中國中車股份有限公司 Crrc Corporation Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should 14A.69(4) consult your licensed dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in CRRC Corporation Limited (the “Company”), you should at once hand this circular and the enclosed New Proxy Form to the purchaser or the transferee or to the bank, licensed dealer in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no 14A.70(1) 13.52 Note 5 responsibility for the contents of this 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 circular.

中國中車股份有限公司 CRRC CORPORATION LIMITED (a joint stock limited company incorporated in the People’s Republic of China with limited liability) 13.28(1) 13.51A (Stock code: 1766) A1B1

(1) PROPOSED ISSUANCE AND PLACING OF NEW A SHARES; (2) CONNECTED TRANSACTION: PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRRC GROUP; AND (3) SUPPLEMENTAL NOTICE OF 2015 ANNUAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A supplemental notice of the AGM of the Company, which will be held as originally scheduled at Empark Grand Hotel, No. 69 Banjing Road, Beijing, the PRC at 2:00 p.m. (registration will begin at 1:30 p.m.) on Thursday, 16 June 2016 is set out on pages 71 to 75 of this circular.

Shareholders who intend to appoint a proxy to attend the AGM and vote on the resolution as set out in the supplemental notice of the AGM are required to complete the enclosed New Proxy Form in accordance with the instructions printed thereon and return the same to the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited, in person or by post but in any event not less than 24 hours before the time stipulated for convening the AGM or any adjourned meeting thereof. Completion and return of the New Proxy Form will not preclude you from attending, and voting at the AGM or any adjourned meeting if you so wish. 31 May 2016 CONTENTS

Definitions ...... 1

Letter from the Board ...... 5

Letter from the Independent Board Committee ...... 32

Letter from the Independent Financial Adviser ...... 33

Appendix I — Shareholders’ Return Plan for the Next Three Years (from 2016 to 2018) ...... 53

Appendix II — Dilutive Impact of the Non-public Issuance of A Shares on the Immediate Returns and Remedial Measures ...... 56

Appendix III — General Information ...... 67

—i— DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“AGM” the 2015 annual general meeting of the Company to be held at 2:00 p.m. (registration will begin at 1:30 p.m.) on Thursday, 16 June 2016 at Empark Grand Hotel, No. 69 Banjing Road, Haidian District, Beijing, the PRC

“A Share(s)” domestic share(s) with a nominal value of RMB1.00 each in the share capital of the Company, which are listed on the Shanghai Stock Exchange (stock code: 601766)

“A Shareholder(s)” holder(s) of A Share(s)

“Articles of Association” the articles of association of the Company

“associates” has the meaning ascribed to it under the Hong Kong Listing Rules

“Board” the board of directors of the Company

“close associate” has the meaning ascribed to it under the Hong Kong Listing Rules

“CNR” the former China CNR Corporation Limited (中國北車股份有限公司)

“Company” CRRC Corporation Limited (中國中車股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, the H shares and A shares of which are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange respectively, formerly known as CSR Corporation Limited (中國南車股份有限公司)(“CSR”)

“Company Law” the Company Law of the People’s Republic of China, as amended from time to time

“connected person(s)” has the meaning ascribed to it under the Hong Kong Listing Rules

“controlling shareholder” has the meaning ascribed to it under the Hong Kong Listing Rules

“CRRC Group” or “CRRCG” CRRC Group (中國中車集團公司), a large-scale wholly state- owned enterprise and controlling shareholder of the Company

—1— DEFINITIONS

“CRRCG Subscription” the proposed subscription of 692,840,646 new A Shares for a total consideration of approximately RMB6 billion by CRRC Group pursuant to the CRRCG Subscription Agreement

“CRRCG Subscription the conditional subscription agreement entered into between Agreement” the Company and CRRC Group on 27 May 2016 in respect of the CRRCG Subscription

“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會)

“Directors” the directors of the Company, including the independent non-executive directors

“Feasibility Analysis Report” the feasibility analysis report relating to the use of proceeds from the non-public issue of A Shares approved by the Board on 27 May 2016

“General Mandate” the general mandate granted to the Directors by the Shareholders pursuant to the special resolution passed at the extraordinary general meeting of the Company held on 30 October 2015, which will be renewed at the AGM by way of passing of a special resolution in respect thereof

“Group” the Company and its subsidiaries

“H Share(s)” overseas listed foreign invested shares in the share capital of the Company, with a nominal value of RMB1.00 each in the share capital of the Company, which are listed on the Hong Kong Stock Exchange and traded in HK$ (stock code: 1766)

“H Shareholder(s)” the holder(s) of H shares

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“HK$” the lawful currency of Hong Kong

“Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

“Independent Board Committee” the independent committee of the Board, the members of which consist of the independent non-executive Directors, formed to advise the Independent Shareholders with respect to the CRRCG Subscription Agreement and the CRRCG Subscription

—2— DEFINITIONS

“Independent Financial Adviser” Platinum Securities Company Limited, the independent financial adviser, licensed to conduct Type 1 (dealings in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the CRRCG Subscription Agreement and CRRCG Subscription

“Independent Shareholders” Shareholders other than (i) CRRC Group and its associates; and (ii) all other parties (if any) who are interested or involved in the CRRCG Subscription and the CRRCG Subscription Agreement

“Latest Practicable Date” 27 May 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

“PRC” the People’s Republic of China, for the purpose of this circular only, excluding Hong Kong, Macau Special Administrative Regions and Taiwan

“Price Determination Date” 28 May 2016, i.e. the date of the announcement on the Shanghai Stock Exchange of the Board’s resolutions in respect of the Proposed Placing

“Proposed Placing” the proposed non-public issuance and placing of not more than 1,385,681,291 new A Shares (inclusive) by the Company to five target subscribers (including CRRC Group), and the total proceeds to be raised therefrom shall not exceed RMB12 billion

“Report on Previous Proceeds” the Report of CRRC Corporation Limited on the Use of Proceeds from Previous Fund Raisings (as at 31 March 2016) approved by the Board on 27 May 2016

“RMB” Renminbi, the lawful currency of the PRC

“SASAC” the State-owned Assets Supervision and Administration Commission of the State Council of the PRC (中國國務院國有資產監督管理委員會)

“Securities Law” the Securities Law of the People’s Republic of China, as amended from time to time

—3— DEFINITIONS

“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Share(s)” A Share(s) and H Share(s)

“Shareholder(s)” A Shareholder(s) and H Shareholder(s)

“trading day” a day on which the Shanghai Stock Exchange is open for dealing or trading in securities

“USD” United States dollars, the lawful currency of the United States of America

“%” per cent

—4— LETTER FROM THE BOARD

中國中車股份有限公司 CRRC CORPORATION LIMITED (a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock code: 1766)

Executive Directors Registered Office: Mr. Cui Dianguo No. 16, Central West Fourth Ring Road 2.14 Mr. Zheng Changhong Haidian District Mr. Liu Hualong Beijing Mr. Xi Guohua the PRC Mr. Fu Jianguo Postal code: 100036

Non-executive Directors Place of Business in Hong Kong: Mr. Liu Zhiyong Unit H, 41/F., Office Tower, Convention Plaza Independent non-executive Directors No. 1 Harbour Road Mr. Li Guo’an Wanchai Mr. Zhang Zhong Hong Kong Mr. Wu Zhuo Mr. Sun Patrick Mr. Chan Ka Keung, Peter

31 May 2016

To H Shareholders

Dear Sirs,

(1) PROPOSED ISSUANCE AND PLACING OF NEW A SHARES; (2) CONNECTED TRANSACTION: PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRRC GROUP; AND (3) SUPPLEMENTAL NOTICE OF 2015 ANNUAL GENERAL MEETING

1. INTRODUCTION

Reference is made to (i) the notice of the AGM of the Company dated 28 April 2016 which sets 14A.70(2) out the time and venue of the AGM and contains the resolutions to be proposed at the AGM for Shareholders’ consideration and approval, (ii) the announcement of the Company dated 13 May 2016 13.28(11) in respect of the Company’s contemplation of the non-public issuance of A Shares, (iii) the announcement of the Company dated 20 May 2016 in respect of the progress of the non-public issuance of A shares, and (iv) the announcement of the Company dated 27 May 2016 in respect of, among others, the Proposed Placing and the CRRCG Subscription.

—5— LETTER FROM THE BOARD

On 27 May 2016, the Board approved the Proposed Placing, pursuant to which the Company shall 13.28(2) issue not more than 1,385,681,291 new A Shares (inclusive) to five target subscribers including CRRC Group, China Development Bank Capital Corporation Limited* (國開金融有限責任公司), China 13.28(3) Development Bank Investment and Development Fund Management (Beijing) Co., Ltd* (國開投資發展基金管理（北京）有限責任公司), Shanghai Xinghan Asset Management Company Limited* (上海興瀚資產管理有限公司) and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.* (上海招銀股權投資基金管理有限公司), and therefore the aggregate nominal value of the A Shares to be issued shall not exceed RMB1,385,681,291. The total proceeds to be raised from the Proposed Placing shall not exceed RMB12 billion.

As part of the Proposed Placing, on 27 May 2016, the Company entered into the CRRCG 13.28(2) Subscription Agreement with CRRC Group, pursuant to which, among other things, CRRC Group has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue 692,840,646 new A Shares with a nominal value of RMB1.00 per A Share for a total consideration of RMB6 billion.

The purpose of this supplemental circular is to provide Shareholders with (i) the additional resolutions proposed to be considered at the AGM which are submitted by CRRC Group to the Company in compliance with the relevant PRC laws and the Articles of Association; (ii) details of the Proposed Placing; (iii) details of the CRRCG Subscription; (iv) the letter of advice from the Independent Financial Adviser and the recommendation from the Independent Board Committee; and (v) the supplemental notice of the AGM.

2. ADDITIONAL RESOLUTIONS PROPOSED TO BE CONSIDERED AT THE AGM

The AGM will be held as originally scheduled on Thursday, 16 June 2016 at which the additional resolutions in respect of the following matters will be proposed for approval as ordinary resolutions: (i) the compliance by the Company with the conditions for the non-public issuance of A Shares; (ii) the Feasibility Analysis Report; and (iii) the Report on Previous Proceeds, and the additional resolutions in respect of the following matters will be proposed for approval as special resolutions: (i) the non-public issuance of A Shares of the Company; (ii) the plan of non-public issuance of A Shares of the Company; (iii) the CRRCG Subscription and the CRRCG Subscription Agreement; (iv) the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and China Development Bank Capital Corporation Limited; (v) the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and China Development Bank Jingcheng (Beijing) Investment Fund Co., Ltd; (vi) the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd; (vii) the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and Shanghai Xinghan Asset Management Company Limited; (viii) the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.; (ix) the authorization to the Board to handle all relevant matters relating to the Proposed Placing; (x) the Shareholders’ Return Plan for the Next Three Years (from 2016 to 2018); and (xi) the Dilutive Impact of the Non-public Issuance of A Shares on the Immediate Returns and Remedial Measures.

—6— LETTER FROM THE BOARD

CRRC Group and its associates, who control or are entitled to exercise control over the voting 2.17 rights of their approximate 55.92% shareholding in the Company, will abstain from voting in respect of (i) the special resolution in relation to the non-public issuance of A Shares of the Company; (ii) the special resolution in relation to the plan of non-public issuance of A Shares of the Company; and (iii) the special resolution in relation to the CRRCG Subscription and the CRRCG Subscription Agreement at the AGM. Five Directors, namely Cui Dianguo, Zheng Changhong, Liu Hualong, Xi Guohua and Fu Jianguo (who hold positions in CRRC Group), will abstain from voting on the above resolutions in respect of their shareholdings in the Company. For their respective shareholding in the Company, please refer to Appendix III General Information of this circular.

3. PROPOSAL IN RELATION TO THE PROPOSED ISSUANCE AND PLACING OF NEW A 14A.69(1) 14A.69(3) SHARES 14A.70(2)

(1) Class and nominal value of Shares to be issued

The Shares to be issued under the Proposed Placing are A Shares with a nominal value of RMB1.00 per A Share.

(2) Method and time of issuance

All new A Shares under the Proposed Placing will be offered to target subscribers by way of non-public issuance, which shall be issued within six months from the date of obtaining the approval from CSRC in respect of the Proposed Placing.

(3) Target subscribers 13.28(7) 13.29(1)

The new A Shares under the Proposed Placing is proposed to be issued to five target subscribers including CRRC Group, China Development Bank Capital Corporation Limited*, China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd.*, Shanghai Xinghan Asset Management Company Limited*, and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.*. China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd.* will subscribe for the A Shares to be issued by the Company under the Proposed Placing through two private investment funds it manages, details of which are set out in the table below.

—7— LETTER FROM THE BOARD

On 27 May 2016, each of the target subscribers (including CRRC Group) entered into a subscription agreement with the Company. Each of these subscription agreements is not inter-conditional with each other.

The table below sets forth the details of the target subscribers and the number of new A Shares to be subscribed for by each of them:

Number of A Shares to be subscribed for by the target Background information of the target Name of target subscriber subscriber subscriber

CRRC Group 692,840,646 It is a large-scale wholly state-owned enterprise incorporated in the PRC and the controlling shareholder of the Company.

China Development Bank 173,210,161 It is a company incorporated in the PRC Capital Corporation which mainly engages in investment Limited* business and investment management business, and a wholly-owned subsidiary of China Development Bank, a state-owned enterprise.

China Development Bank 173,210,161 It is a company incorporated in the PRC Investment and which mainly engages in investment Development Fund (among which, management business and consulting Management (Beijing) 115,473,441 A Shares business, and a wholly-owned subsidiary Co., Ltd. * will be subscribed for of China Development Bank Capital by China Development Corporation Limited. Bank Jingcheng (Beijing) Investment It will subscribe for the A Shares to be Fund Co., Ltd.* (國開 issued by the Company under the 精誠(北京)投資基金有 Proposed Placing through two investment 限公司) and funds it manages, details of which are set 57,736,720 A Shares out in the left column. will be subscribed for by China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd.* (國開思遠(北京) 投資基金有限公司)

—8— LETTER FROM THE BOARD

Number of A Shares to be subscribed for by the target Background information of the target Name of target subscriber subscriber subscriber

Shanghai Xinghan Asset 230,946,882 It is a company incorporated in the PRC Management Company which mainly engages in asset Limited* management business, with its ultimate controller being the State-owned Assets Supervision and Administration Commission of Fujian Province.

It will subscribe for the A Shares to be issued by the Company under the Proposed Placing through Xinghan Ziguan - Xingying No.5 Single Client Asset Management Plan (興瀚資管-興贏5 號單一客戶資產管理計劃), an asset management plan it manages. The settler of such asset management plan is China Industrial International Trust Limited* (興業國際信託有限公司).

Shanghai China Merchant 115,473,441 It is a company incorporated in the PRC Equity Investment Fund which mainly engages in investment Management Co., Ltd. * business, and an indirect subsidiary of China Merchants Bank Co., Ltd.* (招商銀行股份有限公司).

Total 1,385,681,291

In accordance with the relevant provisions of the Implementation Rules of Non-public Issue of Shares by Listed Companies《上市公司非公開發行股票實施細則》 ( ), the target subscribers for the Proposed Placing are determined by the Board and shall be approved by the Shareholders.

Based on the number of A Shares to be subscribed for by each of the target subscribers listed in the table above, CRRC Group will remain as the controlling shareholder of the Company holding, directly and indirectly, approximately 55.63% of the equity interests in the Company after the subscription of A Shares under the Proposed Placing by the target subscribers (including CRRC Group). Therefore, the Proposed Placing will not result in a change in control of the Company.

—9— LETTER FROM THE BOARD

To the best knowledge, information and belief of the Directors, the target subscribers (other than 13.29(1) CRRC Group) and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

(4) Subscription price and pricing principle

The Price Determination Date of the Proposed Placing shall be the date of the announcement on 13.28(8) the Shanghai Stock Exchange of the Board’s resolutions in respect of the Proposed Placing approved at the fourteenth meeting of the first session of the Board, i.e. 28 May 2016. As at 28 May 2016, the average trading price of the A Shares for the last 20 trading days is RMB9.62. The average trading price of A Shares for the 20 trading days prior to the Price Determination Date is the total value of A Shares traded for the 20 trading days prior to the Price Determination Date divided by the total volume of A Shares traded for the 20 days prior to the Price Determination Date.

The subscription price for the Proposed Placing is RMB8.66 per A Share, which is not less than 13.28(4) 90% of the average trading price of the A Shares for the 20 trading days prior to the Price Determination Date.

Within six months of obtaining the approval from CSRC in respect of the Proposed Placing, if the subscription price as determined above equals to or exceeds 70% of the average trading price of the A Shares during the 20 trading days prior to the date of issuance, the Company shall launch the Proposed Placing and issue the payment notice to the target subscribers in respect of the Proposed Placing; however, if the subscription price as determined above is less than 70% of the average trading price of the A Shares during the 20 trading days prior to the date of issuance, the subscription price in respect of the Proposed Placing shall be adjusted to equal to 70% of the average trading price of the A Shares during the 20 trading days prior to the date of issuance, and the number of new A Shares to be issued under the Proposed Placing shall be adjusted, based on the total subscription price of the new A Shares originally committed to by the target subscribers.

The subscription price shall be adjusted correspondingly if there is any ex-rights or ex-dividend event such as dividend distribution, bonus issue and capitalization of the capital reserve between the Price Determination Date and the date of issuance.

If the relevant PRC laws and regulations and regulatory documents or the regulatory and approval policies of CSRC in respect of the non-public issuance of shares have different requirements in respect of matters such as subscription price and pricing method, the Proposed Placing will be implemented in accordance with such requirements.

The Board shall ensure that, in any event, the subscription price (adjusted subscription price, if applicable) shall not represent a discount of 20% or more to the benchmarked price provided under Rule 13.36(5) of the Hong Kong Listing Rules.

—10— LETTER FROM THE BOARD

The net price to the Company of each new A Share to be issued under the Proposed Placing will 13.28(5) be determined and disclosed upon completion of the Proposed Placing and the determination of the relevant expenses incurred or to be incurred in relation to the Proposed Placing in accordance with the requirements of the Hong Kong Listing Rules.

The terms of issuance under the Proposed Placing were finalized on the date of the Board approval for the Proposed Placing, i.e., 27 May 2016. As at 13 May 2016 (i.e. the latest trading day preceding the suspension of trading of A Shares before the Board meeting), the closing price of the A Shares was RMB9.10 per A Share.

(5) Number of Shares to be issued

Based on the subscription price of RMB8.66 per A Share, the number of new A Shares to be issued under the Proposed Placing will be not more than 1,385,681,291 A Share (inclusive), among which CRRC Group proposes to subscribe for 692,840,646 new A Shares, China Development Bank Capital Corporation Limited* proposed to subscribe for 173,210,161 new A Shares, China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd* proposes to subscribe for 173,210,161 new A Shares, Shanghai Xinghan Asset Management Company Limited* proposed to subscribe for 230,946,882 new A Shares and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.* proposes to subscribe for 115,473,441 new A Shares.

Within the range of issuance mentioned above, the ultimate number of new A Shares to be issued and the number of new A Shares to be subscribed for by each target subscriber will be determined by the Board and the person(s) authorized by the Board according to the approvals of the competent authorities and the subscription agreements entered into by the target subscribers.

If there is any ex-rights or ex-dividend event such as dividend distribution, bonus issue and capitalization of the capital reserve between the Price Determination Date and the date of issuance, the number of new A Shares to be issued shall be adjusted by reference to the total proceeds raised and the subscription price (after ex-rights or ex-dividend event).

(6) Method of subscription

All new A Shares to be issued under the Proposed Placing shall be subscribed in cash.

(7) Lock-up period 13.28(15)

The new A Shares to be subscribed for by CRRC Group, China Development Bank Capital Corporation Limited*, China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd.*, Shanghai Xinghan Asset Management Company Limited* and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.* shall not be transferred within 36 months from the date of completion of the Proposed Placing. The transfer and dealings of the new A Shares by the target subscribers after the expiration of the aforesaid lock-up period shall be in accordance with the requirements of the then applicable PRC laws and regulations, regulatory documents and rules of the Shanghai Stock Exchange effective at the time.

—11— LETTER FROM THE BOARD

(8) Use of proceeds

The total proceeds of the Proposed Placing will be RMB12 billion (inclusive), which is intended 13.28(3) to be used for repayment of interest-bearing liabilities and replenishment of working capital of the Company, after deducting the expenses in respect of the Proposed Placing. RMB6 billion of the proceeds will be used for the repayment of interest-bearing liabilities and the remaining will be used to replenish working capital. For detailed analysis on the intended use of proceeds, please refer to paragraph (15) Feasibility Analysis Report below.

(9) Arrangement relating to the accumulated undistributed profits prior to the Proposed Placing

Upon completion of the Proposed Placing, holders of the new A Shares, together with all existing Shareholders of the Company, will be entitled to all undistributed profits of the Company prior to the completion of the Proposed Placing.

(10) Applications for listing of the new A Shares

The Company will apply to the Shanghai Stock Exchange for the listing of, and permission to deal in, the new A Shares pursuant to the Proposed Placing. Dealing in the new A Shares to be issued under the Proposed Placing on the Shanghai Stock Exchange will commence upon expiration of the lock-up period.

(11) Validity of resolutions

The resolutions regarding the Proposed Placing shall be valid for 12 months from the date of consideration and approval of such resolutions at the AGM.

(12) Conditions Precedent 13.28(14)

The Proposed Placing is conditional upon, among other things, (i) consideration and approval by the Board and by the Shareholders at the AGM of all resolutions in respect of the Proposed Placing; (ii) the completion of the internal approval procedures in respect of the subscription of new A Shares under the Proposed Placing by the target subscribers; and (iii) the obtaining of approvals from SASAC and CSRC in respect of the Proposed Placing.

(13) Amendment of Articles of Association

As a result of the Proposed Placing, the Company will amend in due course the Articles of Association to reflect the changes to its registered capital, its share capital structure and other relevant matters that need be adjusted in relation to the Proposed Placing.

—12— LETTER FROM THE BOARD

(14) Report on Previous Proceeds 13.28(9)

In accordance with the requirements of the relevant laws and regulations and regulatory documents including the Measures for Administration of the Issue of Securities by Listed Companies( 《上市公司證券發行管理辦法》), the Implementation Rules for the Non-public Issuance of Shares by Listed Companies《上市公司非公開發行股票實施細則》 ( ), and the Regulations for Reports on the Use of Proceeds from Previous Fund Raising《關於前次募集資金使用情況報告的規定》 ( ) issued by CSRC, the Company has, upon verification of the use of proceeds from the previous fund raisings, prepared the Report of CRRC Corporation Limited on the Use of Proceeds from Previous Fund Raisings.

After the verification of the use of proceeds from previous fund raisings of the Company, Deloitte Touche Tohmatsu Certified Public Accountants LLP has issued the Verification Report on the Use of Proceeds by CRRC Corporation Limited from Previous Fund Raisings (中國中車股份有限公司前次募集資金使用情況的鍳証報告). Deloitte Touche Tohmatsu Certified Public Accountants LLP was of the opinion that the Reports on Previous Proceeds were prepared by the Company in accordance with the Regulations for Reports on the Use of Proceeds from Previous Fund Raising, and reflect in all material respects the use of proceeds from the previous fund raisings of the Company.

Set out below is a summary of the Report on Previous Proceeds.

1. Non-public Issuance of A Shares by CSR

CSR had issued in 2012 by way of non-public issuance 1,963,000,000 A shares at the subscription price of RMB4.46 per A share, with total proceeds of RMB8,754.98 million and after deduction of the underwriting commission and other fees incurred, the net proceeds raised was RMB8,699.41 million.

As at 31 March 2016, interest of bank deposit received from the proceeds amounted to a total of RMB18.11million. An accumulated amount of RMB8,175.41 million from the proceeds had been utilised with the remaining of the proceeds amounting to RMB542.11 million (including interest) as at 31 March 2016, representing 6.19 % of the total proceeds raised. The Board had proposed to utilise the remaining proceeds (including interest) to permanently supplement the work capital of the implementation entity of each project funded by proceeds raised, in order to support the development of the principal businesses of the Company, which is subject to approval by Shareholders at the AGM.

2. A Share Rights Issue by CNR

CNR had issued in 2012 by way of rights issue 2,020,060,000 A shares at the subscription price of RMB3.42 per A share and in the proportion of 2.5 new shares for every 10 existing shares. CNR received total proceeds of RMB6,908.59 million and after deduction of the underwriting commission and other fees incurred, the net proceeds raised was RMB6,873.64 million.

—13— LETTER FROM THE BOARD

As at 31 March 2016, interest of bank deposit received from the proceeds amounted to a total of RMB27.76 million. An accumulated amount of RMB6,834.42 million from the proceeds had been utilised with the remaining of the proceeds amounting to RMB66.98 million (including interest), representing 0.97% of the total proceeds raised. The Board had proposed to utilise RMB0.38 million of the remaining proceeds to make final payment for project(s) funded by proceeds raised and RMB66.6 million to permanently supplement the work capital of the implementation entity of each project funded by proceeds raised, in order to support the development of the principal businesses of the Company, which is subject to approval by Shareholders at the AGM.

3. H Share Initial Pubilic Offering by CNR

CNR issued in 2014 by way of initial public offering 1,939,720,000 H shares at a issue price of HKD5.17 per H share with total proceeds of HKD10,028.37 million and after deduction of the underwriting commission and other fees incurred, the net proceeds raised was HKD9,836.74 million (equivalent to RMB7,822.28 million based on the exchange rate on the date of the receipt of such proceeds).

As at 31 March 2016, interest of bank deposit received from the proceeds amounted to a total equivalent of HKD115 million. An accumulated amount of HKD9,050 million (equivalent to RMB7,044.98 million) from the proceeds had been utilised and another HKD990 million had been applied for temporarily supplementing the working capital of the Company. The Company had not utilised all of the proceeds raised as at 31 March 2016 due to the following reasons: (1) research and development and manufacturing projects for high-end products had not been completed; and (2) procurement of equipment such as welding robots and high-speed milling machining centers from international suppliers had not been fully implemented.

4. Merger by Absorption of CSR and CNR

CSR issued additional 11,138,690,000 A shares and 2,347,070,000 H shares for merger with CNR in 2015. The merger was implemented by way of share exchange and no proceeds were raised.

5. Issue of H Share Convertible Bonds by CRRC

The Company issued USD600 million five-year H Share convertible bonds to subscribers in 2016. The bonds were issued at par value in the denomination of USD250,000 each. After deduction of the underwriting commission and other fees incurred, the net proceeds raised was USD595.8 million.

As at 31 March 2016, interest of bank deposit received from the proceeds amounted to a total of USD80,000. An accumulated amount of USD47 million had been utilised with the remaining of the proceeds amounting to USD548.88 million (including interest) as at 31 March 2016.

CSR, CNR and the Company had been following the use of proceeds designated at the time of each of the fund raising activities, except where, in consideration of the actual progress of projects funded by raised proceeds and improvement in the efficiency of capital utilisation, and to safeguard the interests of the Shareholders, they had made adjustments to the use of proceeds from such fund

—14— LETTER FROM THE BOARD raising activities, including but not limited to adjustments on the proportion of proceeds used among different projects and temporary supplement of working capital with proceeds not yet utilised. Details of such adjustments had been disclosed and relevant internal approval procedures had been duly completed by CSR, CNR and the Company in compliance with the relevant laws and regulations, regulatory documents and listing rules of stock exchanges.

Save as disclosed above, at the forthcoming AGM, a resolution in relation to the termination of certain projects funded by proceeds and the use of remaining proceeds to supplement the working capital on a permanent basis will be proposed for Shareholders’ consideration and approval.

According to requirements of CSRC, the Reports on Previous Proceeds will be submitted to the Shareholders for their consideration and approval by way of an ordinary resolution at the AGM.

(15) Feasibility Analysis Report

(i) Plan for the Use of Proceeds

The total proceeds of the Proposed Placing will be RMB12 billion. After deducting the expenses in respect of the Proposed Placing, RMB6 billion of the proceeds will be used for the repayment of interest-bearing liabilities and the remaining will be used to replenish working capital.

Before receipt of the proceeds from the Proposed Placing, the Company will self-raise funds to repay the interest-bearing liabilities based on their respective maturity dates and replace such self-raised funds with the proceeds received from the Proposed Placing in accordance with the procedures set out in the relevant regulations. If the net proceeds is lower than the proceeds required for the above items, the difference shall be resolved through self-raising of funds.

(ii) Analysis of the Necessity and Feasibility of the Use of Proceeds

(a) To Improve the capital structure and to reduce the liquidity risk

As at the end of 2013, 2014, 2015 and as at 31 March 2016, the assets and liabilities of the Company on a consolidated basis and the major debt indicators of the Company are as follows:

31 March 31 December 31 December 31 December Item 2016 2015 2014 2013

Liability to asset ratio 63.67% 63.56% 65.81% 64.28% Current ratio 1.22 1.21 1.16 1.09 Quick ratio 0.83 0.86 0.81 0.83

Note: The above financial information for 2013 and 2014 is on a pro forma basis. The calculation methods for the financial indicators are as follows: (1) Liability to asset ratio = total liabilities / total assets (2) Current ratio = current assets / current liabilities (3) Quick ratio = (current assets - inventories) / current liabilities

—15— LETTER FROM THE BOARD

In recent years, the Company seized the historical opportunities of the vigorous development of the domestic and overseas rail transit industries, continuously expanded the scale of its principal operations and enhanced its comprehensive competitiveness in the relevant business sector. However, due to the fact that the funds of the Company itself is limited, a substantial portion of the project investment funds and working capital is raised through external debt financing. As a result, the Company’s liability to asset ratio will remain relatively high. In the first half of 2017, with the successive maturity of the Group’s medium-term notes and other interest-bearing liabilities, the Company will face greater cash outflow pressures. Through the repayment of interest-bearing liabilities such as the relevant medium-term notes with the proceeds raised from the Proposed Placing, the liability to asset ratio of the Company (based on the static test on the assets and liabilities of the Company as at the end of March 2016, the liability to asset ratio will be reduced from 63.67% to 60.64%) will be effectively reduced, which will further improve the capital structure, alleviate the cash outflow pressure and enhance the sustainable development of the Company.

(b) To Reduce financial expenses and to enhance the future profitability of the Company

With the expansion of the scale of production and operation of the Company, the liabilities of the Company are increasing, and the relevant financial expenses and interest expenses of the Company remains relatively high. From 2013 to 2015, the interest expenses within the financial expenses of the Company was RMB2.273 billion, RMB2.626 billion and RMB1.458 billion, respectively. The repayment of interest-bearing liabilities with the proceeds raised from the Proposed Placing, on the one hand, will effectively alleviate the financial pressure of the Company, decrease the size of loans, reduce financial expenses and enhance profitability; and on the other hand, the replenishment of working capital will satisfy the demand of the Company for working capital during the constant growth of its business, further expand the development space for its principal operations and satisfy the need of funding for long-term development.

(c) To grasp rail transit market opportunities and so satisfy the increasing demands for working capital as a result of the expansion of future business scale

Through continuous improvement in innovation and technical transformation, the Company has built a series of research and development manufacturing bases for high-speed electric MUs, electric locomotives, diesel locomotives, mass transit vehicles and railway wagons that meet advanced global standards and the world’s leading manufacturing scale, which not only is able to satisfy the demand of the volatile domestic market, but is also able to rapidly cater to the global demand of the rolling stock market.

In the domestic market, the current rolling stock manufacturing industry synergies well with the key strategic objectives of the Chinese government. The rail transit plays a major role in national major strategies such as “the Belt and Road”, “Integration in Jing-Jin-Ji Area” and “Yangtze River Economic Zone”. According to the Railway Network Planning Scheme under the 13th Five-year Plan by National Railway Administration of PRC (consultative draft), during the 13th Five-year Plan, China plans to further increase 29,000 km of railway operation, which is predicted to reach more than 150,000 km upon its completion. The operational length of high-speed rail is planned to be 11,000 km,

—16— LETTER FROM THE BOARD which is predicted to reach 30,000 km upon its completion. Therefore, the demand of the railway equipment market will remain stable. Meanwhile, during the 13th Five-year Plan, China plans to invest in the construction of 5,000 km of intercity MUs, which is expected to reach 8,000 km upon its completion. Hence, the demand for intercity electric MUs will increase.

In the overseas market, through continuous innovations, China’s rolling stock manufacturing industry is at an advantageous position globally in terms of its competitive cost. CRRC has the world’s leading research and development platform for rolling stock, with products achieving or approaching advanced global standards. CRRC is also one of the few enterprises in the global rail-transit industry which offers a full range of product. According to forecast of SCI Verkehr, an authoritative consulting institution based in Germany, the total demand for rail transit throughout the world will exceed 200 billion Euros by 2020. There will be an overall positive trend in terms of market demand, which presents a great opportunity for the China’s rolling stock industry highlighted by the “venturing out” of “high-speed rails”.

In 2015, the Company has capitalized on its reorganization and enhanced corporate synergy to provide effective support for production and operation. The Company has generated contracted sales totaling RMB287,500 million (of which, export contracted sales generated by international businesses amounted to USD5,781 million) during the year. Orders on hand as at the end of the reporting period amounted to RMB214,400 million. However, unlike traditional machinery manufacturing, rolling stock manufacturing with sophisticated technology has a high unit cost, a long production cycle, a high usage of working capital and higher requirements for capital investment. The proceeds raised from the Proposed Placing is intended to be used to replenish the working capital. After the receipt of the proceeds, the pressure of working capital required for the daily operation and development of the Company will be alleviated on the one hand; and the capital strength of the Company will be enhanced on the other hand to satisfy the long-term capital needs of the Company for its continuous growth and development.

(d) The use of proceeds from the Proposed Placing for the repayment of interest-bearing liabilities and the replenishment of working capital complies with the relevant provisions in respect of the use of proceeds under Article 10 of the “Measures for the Management of the Issuance of Securities by Listed Companies” and is feasible.

(iii) Analysis of the Impact of the Proposed Placing on the Company

(a) Impact of the Proposed Placing on its financial position

Upon completion of the Proposed Placing, by using the proceeds raised from the Proposed Placing to repay interest-bearing liabilities and to replenish working capital, the liquidity indicators and the capital structure of the Company can be significantly improved, thus reducing the financial risks of the Company. As at 31 March 2016, the liability to asset ratio of the Company was 63.67% (on a consolidated basis). The Proposed Placing will increase the total assets and net assets of Company and reduce its liability to asset ratio, to ensure that such ratio is at a reasonable level. The

—17— LETTER FROM THE BOARD proceeds raised is expected to amount to RMB12 billion, and the liability to asset ratio will be reduced to 60.64% (on a consolidated basis). Therefore, the Proposed Placing is expected to improve the capital structure of the Company to a certain extent, alleviate the cash flow pressures of the Company and enhance the sustainable development of the Company.

(b) Impact of the Proposed Placing on profitability

Upon completion of the Proposed Placing, by using the proceeds raised from the Proposed Placing to repay interest-bearing liabilities and to replenish working capital, the financial pressure of the Company will on the one hand be alleviated, which will effectively alleviate financial pressure of the Company, decrease the size of loans, reduce financial expenses and enhance profitability; and on the other hand, the replenishment of working capital will satisfy the demand of the Company for working capital during the constant growth of its business, further expand the development space for its principal operations and satisfy the need of funding for long-term development.

Upon completion of the Proposed Placing, by using the proceeds raised from the Proposed Placing to repay interest-bearing liabilities and to replenish working capital, the cash inflow from fund raising activities of the Company will increase, which will effectively alleviate the cash flow pressures caused by the repayment of matured debts and the increase in working capital required for daily operations. The capital strength of the Company is expected to be significantly enhanced, which will lay a foundation to build a leading world-class multinational enterprise which focuses on rolling stock and operates globally.

The Board considers that the use of the proceeds raised from the Proposed Placing are in compliance with the relevant industry policies of the PRC and the overall strategic development of the Company, and the proposed use of the proceeds is reasonable, feasible and in the interests of the Company and its Shareholders as a whole.

In accordance with the regulations of CSRC, the Feasibility Analysis Report will be submitted to the Shareholders for consideration and approval at the AGM by way of an ordinary resolution.

(16) Authorizations to the Board in connection with the Proposed Placing

The Board also proposes that the AGM approve the authorizations to the Board and its authorized person by way of special resolution to handle all matters in connection with the Proposed Placing within the scope of the relevant PRC laws and regulations and regulatory document, including:

1. to authorize the Board to handle all application matters in connection with the Proposed Placing;

—18— LETTER FROM THE BOARD

2. to authorize the Board to appoint the sponsor(s) (lead underwriter(s)) and other intermediaries to handle all application matters in connection with the Proposed Placing, and to sign any agreements and documents in relation to the Proposed Placing and subscription of the new A Shares, including but not limited to, underwriting agreement(s), sponsor agreement(s) and the employment agreement(s) with agencies;

3. to authorize the Board to adjust the specific plan for the Proposed Placing and supplement, amend and adjust the application documents relating to the Proposed Placing in accordance with the policy changes regarding the non-public issuance of A Shares and the review opinions of the related regulatory authorities in respect of the Proposed Placing;

4. to authorize the Board to formulate and organize the implementation of the specific plan for the Proposed Placing according to the specific conditions, including but not limited to, issuance time, subscription price, ultimate number of new A Shares to be issued, size of proceeds and selection of target subscribers;

5. to authorize the Board to sign, amend, supplement, submit, report and execute all documents and agreements in connection with the Proposed Placing;

6. to authorize the Board to establish a special bank account designated for the proceeds raised and to proceed with relevant matters, and sign relevant documents and agreements in respect of the investment projects to be financed by the proceeds raised from the Proposed Placing;

7. to authorize the Board to handle the capital verification procedures relating to the Proposed Placing;

8. to authorize the Board to adjust the investment projects and specific arrangements thereof within the authorization scope of the AGM and in accordance with the relevant regulatory requirements and the actual condition of the securities market; to adjust the plan for the Proposed Placing and the use of proceeds in line with any changes in policies of the PRC and new requirements of regulatory authorities in relation to the non-public issuance of A Shares or any changes in market conditions (including the feedback opinions from the approving authorities in respect of the application for the Proposed Placing), except where re-approval at a general meeting is otherwise required by any relevant laws and regulations and the Articles of Association and provided that the relevant laws and rules are being complied with;

9. to authorize the Board to handle the capital increase matters in connection with the use of proceeds;

10. to authorize the Board to handle such relevant matters as subscription, registration, lock- up and listing of the new A shares upon completion of the Proposed Placing;

—19— LETTER FROM THE BOARD

11. to authorize the Board, upon completion of the Proposed Placing, to handle matters such as change in the registered capital, amend the corresponding terms of the articles of association of the Company and execute relevant registration changes with the administration for industry and commerce;

12. to authorize the Board to handle other matters relating to the Proposed Placing; and

13. such authorizations shall be valid for a period of 12 months after being approved at the AGM of the Company.

(17) Implications under the Hong Kong Listing Rules

One of the target subscribers, CRRC Group, being a controlling shareholder and hence a 14A.70(4) connected person of the Company, has a material interest in the Proposed Placing. CRRC Group and its associates shall therefore abstain from voting on the resolutions approving the Proposed Placing at the AGM. 2.17(1), 14A.70(12)

Five Directors, namely Cui Dianguo, Zheng Changhong, Liu Hualong, Xi Guohua and Fu Jianguo (who hold positions in CRRC Group), have abstained from voting on the Board resolutions in respect of the Proposed Placing and will abstain from voting on the same resolutions proposed at the AGM. Save as stated above, none of the Directors have a material interest in the Proposed Placing and hence 14A.70(11) no other Director has abstained from voting on such resolutions.

According to the relevant requirements of the Hong Kong Listing Rules, the Company will proceed with the Proposed Placing after obtaining the approval from the Independent Shareholders by way of special resolution at the AGM convened in compliance with the Articles of Association.

—20— LETTER FROM THE BOARD

(18) Fund raising in the past twelve months

Date of completion Fund raising activity Net proceeds raised Use of net proceeds

5 February 2016 The issue of zero coupon Approximately An amount of USD47 convertible bonds USD595.8 million million of the net proceeds convertible into H Shares raised has been utilised, of the Company under the among which, an amount of general mandate granted USD17 million has been to the Board at the utilised to repay the loans extraordinary general and an amount of USD30 meeting of the Company million has been utilised to held on 30 October 2015 meet the operational needs of the Company. The remaining net proceeds not utilised are currently kept in its term deposit bank account. The Company currently intends to use (i) approximately HK$1 billion to increase the capital of CRRC (Hong Kong) Co. Limited (中國中車(香港)有限公司) (a wholly-owned subsidiary of the Company); (ii) and approximately USD250 million to fund overseas projects of its subsidiaries by way of loans. For the remaining proceeds, the Company currently has no specific plan for their use, but will utilize them in accordance with the use of proceeds disclosed in its announcement dated 26 January 2016, i.e., to satisfy the production and operation needs of the Company, adjust its debt structure, increase the capital contribution to subsidiaries, replenish working capital and project investments etc.

—21— LETTER FROM THE BOARD

Save for the fund raising activity disclosed above, the Company has not conducted any other fund raising activities by way of issue of equity securities within the 12 months immediately prior to the Latest Practicable Date.

(19) General Mandate to issue new A Shares

The Company will issue and place the new A Shares pursuant to the General Mandate as approved by the Shareholders. Under the General Mandate, the Board is authorized to issue and place not more than 4,583,538,458 A Shares and/or 874,213,208 H Shares.

As at the Latest Practicable Date, the Company has not issued any A Shares or H Shares pursuant 13.28(12) to the General Mandate.

The Directors (including the independent non-executive Directors) consider that the terms of the Proposed Placing (including the subscription price) are on normal commercial terms and are fair and reasonable taking into consideration the prevailing market conditions and are in the interests of the Company and its Shareholders as a whole.

Shareholders and potential investors should be aware that the Proposed Placing is subject to the conditions precedent set out above, and consequently the Proposed Placing may or may not proceed. Accordingly, they are advised to exercise caution when dealing in the securities of the Company.

4. PROPOSAL IN RELATION TO THE PROPOSED SUBSCRIPTION OF NEW A SHARES 14A.69(1) 14A.70(3) BY CRRC GROUP

(1) New A Shares to be subscribed by CRRC Group

As part of the Proposed Placing, on 27 May 2016, the Company entered into the CRRCG Subscription Agreement with CRRC Group, pursuant to which, among other things, CRRC Group has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue 692,840,646 new A Shares for a total consideration of RMB6 billion at the subscription price of RMB8.66 per A Share.

Immediately upon completion of the CRRCG Subscription, assuming that the number of new A Shares issuable under the Proposed Placing is 1,385,681,291 A Shares, CRRC Group will hold (directly and indirectly) in aggregate 15,952,421,384 A Shares, representing approximately 65.64% of the enlarged total issued A Shares and approximately 55.63% of the enlarged total issued share capital of the Company.

—22— LETTER FROM THE BOARD

If, owing to reasons relating to the approval from CSRC, the number of subscription Shares eventually acquired by CRRC Group is different from (lower than) the number as disclosed in the announcement of the Board’s resolutions in respect of the Proposed Placing or as agreed pursuant to the CRRCG Subscription Agreement, the Company will not be liable to issue the shortfall of the subscription Shares and will adjust the number of subscription Shares in proportion to the number of subscription Shares issuable pursuant to the approval from CSRC.

(2) Subscription price and payment method

The subscription price of the new A Shares to be issued to CRRC Group under the CRRCG Subscription Agreement shall be the same as that of the new A shares to be issued to the other target subscribers, i.e. RMB8.66 per A Share, subject to the same adjustment mechanisms as set out under paragraph (4) Subscription price and pricing principle under the section headed Proposal in Relation to the Proposed Issuance and Placing of new A Shares on page 7 of this circular.

Upon the CRRCG Subscription Agreement coming into effect, CRRC Group has agreed that the subscription price will, as agreed upon in the payment notice issued by the Company and the sponsor(s) of the Proposed Placing, be paid in one lump sum in cash to the bank account specifically maintained by the sponsor(s) for the Proposed Placing. Such payments, after capital verification by the accounting firm engaged and deduction of the relevant fees, shall then be transferred to a special account of the Company designated for the proceeds raised from the Proposed Placing.

Upon payment of the subscription price by CRRC Group, the Company will register the new A Shares subscribed for by CRRC Group with the securities depository and clearing institution as soon as practicable in order for CRRC Group to become the legal holder of such A Shares.

If the Proposed Placing does not proceed, the Company will return the subscription price paid in cash by CRRC Group together with the interest calculated at the demand deposit rate during the relevant period to CRRC Group.

(3) Lock-up arrangement

CRRC Group shall not transfer any of the new A Shares that it will subscribe for pursuant to the CRRCG Subscription Agreement within 36 months from the date of the completion of the Proposed Placing.

CRRC Group shall issue the relevant lock-up undertaking and handle the relevant matters for the lock-up arrangement for the new A Shares that it will subscribe for pursuant to the Proposed Placing in accordance with the relevant PRC laws and regulations, the relevant requirements of CSRC and the Shanghai Stock Exchange, and the requirements of the Company.

—23— LETTER FROM THE BOARD

(4) Conditions precedent

The CRRCG Subscription Agreement shall become effective after being signed and sealed by the legal representatives or authorised representatives of CRRC Group and the Company, and upon the satisfaction of the following conditions:

(a) consideration and approval by the Board and by the Shareholders at the AGM of all resolutions in respect of the Proposed Placing (including but not limited to the consideration and approval of the CRRCG Subscription Agreement and all connected transactions contemplated thereunder by the Independent Shareholders);

(b) the completion of the internal approval procedure in respect of the subscription of part of new A Shares of the Proposed Placing by CRRC Group; and

(5) General Information on the Parties to the CRRCG Subscription Agreement 14A.70(3)

(a) The Company

The Company is a joint stock limited company incorporated in the PRC with limited liability. The Group is the largest rolling stock provider in the world, with the most diverse offerings and leading technologies. The main scope of business of the Company include: research and development, design, manufacturing, repairs, sales, leasing and technical services of locomotives, MUs, rapid transit vehicles, engineering machinery, various electromechanical equipment, electronic equipment and components, as well as electric devices and environmental protection equipment; information consultation; industrial investment and management; asset management and import and export businesses.

(b) CRRC Group

CRRC Group is a large-scale wholly state-owned enterprise approved for establishment by the State Council and the controlling shareholder of the Company. The principal businesses of CRRC Group (through the Company) include research and development, manufacturing, sales, repairs and leasing of rolling stock and key components, and the extended businesses relying on the proprietary technology of rolling stock.

(6) Implications under the Hong Kong Listing Rules

CRRC Group is the controlling shareholder of the Company and thus a connected person of the 2.17(1), 2.17(2) Company. The issuance and placing of new A Shares to CRRC Group pursuant to the CRRCG 14A.70(12) Subscription Agreement constitutes a connected transaction of the Company and is subject to announcement, circular and Shareholders’ approval requirements under the Hong Kong Listing Rules. The proposal relating to the CRRCG Subscription and the CRRCG Subscription Agreement will be

—24— LETTER FROM THE BOARD proposed by way of a special resolution at the AGM for the Independent Shareholders to approve. As required by the Hong Kong Listing Rules, CRRC Group (holding, directly and indirectly, 55.92% of the Company’s equity interest as at the Latest Practicable Date) and its associates will abstain from voting in respect of the relevant resolutions at the AGM.

Five Directors, namely Cui Dianguo, Zheng Changhong, Liu Hualong, Xi Guohua and Fu Jianguo 14A.70(11) (who hold positions in CRRC Group), have abstained from voting on the Board resolution in respect of the transactions contemplated under the CRRCG Subscription Agreement and will abstain from voting on the same resolution at the AGM. Save as stated above, none of the Directors have a material interest in the CRRCG Subscription and hence no other Director has abstained from voting on such resolution.

The terms of the CRRCG Subscription Agreement were determined after arm’s length negotiations between the Company and CRRC Group. The Directors (including the independent non-executive Directors) consider that the terms of the CRRCG Subscription Agreement (including the subscription price) are on normal commercial terms and are fair and reasonable taking into consideration the prevailing market conditions and are in the interests of the Company and its Shareholders as a whole.

5. PROPOSAL IN RELATION TO COMPLIANCE WITH THE CONDITIONS FOR THE NON-PUBLIC ISSUANCE OF A SHARES BY THE COMPANY

In accordance with the Company Law, the Securities Law, the Measures for Administration of the Issue of Securities by Listed Companies and the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies issued by CSRC and other related regulations in relation to the conditions for the non-public issuance of A shares by listed companies, the Company conducted internal review and self-examination and considers that the Company has complied with the regulations of the prevailing laws and rules on the non-public issuance of A shares, and satisfied the conditions for the non-public issuance of A shares.

This resolution will be put forward at the AGM as an ordinary resolution for consideration and approval by the Shareholders.

6. PROPOSAL IN RELATION TO THE PLAN ON THE NON-PUBLIC ISSUANCE OF A SHARES BY THE COMPANY

In accordance with the Company Law, the Securities Law, the Measures for Administration of the Issue of Securities by Listed Companies, No.25 of Standard of Content and Format on Information Disclosure for Publicly Listed Companies-Listed Company Non-Public Share Issue Proposal and Issuance Report《公開發行證券的公司信息披露內容與格式準則第 ( 25號上市公司非公開發行股票預案和發行情況報告書》) and the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies of CSRC as well as other relevant regulations, the Company formulated the Plan on the Non-Public Issuance of A Shares by the Company.

—25— LETTER FROM THE BOARD

The main content of the Plan on the Non-Public Issuance of A Shares has been included in the 2.17(1), 2.17(2) relevant sections of this circular. In accordance with requirements under rules and regulations 14A.70(12) including the Rules Governing the Listing of Stocks on Shanghai Stock Exchange and internal procedural documents including the Articles of Association, as CRRC Group, the controlling shareholder of the Company, will subscribe for the new A Shares in respect of the Proposed Listing, the transaction contemplated under this resolution is a related party transaction. CRRC Group and its associates shall therefore abstain from voting on the resolution in respect of the Plan on the Non-Public Issuance of A Shares at the AGM.

Five Directors, namely Cui Dianguo, Zheng Changhong, Liu Hualong, Xi Guohua and Fu Jianguo 14A.70(11) (who hold positions in CRRC Group), have abstained from voting on the Board resolution in respect of the Plan on the Non-public Issuance of A Shares and will abstain from voting on the same resolution at the AGM. Save as stated above, none of the Directors have a material interest in the Non-public Issuance of A Shares and hence no other Director has abstained from voting on such resolution.

This resolution will be put forward at the AGM as a special resolution for consideration and approval by the Shareholders.

7. PROPOSAL IN RELATION TO SHAREHOLDERS’ RETURN PLAN FOR THE NEXT THREE YEARS OF THE COMPANY

In accordance with the requirements of the relevant documents including the Notice on the Further Implementation of the Relevant Matters concerning Cash Dividends of Listed Companies《關 ( 于進一步落實上市公司現金分紅有關事項的通知》) issued by CSRC, the Notice on the Further Improvement of the Relevant Matters concerning Cash Dividends of Listed Companies《關于進一步 ( 完善上市公司現金分紅有關事項的通知》) issued by the CSRC Beijing Bureau, the Guidance on Cash Dividends of Companies Listed on the Shanghai Stock Exchange《上海證券交易所上市公司現金分 ( 紅指引》) and the Guideline No. 3 for the Supervision and Administration of Listed Companies—Cash Dividends of Listed Companies《上市公司監管指引第三號 ( -上市公司現金分紅》) and the requirements of the Articles of Association, the Company formulated the Shareholders’ Return Plan for the Next Three Years of CRRC Corporation Limited (from 2016 to 2018), details of which are set out in Appendix I of this circular.

This resolution will be put forward at the AGM as a special resolution for consideration and approval by the Shareholders.

—26— LETTER FROM THE BOARD

8. PROPOSAL IN RELATION TO THE DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON THE IMMEDIATE RETURNS AND REMEDIAL MEASURES

In accordance with the requirements under the relevant PRC laws and regulations and regulatory documents including Certain Opinions of the State Council on the Further Promoting the Healthy Growth of the Capital Markets (Guo Fa [2014]No. 17)《國務院關於進一步促進資本市場健康發展的 ( 若干意見》, 國發[2014]17號), the Opinion of the General Office of the State Council on Further Enhancing the Protection of the Legal Rights of Medium and Small Investors of the Capital Markets (Guo Ban Fa[2013]No. 110)《國務院辦公廳關於進一步加強資本市場中小投資者合法權益保護工作 ( 的意見》, 國辦發[2013]110 號), the Guidance Opinion on Relevant Matters Concerning the Dilutive Impact of Initial Offerings, Refinancing and Reorganizations of Major Assets on Immediate Returns (Announcement [2015] No. 31 of CSRC)《關於首發及再融資、重大資產重組攤薄即期回報有關事 ( 項的指導意見》, 中國證券監督管理委員會公告[2015]31號), and for the purpose of the Proposed Placing, the Company formulated the Dilutive Impact of the Non-Public Issuance of Shares on the Immediate Returns and Remedial Measures of CRRC Corporation Limited details of which are set out in Appendix II of this circular.

This resolution will be put forward at the AGM as a special resolution for consideration and approval by the Shareholders.

9. EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The shareholding structures of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Proposed Placing and the subscription by the target subscribers (including the CRRCG Subscription) are set out in the table below:

As at the Latest Practicable Date

Percentage of the issued A the total issued Share capital of share capital Name of Shareholder Number of Shares held the Company of the Company

CRRC Group and its associates (Note 1) 15,259,580,738 A Shares 66.58% 55.92% Public 7,658,111,555 A Shares 33.42% 28.06% 4,371,066,040 H Shares — 16.02%

Total 27,288,758,333 Shares 100% 100%

—27— LETTER FROM THE BOARD

Immediately after completion of the Proposed Placing and the subscription by the target subscribers (including the CRRCG Subscription)

Assuming that (1) a total of 1,385,681,291 A Shares to be issued under the Proposed Placing are being fully subscribed by the target subscribers (including the CRRC Group); and (2) no other Shares will be issued or transferred after the Latest Practicable Date until completion of the Proposed Placing and the CRRCG Subscription:

Percentage of the issued A the total issued Share capital of share capital Name of Shareholder Number of Shares held the Company of the Company

CRRC Group and its associates (Note 1) 15,952,421,384 A Shares 65.64% 55.63% China Development Bank Capital Corporation Limited* 173,210,161 A Shares 0.71% 0.60% China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd. * 173,210,161 A Shares 0.71% 0.60% • China Development Bank Jingcheng (Beijing) Investment Fund Co., Ltd.* (國開精誠（北京）投資基金有限公司) (Note 2) 115,473,441 A Shares 0.48% 0.40% • China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd.* (國開思遠（北京）投資基金有限公司) (Note 2) 57,736,720 A Shares 0.24% 0.20% Shanghai Xinghan Asset Management Company Limited* 230,946,882 A Shares 0.95% 0.81% Shanghai China Merchant Equity Investment Fund Management Co., Ltd. * 115,473,441 A Shares 0.48% 0.40% Public (other than the target 7,658,111,555 A Shares 31.51% 26.71% subscribers) 4,371,066,040 H Shares — 15.24% Total 28,674,439,624 Shares 100% 100%

Note 1: 380,172,012 A Shares and 93,085,715 A Shares are held by CRRC Financial and Securities Investment Co., Ltd. and CSR Capital Company respectively, which are wholly-owned Subsidiaries of CRRC Group.

Note 2: China Development Bank Jingcheng (Beijing) Investment Fund Co., Ltd.* (國開精誠(北京_投資基金有限公司) and China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd.* (國開思遠(北京)投資基金有限公司) are managed by China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd. *.

—28— LETTER FROM THE BOARD

Shareholders and potential investors should be aware that the CRRCG Subscription is subject to the conditions precedent set out above, and consequently the CRRCG Subscription may or may not proceed. Accordingly, they are advised to exercise caution when dealing in the securities of the Company.

10. REASONS FOR AND BENEFITS OF THE PROPOSED PLACING AND CRRCG 14A.69(1) 13.28(6) SUBSCRIPTION

The Directors believe that following the completion of the Proposed Placing (including the CRRCG Subscription), the capital strength of the Company will increase, its capital structure will be optimized and its pressure on repayment of liabilities will be alleviated to a certain degree, and the Company’s resilience against financial risks will be effectively boosted.

The Board had considered various other means of fund raising which is on a pro-rata manner, such as rights issue and open offer. However, after due and careful consideration by the Board, the Board is of the view that the Proposed Placing by way of a non-public issuance of new A Shares is the most preferable method over others, as non-public issuance, as compared with rights issue and open offer, presents less uncertainties and risks given the current capital market situation and in terms of the PRC approval process. In addition, the Board expects that the non-public issuance, coupled with the relatively long lock-up period, will have less adverse effect on the Share price of the Company. Further, subscription by other long term investors in the Proposed Placing demonstrates the recognition of the value of the Company and the confidence that such investors place in the Company, which may help stabilize the Share price of the Company. Therefore, the Board considers that the Proposed Placing is in the best interests of the Company and its investors as a whole.

In addition, the CRRCG Subscription also demonstrates the confidence CRRC Group places in the Company and its support to the development of the Company’s business, which is conducive to enhancing the market image of the Company and stabilizing the trading price of the Company’s Shares.

11. AGM

For details regarding other resolutions to be proposed at the AGM for consideration and approval as well as the closure of register of members, eligibility for attending the AGM, registration procedures of attending the AGM, appointment of proxies and other matters, please refer to the notice of the AGM of the Company dated 28 April 2016.

—29— LETTER FROM THE BOARD

Registrar, Computershare Hong Kong Investor Services Limited, in person or by post but in any event not less than 24 hours before the time stipulated for convening the AGM or any adjourned meeting thereof. Completion and return of the New Proxy Form will not preclude you from attending, and voting at, the AGM or at any adjourned meeting if you so wish.

Shareholders who have not yet completed and returned the form of proxy as enclosed to the circular of the Company dated 28 April 2016 (the “Old Proxy Form”) are required to complete and return the New Proxy Form if they wish to attend the AGM by proxy. In this case, no return of the Old Proxy Form is required.

A Shareholder who has already completed and returned the Old Proxy Form properly should note that:

(a) if the New Proxy Form is not completed and returned properly or if the New Proxy Form is returned after 24 hours before the time fixed for holding the AGM, the Old Proxy Form will be treated as a valid form of proxy returned by you if correctly completed. The proxy so appointed by you will be entitled to vote at his or her discretion or to abstain from voting on the additional resolution properly put to the AGM; and

(b) if the New Proxy Form is completed and returned 24 hours before the time fixed for holding the AGM, the New Proxy Form will revoke and supersede the Old Proxy Form previously returned by you. The New Proxy Form will be treated as a valid form of proxy returned by you if correctly completed.

12. VOTING BY WAY OF POLL

In accordance with the requirements of the Hong Kong Listing Rules, the resolutions set out in the supplemental notice of the AGM will be voted on by way of poll. Voting results will be uploaded to the website of the Company at www.crrcgc.cc and the website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk upon the conclusion of the AGM.

13. RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the resolutions as set out in the supplemental notice of the AGM are in the interests of the Company and its Shareholders as a whole, and therefore recommend all Shareholders to vote in favour of the above proposed resolutions.

—30— LETTER FROM THE BOARD

Platinum Securities Company Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the CRRCG Subscription and the CRRCG Subscription Agreement. Platinum Securities Company Limited is of the view that the terms of the CRRCG Subscription and the CRRCG Subscription Agreement are on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders as a whole. Platinum Securities Company Limited therefore recommends the Independent Board Committee to advise the Independent Shareholders and recommends the Independent Shareholders to vote in favour of the resolutions in respect of the CRRCG Subscription and the CRRCG Subscription Agreement to be proposed at the AGM.

Your attention is drawn to the letter from the Independent Board Committee set out on page 32 of this circular and the letter of advice from the Independent Financial Adviser set out on pages 33 to 52 of this circular. The Independent Shareholders are advised to read the aforesaid letters before deciding as to how to vote on the resolutions approving the Proposed Placing and the CRRCG Subscription.

Yours faithfully, By Order of the Board CRRC Corporation Limited Cui Dianguo Chairman

* For identification purpose only

—31— LETTER FROM THE INDEPENDENT BOARD COMMITTEE

中國中車股份有限公司 CRRC CORPORATION LIMITED (a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock code: 1766)

31 May 2016

To the Shareholders

Dear Sirs,

CONNECTED TRANSACTION: SUBSCRIPTION OF NEW A SHARES BY CRRC GROUP

We refer to the circular despatched to the Shareholders of CRRC Corporation Limited (the “Company”) on 31 May 2016 (the “Circular”), of which this letter forms a part. Unless otherwise indicated, capitalized terms used in this letter shall have the same meanings as those defined in the Circular.

We have been appointed to form the Independent Board Committee to advise the Independent Shareholders on the terms of the CRRCG Subscription and the CRRCG Subscription Agreement in accordance with the relevant requirements of Chapter 14A of the Hong Kong Listing Rules.

We wish to draw your attention to the letter from the Board as set out on pages 5 to 31 of the Circular and the letter from the Independent Financial Adviser as set out on pages 33 to 52 of the Circular.

Having considered the advice given by the Independent Financial Adviser, we are of the opinion that the CRRCG Subscription and the CRRCG Subscription Agreement are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the AGM.

Yours faithfully, For and on behalf of the Independent Board Committee of CRRC Corporation Limited Li Guo’an, Zhang Zhong, Wu Zhuo, Sun Patrick, Chan Ka Keung, Peter Independent Non-executive Directors

—32— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders for the purpose of incorporation into this circular.

PLATINUM Securities Company Limited

21/F LHT Tower 31 Queen’s Road Central Hong Kong Telephone (852) 2841 7000 Facsimile (852) 2522 2700 Website www.platinum-asia.com

31 May 2016

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

(1) PROPOSED ISSUANCE AND PLACING OF NEW A SHARES; (2) CONNECTED TRANSACTION: PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRRC GROUP

INTRODUCTION

We refer to the announcement of the Company dated 27 May 2016 (the “Announcement”). On 31 May 2016, the Company despatched a circular (the “Circular”) to the Shareholders. Details of the Proposed Placing and CRRCG Subscription are contained in the letter from the Board in the Circular. Independent Shareholders are advised to read the Circular, including the letter from the Board, carefully.

In our capacity as the Independent Financial Adviser, our role is to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Proposed Placing and CRRCG Subscription Agreement are on normal commercial terms, in the ordinary and usual course of business of the Company, fair and reasonable, and in the interests of the Company and the Shareholders as a whole, and as to whether the Independent Shareholders should vote in favour of the Proposed Placing and CRRCG Subscription at the AGM. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

We are independent from, and are not connected with the Company, any other party to the Proposed Placing and CRRCG Subscription or any of their respective associates, connected persons or parties acting in concert with any of them and accordingly, we are considered eligible to give independent advice to the Independent Board Committee and the Independent Shareholders.

—33— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In formulating our opinion, we have relied on the information and facts supplied to us by the Company. We have reviewed, among other things: (i) annual report of the Group for the financial year ended 31 December 2015 (the “2015 Annual Report”); (ii) annual report of the Group for financial year ended 31 December 2014 (the “2014 Annual Report”) and (iii) the CRRCG Subscription Agreement.

We have assumed that all information, facts, opinions and representations contained in the Circular and all information, statements and representations provided to us by the Company are true, complete, accurate and not misleading in all material respects as of the date hereof and we and the Independent Shareholders will be notified by the Company of any material changes thereof as soon as practicable. The Company has confirmed that they take full responsibility for the contents of the Circular and have made all reasonable inquiries that no material facts have been omitted from the information supplied to us.

The Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make the Circular or any statement in the Circular misleading.

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular and of the information and representations provided to us by the Company. Furthermore, we have no reason to suspect the reasonableness of the opinions and representations expressed by the Company and/or the Directors which have been provided to us. In line with normal practice, we have not, however, conducted a verification process of the information supplied to us, nor have we conducted any independent in-depth investigation into the business and affairs of the Company. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the Proposed Placing and CRRCG Subscription, and we consider that we have taken sufficient and necessary steps based on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

During the past two years, Mr. Li Lan, for and on behalf of Platinum Securities Company Limited, signed the opinion letter from the independent financial adviser contained in the Company’s circular dated 21 January 2015 in respect of the merger of CSR Corporation Limited and China CNR Corporation Limited. The past engagement was limited to providing independent advisory services to the Independent Board Committee and the Independent Shareholders of the Company pursuant to the Listing Rules. Under the past engagement, Platinum Securities Company Limited received normal professional fees from the Company. Notwithstanding the past engagement, as at the Latest Practicable Date, we were independent from, and were not associated with the Company or any other party to the Proposed Placing and CRRCG Subscription, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules and accordingly, are considered eligible to give independent advice on the Proposed Placing and CRRCG Subscription. We will receive a fee from

—34— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER the Company for our role as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Proposed Placing and CRRCG Subscription. Apart from this normal professional fee payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company or any other party to the Proposed Placing and CRRCG Subscription or any of their respective substantial shareholder(s), associates, connected person(s), as defined under the Hong Kong Listing Rules.

The Independent Board Committee, comprising all of the independent non-executive directors of the Company, namely, Mr. Li Guo’an, Mr. Zhang Zhong, Mr. Wu Zhuo, Mr. Sun Patrick and Mr. Chan Ka Keung, Peter, has been established to advise the Independent Shareholders in relation to the Proposed Placing.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in relation to the Proposed Placing and CRRCG Subscription, and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors and reasons:

1. Background of the Proposed Placing and CRRCG Subscription

On 27 May 2016, the Board approved the Proposed Placing, pursuant to which the Company shall issue not more than 1,385,681,291 new A shares (inclusive) to five target subscribers including CRRC Group, China Development Bank Capital Corporation Limited* (國開金融有限責任公司), China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd* (國開投資發展基金管理（北京）有限責任公司), Shanghai Xinghan Asset Management Company Limited* (上海興瀚資產管理有限公司) and Shanghai China Merchant Equity Investment Fund Management Co., Ltd. (上海招銀股權投資基金管理有限公司), and therefore the aggregate nominal value of the A Shares to be issued shall not exceed RMB1,385,681,291. The total proceeds to be raised therefrom shall not exceed RMB12 billion.

As part of the Proposed Placing, on 27 May 2016, the Company entered into the CRRCG Subscription Agreement with CRRC Group, pursuant to which, among other things, CRRC Group has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue 692,840,646 new A Shares with a nominal value of RMB1.00 per A Share for a total consideration of RMB 6 billion.

2. Information of the Group and CRRC Group

According to the letter from the board as contained in the Circular (the “Letter from the Board”), the Company is a joint stock limited company incorporated in the PRC with limited liability. The Group is the largest rolling stock provider in the world, with the most diverse offerings and leading technologies. The main scope of business of the Company include: research and development, design, manufacturing, repairs, sales, leasing and technical services of locomotives, MUs, rapid transit

—35— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER vehicles, engineering machinery, various electromechanical equipment, electronic equipment and components, as well as electric devices and environmental protection equipment, information consultation, industrial investment and management, asset management and import and export businesses.

Set out below are the financial highlights of the Company’s consolidated financial statements extracted from the 2015 Annual Report:

For the year ended 31 December 2015 2014 RMB’000 RMB’000

Revenue 237,784,602 218,450,551 Gross profit 46,534,942 42,830,825 Profit for the year 14,097,878 12,346,361 Profit for year attributable to the owners of the Company 11,818,398 10,815,468

Total assets 311,693,729 298,813,676 Total liabilities 198,119,156 196,636,447 Net assets 113,574,573 102,177,229 Equity attributable to owners of the Company 96,900,316 89,294,953

The Group generated approximately RMB237,784.6 million of revenue in 2015, increased by approximately 8.9% of RMB19,334.1 million as compared with approximately RMB218,450.1 million in 2014. The revenue mainly represents the net invoiced value of goods and services sold, after allowance for returns and trade discounts, and exclude sales taxes and intra-group transactions. The gross profit recorded approximately RMB46,534.9 million, increased by 8.6% year on year, while the profit for the year amounted to approximately RMB14,097.9 million in 2015, increased by 14.2% as compared with approximately RMB12,346.4 million in 2014. The profit for the year attributable to the owners of the Company amounted to approximately RMB11,818.4 million in 2015, up by 9.3% as compared with approximately RMB10,815.5 million in 2014.

As at 31 December 2015, the total assets amounted to approximately RMB311,693.7 million increased by 4.3% as compared to the same period of 2014. While the net asset value recorded approximately RMB113,574.6 million, representing an increase of 11.2% as compared to the same period of the previous year.

—36— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Terms of the Proposed Placing of New A Shares and proposed subscription of new A Shares by CRRC Group

Independent Shareholders are advised to refer to the Letter from the Board for the full details of the terms in relation to the Proposed Placing and CRRCG Subscription.

Proposed Placing of new A Shares

Class and nominal value of Shares to be issued

As stated in the Letter from the Board, the Shares to be issued under the Proposed Placing are A Shares with a nominal value of RMB1.00 per A Share.

Method and time of issuance

As stated in the Letter from the Board, all new A Shares under the Proposed Placing will be offered to target subscribers by way of non-public issuance of A Shares, which shall be issued within 6 months from the date of obtaining the approval from CSRC in respect of the Proposed Placing.

Target subscribers

As stated in the Letter from the Board, the new A Shares under the Proposed Placing is proposed to be issued to five target subscribers including CRRC Group, China Development Bank Capital Corporation Limited, China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd., Shanghai Xinghan Asset Management Co., Ltd., and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.. China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd. will subscribe for the A Shares to be issued by the Company under the Proposed Placing through two investment funds it manages, details of which can be referred to the Letter from the Board.

Based on the number of A Shares to be subscribed for by each of the target subscribers, CRRC Group will remain as the controlling shareholder of the Company holding, directly and indirectly, approximately 55.63% of the equity interests in the Company after the subscription of A Shares under the Proposed Placing by the target subscribers (including CRRC Group). Therefore, the Proposed Placing will not result in a change in control of the Company.

—37— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Further, the Directors advised that, to the best of their knowledge, information and belief, the target subscribers (other than CRRC Group) and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

Subscription price and pricing principle

As stated in the Letter from the Board, the Price Determination Date of the Proposed Placing shall be the date of the announcement on the Shanghai Stock Exchange of the Board’s resolutions in respect of the Proposed Placing approved at the fourteenth meeting of the first session of the Board, i.e. 28 May 2016. As at 28 May 2016, the average trading price of the A Shares for the last 20 trading days is RMB9.62. The average trading price of A Shares for the 20 trading days prior to the Price Determination Date is the total value of A Shares traded for the 20 trading days prior to the Price Determination Date divided by the total volume of A Shares traded for the 20 days prior to the Price Determination Date.

The Company further advises that the subscription price for the Proposed Placing is RMB8.66 per A Share, which is not less than 90% of the average trading price of the A Shares during the 20 trading days prior to the Price Determination Date.

In particular, it was stated in the Letter from the Board, and Independent Shareholders are advised to take note, that the subscription price may subject to adjustment when the followings happen. Within six months of obtaining the approval from CSRC in respect of the Proposed Placing, if the subscription price as determined above equals to or exceeds 70% of the average trading price of the A Shares during the 20 trading days prior to the date of issuance, the Company shall launch the Proposed Placing and issue the payment notice to the target subscribers in respect of the Proposed Placing; however if the subscription price as determined above is less than 70% of the average trading price of the A Shares during the 20 trading days prior to the date of issuance, the subscription price in respect of the Proposed Placing shall be adjusted to equal to 70% of the average trading price of the A Shares during the 20 trading days prior to the date of issuance, and the number of new A Shares to be issued under the Proposed Placing shall be adjusted, based on the total subscription price of the new A Shares originally committed to by the target subscribers.

—38— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The net price to the Company of each new A Share to be issued under the Proposed Placing will be determined and disclosed upon completion of the Proposed Placing and the determination of the relevant expenses incurred or to be incurred in relation to the Proposed Placing in accordance with the requirements of the Hong Kong Listing Rules.

Number of Shares to be issued and method of subscription

Based on the subscription price of RMB8.66 per A Share, the number of new A Shares to be issued under the Proposed Placing will be not more than 1,385,681,291 A Share (inclusive), among which CRRC Group proposes to subscribe for 692,840,646 new A Shares, China Development Bank Capital Corporation Limited proposed to subscribe for 173,210,161 new A Shares, China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd proposes to subscribe for 173,210,161 new A Shares, Shanghai Xinghan Asset Management Company Limited* (上海興瀚資產管理有限公司) proposed to subscribe for 230,946,882 new A Shares and Shanghai China Merchant Equity Investment Fund Management Co., Ltd. proposes to subscribe for 115,473,441 new A Shares.

Method of subscription

All new A Shares to be issued under the Proposed Placing shall be subscribed in cash.

Conditions Precedent

According to the Letter from the Board, the Proposed Placing is conditional upon, among other things, (i) consideration and approval by the Board and by the Shareholders at the AGM of all resolutions in respect of the Proposed Placing; (ii) the completion of the internal approval procedures in respect of the subscription of new A Shares under the Proposed Placing by the target subscribers; and (ii) the obtaining of approvals from SASAC and CSRC in respect of the Proposed Placing.

—39— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Lock-up period

With reference to the Letter of the Board, the A Shares to be subscribed by CRRC Group, China Development Bank Capital Corporation Limited, China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd, Shanghai Xinghan Asset Management Company Limited* (上海興瀚資產管理有限公司) and Shanghai China Merchant Equity Investment Fund Management Co., Ltd. shall not be transferred within 36 months from the date of completion of the Proposed Placing. The transfer and dealings of the new A Shares by the target subscribers after the expiration of the aforesaid lock-up period shall be in accordance with the requirements of the PRC laws and regulations, regulatory documents and rules of the Shanghai Stock Exchange effective at the time.

Proposed subscription of new A Shares by CRRC Group

As per our discussion with the Directors, the terms of the CRRCG Subscription Agreement, besides the subscription price which will be determined by price bidding process, were determined after arm’s length negotiations between the Company and CRRC Group. The Directors (including the independent non-executive Directors) consider that the terms of the CRRCG Subscription Agreement to be fair and reasonable and in the interest of the Company and the Shareholders as a whole.

New A Shares to be subscribed by CRRC Group

With reference to the Letter from the Board, as part of the Proposed Placing, on 27 May 2016, the Company entered into the CRRCG Subscription Agreement with CRRC Group, pursuant to which, among other things, CRRC Group has conditionally agreed to subscribe in cash for and the Company has conditionally agreed to allot and issue 692,840,646 new A Shares for a total consideration of RMB 6 billion at the subscription price of RMB8.66 per A Share.

Further, it is noted from the Letter from the Board that, immediately upon completion of the CRRCG Subscription, assuming that the number of A Shares issuable under the Proposed Placing is 1,385,681,291 Shares, CRRC Group and its associate, as ultimate beneficial owner, will hold (directly and indirectly) in aggregate 15,952,421,384 A Shares, representing approximately 64.64% of the enlarged total issued A Shares and approximately 55.63% of the enlarged total issued share capital of the Company.

If, owing to reasons relating to the approval from CSRC, the number of subscription shares eventually acquired by CRRC Group is different from (lower than) the number as disclosed in the announcement of the Board’s resolutions in respect of the Proposed Placing or as agreed pursuant to the CRRCG Subscription Agreement, the Company will not be liable to issue the shortfall of the subscription shares and will adjust the number of subscription shares in proportion to the number of subscription shares issuable pursuant to the approval from CSRC.

—40— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Subscription price and payment method

According to the Letter from the Board, the subscription price of the new A Shares to be issued to CRRC Group under the CRRCG Subscription Agreement shall be the same as that of the new A shares to be issued to the other target subscribers, i.e. RMB8.66 per A Share, subject to the same adjustment mechanisms as mentioned above.

It was further stated in the Letter from the Board that, upon the CRRCG Subscription Agreement coming into effect, CRRC Group has agreed that the subscription price will, as agreed upon in the payment notice issued by the Company and the sponsor(s) of the Proposed Placing, be paid in one lump sum in cash to the bank account specifically maintained by the sponsor(s) for the Proposed Placing. Such payments, after capital verification by the accounting firm engaged and deduction of the relevant fees, shall then be transferred to a special account of the Company designated for the proceeds raised from the Proposed Placing.

Upon payment of the subscription price by CRRC Group, the Company will register the new A Shares subscribed by CRRC Group with the securities depository and clearing institution as soon as practicable in order for CRRC Group to become the legal holder of such A Shares.

Lock-up arrangement

CRRC Group shall not transfer any of the new A Shares that it will subscribe for pursuant to the CRRCG Subscription Agreement within 36 months from the date of the completion of the Proposed Placing.

CRRC Group shall issue the relevant lock-up undertaking and handle the relevant matters for the lock-up arrangement for the new A Shares that it will subscribe for pursuant to the Proposed Placing in accordance to the relevant PRC laws and regulations, the relevant requirements of CSRC and the Shanghai Stock Exchange, and the requirements of the Company.

The transfer and dealings of the new A Shares by the target subscribers after the expiration of the aforesaid lock-up period shall be in accordance to the requirements of the PRC laws and regulations, regulatory documents and rules of the Shanghai Stock Exchange enforceable at the time, and the Company shall not make any guarantee or undertaking in this respect.

—41— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Conditions precedent

The Letter from the Board stated that the CRRCG Subscription Agreement shall become effective after being signed and sealed by the legal representatives or authorised representatives of CRRC Group and the Company, and upon the satisfaction of the following conditions:

(i) consideration and approval by the Board and by the Shareholders at the AGM of all resolutions in respect of the Proposed Placing (including but not limited to the consideration and approval of the CRRCG Subscription Agreement and all connected transactions thereunder by the Independent Shareholders);

(ii) the completion of the internal approval procedure in respect of the subscription of part of new A Shares of the Proposed Placing by CRRC Group; and

(iii) the obtaining of approvals from SASAC and CSRC in respect of the Proposed Placing.

4. Reasons for and benefits of the Proposed Placing (including the CRRCG Subscription)

As noted from the Letter from the Board, the Directors believe that following the completion of the Proposed Placing (including the CRRCG Subscription), the capital strength of the Company will increase, its capital structure will be optimised and its pressure on repayment of liabilities will be alleviated to a certain degree, and the Company’s resilience against financial risks will be effectively boosted.

The Board had considered various other means of fund raising which is on a pro-rata manner, such as rights issue and open offer. However, after due and careful consideration by the Board, the Board is of the view that the Proposed Placing by way of a non-public issuance of new A Shares is the most preferable method over others as non-public issuance, as compared with rights issue and open offer, presents less uncertainties and risks given the current capital market situation and in terms of the PRC approval process. For a more detailed assessments of the alternative fund raising methods, please refer to the section headed “Alternative Fund Raising Methods” in this letter. In addition, the Board expects that the non-public issuance, coupled with the relatively long lock-up period, will have less adverse effect on the Share price of the Company. Further, subscription by other long term investors in the Proposed Placing demonstrates the recognition of the value of the Company and the confidence that such investors place in the Company which may help stabilize the Share price of the Company. Therefore, the Board considers that the Proposed Placing is in the best interests of the Company and its investors at large.

Having considered the above and our discussion with the management of the Company, we concur with the view of the Directors that the Proposed Placing (including the CRRCG Subscription) is in the interests of the Company and Shareholders as a whole to raise funds for various projects as

—42— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER to strengthen the capabilities for future development of the Group through equity financing by way of a non-public issuance of new A Shares to the target subscribers as prescribed in the Circular and it might potentially increases investors’ confidence in the Company.

5. The subscription price of the Proposed Placing

In order to assess the fairness and reasonableness of the subscription price of the Proposed Placing, we took reference to, among other things, (i) a comparison between the subscription price of the Proposed Placing and the historical closing prices of the Company’s A Shares; and (ii) market fund raising comparables which involved placings by way of a non-public issuance of new A Shares.

(i) Historical share prices

To assess the fairness and reasonableness of the subscription price of the Proposed Placing, we have compared the subscription price of the Proposed Placing to the historical closing prices of the Company’s A Shares. Having considered assessing either the historical closing price of the Company’s H Shares or A Shares, we are of the view that the valuation and investors in the A share market are different from those in the H share market, and since the Proposed Placing involves only A Shares, share price of the Company’s A Shares would provide a more appropriate reference to the subscription price of the Proposed Placing. Chart 1 below illustrates the historical daily closing prices of the A Shares for the past 6 months before the Last Trading Date up to and including the Latest Practicable Date (together the “Review Period”).

Chart 1: Historical daily closing prices of the Company’s A Share

Share Price (RMB) 4

0 27/11/2015 27/12/2015 27/01/2016 27/02/2016 27/03/2016 27/04/2016 27/05/2016

Source: Bloomberg

—43— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Independent Shareholders are advised to take note that the Review Period only has a duration of 6 months as we are of the view that the unusual surge and collapse in the stock market for the period from April 2015 to August 2015 would have an adverse impact on the assessment of the fairness and reasonableness of the subscription price since the Company’s Share price was materially affected by the abnormal market condition during the aforementioned period and the outcome of the analysis might be distorted. As shown in Chart 1 above, during the Review Period, the daily closing prices of the A Shares ranged from RMB9.1 to RMB13.61, with an average daily closing price of approximately RMB10.77. It is noted that the subscription price of RMB8.66 is both below the average daily closing price of the Review Period, and outside the range of daily closing prices of the Review Period by approximately 4.8% of the lower end of the share price range. As such, we have further examined market comparables in the section below to study whether the subscription price of the Proposed Placing to be fair and reasonable.

(ii) Comparable transactions

To further assess the fairness and reasonableness of the subscription price of the Proposed Placing, we have tried to compare the subscription price of the Proposed Placing against the placings and subscriptions of shares made by other rail companies listed on the main board of the Hong Kong Stock Exchange. However, we were unable to identify, to the best of our endeavour, sufficient comparables for the past 2 years to make a meaningful comparison. As such, we have chosen to make comparisons against other placings conducted by companies listed on the main board of the Shanghai Stock Exchange which involved issuance of new shares by way of non-public issuance (the “Comparable Subscriptions”) which were announced from two months prior to, and including, the Latest Practicable Date. Although, the businesses and operations of the comparable companies making these Comparable Subscriptions are different to that of the Company, we are of the view that the comparison would provide a reasonable reference to the Independent Shareholders as to the most recent market conditions for placings and subscriptions of new A Shares. In addition, given that the Proposed Placing involves only A Shares, we are of the view that the review of companies listed on the main board of the Shanghai Stock Exchange as comparables would be appropriate. In particular,the following set of comparables represents an exhaustive list of companies selected, to the best of our

—44— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER endeavours, based on our above-mentioned selection criteria. The Table 1 below sets out the summary of the Comparables Subscriptions:

Table 1: The Comparable Subscriptions

Discount of the subscription price to the average closing price of the last twenty trading days of the relevant price determination Minimum date in the Date of Name of the A Share Subscription respective Announcement listed company Stock Code price (RMB) announcement

26 May 16 Zhejiang Huahai 600521CH 20.27 -9.89% Pharmaceuatical Co Ltd 23 May 16 China Security & Fire Co 600654CH 22.35 -9.28% Ltd 20 May 16 China Molybdenum Co 603993CH 3.17 -8.92% Ltd 17 May 16 Zhejiang Huatie 603300CH 19.66 -8.24% Construction Safety Science and Technology Co Ltd 14 May 16 Jiangsu Zhongtian 600522CH 16.39 -9.75% Technology Co. Ltd. 13 May 16 Baoding Tianwei Baobian 600550CH 6.00 -8.52% Electr 12 May 16 Shandong Tyan Home Co 600807CH 11.97 -10.07% Ltd 11 May 16 Power Construction Corp 601669CH 5.93 -8.84% Of China Ltd 11 May 16 V-Grass Fashion Co Ltd 603518CH 25.59 -9.80% 10 May 16 Sichuan Road & Bridge 600039CH 3.64 -9.19% Co Ltd 10 May 16 Shandong Pharmaceutical 600529CH 13.52 -10.27% Glass 10 May 16 Nanjing Inform Storage 603066CH 42.46 -7.59% Equipment Co. Ltd 09 May 16 Tande Co Ltd 600665CH 5.01 -9.59% 07 May 16 China Security & Fire Co 600654CH 22.35 -9.28% Ltd

—45— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

05 May 16 Yueyang Forest & Paper 600963CH 6.46 -9.69% Co Ltd 05 May 16 Zhejiang Huayou Cobalt 603799CH 19.16 -7.88% Co Ltd 30 Apr 16 Shinva Medical 600587CH 23.79 -8.97% Instrument Co Ltd 27 Apr 16 Ginwa Enterprise Group 600080CH 8.50 -9.20% Inc 23 Apr 16 Datang Huayin Electric 600744CH 5.56 -8.79% Power Co. Ltd. 22 Apr 16 Shenzhen Kingdom 600446CH 30.65 -4.56% Sci-Tech Co Ltd 20 Apr 16 Xingguang Agricultural 603789CH 30.34 -8.87% Machinery Co. Ltd 19 Apr 16 Anhui Leimingkehua Co 600985CH 8.90 -9.54% Ltd 16 Apr 16 Shanghai Shenda Co Ltd 600626CH 10.63 -9.43% 16 Apr 16 Jilin Yatai Group Co Ltd 600881CH 4.70 -8.19% 12 Apr 16 Hunan Haili Chemical 600731CH 7.53 -9.86% Industry 12 Apr 16 Laobaixing Pharmacy 603883CH 42.51 -7.70% Chain Jsc 31 Mar 16 Shanghai Aj Group Co 600643CH 8.97 -9.22% Ltd

Highest -10.27% Lowest -4.56% Average -8.93%

Company 8.66 -9.98%

Sources: Announcements of the respective companies, Shanghai Stock Exchange and Bloomberg.

—46— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As shown in Table 1 above, the subscription price of the Comparable Subscriptions are within a range of discount from 4.56% to 10.27% of their respective closing price of the last twenty trading days (the “Market Range”) with an average discount of 8.93% (the “Market Average”). We note that the subscription price of the Proposed Placing has a discount of approximately 9.98% based on the subscription price of RMB8.66, as such, it is slightly higher than the Market Average but it is within the Market Range.

Based on the above and having taken into account, (i) the recent movements of the Share price during the Review Period; and (ii) the Comparable Subscriptions announced from two months prior to, and including, the Latest Practicable Date, on balance, we are of the view that the subscription price of the Proposed Placing evident a similar level of discount as those Comparable Subscriptions and it is in line with the market practice. Therefore, we agree with the Directors’ view that the subscription price of the Proposed Placing is fair and reasonable and was reached based on normal commercial terms so far as the Independent Shareholders are concerned and in the interests of Company and the Shareholders as a whole.

6. Alternative fund raising methods

Based on our discussion with the Directors, we noted that apart from the Proposed Placing, the Directors had also considered certain alternative means of financing, including both debt and equity financing (such as rights issue and open offer which were also mentioned in the section headed “Reason for and benefits of the Proposed Placing and CRRCG Subscription”).

On one hand, the Directors are of the view that any potential debt financing through bank borrowings and issuance of bonds would only further increase the debt burden of the Group and result in higher future finance costs. It is also understood that the Company has been dedicated in reducing debt burden over the years which, in particular, gearing ratio of the Company had been lowered noticeably over the past few years, 65.81% and 63.56% for the financial year ended 2014 and 2015, respectively. Therefore, debt financing is less ideal due to the adverse impact on the Company’s financial position.

On the other hand, equity financing through rights issue and open offer would both require a longer time to complete than the Proposed Placing as they require more time for obtaining governmental approvals. In addition, both of these equity financing alternatives are required by the Listing Rules to be fully underwritten, resulting in a higher transaction costs as compared to the Proposed Placing (including the CRRCG Subscription). In addition, pursuant to the relevant PRC laws and regulations, the Proposed Placing by way of a non-public issuance of new A Shares is coupled with a locked-up period of 36 months, i.e. the target subscribers are not allowed to transfer their new A Shares within 36 months from the completion date of the Proposed Placing (including respective subscriptions by the target subscribers). Hence, the Directors are of the view that it will provide greater confidence to the Company’s investors and could potentially have a positive impact of the Company’s Share price in the longer run.

—47— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into consideration, (i) the financial position of the Company; (ii) time and costs needed for the Proposed Placing; and (iii) the long locked-up period, we are of the view that the Proposed Placing is in the interests of the Company and the Shareholders as a whole for the Company to raise funds through the Proposed Placing.

7. Financial impact

7.1. Effect on the net asset value (“NAV”)

According to the 2015 Annual Report, the NAV of the Group attributable to the owners of the Company was approximately RMB96,900 million as at 31 December 2015. Upon completion of the Proposed Placing (including the CRRCG Subscription), the total proceeds from the Proposed Placing are estimated to be no more than approximately RMB12 billion in cash, and it is expected to lead to increase in the net assets attributable to the owners of the Company.

7.2. Effect on the gearing ratio

As disclosed in the 2015 Annual Report, the Group reported a gearing ratio (calculated as total liabilities divided by total assets) of 63.56% as at 31 December 2015. Upon completion of the Proposed Placing (including the CRRCG Subscription), the total assets of the Group will be enhanced in respect of the addition of cash from the total proceeds of no more than approximately RMB12 billion, which the addition of cash is expected to be used to reduce outstanding debt and it lowers the gearing ratio of the Group. As such, we are of the view that the Proposed Placing (including the CRRCG Subscription) would have a positive impact on the gearing ratio of the Group.

Base on the above, we are of the view that the Proposed Placing (including the CRRCG Subscription) will have positive effects on the Group’s financial position and is in the interests of the Company and the Shareholders as a whole.

Given that the Proposed Placing is expected to have:

(i) a positive impact on the NAV of the Company; and

(ii) a positive impact on the gearing ratio of the Group, we are of the view that the Proposed Placing would have an overall positive effect on the financial position of the Group and is in the interests of the Company and the Shareholders as a whole.

—48— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

8. Potential dilution

Table 2 and 3 below sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Proposed Placing and the subscription by the target subscribers (including the CRRCG Subscription), respectively.

Table 2: Shareholding structure of the Company as at the Latest Practicable Date

As at the Latest Practicable Date

Percentage of the Percentage of the issued A Share total issued share capital of the capital of the Name of Shareholder Number of Shares held Company Company

CRRC Group and its 15,259,580,738 A Shares 66.58% 55.92% associates Public 7,658,111,555 A Shares 33.42% 28.06% 4,371,066,040 H Shares — 16.02% Total 27,288,758,333 Shares 100% 100%

Table 3: Shareholding structure of the Company immediately after completion of the Proposed Placing and the subscription by the target subscribers (including the CRRCG Subscription

According to the Letter from the Board, it assumes that (1) a total of 1,385,681,291 A Shares to be issued under the Proposed Placing are being fully subscribed by the target subscribers (including the CRRC Group); and (2) no other Shares will be issued or transferred after the Latest Practicable Date until completion of the Proposed Placing and the CRRCG Subscription:

Percentage of the issued A the total Share capital issued share of the capital of the Name of Shareholder Number of Shares held Company Company

CRRC Group and its associates (Note 1) 15,952,421,384 A Shares 65.64% 55.63% China Development Bank Capital Corporation Limited* 173,210,161 A Shares 0.71% 0.60%

—49— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Percentage of the issued A the total Share capital issued share of the capital of the Name of Shareholder Number of Shares held Company Company

China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd.* 173,210,161 A Shares 0.71% 0.60% • China Development Bank Jingcheng (Beijing) Investment Fund Co., Ltd.* (國開精誠（北京）投資基金有限公司) (Note 2) 115,473,441 A Shares 0.48% 0.40% • China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd.* (國開思遠（北京）投資基金有限公司) (Note 2) 57,736,720 A Shares 0.24% 0.20% Shanghai Xinghan Asset Management Company Limited* 230,946,882 A Shares 0.95% 0.81% Shanghai China Merchant Equity Investment Fund Management Co., Ltd.* 115,473,441 A Shares 0.48% 0.40% Public (other than the target 7,658,111,555 A Shares 31.51% 26.71% subscribers) 4,371,066,040 H Shares — 15.24% Total 28,674,439,624 Shares 100% 100%

Note 2: China Development Bank Jingcheng (Beijing) Investment Fund Co., Ltd.* (國開精誠（北京）投資基金有限公司) and China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd.* (國開思遠（北京）投資基金有限公司) are managed by China Development Bank Investment and Development Fund Management (Beijing) Co., Ltd.*.

* For identification purpose only

Source: The Letter from the Board

—50— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

From Table 2 and 3 above, one can see that upon the completion of the Proposed Placing and the subscription by the target subscribers (including the CRRCG Subscription), shareholding of the H Share public Shareholders would decrease from approximately 16.02% to approximately 15.24%, which represents a decrease of approximately 0.78%. In addition, shareholding of the A Share public Shareholders would also decrease from approximately 28.06% to 26.71%, which represents a decrease of approximately 1.35%.

However, having taken into account:

(i) that the Parent Company already has a majority control of the Company and will remain as the single largest Shareholder of the Company;

(ii) that the potential benefits of the Proposed Placing (including the CRRCG Subscription) as discussed in the above section headed “Reasons for and benefits of the Proposed Placing (including the CRRCG Subscription)”;

(iii) that the subscription price of the Proposed Placing (including the CRRCG Subscription) is fair and reasonable;

(iv) that the Proposed Placing (including the CRRCG Subscription) is expected to have an overall positive effect on the financial position of the Group, we consider that the potential shareholding dilution to the Independent Shareholders as a result of the Proposed Placing (including the CRRCG Subscription) is acceptable.

RECOMMENDATION

We have considered the above principal factors and reasons and in particular, have taken into account the following factors in arriving at our opinion:

(i) the Proposed Placing (including the CRRCG Subscription) is in the interests of the Shareholders and the Company as a whole;

(ii) the subscription price of the Proposed Placing (including the subscription price of CRRCG Subscription) is within the range of the subscription price of the Comparable Subscriptions and we are of the view that the subscription price is fair and reasonable;

(iii) the Proposed Placing (including the CRRCG Subscription) would have an overall positive effect on the financial position of the Group and is in the interests of the Company and the Shareholders as a whole;

(iv) the Proposed Placing (including the CRRCG Subscription) is of better interests to the Company and the Shareholders as a whole to raise funds through the Proposed Placing when compared against other fund raising alternatives; and

(v) the potential shareholding dilution to the Independent Shareholders as a result of the Proposed Placing (including the CRRCG Subscription) is acceptable.

—51— LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered the above, we are of the view that the terms of the Proposed Placing and CRRCG Subscription Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders and we recommend the Independent Shareholders to vote in favour of the resolutions in respect of the Proposed Placing and CRRCG Subscription to be proposed at the AGM.

Yours faithfully, For and on behalf of Platinum Securities Company Limited Li Lan Director and Co-head of Corporate Finance

Mr. Li Lan is a licensed person registered with the Securities and Futures Commission and as a responsible officer of Platinum Securities Company Limited to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO and has over ten years of experience in corporate finance industry.

—52— APPENDIX I SHAREHOLDERS’ RETURN PLAN FOR THE NEXT THREE YEARS (FROM 2016 TO 2018)

SHAREHOLDERS’ RETURN PLAN FOR THE NEXT THREE YEARS (FROM 2016 TO 2018)

In order to perfect and improve the objective, sustained and stable profit distribution policy and supervision policy of the Company, to pay attention to the return for Shareholders actively, and to build an idea of long-term investment and reasonable investment for investors, the Shareholders’ Return Plan for the Next Three Years of CRRC Corporation Limited (from 2016 to 2018), which is integrated with the Company’s actual condition, is formulated according to the rules and requirements of documents in relation to the “Notice on Relevant Issues Relating to the Further Implementation of Cash Dividend Distribution by Listed Companies (Zheng Jian Fa [2012] No.37)《關於進一步落實上 ( 市公司現金分紅有關事項的通知》(證監發[2012]37 號))”, “the Guideline No. 3 for the Supervision and Administration of Listed Companies — Cash Dividend for Listed Companies《上市公司監管指 ( 引第3號 — 上市公司現金分紅》)”, and “Articles of Association of CRRC Corporation Limited《中 ( 國中車股份有限公司章程》)” (hereinafter referred to as “the Plan”).

Article 1 Factors taken into consideration in formulating the Plan

With a vision on long-term and sustainable development, the Company has taken into consideration important factors, such as future development plans, operating conditions and profitability of the Company, to establish a sustainable, stable and scientific plan and mechanism on investors’ return and make systematic arrangements for profit distribution in order to ensure the continuity and stability of the profit distribution policy.

Article 2 Principles for formulating the Plan

The Plan shall fully consider and listen to the opinions of the Shareholders (in particular medium and small Shareholders) and independent Directors, while offering reasonable investment return to Shareholders and addressing the needs for sustainable development of the Company at the same time. Provided the funding requirements for normal production and operation of the Company are satisfied, the Company shall implement an active profit distribution plan, consider the distribution of cash dividends with priority and pay attention to the reasonable investment return to investors.

Article 3 Specific plan of Shareholders’ return for the next three years (from 2016 to 2018)

1. The Company will distribute dividends by way of cash, Shares or a combination of cash and Shares or increasing share capital through conversion of capital reserves as well as other methods in compliance with the requirements of laws and regulations. The Company adopts with priority the distribution of cash dividends for distibuting profit. If the Company meets the conditions for distributing cash dividends, profit shall be distributed by way of cash dividends. In principle, the Company will distribute profit once per annum, and subject to fulfillment of required conditions, the Company may distribute an interim profit.

—53— APPENDIX I SHAREHOLDERS’ RETURN PLAN FOR THE NEXT THREE YEARS (FROM 2016 TO 2018)

2. Pursuant to the requirements of the Articles of Association, except for under special circumstances, if the Company has recorded a profit for the current year, the accumulated undistributed profit is positive and capable to satisfy the actual needs for distribution, then a distribution by way of cash dividends shall be adopted. Distribution of profit by way of cash in each year shall not be less than 15% of distributable profit realized for the current year as set out in the consolidated financial statements of the Company. And the cumulative distribution of profit in the form of cash for every three consecutive years shall not be less than 45% of the average annual amount of distributable profit realized for the last three years as set out in the consolidated financial statements of the Company.

The aforesaid “special circumstances” shall include the following:

(1) the production and operation of the Company are affected significantly due to the impact of force majeure events (such as war, natural disaster, etc.);

(2) the Company has realized a relatively small amount of distributable profit for that year as set out in the consolidated financial statements, which is not sufficient to distribute in practice;

(3) the audit firm appointed by the Company to audit the annual financial report for the current year has issued a non-standard audit report with qualified opinions;

(4) the liability-to-asset ratio of the Company as at the end of that year has exceeded seventy per cent (70%);

(5) the Company’s intended cumulative expenditure on external investment, acquisition of assets or purchase of equipment within the next 12 months will reach or exceed twenty per cent (20%) of the audited total assets in the latest accounting period of the Company;

(6) material changes have occurred in the external operating environment which have resulted in material effects on the production and operation of the Company; and

(7) other events which have material effects on the production and operation and financial situation of the Company have occurred or will occur in the next 12 months as anticipated by the Company.

3. When the Company is in good operating conditions, and in the opinion of the Board, the Share price of the Company is not consistent with the size of Share capital of the Company and a distribution in specie will be favorable to and in the interest of the Shareholders as a whole, the Company may propose plan of distribution in specie provided the above conditions for distribution of cash dividends are satisfied.

—54— APPENDIX I SHAREHOLDERS’ RETURN PLAN FOR THE NEXT THREE YEARS (FROM 2016 TO 2018)

4. The profit distribution plan of the Company, after taken into consideration the views of Shareholders (in particular, medium and small shareholders) and independent Directors, shall be considered and approved by a meeting of the President’s Office of the Company before it is submitted to the Board and Supervisory Committee for consideration. The Board will fully discuss the reasonableness of the profit distribution plan and a specific resolution will be formulated for submission to the general meeting for consideration.

5. If the Company fails to distribute cash dividends or the ratio of cash dividends distributed falls below the required ratio due to any special circumstances as set out above in Clause 2 of Article 3, the Board shall provide a specific explanation on such issues, including the specific reasons for failing to distribute cash dividends, the actual use of retained earnings and the anticipated investment gains. After the independent Directors have expressed their views thereon, such explanation shall be submitted to the general meeting for consideration and disclosed in the media designated by the Company. When the aforementioned relevant matters are considered at the general meeting, the Company will provide the means of voting online to Shareholders.

Article 4 Adjustment to the Shareholders’ return plan

When it is necessary for the Company to adjust the approved Shareholders’ return plan for the three-year period due to material changes in the external operating environment or in its own operating conditions, the Board shall specifically discuss and justify the matter in detail and explain the reasons, and shall formulate an adjusted plan for the Shareholders’ return and submit such proposed adjusted plan to the general meeting for review and approval after it has been reviewed and considered by Independent Shareholders.

Article 5 Formulation cycle and related decision-making mechanism for the Shareholders’ return plan

1. The Company shall review the Shareholders’ return plan at least once for every three years and confirm the Plan of shareholders’ return for that period according to the operating conditions of the Company and the opinions of Shareholders (in particular the medium and small Shareholders).

2. On the basis of taking into full consideration of the size of profit, cash flow conditions, development stage and funding requirements for that period of the Company, together with the opinions from Shareholders (in particular the medium and small Shareholders), the Company’s Shareholders’ return plan will be formulated by the Board and after being considered by independent Directors, the Plan will be submitted to the general meeting for consideration and approval.

—55— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

In order to implement the Opinions of the General Office of the State Council on Further Strengthening the Protection of Legal Rights and Interests of Small and Medium Investors in the Capital Market (Guo Ban Fa [2013] No.110)《國務院辦公廳關於進一步加強資本市場中小投資合法 ( 權益保護工作的意見》), and to safeguard the information rights and interests of small and medium investors, the Company has considered and approved the Resolution in relation to the Remedial Measures to the Dilutive Impact of the Proposed Placing on the Immediate Returns by CRRC Corporation Limited at the fourteenth meeting of the first session of the Board in accordance with the relevant requirements under the Guidance on Matters relating to the Dilutive Impact on Immediate Returns due to Initial Public Offerings, Refinancing and Major Assets Reorganisations (CSRC Notice [2015] No. 31)《關於首發及再融資、重大資產重組攤薄即期回報有關事項的指導意見》 ( ), and diligently analyzed the dilutive impact of the Proposed Placing on the immediate returns. The dilutive impact on immediate returns in respect of the key financial indicators of the Company and details of the relevant remedial measures adopted by the Company are set out below:

I. CALCULATION OF THE IMPACT OF THE PROPOSED PLACING ON THE MAJOR FINANCIAL INDICATORS

(I) Assumptions

1. The Proposed Placing will be completed by the end of September 2016, which is an estimated date of completion and is subject to the approval by CSRC;

2. The number of new A Shares to be issued under the Proposed Placing shall not exceed the maximum number of new A Shares considered and approved by the Board, i.e. 1,385,681,291 new A Shares;

3. The total proceeds of the Proposed Placing shall be not more than RMB12 billion (without deducting the expenses relating to the Proposed Placing);

4. There will be no material change to the macroeconomic environment, industry policies and industry development trends etc.;

5. Assuming that the Resolution in relation to the 2015 Profit Distribution Plan of CRRC Corporation Limited considered and approved at the twelfth meeting of the first session of the Board will be considered and approved at the AGM held on 16 June 2016. Based on the Company’s total issued share capital of 27,288,758,333 Shares as at 31 December 2015, a cash dividend of RMB1.5 (tax inclusive) every 10 Shares will be distributed to all Shareholders pursuant to he 2015 Profit Distribution Plan;

—56— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

6. The impact of H shares convertible corporate bonds issued by the Company on 5 February 2016 has not been taken into consideration in estimating the impact of the Proposed Placing on the diluted earnings per share in 2016;

7. The impact of other factors on net assets (other than proceeds raised, net profit and cash dividend) has not been taken into consideration in estimating the net assets of the Company;

8. The estimation of the total Share capital of the Company will be based on the Company’s total Share capital of 27,288,758,333 Shares prior to the Proposed Placing, and only the impact of the Proposed Placing (disregarding other factors which may result in a change of Share capital) has been taken into consideration;

9. The audited net profit attributable to shareholders of the parent company in 2015 amounted to RMB11,818.398 million, and the net profit after extraordinary gains and losses attributable to shareholders of the parent company amounted to RMB9,184.963 million. An assumption is made that the net profit attributable to shareholders of the parent company and the net profit after extraordinary gains and losses attributable to shareholders of the parent company in 2016 will increase by 0%, 10% and 20%, respectively.

10. The above assumptions are made for estimation purposes only, and do not constitute any commitment and profit forecasts. Investors are advised not to make investment decisions based on these assumptions. The Company does not assume responsibility for any losses of investors due to decisions made based on such assumptions, and the examination and approval by CSRC.

—57— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

(II) Particulars of the Estimation

Under the assumptions of different annual growth rates for net profit, the dilutive impact of the Proposed Placing on the Company’s major financial indicators is analyzed as follows:

Scenario 1: The net profit attributable to shareholders of the parent company and the net profit after extraordinary gains and losses attributable to shareholders of the parent company in 2016 increase by 0% as compared with those in 2015

Not considering the After the Prior to the Proposed Proposed Placing Proposed Placing Placing (2015/ As at (2016/ As at 31 (2016/As at 31 Item 31 December 2015) December 2016) December 2016)

Total Share capital (’000 Shares) 27,288,758 27,288,758 28,674,440 Total equity attributable to shareholders of the parent company at the beginning of the period (RMB’000) 89,294,953 96,900,316 96,900,316 Net profit attributable to shareholders of the parent company during the year (RMB’000) 11,818,398 11,818,398 11,818,398 Net profit after extraordinary gains and losses attributable to shareholders of the parent company during the year (RMB’000) 9,184,963 10,904,821 10,904,821 Equity attributable to owners of the parent company at the end of the period (RMB’000) 96,900,316 104,625,400 116,625,400 Basic earnings per share (RMB) 0.43 0.43 0.43 Diluted earnings per share (RMB) 0.43 0.43 0.43 Basic earnings per share after extraordinary gains and losses (RMB) 0.42 0.40 0.39 Diluted earnings per share after extraordinary gains and losses (RMB) 0.42 0.40 0.39 Weighted average return on net assets 12.47% 11.73% 11.39%

—58— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

Scenario 2: The net profit attributable to shareholders of the parent company and the net profit after extraordinary gains and losses attributable to shareholders of the parent company in 2016 increase by 10% as compared with those in 2015

Not considering the Prior to the Proposed Proposed Placing After the Proposed Placing (2015/ As at (2016/As at 31 Placing (2016/ As at Item 31 December 2015) December 2016) 31 December 2016)

Total Share capital (’000 Shares) 27,288,758 27,288,758 28,674,440 Total equity attributable to shareholders of the parent company at the beginning of the period (RMB’000) 89,294,953 96,900,316 96,900,316 Net profit attributable to shareholders of the parent company during the year (RMB’000) 11,818,398 13,000,238 13,000,238 Net profit after extraordinary gains and losses attributable to shareholders of the parent company during the year (RMB’000) 9,184,963 11,995,303 11,995,303 Equity attributable to owners of the parent company at the end of the period (RMB’000) 96,900,316 105,807,240 117,807,240 Basic earnings per share (RMB) 0.43 0.48 0.47 Diluted earnings per share (RMB) 0.43 0.48 0.47 Basic earnings per share after extraordinary gains and losses (RMB) 0.42 0.44 0.43 Diluted earnings per share after extraordinary gains and losses (RMB) 0.42 0.44 0.43 Weighted average return on net assets 12.47% 12.83% 12.46%

—59— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

Scenario 3: The net profit attributable to shareholders of the parent company and the net profit after extraordinary gains and losses attributable to shareholders of the parent company in 2016 increase by 20% as compared with those in 2015

Not considering the Prior to the Proposed Proposed Placing After the Proposed Placing (2015/As at 31 (2016/As at 31 Placing (2016/ As at Item December 2015) December 2016) 31 December 2016)

Total Share capital (’000 Shares) 27,288,758 27,288,758 28,674,440 Total equity attributable to shareholders of the parent company at the beginning of the period (RMB’000) 89,294,953 96,900,316 96,900,316 Net profit attributable to shareholders of the parent company during the year (RMB’000) 11,818,398 14,182,078 14,182,078 Net profit after extraordinary gains and losses attributable to shareholders of the parent company during the year (RMB’000) 9,184,963 13,085,785 13,085,785 Equity attributable to owners of the parent company at the end of the period (RMB’000) 96,900,316 106,989,080 118,989,080 Basic earnings per share (RMB) 0.43 0.52 0.51 Diluted earnings per share (RMB) 0.43 0.52 0.51 Basic earnings per share after extraordinary gains and losses (RMB) 0.42 0.48 0.47 Diluted earnings per share after extraordinary gains and losses (RMB) 0.42 0.48 0.47 Weighted average return on net assets 12.47% 13.91% 13.51%

—60— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

Note 1: The above assumptions are only used to estimate the dilutive impact of the Proposed Placing on immediate returns in respect of the Company’s major financial indicators, and does not represent the Company’s view about its profitability in 2016 or its judgment about the operating conditions and trends in 2016;

Note 2: The above estimation has not taken into consideration the impact on production and operation and financial position (such as finance cost and finance income) of the Company after receiving the proceeds from the Proposed Placing;

Note 3: Equity attributable to owners of the parent company at the end of the period = equity attributable to owners of the parent company at the beginning of the period — cash dividend for the current period + net profit attributable to owners of the parent company for the current period + proceeds from the Proposed Placing.

Based on the above estimations, the Company’s basic earnings per share and weighted average return on net assets for the current period will be diluted to a certain degree after the completion of the Proposed Placing.

II. RISK WARNINGS ON THE DILUTIVE IMPACT ON THE IMMEDIATE RETURNS DUE TO THE PROPOSED PLACING

After receiving the proceeds from the Proposed Placing, the Company’s total Share capital and net assets will increase accordingly. In the short term, the growth rate of the net profit of the Company may be lower than the growth rate of the net assets and total Share capital of the Company; financial indicators such as basic earnings per share and weighted average return on net assets will decrease to a certain extent, resulting in risks on the dilutive impact on the immediate returns for Shareholders. Investors are advised to note the risks on the dilutive impact on the immediate returns due to the Proposed Placing.

III. NECESSITY AND RATIONALE OF THE PROPOSED PLACING

(I) Use of Proceeds of the Proposed Placing

The total proceeds of the Proposed Placing will not exceed RMB12 billion, of which, RMB6 billion will be used for the repayment of interest-bearing liabilities, and the remaining will be used to replenish working capital, after deducting the expenses relating to the Proposed Placing.

(II) Necessity and rationale of the Proposed Placing

1. Optimizing the capital structure of the Company to reduce liquidity risk

As at the end of 2013, 2014 and 2015, the gearing ratios of the Company were 64.28%, 65.81% and 63.56% in the consolidated accounts of the Company, respectively. Such relatively high gearing ratios will restrict the Company’s business development to a certain degree. In the first half of 2017, with the successive expiry of the Company’s medium-term notes and other interest-bearing liabilities,

—61— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES the Company will also face greater pressure in relation to the outflow of cash. Through the repayment of interest-bearing liabilities such as relevant medium-term notes with the proceeds from the Proposed Placing, the gearing ratio of the Company will be effectively reduced, which will help the Company to improve its capital structure, alleviate the cash outflow pressures, gain long-term stable financial support and enhance the sustained development capacity of the Company.

2. Reducing liabilities and financial expenses to enhance the profitability of the Company

With the expansion of the scale of production and operation of the Company, the liabilities of the Company are increasing, and the relevant financial expenses and interest expenses remain relatively high. In 2013, 2014 and 2015, the interest expenses within the financial expenses of the Company was RMB2.273 billion, RMB2.626 billion and RMB1.458 billion, respectively. Such relatively high financial expenses will have an adverse effect on the Company’s operation results. Accordingly, reducing the bank loans and interest-bearing liabilities, and financial expenses of the Company using the proceeds from the Proposed Placing appropriately will have a positive effect on the Company’s profitability.

3. Sufficient liquidity required to support strategies and expansion plan of the Company

The rolling stock manufacturing industry plays an important role in implementing the national strategies such as “the Belt and Road”, “Beijing-Hebei-Tianjin Integration” and “Yantze River Economic Belt”. During the 13th Five-year Plan, China’s demand for railway equipment will remain stable, and as a result, the demand for intercity MUs will grow. The Company would like to take advantage of the opportunities that may arise from the steady railway development and enhanced efforts towards green public transport in the PRC, to promote technical innovation, optimizse business structure and resources allocation, and to develop in a manner that would integrate industry and finance, and allow industrial transformation. The Company intends to expand facilities in the rapid transit and the mass transit industry chain, to transform from a manufacturer to a “manufacturing + services” enterprise.

Therefore, the replenishment of working capital from the Proposed Placing will effectively allow the Company to satisfy the above operation and development demands, alleviate financial pressure and support the business development of the Company.

IV. RELATIONSHIP BETWEEN THE USE OF PROCEEDS FROM THE PROPOSED PLACING AND THE EXISTING BUSINESS OF THE COMPANY, PREPARATIONS IN TERMS OF HUMAN RESOURCES, TECHNOLOGY AND MARKET MADE BY THE COMPANY FOR THE PROJECTS TO BE INVESTED WITH THE PROCEEDS

The proceeds from the Proposed Placing are intended to be used for the repayment of interest-bearing liabilities with the remaining to be used to replenish working capital (after deducting the expenses relating to the Proposed Placing), which, in turn, will enhance the Company’s capital structure, reduce its financial risks, replenish the liquidity required for its long-term development, thereby laying a solid foundation for its rapid growth. The use of proceeds from the Proposed Placing does not relate to the relevant reserves in human resources, technology and market .

—62— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

V. REMEDIAL MEASURES ADOPTED BY THE COMPANY IN RESPONSE TO THE DILUTIVE IMPACT OF THE PROPOSED PLACING ON THE SHAREHOLDERS’ IMMEDIATE RETURN

(I) Operation and development of the Company’s existing business segments

The Company mainly focuses on research and development, manufacturing, sales, repairs and leasing of locomotives, passenger cars, trucks, MUs, rapid transit vehicles, and major parts and components, as well as derivative industries of know-how for rolling stock. In 2015, the operating revenue of the Company was RMB241.9 billion, representing an increase of 8.98% compared to the previous year; the net profit attributable to owners of the parent company was RMB11.818 billion, representing an increase of 9.27% compared to the previous year. The Company has generated contracted sales totaling RMB287.5 billion (of which, export contracted sales generated by the international businesses amounted to USD5.781 billion) during the year. Orders on hand as at the end of the reporting period amounted to RMB214.4 billion, highlighting the Company’s position as one of the largest rolling stock manufacturers and solution providers in the world.

(II) Major risks facing the Company’s existing business segments and remedial measures

1. Risk exposure to the rolling stock manufacturing by changing industry policies

The rolling stock manufacturing sector is highly sensitive to the nation’s macroeconomic policies. After the establishment of the Company after the merger of CSR and CNR, the Company may experience changing market environment and growth potential in the event of changes in industry policies or industry planning regarding the future of rolling stock manufacturing, which would in turn expose risks to its business operation.

The Company will collect information on the industry policies and industry planning promptly in order to thoroughly research on policies and trends, so as to counter against possible changes in such policies and planning. Additionally, the Company will continue to enhance internal management, increase the level of operation and management, and reduce operating costs, to increase its operating efficiency, form a competitive advantage, and develop the ability to mitigate against risk from changes in policies.

2. Risks exposure to the international market

The recovery of the global economy is sluggish given complications in international political and economic conditions. Riding on the nation’s “One Belt One Road” strategy, the Company may, in the course of carrying out its “Going Global” strategy, be presented with more opportunities to invest in and manage projects abroad. For this reason, uncertainties in international conditons and overseas projects will expose the Company to risks in expanding to foreign markets.

The Company will continue to be aggressive in its research in the international market, be timely and accurately in keeping abreast of changes in market demands and policies, and propose strategies in response to such changes. While investing in the international market, the Company will carry out risk

—63— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES assessment and due diligence prior to investment, exercise control on high risk businesses, perform post-investment management, pay attention to the human resources and environment issues and the integration of culture, while taking into consideration the global political, economic, social and environmental considerations.

3. Product quality risk

The Company is principally engaged in the manufacturing of rolling stock equipment, with most of its products relating to the interest of the general public, and consequently, any issue on product quality will have a significant impact on the public. With the technological innovation and upgrade of products, higher-standard requirements are raised for quality and reliability of the Company’s products. Product quality defects on the part of the Company may cause adverse impact to its business operation.

The Company has always valued product quality management. Firstly, the Company has set up a designated quality management department to monitor quality risks. Secondly, the Company has established a sound quality management system and monitors its accreditation and operation. Thirdly, the Company has developed an after-sale service quality management system to regulate its after-sale services. In addition, the Company has increased its efforts in managing supplier qualification to prevent potential product quality risks, i.e. controlling quality from the source.

(III) Specific measures to improve the Company’s operation results

To ensure proper use of proceeds from the Proposed Placing, effectively prevent risks of diluting the immediate returns and increase the future ability of the Company to generate returns, the Company intends to accelerate the development of its principal businesses, enhance its profitability, improve its profit distribution policy and strengthen investor return through mechanisms such to strictly implementing management rules on the use of proceeds and increasing utilization efficiency of the proceeds, so as to increase the asset quality, operating revenue and future earnings of the Company to achieve sustainable development and generate returns for investors. Specific measures in that regard are set out below:

1. Enhance the management of proceeds to increase its utilization efficiency

In order to regulate use and management of the proceeds, and to ensure regulated, safe and efficient use of the proceeds, the Company has formulated the Administrative Measures on the Use of Proceeds by CRRC Corporation Limited《中國中車股份有限公司募集資金使用管理辦法》 ( )in compliance with relevant laws and regulations, including the Companies Law, the Securities Law, Guideline 2 for Regulating Listed Companies — Regulatory Requirements on Management and Use of Proceeds by Listed Companies《上市公司監管指引第 ( 2號——上市公司募集資金管理和使用的監管要求》) and Regulations on Proceeds of Listed Companies on the Shanghai Stock Exchange (2013 revision)《上海證券交易所上市公司募集資金管理辦法 ( （2013年修訂）》). After receiving the proceeds from the Proposed Placing, the Company will strive to improve the utilization efficiency of the proceeds, perfect and enhance the investment decision process, make reasonable use of various financing tools and channels, strengthen finance cost control, effectively reduce finance costs and realize sustainable development.

—64— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

2. Persistently perfecting the profit distribution policy and enhancing investors’ return mechanism

Pursuant to the provisions of Notice on Further Implementation of Relevant Provisions on Dividend Distribution by Listed Companies (Zheng Jian Fa [2012] No.37) (關於進一步落實上市公司分紅相關規定的通知（證監發[2012]37號）) and No. 3 Regulatory Guideline for Listed Companies — Cash Dividends of Listed Companies (CSRS Notice [2013] No.43 ) (上市公司監管指引第3號——上市公司現金分紅（證監會公告[2013]43號）) and the Guidelines for the Articles of Association of Listed Companies (2014 revision) (上市公司章程指引（2014年修訂）) released by CSRC, the Company has considered and approved the Resolution on the Shareholders’ Return Plan of CRRC Corporation Limited for the Next Three Years (from 2016 to 2018) (關於中國中車股份有限公司未來三年（2016年-2018年）股東回報規劃的議案) at the fourteenth meeting of the first session of the Board. The Company will strictly implement the Shareholder Return Plan considered and approved at the AGM, maintain the continuity and stability of the profit distribution policy and pay attention to the reasonable return for investors, while considering the overall interest of its Shareholders and the sustainable development of the Company.

3. Persistently perfecting corporate governance to provide systematic safeguard for corporate development

In strict compliance with the requirements of laws, regulations and regulatory documents including the Company Law, the Securities Law and the Standards for Corporate Governance of Listed Companies, the Company shall persistently perfect its corporate governance structure to ensure that Shareholders can sufficiently exercise their rights, the Board can exercise its duties and powers and make scientific, swift and prudent decisions according to the requirements of laws, regulations and the Articles of Association, to ensure that the independent Directors can earnestly perform their duties and protect the Company’s overall interests, in particular the legal rights and interests of minority Shareholders, thereby providing a systematic safeguard for corporate development.

VI. UNDERTAKINGS OF THE RELEVANT PARTIES

(I) Undertakings made by Directors and senior management as to the implementation of remedial measures against the dilution of immediate return due to the Proposed Placing:

“(1) I undertake that I will not transfer any interests to other entities or individuals without consideration or with unfair conditions, nor otherwise damage the interests of the Company;

(2) I undertake that I will be moderate in the corporate expenses incurred by me;

(3) I undertake that I will not use the Company’s assets to engage in investment and consumption activities that are not relevant to the performance of my duties.

—65— APPENDIX II DILUTIVE IMPACT OF THE NON-PUBLIC ISSUANCE OF A SHARES ON IMMEDIATE RETURNS AND REMEDIAL MEASURES

(4) I undertake that the remuneration system developed by the Board or the Remuneration and Evaluation Committee will be linked to the implementation of the remedial measures for the returns by the Company.

(5) If a Share Incentive Scheme is subsequently introduced by the Company, the exercise conditions of the Company’s share incentives to be announced will be linked to the implementation of the remedial measures for the returns by the Company.

I undertake to ensure the effective implementation of the related remedial measures for the returns formulated by the Company and any undertakings I made regarding to the related remedial measures for the returns, I shall lawfully indemnify the Company or the investors if the Company or the investors has incurred loss by reason of my violation to the undertakings.

(II) Undertakings from CRRC Group as the controlling shareholder as to the implementation of remedial measures against dilution of the immediate returns due to the Proposed Placing:

“The company will not exceed its power to intervene in the Company’s business management activities and will not infringe upon the Company’s interest.”

VII. PROCEDURES FOR CONSIDERING AND APPROVING THE MEASURES AND UNDERTAKINGS AGAINST THE DILUTIVE IMPACT OF THE PROPOSED PLACING ON IMMEDIATE RETURNS

The Board has considered and approved the analysis of the dilutive impact of the Proposed Placing on immediate returns, the remedial measures against the dilutive impact on the immediate returns and the undertakings of the relevant parties at the fourteenth meeting of the first session of the Board, and will submit the resolution for consideration and approval at the AGM to be held on 16 June 2016.

—66— APPENDIX III GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, A1B2 includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(1) Interests of Directors, Supervisors and Chief Executives in the Securities of the Company 14A.70(14) A1B34

As at the Latest Practicable Date, the following Directors and supervisors have interests in the A Shares and H Shares of the Company, further details of which are set out below:

% of interest in % of interest in Shares held in Shares held in Class of Number of the total issued the total issued Name Position Shares Shares A Shares Shares A1B38 (1)(a) (b)(c)(1A) Cui Dianguo Chairman, Executive A Shares 137,500 0.00060% 0.00050% Director Zheng Vice Chairman, A Shares 60,000 0.00026% 0.00022% Changhong Executive Director Liu Hualong Vice Chairman, A Shares 50,000 0.00022% 0.00018% Executive Director Xi Guohua Executive Director, A Shares 231,800 0.00101% 0.00085% President Fu Jianguo Executive Director A Shares 50,000 0.00022% 0.00018% Qiu Wei Employee A Shares 30,000 0.00013% 0.00011% representative supervisor

Save as disclosed above, as at the Latest Practicable Date, so far as the Company is aware, none of the Directors, supervisors, chief executives or members of the senior management of the Company and their respective associates had any interests or short positions in the Shares, underlying Shares and/or debentures (as the case may be) of the Company and/or any of its associated corporations (within the meaning of Part XV of the SFO) which was required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any Director, supervisor or chief executive or member of senior management was taken or deemed to have under such provisions of the SFO), or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which

—67— APPENDIX III GENERAL INFORMATION are required, pursuant to the Model Code for Securities Transactions by Directors of the Listed Companies as set out in Appendix 10 to the Hong Kong Listing Rules to be notified to the Company and the Hong Kong Stock Exchange (which for this purpose shall be deemed to apply to the supervisors of the Company to the same extent as it applies to the Directors).

(2) Directors’ Positions in Other Companies

As at the Latest Practicable Date, save as disclosed below, none of the other Directors or supervisors of the Company was also a director or employee of a company which had an interest or short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Division 2 and 3 of Part XV of SFO:

Name of Director Position held in CRRC Group

Cui Dianguo Chairman

Zheng Changhong Vice chairman

Liu Hualong General manager

Xi Guohua Director

3. CONSENT AND QUALIFICATION OF EXPERT

Platinum Securities Company Limited has given and has not withdrawn its consent to the issue A1B5(2) of this circular with the inclusion herein of its letter of advice dated 31 May 2016, and report and references to its name included in the form and context in which it appears.

The following is the qualification of the expert who has given an opinion or advice, which is contained in this circular:

Name Qualification

Platinum Securities Company a corporation licensed to carry out Type 1 (dealing in A1B5(1) Limited securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, the said expert did not have any shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the above expert did not have any interest, directly or indirectly, in any assets which had been, since 31 December 2015, being the date on which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to, or proposed to be acquired or disposed of by or leased to, any member of the Group.

—68— APPENDIX III GENERAL INFORMATION

4. NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change A1B32 in the financial or trading positions of the Company since 31 December 2015, being the date to which the latest published audited accounts of the Company were made up.

5. SERVICE CONTRACTS OF THE DIRECTORS AND SUPERVISORS A1B39

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had entered into any service contract with members of the Group (including contracts expiring or determinable by the relevant member of the Group within one year without payment of compensation (other than statutory compensation)).

6. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or supervisors of the Company or their 14A.70(15) respective close associates (as defined under the Hong Kong Listing Rules) had any interest in other business which competes or is likely to compete with the business of the Group as if each of them were treated as a controlling shareholder of the Company under Rule 8.10 of the Hong Kong Listing Rules.

7. DIRECTORS AND SUPERVISORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had any A1B40(1) interest, either directly or indirectly, in any assets which had since 31 December 2015, being the date on which the latest published audited accounts of the Company were made up, been acquired or disposed of by or leased to, or proposed to be acquired or disposed of by or leased to, any member of the Group.

As at the Latest Practicable Date, none of the Directors or supervisors of the Company was A1B40(2) materially interested in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and was significant to the business of the Group.

8. MATERIAL LITIGATION

As at the Latest Practicable Date, the Group was a party to certain litigations arising from the ordinary course of business. The likely outcome of such contingent liabilities, lawsuits or other legal proceedings cannot be ascertained at present, but the management of the Group believes that, any possible legal liability which may incur from the aforesaid litigation shall not have material adverse effect on the financial position and operating results of the Group. Save as disclosed, as at the Latest Practicable Date, no litigation or claims that may have material adverse effect on the operating results were pending or threatened or made against the Group so far as the Directors are aware.

—69— APPENDIX III GENERAL INFORMATION

9. MISCELLANEOUS

(i) Mr. Xie Jilong and Mr. Wong Kai Yan, Thomas act as joint company secretaries of the Company. Mr. Xie, a professional level senior economist, has been serving as company secretary of the Company since July 2015. Mr. Wong, a qualified accountant and a member of Hong Kong Institute of Certified Public Accountants since July 1999, has been serving as company secretary of the Company since June 2015.

(ii) The registered office of the Company is at No. 16 Central West Fourth Ring Road, Haidian District, Beijing, the PRC.

(iii) The Company’s H Share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, is situated at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

10. DOCUMENTS AVAILABLE FOR INSPECTION A1B43(2)(c)

Copies of the following documents will be available for inspection at the principal place of business of the Company during normal business hours on any weekday (except public holidays) from the date of this circular up to and including 16 June 2016:

(i) the CRRCG Subscription Agreement;

(ii) the letter from the Board dated 31 May 2016, the text of which is set out on pages 5 to 31 of this circular;

(iii) the letter of recommendation from the Independent Board Committee dated 31 May 2016, the text of which is set out on page 32 of this circular;

(iv) the letter of advice from the Independent Financial Adviser dated 31 May 2016, the text of which is set out on pages 33 to 52 of this circular;

(v) the written consent given by Independent Financial Adviser as referred to in the paragraph headed “Consent and Qualification of Expert” in Appendix III of this circular;

(vi) the Feasibility Analysis Report; and

(vii) the Report on Previous Proceeds

—70— SUPPLEMENTAL NOTICE OF THE 2015 ANNUAL GENERAL MEETING

中國中車股份有限公司 CRRC CORPORATION LIMITED (a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock code: 1766)

SUPPLEMENTAL NOTICE OF THE 2015 ANNUAL GENERAL MEETING

Reference is made to the Notice of the 2015 Annual General Meeting of CRRC Corporation Limited (the “Company”) dated 28 April 2016 (the “Notice”) which sets out the time and venue of the 2015 annual general meeting of the Company (the “AGM”or“Annual General Meeting”) and contains the resolutions to be proposed at the AGM for shareholders’ consideration and approval.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the AGM will be held as originally scheduled at Empark Grand Hotel, No. 69 Banjing Road, Haidian District, Beijing, the PRC at 2:00 p.m. on Thursday, 16 June 2016 (registration will begin at 1:30 p.m.) for the purpose of considering and approving, if appropriate, the following resolutions in addition to the resolutions as set out in the Notice (unless otherwise indicated, capitalized terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 28 April 2016):

ORDINARY RESOLUTIONS

13. To consider and approve the proposal in relation to compliance with the conditions for the non- public issuance of A Shares by the Company. (Relevant details are set out in the circular of the Company dated 31 May 2016.)

14. To consider and approve the proposal in relation to the Feasibility Analysis Report on the use of proceeds raised from the Proposed Placing by the Company. (Relevant details are set out in the circular of the Company dated 31 May 2016.)

15. To consider and approve the proposal in relation to the Report on Previous Proceeds of the Company. (Relevant details are set out in the circular of the Company dated 31 May 2016.)

SPECIAL RESOLUTIONS

16. To consider and approve the proposal in relation to the non-public issuance of A Shares of the Company, in respect of which CRRC Group and its associates, being connected Shareholders, will abstain from voting.

“That

the following items of the non-public issuance of A Shares by the Company within the PRC be and are hereby individually approved and be implemented subsequent to the obtaining of the relevant approvals from relevant governmental authorities in the PRC:

1.01 Class and par value of shares to be issued

—71— SUPPLEMENTAL NOTICE OF THE 2015 ANNUAL GENERAL MEETING

1.02 Method and time of issuance

1.03 Target subscribers

1.04 Issue price and pricing policy

1.05 Number of shares to be issued

1.06 Method of subscription

1.07 Lock-up period

1.08 Use of proceeds

1.09 Arrangement relating to the accumulated undistributed profits prior to the Proposed Placing

1.10 Place of listing

1.11 Validity of the resolution in relation to the Non-public Issue of A Shares”

(Relevant details are set out in the circular of the Company dated 31 May 2016.)

17. To consider and approve the proposal in relation to the plan of non-public issuance of A Shares of the Company. CRRC Group and its associates, being connected Shareholders, will abstain from voting on this proposal. (Relevant details are set out in the circular of the Company dated 31 May 2016.)

18. To consider, approve and permit the CRRCG Subscription and the CRRCG Subscription Agreement entered into by the Company and CRRC Group, the terms thereof and all transactions contemplated thereunder, and Board to be authorized to do all such acts and things and to sign and execute all documents and to take such steps as the Board (or any Directors) may in their absolute discretion consider necessary and appropriate to give effect to the CRRCG Subscription Agreement. CRRC Group and its associates will abstain from voting on this proposal. (Relevant details are set out in the circular of the Company dated 31 May 2016.)

19. To consider and approve the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and China Development Bank Capital Corporation Limited* (國開金融有限責任公司).

20. To consider and approve the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and China Development Bank Jingcheng (Beijing) Investment Fund Co., Ltd.* (國開精誠(北京)投資基金有限公司).

21. To consider and approve the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and China Development Bank Siyuan (Beijing) Investment Fund Co., Ltd.* (國開思遠(北京)投資基金有限公司).

—72— SUPPLEMENTAL NOTICE OF THE 2015 ANNUAL GENERAL MEETING

22. To consider and approve the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and Shanghai Xinghan Asset Management Company Limited* (上海興瀚資產管理有限公司).

23. To consider and approve the conditional subscription agreement for the non-public issuance of A Shares entered into by the Company and Shanghai China Merchant Equity Investment Fund Management Co., Ltd.* (上海招銀股權投資基金管理有限公司).

24. To consider and approve the authorization to the Board to handle relevant matters in connection with the Proposed Placing.

“That

The Board and its authorized person be authorized to handle all matters in connection with the Proposed Placing within the scope of relevant laws and regulations and regulatory document, including:

(1) to authorize the Board to handle all application matters in connection with the Proposed Placing;

(2) to authorize the Board to appoint the sponsor(s) (lead underwriter(s)) and other intermediaries to handle all application matters in connection with the Proposed Placing, and to sign any agreements and documents in relation to the Proposed Placing and subscription of the new A Shares, including but not limited to, underwriting agreement(s), sponsor agreement(s) and the employment agreement(s) with agencies;

(3) to authorize the Board to adjust the specific plan for the Proposed Placing and supplement, amend and adjust the application documents relating to the Proposed Placing in accordance with the policy changes regarding the non-public issuance of A Shares and the review opinions of the related regulatory authorities in respect of the Proposed Placing;

(4) to authorize the Board to formulate and organize the implementation of the specific plan for the Proposed Placing according to the specific conditions, including but not limited to, issuance time, subscription price, ultimate number of new A Shares to be issued, size of proceeds and selection of target subscribers;

(5) to authorize the Board to sign, amend, supplement, submit, report and execute all documents and agreements in connection with the Proposed Placing;

(6) to authorize the Board to establish a special bank account designated for the proceeds raised and to proceed with relevant matters, and sign relevant documents and agreements in respect of the investment projects to be financed by the proceeds raised from the Proposed Placing;

—73— SUPPLEMENTAL NOTICE OF THE 2015 ANNUAL GENERAL MEETING

(7) to authorize the Board to handle the capital verification procedures relating to the Proposed Placing;

(8) to authorize the Board to adjust the investment projects and specific arrangements thereof within the authorization scope of the AGM and in accordance with the relevant regulatory requirements and the actual condition of the securities market; adjusting the plan for the Proposed Placing and the use of proceeds in line with any changes in policies of the PRC and new requirements of regulatory authorities in relation to the non-public issuance or any changes in market conditions (including the feedback opinions from the approving authorities in respect of the application for the Proposed Placing), except where re-approval at a general meeting is otherwise required by any relevant laws and regulations and the articles of association of the Company and provided that the relevant laws and rules are being complied with;

(9) to authorize the Board to handle the capital increase matters in connection with the use of proceeds;

(10) to authorize the Board to handle such relevant matters as subscription, registration, lock- up and listing of the new A shares upon completion of the Proposed Placing;

(11) to authorize the Board, upon completion of the Proposed Placing, to handle matters such as change in the registered capital, amend the corresponding terms of the articles of association of the Company and execute relevant registration changes with the administration for industry and commerce;

(12) to authorize the Board to handle other matters relating to the Proposed Placing; and

(13) such authorizations shall be valid for a period of 12 months after being approved at the AGM of the Company.”

25. To consider and approve the proposal in relation to the Shareholders’ Return Plan for the Next Three Years (from 2016 to 2018).

26. To consider and approve the proposal in relation to the Dilutive Impact of the Non-public Issuance of A Shares on the Immediate Returns and Remedial Measures.

By Order of the Board CRRC Corporation Limited Cui Dianguo Chairman

Beijing, the PRC 31 May 2016

* For identification purpose only

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As at the date of this notice, the executive directors of the Company are Mr. Cui Dianguo, Mr. Zheng Changhong, Mr. Liu Hualong, Mr. Xi Guohua and Mr. Fu Jianguo; the non-executive director is Mr. Liu Zhiyong; and the independent non-executive directors are Mr. Li Guo’an, Mr. Zhang Zhong, Mr. Wu Zhuo, Mr. Sun Patrick and Mr. Chan Ka Keung, Peter.

Notes:

1. Details of the above resolution are set out in the circular of the Company dated 31 May 2016 (the “Circular”).

2. The New Form of Proxy in connection with the above resolution is enclosed to the Circular.

3. For details of other resolutions proposed to the AGM for consideration and approval as well as the closure of register of members, eligibility for attending the AGM, registration procedures of attending the AGM, appointment of proxies and other matters, please refer to the notice of the AGM of the Company dated 28 April 2016.

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