-owned enterprise under the Yunnan provincial government since May 2014. Mr. LUO obtained a bachelor’s degree in military operations research from Academy of Artillery at Xuanhua.

Ms. QI Fengli（祁鳳麗）has served as an employee supervisor since 2012. Ms. QI served as a deputy general manager of the investment management department, a deputy general manager (in charge of work) of the project management department and the manager of the design and construction cost department of the Guarantor. Ms. QI obtained a bachelor’s degree in International Economics and Trade from Yunnan Institute of Technology and an EMBA from Dalian University of Technology.

102 Mr. MOU Xiaoling（牟曉淩）has served as a supervisor since 2012. Mr. MOU obtained a bachelor’s degree in international and domestic marketing from Kunming Institute of Technology.

Senior Management The table below sets forth certain information with respect to the Guarantor’s senior management members.

Name Age Title LIJianmei...... 59 Director,Deputy Secretary of Party Committee and Secretary of Disciplinary Committee FENG Xuelan . . . . 54 Deputy Chairman CAI Jiaming . . . . . 56 Director and Vice President YANG Xiaoxuan. . 55 Vice President LIANG Xingchao . 48 Vice President HE Yuming . . . . . 59 Vice President ZHANG Ping . . . . 43 Chief Financial Officer WANG Dong . . . . 54 Vice President XULei...... 50 ChairmanandDeputySecretaryofPartyCommittee YANG Tao...... 41 Deputy Chairman and Secretary of Party Committee

Ms. LI Jianmei – see ‘‘– Directors’’ above.

Mr. FENG Xuelan – see ‘‘– Directors’’ above.

Mr. CAI Jianming – see ‘‘– Directors’’ above.

Mr. YANG Xiaoxuan（楊曉軒）has served as vice president since 2005. Prior to joining the Group, Mr. YANG served as secretary of party committee and managing vice president of Yunnan province Second Construction Co., Ltd. Mr. YANG obtained an Executive Master of Business Administration degree from Dalian University of Technology and is a certified senior engineer.

Mr. LIANG Xingchao（梁興超）has served as vice president since 2006. Prior to joining the Group, Mr. LIANG served as chief correspondent of Shenzhen Economic Daily. Mr. LIANG obtained a master’s degree in journalism from Sichuan Academy of Social Sciences and is a certified senior economist.

Mr. HE Yuming（何玉明）has served as vice president since 2009. Prior to joining the Group, Mr. HE served as a manager of human resources department of Yunnan International Economics and Technology Cooperation Co., Ltd. and chief operating officer of Kunming Xindu Property Co., Ltd. Mr. HE obtained amaster’s degree in business management from Macau University of Science and Technology and is a certified senior economist.

Ms. ZHANG Ping（張萍）has served as chief financial officer of the Guarantor since 2012. Prior to joining the Group, Ms. ZHANG served as a manager of the finance department at and assistant to chief operating officer of Yunnan World Exhibition Group Co., Ltd. Ms. Zhang obtained master’sdegreein International Economics and Trade from the joint program between Nankai University in China and Flinders University of Australia and is a certified senior accountant.

Mr. WANG Dong（王東）has served as vice president since 2013 and president of the workers’ union between 2011 and 2013. Prior to joining the Group, Mr. WANG served as deputy chief operating officer of Yunnan Construction and Engineering Investment Co., Ltd. Mr. WANG obtained an Executive Master of Business Administration degree from Yunnan University and an Executive Master of Business Administration degree from Cheung Kong Graduate School of Business and is a certified senior engineer.

103 PRC LAWS AND REGULATIONS

Cross-border Security Laws On 12 May 2014, the SAFE promulgated the Notice concerning the Foreign Exchange Administration Rules on Cross-Border Guarantees and the relating implementation guidelines（國家外匯管理局關於發 佈《跨境擔保外匯管理規定》的通知）(collectively the ‘‘New Regulations’’). The New Regulations, which came into force on 1 June 2014, replace twelve other regulations regarding cross-border security and introduce a number of significant changes, including: (i) abolishing prior SAFE approval and quota requirements for cross-border security; (ii) requiring SAFE registration or filing for two specific types of cross-border security only; (iii) removing eligibility requirements for providers of cross-border security; (iv) the validity of any cross-border security agreement is no longer subject to SAFE approval, registration, filing, and any other SAFE administrative requirements; (v) removing SAFE verification requirement for performance of cross-border security. A cross-border guarantee is a form of security under the New Regulations. The New Regulations classify cross-border security into three types:

• NeiBaoWaiDai（內保外貸）(‘‘NBWD’’): security/guarantee provided by an onshore security provider for a debt owing by an offshore debtor to an offshore creditor.

• Wai Bao Nei Dai（外保內貸）(‘‘WBND’’): security/guarantee provided by an offshore security provider for a debt owing by an onshore debtor to an onshore creditor.

• Other Types of Cross-border Security（其他形式跨境擔保）: any cross-border security/guarantee other than NBWD and WBND.

In respect of NBWD, in the case where the onshore security provider is a non-financial institution, it shall conduct a registration of the relevant security/guarantee with SAFE within 15 working days after its execution (or 15 working days after the date of any change to the security). The funds borrowed offshore shall not be directly or indirectly repatriated to or used onshore by means of loans, equity investments or securities investments without SAFE approval. Upon enforcement, the onshore security provider can pay to the offshore creditor directly (by effecting remittance through an onshore bank) where the NBWD has been registered with SAFE. In addition, if any onshore security provider under a NBWD provides any security or guarantee for an offshore bond issuance, the offshore issuer’s equity shares must be fully or partially held directly or indirectly by the onshore security provider. Moreover, the proceeds from any such offshore bond issuance must be applied towards the offshore project(s), where an onshore entity holds equity interest, and in respect of which the related approval, registration, record, or confirmation have been obtained from or made with the competent authorities subject to PRC Laws.

Under the New Regulations, the local SAFE will go through a procedural review (as opposed to a substantive examination process) of the onshore security provider’s application for registration. Upon completion of the review, the local SAFE will issue a registration notice or record to the onshore security provider to confirm the completion of the registration.

Under the New Regulations:

• non-registration does not render the onshore security ineffective or invalid under PRC law although SAFE may impose penalties on the onshore security provider if submission for registration is not carried out within the stipulated time frame of 15 working days; and

• there may be logistical hurdles at the time of remittance (if any cross-border payment is to be made by the onshore security provider under the onshore security) as domestic banks require evidence of SAFE registration in order to effect such remittance, although this does not affect the validity of the onshore security itself.

104 NDRC Filing On 14 September 2015, the NDRC issued the NDRC Notice, which became effective on the same day. In order to encourage the use of low-cost capital in the international capital markets in promoting investment and steady growth and to facilitate cross-border financing, the NDRC Notice abolishes the case-by-case quota review and approval system for the issuance of foreign debts by PRC enterprises and sets forth the following measures to promote the administrative reform of the issuance of foreign debts by PRC enterprises or overseas enterprises and branches controlled by PRC enterprises:

• steadily promote the administrative reform of the filing and registration system 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 as agreed, 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 shall: (i) apply to the NDRC for the filing and registration procedures prior to the issuance of the bonds; and (ii) shall report the information on the issuance of the bonds to NDRC within 10 working days after the completionofeachissuance.Thematerialstobe submitted by an enterprise shall 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. The NDRC shall decide whether to accept an application within 5 working days of receipt and shall issue an enterprise foreign debt pre-issuance registration certificate within 7 working days of accepting the application.

To issue foreign debts, an enterprise shall meet these basic conditions:

• have a good credit history with no default in its issued bonds or other debts;

• have sound corporate governance and risk prevention and control mechanisms for foreign debts; and

• have a good credit standing and relatively strong capability to repay its debts.

Pursuant to the NDRC Notice, the NDRC shall control the overall size of foreign 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 shall 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. When the limit of the overall size of foreign debts has been exceeded, the NDRC shall make a public announcement and shall no longer accept applications for filing and registration. According to the NDRC Notice, the proceeds raised may be used onshore or offshore according to the actual needs of the enterprises, but priority shall be given to supporting the investment in major construction projects and key sectors, such as ‘‘The Belt and Road’’,the coordinated development of Beijing-Tianjin-Hebei, the Yangtze River Economic Belt, international

105 cooperation on production capacity, and the manufacturing of equipment. As the NDRC Notice is newly published, certain detailed aspects of its interpretation and application remain subject to further clarification.

According to the NDRC Notice, an enterprise shall report the information relating to the issuance of the bonds to the NDRC within 10 working days in the PRC after the completion of the issuance (the ‘‘NDRC Post-issuance Report’’). The NDRC Notice provides that, in the case where the reported information relating to the issuance of foreign debts significantly varies from the information indicated in the filing and registration application filed with the NDRC the enterprise shall provide an explanation regarding such variance in the NDRC Post-issuance Report. In addition, if an enterprise maliciously and falsely reports the size of its issuance of foreign debts in the Post-issuance Report, the NDRC shall list the enterprise as an enterprise with poor credit in the national credit information platform.

Value Added Tax On 23 March 2016, the Ministry of Finance and the State Administration of Taxation (‘‘SAT’’) issued the Circular of Full Implementation of Business Tax to Value Added Tax Reform（關於全面推開營業稅 改徵增值稅試點的通知）(Caishui [2016] No. 36, ‘‘Circular 36’’) which confirms that business tax will be completely replaced by value added tax (‘‘VAT’’) from 1 May 2016. Since then, the income derived from the provision of financial 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.

It is not clear from the interpretation of Circular 36, if the provision of loans to the Issuer could be consider services provided within the PRC, which thus could be regarded as the provision of financial services that could be subject to VAT. Furthermore, there is no assurance that the Issuer will not be treated as ‘‘resident enterprises’’ under the EIT Law. PRC tax authorities could take the view that the holders of the Bonds are providing loans within the PRC because the Issuer is treated as PRC tax residents. In which case, the issuance of the Bonds could be regarded as the provision of financial services within the PRC that is subject to VAT.

If the Issuer is treated as PRC tax residents and if PRC tax authorities could take the view that the holders of the Bonds are providing loans within the PRC, or if the interest component of the amount payable by the Guarantor to the Bondholders under the Deed of Guarantee is viewed as interest income arising within the territory of the PRC, the holders of the Bonds shall be subject to VAT at the rate of 6 per cent. when receiving the interest payments under the Bonds. In addition, the holders of the Bonds 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 6.7 per cent. Given that the Issuer or the Guarantor pays interest income to Bondholders who are located outside of the PRC, the Issuer or the Guarantor, acting as the obligatory withholder in accordance with applicable law, shall withhold VAT and local levies from the payment of interest income to Bondholders who are located outside of the PRC.

Where a holder of the Bonds who is an entity or individual located outside of the PRC resells the Bonds to an entity or individual located outside of the PRC and derives any gain, since neither the service provider nor the service recipient is located in the PRC, theoretically the 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 Bonds is located within the PRC.

106 The Circular 36 has been issued quite recently and the above disclosure may be subject to further change upon the issuance of further clarification rules and/or different interpretationbythecompetent tax authority. There is uncertainty as to the application of the Circular 36.

PBOC Circular On 29 April 2016, the PBOC issued the Circular of the People’s Bank of China on the Nationwide Implementation of the Macro-prudence Management of Cross-border Financing in Full Aperture（《中國 人民銀行關於在全國範圍內實施全口徑跨境融資宏觀審慎管理的通知》）(the ‘‘Cross Border Financing Circular’’), which came into effect on 3 May 2016. The Cross Border Financing Circular established a mechanism aimed at regulating cross border financing activities based on the capital or net asset of the borrowing entities using a prudent management principle on a macro nationwide scale. A one-year transitional period has been set for this pilot program, during which domestic enterprises and financial institutions are able to access cross border financings or regional cross border financings denominated in Renminbi or foreign currencies. After the transitional period, cross border financing activities conducted by domestic companies will be regulated by the Cross Border Financing Circular. Foreign invested enterprises and foreign invested financial institutions in the PRC are able to elect to follow the new Cross Border Financing Circular or the existing Foreign Debt Registration Measures, and should file such selection with both the PBOC and the SAFE. For foreign invested enterprises and foreign invested financial institutions, length of the transitional period and the arrangements during the transitional period will be set out separately.

Neither the PBOC nor the SAFE has promulgated implementation rules of the Cross Border Financing Circular as at the date of this Offering Circular. The filing process for the aforesaid selection and the interpretation and enforcement of the Cross Border Financing Circular thus involve substantial uncertainties due to its recent promulgation and publication.

107 TAXATION

The following summary of certain Hong Kong and PRC tax consequences of the purchase, ownership and disposition of the Bonds 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 discussion 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 Bonds 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 Bonds or any persons acquiring, selling or otherwise dealing in the Bonds or on any tax implications arising from the acquisition, sale or other dealings in respect of the Bonds. Persons considering the purchase of the Bonds should consult their own tax advisers concerning the possible tax consequences of buying, holding or selling any Bonds under the laws of the PRC, Hong Kong and their country of citizenship, residence or domicile.

PRC

The following summary describes the principal PRC tax consequences of ownership of the Bonds by beneficial owners who, or which, are not residents of mainland China for the PRC tax purposes. These beneficial owners are referred to as non-PRC Bondholders in this ‘‘PRC Taxation’’ section. In considering whether to invest in the Bonds, 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.

Pursuant to the Enterprise Income Tax Law of the PRC (the ‘‘EIT Law’’) effective on 1 January 2008 and its implementation regulations, enterprise that are established under laws of foreign countries and regions (including Hong Kong, Macau and Taiwan) but whose ‘‘de facto management bodies’’ are within the territory of the PRC are treated as PRC tax resident enterprises for the purpose of the EIT Law and must pay enterprise income tax at the rate of 25 per cent. in respect of their worldwide income. If relevant PRC tax authorities decide, in accordance with applicable tax rules and regulations, that the ‘‘de facto management body’’ of the Issuer is within the territory of the PRC, the Issuer may be held to be a PRC tax resident enterprise for the purpose of the EIT Law and be subject to enterprise income tax at the rate of 25 per cent. for its income sourced from both within and outside PRC (although dividends from PRC subsidiaries may be excluded).

As confirmed by the Issuer, as at the date of this Offering Circular, the Issuer has not been notified or informed by the PRC tax authorities that it is considered as a PRC tax resident enterprise for the purpose of the EIT Law. On that basis, Bondholders will not be subject to withholding tax, income tax or any other taxes or duties (including stamp duty) imposed by any governmental authority in the PRC in respect of payments of interest and repayments of principal by the Issuer.

However, there is no assurance that the Issuer will not be treated as a PRC tax resident enterprise under the EIT Law and related implementation regulations in the future. Pursuant to the EIT Law and its implementation regulations, any non-resident enterprise without establishment within the PRC or whose income has no actual connection to its establishment inside the PRC must pay enterprise income tax on PRC source income and such income tax must be withheld by the PRC payer at source. Pursuant to the Individual Income Tax Law of the PRC (the ‘‘IIT Law’’) effective on 1 Sept 2011 and relevant implementations, any individual who has no domicile and does not stay within the territory of China or who has no domicile but has stayed within the territory of China for less than one year must pay individual income tax for any income obtained from sources within the territory of China.

Accordingly, in the event the Issuer is deemed to be a PRC tax resident enterprise by the PRC tax authorities in the future, the Issuer may be required to withhold income tax from the payments of interest or redemption premium in respect of the Bonds to any non-PRC Bondholder and gain from the

108 disposition of the Bonds may be subject to PRC tax if such income or gain is treated as PRC source. The tax rate is generally 10 per cent. for non-PRC enterprise Bondholders and 20 per cent. in the case of non-PRC individual Bondholders, subject to the provisions of any applicable tax treaty.

In addition, as the Guarantor is a PRC enterprise, if any interest payments are made by the Guarantor under the Guarantee, the Guarantor must withhold PRC income tax on payments of interest or redemption premiums with respect to the Bonds to non-PRC enterprise Bondholder generally at the rate of 10 per cent. (and possibly at a rate of 20 per cent. in the case of payments to non-PRC individual Bondholder) if such interest payments are deemed to be derived from sources within the PRC, subject to the provisions of any applicable tax treaty.

Subject to certain exceptions, the Issuer and the Guarantor have agreed to pay additional amounts to Bondholders so that Bondholders would receive the full amount of the scheduled payment, as further set out in the Terms and Conditions. The requirement to pay additional amounts as a result of any such PRC withholding tax will increase the cost of servicing the debt and could have an adverse effect on the Issuer or Guarantor’s financial condition.

No PRC stamp duty will be imposed on non-resident holders either upon issuance of the Bonds or upon a subsequent transfer of Bonds to the extent that the register of holders of the Bonds is maintained outside the PRC and the issue and the sale of the Bonds is made outside of the PRC.

Hong Kong Withholding tax No withholding tax is payable in Hong Kong in respect of payments of principal, premium or interest on the Bonds or in respect of any gains arising from the sale of the Bonds.

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 of capital assets).

Under the Inland Revenue Ordinance (Cap. 112) of Hong Kong (the ‘‘Inland Revenue Ordinance’’)as it is currently applied, interest on the Bonds may be deemed to be profits arising in or derived from Hong Kong from a trade, profession or business carried on in Hong Kong in the following circumstances: a. interest on the Bonds 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 Bonds is derived from Hong Kong and is received by or accrues to a company carrying on a trade, profession or business in Hong Kong; or c. interest on the Bonds is derived from Hong Kong and is received by or accrues to a person other than a company (such as a partnership), carrying on a trade, profession or business in Hong Kong and is in respect of the funds of the trade, profession or business.

Sums derived from the sale, disposal or redemption of the Bonds 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. The source of such sums will generally be determined by having regard to the manner in which the Bonds are acquired and disposed of.

109 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 the Bonds will be subject to profits tax.

Stamp duty No Hong Kong stamp duty will be chargeable upon the issue or transfer of a Bond.

The Proposed Financial Transactions Tax (the ‘‘FTT’’) On 14 February 2013, the European Commission published a proposal (the ‘‘Commission’sProposal’’) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the ‘‘participating Member States’’). 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 Bonds (including secondary market transactions) in certain circumstances. The issuance and subscription of Bonds 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 Bonds 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 Bonds are advised to seek their own professional advice in relation to the FTT.

FATCA

Foreign Account Tax Compliance Act, also commonly known as FATCA, imposes a United States federal withholding tax of 30 per cent. on certain payments made after December 31, 2018 to certain non-U.S. entities unless various United States information reporting and due diligence requirements (generally relating to ownership by U.S. persons of certain interests in or accounts with those entities) have been satisfied. The scope of FATCA, as enacted, is not entirely clear, and future United States Treasury regulations may be issued that broaden or change the scope of FATCA. Under current guidance, Bonds that are issued prior to the date that is six months after the date on which the final regulations that define ‘‘foreignpassthrupayments’’ are published would be grandfathered and, therefore, withholding under FATCA would not apply to payments on such Bonds, unless the Bonds are materially modified after such date or are characterised as equity for United States federal income tax purposes. Non-U.S. governments have entered into intergovernmental agreements (an ‘‘IGA’’) with the United States (and additional non-U.S. governments are expected to enter into such agreements) to implement FATCA in a manner that alters the rules described herein.

If the Bonds were not grandfathered, withholding tax may be imposed under FATCA if an investor or custodian of the Bonds is unable to receive payments free of withholding. Whilst the Bonds are in global form and held within Clearstream and/or Euroclear, it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Bonds by the Issuer, the Guarantor, any paying agent and the common depositary, given that each of the entities in the payment chain between the Issuer and the participants in the Clearing Systems is a major financial institution whose business is

110 dependent on compliance with FATCA and that any alternative approach introduced under an IGA will be unlikely to affect the Bonds. The documentation expressly contemplates the possibility that the Bonds may go into definitive form and therefore that they may be taken out of the Clearing Systems. If this were to happen, then a non-FATCA compliant holder could be subject to withholding. However, definitive bonds will only be printed in remote circumstances. Further, foreign financial institutions in a jurisdiction which has entered into an IGA are generally not expected to be required to withhold under FATCA or an IGA (or any law implementing an IGA) from payments they make.

111 DESCRIPTION OF CERTAIN MATERIAL 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 the PRC GAAP. PRC GAAP is substantially in line with IFRS, except for certain modifications between PRC GAAP and IFRS, which might be relevant to the financial information of the Group included herein.

The following is a general summary of certain differences between PRC GAAP and IFRS as applicable to the Group. The differences identified below are limited to those significant differences that are appropriate to the Group’s financial statements. The Company is responsible for preparing the summary below. Since the summary is not meant to be exhaustive, there can be no assurance regarding the completeness of the summary. The Company has not prepared a complete reconciliation of the consolidated financial information and related footnote disclosure between PRC GAAP and IFRS and has not quantified such differences. Had any such quantification or reconciliation been undertaken by the Group, other potentially significant accounting and disclosure differences may be 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 projects ongoing that could affect future comparisons such as this one. Finally, no attempt has been made to identify future differences between PRC GAAP and IFRS that may affect the financial information as a result of transactions 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, investors must rely upon their own examination of the Issuer, the Guarantor, the Group, the terms of the offering and other disclosure contained herein. 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.

GOVERNMENT GRANT

PRC GAAP only requires an assets-related government grant to be recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset. However, under IFRS, such assets-related government grants are allowed to be presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.

Under PRC GAAP, the relocation compensation for public interests shall be recognised as special payables. The income from compensation attributable to losses of fixed assets and intangible assets, related expenses, losses from production suspension incurred during the relocation and reconstruction period and purchases of assets after the relocation shall be transferred from special payables to deferred income and accounted for in accordance with the government grants standard. The surplus reached after deducting the amount transferred to deferred income shall be recognised in capital reserve.

Under IFRS, if an entity relocates for reasons of public interests, the compensation received shall be recognised in profit and loss.

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.

112 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.

FIXED ASSETS AND INTANGIBLE ASSETS

Under PRC GAAP, only the cost model is allowed.

Under IFRS, an entity can choose either the cost model or the revaluation model as its accounting policy.

113 SUBSCRIPTION AND SALE

The Issuer and the Guarantor have entered into a subscription agreement with Citigroup Global Markets Limited, Guotai Junan Securities (Hong Kong) Limited, BOCI Asia Limited and Orient Securities (Hong Kong) Limited as joint lead managers (the ‘‘Joint Lead Managers’’) dated @@ 2016 (the ‘‘Subscription Agreement’’), pursuant to which and subject to certain conditions contained therein, the Issuer has agreed to sell, and the Joint Lead Managers have agreed to severally, but not jointly, subscribe and pay for, or to procure subscribers to subscribe and pay for, the aggregate principal amount of the Bonds set forth opposite its name below:

Principalamountofthe Joint Lead Manager Bonds to be subscribed CitigroupGlobalMarketsLimited...... US$@@ GuotaiJunanSecurities(HongKong)Limited...... US$@@ BOCIAsiaLimited...... US$@@ OrientSecurities(HongKong)Limited...... US$@@ Total...... US$@@

The Subscription Agreement provides that the Issuer and the Guarantor will jointly and severally indemnify the Joint Lead Managers against certain liabilities in connection with the offer and sale of the Bonds. 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 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 (‘‘Banking Services or Transactions’’). The Joint Lead Managers and their respective affiliates may have, from time to time, performed, and may in the future perform, various Banking Services or Transactions with the Issuer and the Guarantor for which they have received, or will receive, fees and expenses.

In connection with the Offering of the Bonds, the Joint Lead Managers and/or their respective affiliates, or affiliates of the Issuer or the Guarantor, may place orders, receive allocations and purchase Bonds for their own account (without a view to distributing such Bonds). Such entities may hold or sell such Bonds or purchase further Bonds for their own account in the secondary market or deal in any other securities of the Issuer or the Guarantor, and therefore, they may offer or sell the Bonds or other securities otherwise than in connection with the offering. Accordingly, references herein to the Bonds being ‘‘offered’’ should be read as including any offering of the Bonds to the Joint Lead Managers and/ or their respective affiliates or affiliates of the Issuer or the Guarantor, for their own account. Such entities are not expected to disclose such transactions or the extent of any such investment, otherwise than in accordance with any legal or regulatory obligation to do so. Furthermore, it is possible that only a limited number of investors may subscribe for a significant proportion of the Bonds. If this is the case, liquidity of trading in the Bonds may be constrained (see ‘‘Risk Factors – RisksRelatingtotheBonds and the Guarantee – The liquidity and price of the Bonds following this offering may be volatile’’). The Issuer, the Guarantor and the Joint Lead Managers are under no obligation to disclose the extent of the distribution of the Bonds amongst individual investors.

114 In the ordinary course of their various business activities, the Joint Lead Managers and their respective affiliates 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 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 or the Guarantor, including the Bonds and could adversely affect the trading prices of the Bonds. The Joint Lead Managers and their affiliates may make investment recommendations and/or publish or express independent research views (positive or negative) in respect of the Bonds or other financial instruments of the Issuer, the Guarantor or the Group, and may recommend to their clients that they acquire long and/or short positions in the Bonds or other financial instruments.

In connection with the issue of the Bonds, any of the Joint Lead Managers (each, a ‘‘Stabilising Manager’’) or any person acting on behalf of the Stabilising Manager may, to the extent permitted by applicable laws and directives, over-allot the Bonds or effect transactions with a view to supporting the price of the Bonds at a level higher than that which might otherwise prevail, but in so doing, the Stabilising Manager or any person acting on behalf of the Stabilising Manager shall act as principal and not as agent of the Issuer or the Guarantor. However, there is no assurance that any Stabilising Manager or any person acting on behalf of any Stabilising Manager will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the Bonds is made and, if begun, may be ended at any time, and must be brought to an end after a limited period. Any loss or profit sustained as a consequence of any such overallotment or stabilisation shall be for the account of the Joint Lead Managers.

General The distribution of this Offering Circular or any offering material and the offering, sale or delivery of the Bonds are subject to restrictions and may not be made except pursuant to registration with or authorisation by the relevant securities regulatory authorities or an exemption therefrom. Therefore, persons who may come into possession of this Offering Circular or any offering material are advised to consult with their own legal advisors 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.

No action has been or will be taken in any jurisdiction by the Issuer, the Guarantor or the Joint Lead Managers that would, or is intended to permit a public offering, or any other offering under circumstances not permitted by applicable law, of the Bonds, or possession or distribution of this Offering Circular, any amendment or supplement thereto issued in connection with the proposed resale of the Bonds or any other offering or publicity material relating to the Bonds, in any country or jurisdiction where action for that purpose is required. Persons into whose hands this Offering Circular comes are required by the Issuer, the Guarantor and the Joint Lead Managers to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, offer, sell or deliver Bonds or have in their possession, distribute or publish this Offering Circular or any other offering material relating to the Bonds, in all cases at their own expense.

If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Joint Lead Managers or any of their respective affiliates 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.

United States The Bonds and the Guarantee have not been and will not be registered under the Securities Act and may not be offered or sold within the United States unless pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Bonds and the Guarantee are being offered and sold outside of the United States in reliance on Regulation S.

115 United Kingdom Each of the Joint Lead Managers has severally and not jointly with the other Joint Lead Managers represented, warranted and agreed that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, as amended (the ‘‘FSMA’’)) received by it in connection with the issue or sale of the Bonds in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantor; 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 Bonds in, from or otherwise involving the United Kingdom.

European Union In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a ‘‘Relevant Member State’’), each Joint Lead Manager has severally and not jointly with the other Joint Lead Managers represented and agreed with the Issuer and the Guarantor that with effect from and including the date on which the Prospectus Directive (as defined below) is implemented in that Relevant Member State (the ‘‘Relevant Implementation Date’’)ithasnotmadeandwillnot make an offer of the Bonds to the public in that Relevant Member State other than:

• to any legal entity which is a ‘‘qualified investor’’ as defined in the Prospectus Directive;

• to fewer than 150 natural or legal persons (other than ‘‘qualified investors’’ as defined in the Prospectus Directive), subject to obtaining the prior written consent of the relevant Joint Lead Manager or Joint Lead Managers nominated by the Issuer and the Guarantor for any such offer; or

• in any other circumstances falling within Article 3(2) of the Prospectus Directive. provided that no such offer of the Bonds shall require the Issuer, the Guarantor or any Joint Lead Manager to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an ‘‘offer of the Bonds to the public’’ in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Bonds to be offered so as to enable an investor to decide to purchase or subscribe the Bonds, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State; the expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State.

The Issuer and the Guarantor have not authorized and do not authorize the making of any offer of Bonds through any financial intermediary on their behalf, other than offers made by the Joint Lead Managers with a view to the final placement of the Bonds as contemplated in this Offering Circular. Accordingly, no purchaser of the Bonds, other than the Joint Lead Managers, is authorized to make any further offer of the Bonds on behalf of the Issuer, the Guarantor or the Joint Lead Managers.

Italy The offering of the Bonds has not been registered pursuant to Italian securities legislation and, accordingly, no Bonds may be offered, sold or delivered, nor may copies of this Offering Circular or of any other document relating to the Bonds be distributed in the Republic of Italy, except:

116 (i) to qualified investors (investitori qualificati), as defined pursuant to Article 100 of Legislative Decree No. 58 of 24 February 1998, as amended (the ‘‘Financial Services Act’’) and Article 34- ter, first paragraph, letter (b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended from time to time (‘‘Regulation No. 11971’’); or

(ii) in other circumstances which are exempted from the rules on public offerings pursuant to Article 100 of the Financial Services Act and Article 34-ter of Regulation No. 11971.

Any offer, sale or delivery of the Bonds or distribution of copies of this Offering Circular or any other document relating to the Bonds in the Republic of Italy under (i) or (ii) above must be:

(a) made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007 (as amended from time to time) and Legislative Decree No. 385 of 1 September 1993, as amended (the ‘‘Banking Act’’); and

(b) in compliance with Article 129 of the Banking Act, as amended, and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the Bank of Italy may request information on the issue or the offer of securities in the Republic of Italy; and

(c) in compliance with any other applicable laws and regulations or requirement imposed by CONSOB or other Italian authority.

Hong Kong Each of the Joint Lead Managers has severally and not jointly with the other Joint Lead Managers represented, warranted and agreed that:

(i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Bonds other than (a) to ‘‘professional investors’’ as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) 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) or which do not constitute an offer to the public within the meaning of that Ordinance; 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 Bonds, 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 Bonds which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Singapore Each of the Joint Lead Managers has severally and not jointly with the other Joint Lead Managers acknowledged that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each of the Joint Lead Managers has represented, warranted and agreed that it has not offered or sold any Bonds or caused such Bonds to be made the subject of an invitation for subscription or purchase and will not offer or sell such Bonds or cause such Bonds 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 such Bonds, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the ‘‘SFA’’), (ii) to a relevant person pursuant to

117 Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

This Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Offering Circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of any Bonds may not be circulated or distributed, nor may any Bonds be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Bonds are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(i) 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

(ii) 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 (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Bonds pursuant to an offer made under Section 275 of the SFA except:

(a) to an institutional investor or to a relevant person 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;

(b) where no consideration is or will be given for the transfer;

(c) where the transfer is by operation of law;

(d) as specified in Section 276(7) of the SFA; or

(e) as specified in Regulation 32 of the Securities and Futures (Offer of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

The PRC Each of the Joint Lead Managers has severally and not jointly with the other Joint Lead Managers represented, warranted and agreed that the Bonds are not being offered or sold and may not be offered or sold, directly or indirectly, in the People’s Republic of China (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws of the People’s Republic of China.

Taiwan Each of the Joint Lead Managers has severally and not jointly with the other Joint Lead Managers represented, warranted and agreed that it has not offered, sold or delivered, and it will not offer, sell or deliver, at any time, directly or indirectly, any Bonds acquired by it as a part of the offering in Taiwan or to, or for the account or benefit of, any resident of Taiwan, except as permitted by the securities laws of Taiwan.

118 GENERAL INFORMATION

(1) Clearing Systems: The Bonds have been accepted for clearance through Euroclear and Clearstream. The ISIN and the Common Code for the Bonds are XS1436193624 and 143619362, respectively.

(2) Authorisations: The Issuer and the Guarantor have obtained all necessary consents, approvals and authorisations in connection with the issue and performance of the Bonds and the provision of the Guarantee of the Bonds (as the case may be). The issue of the Bonds was authorised by resolutions of the Board of Directors of the Issuer passed on 13 June 2016. The Guarantee of the Bonds was authorised by resolutions of the Board of Directors of the Guarantor passed on 19 May 2016.

(3) No Material Adverse Change: Save as disclosed in this Offering Circular, there has been no material adverse change in the financial or trading position, prospects or results of operations of the Group since 31 December 2015.

(4) Litigation: Save as disclosed in this Offering Circular, neither of the Issuer nor the Guarantor is involved in any governmental, litigation or arbitration proceedings nor is the Issuer or the Guarantor aware that any such proceedings are pending or threatened. Each of the Issuer and the Guarantor may from time to time become a party to various legal, governmental or administrative proceedings arising in the ordinary course of its business.

(5) Available Documents: Upon prior written request, copies of the Group’s audited consolidated financial statements as at and for the years ended 31 December 2013, 2014 and 2015, the Issuer’s consolidated financial statements as at 31 December 2015 and for the period from 8 July 2015 to 31 December 2015, the Trust Deed, the Agency Agreement and the Deed of Guarantee will be available for inspection from the Issue Date at the specified office of the Principal Paying Agent (subject to the Principal Paying Agent having been provided with the same by the Issuer or the Guarantor) during normal business hours, so long as any Bond is outstanding.

(6) Independent Auditors of the Group:TheGroup’s audited consolidated financial statements as at and for the years ended 31 December 2013, 2014 and 2015, which are included elsewhere in this Offering Circular, have been audited by ShineWing Certified Public Accountants, the independent auditor of the Guarantor. The Issuer’s audited consolidated financial statements as at 31 December 2015 and for the period from 8 July 2015 to 31 December 2015, which are included elsewhere in this Offering Circular, have been audited by SHINEWING (HK) CPA Limited, the independent auditor of the Issuer.

(7) Listing of Bonds: Application has been made to the Hong Kong Stock Exchange for the listing of, and permission to deal in, the Bonds by way of debt issues to professional investors (as defined in the SFO) only.

119 INDEX TO FINANCIAL INFORMATION

Page

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP AS AT AND FOR THE YEARS ENDED 31 DECEMBER 2013, 2014 AND 2015 ReportoftheAuditors ...... F-2 ConsolidatedBalanceSheetoftheGroup ...... F-4 BalanceSheetoftheGuarantor ...... F-6 ConsolidatedIncomeStatementoftheGroup ...... F-8 IncomeStatementoftheGuarantor ...... F-9 ConsolidatedCashFlowStatementoftheGroup ...... F-10 CashFlowStatementoftheGuarantor ...... F-11 Consolidated Statement of Changes in Shareholders’ EquityoftheGroup ...... F-12 Statement of Changes in Shareholders’ EquityoftheGuarantor ...... F-15 NotestoFinancialStatements ...... F-18

AUDITED FINANCIAL STATEMENTS OF THE ISSUER AS AT 31 DECEMBER 2015 AND FOR THE PERIOD FROM 8 JULY 2015 TO 31 DECEMBER 2015 ReportoftheAuditors ...... F-195 BalanceSheet ...... F-197 IncomeStatement ...... F-198 Statement of Changes in Shareholders’ Equity ...... F-200 CashFlowStatement ...... F-201 NotestoFinancialStatements ...... F-202

F-1 F-2 F-3 F-4 F-5 F-6 F-7 F-8 F-9 F-10 F-11 F-12 F-13 F-14 F-15 F-16 F-17 F-18 F-19 F-20 F-21 F-22 F-23 F-24 F-25 F-26 F-27 F-28 F-29 F-30 F-31 F-32 F-33 F-34 F-35 F-36 F-37 F-38 F-39 F-40 F-41 F-42 F-43 F-44 F-45 F-46 F-47 F-48 F-49 F-50 F-51 F-52 F-53 F-54 F-55 F-56 F-57 F-58 F-59 F-60 F-61 F-62 F-63 F-64 F-65 F-66 F-67 F-68 F-69 F-70 F-71 F-72 F-73 F-74 F-75 F-76 F-77 F-78 F-79 F-80 F-81 F-82 F-83 F-84 F-85 F-86 F-87 F-88 F-89 F-90 F-91 F-92 F-93 F-94 F-95 F-96 F-97 F-98 F-99 F-100 F-101 F-102 F-103 F-104 F-105 F-106 F-107 F-108 F-109 F-110 F-111 F-112 F-113 F-114 F-115 F-116 F-117 F-118 F-119 F-120 F-121 F-122 F-123 F-124 F-125 F-126 F-127 F-128 F-129 F-130 F-131 F-132 F-133 F-134 F-135 F-136 F-137 F-138 F-139 F-140 F-141 F-142 F-143 F-144 F-145 F-146 F-147 F-148 F-149 F-150 F-151 F-152 F-153 F-154 F-155 F-156 F-157 F-158 F-159 F-160 F-161 F-162 F-163 F-164 F-165 F-166 F-167 F-168 F-169 F-170 F-171 F-172 F-173 F-174 F-175 F-176 F-177 F-178 F-179 F-180 F-181 F-182 F-183 F-184 F-185 F-186 F-187 F-188 F-189 F-190 F-191 F-192 F-193 F-194 F-195 F-196 F-197 F-198 F-199 F-200 F-201 F-202 F-203 F-204 F-205 F-206 F-207 F-208 F-209 F-210 F-211 F-212 F-213 F-214 F-215 F-216 F-217 F-218 F-219 F-220 F-221 F-222 F-223 F-224 F-225 F-226 F-227 F-228 F-229 F-230 F-231 F-232 F-233 ISSUER GUARANTOR

Caiyun International Investment Limited Yunnan Metropolitan Construction Suite 1702-04 17th Floor, Shui On Centre Investment Group Co., Ltd. 6-8 Harbour Road Yunnan Metropolitan Building Wan Chai, Hong Kong 400 MinHang Road Kunming, 650200 PRC

TRUSTEE AND PRINCIPAL PAYING AGENT REGISTRAR AND TRANSFER AGENT

The Bank of New York Mellon, London Branch The Bank of New York Mellon (Luxembourg) S.A. One Canada Square Vertigo Building – Polaris London E14 5AL 2-4 rue Eugène Ruppert United Kingdom L-2453 Luxembourg

LEGAL ADVISERS

To the Issuer and Guarantor To the Issuer and the Guarantor as to English law and Hong Kong law as to PRC law

Latham & Watkins Haiwen & Partners 18th Floor, One Exchange Square 20th Floor, Fortune Financial Centre 8 Connaught Place 5 Dong San Huan Central Road Chaoyang District Central, Hong Kong Beijing, People’s Republic of China

To the Joint Bookrunners To the Joint Bookrunners To the Joint Bookrunners as to English law as to Hong Kong law as to PRC law

Sidley Austin LLP Sidley Austin King & Wood Mallesons Woolgate Exchange Level 39 20th Floor East Tower, 25 Basinghall Street Two International Finance Centre World Financial Centre London EC2V 5HA 8 Finance Street 1 Dongsanhuan Zhonglu, United Kingdom Central, Hong Kong Chaoyang District Beijing, PRC

To the Trustee as to English law

Herbert Smith Freehills 23rd Floor Gloucester Tower 15 Queen’s Road Central Hong Kong

AUDITOR OF THE GROUP AUDITOR OF THE ISSUER

ShineWing Certified Public Accountants SHINEWING (HK) CPA Limited 8th Floor, Block B, Fuhua Monsion 43/F, Lee Garden One 8 Chaoyangmen North Street 33 Hysan Avenue Dongcheng District Causeway Bay Beijing, PRC Hong Kong A.Plus International FINANCIAL PRESS LIMITED 160680194