Central Development Holdings Limited - Proxy Solicitation & Information Statement 2013

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 consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Resources and Transportation Group Limited , you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities in China Resources and Transportation Group Limited .

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no 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.

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CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED 中國資源交通集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 269)

(1) MAJOR TRANSACTION IN RELATION TO ENTERING INTO THE CAPITAL INCREASE AGREEMENT; (2) PROPOSED ISSUE OF 9% CONVERTIBLE BONDS DUE 2015; AND (3) PROPOSED ISSUE OF NEW SHARES

Joint Financial Advisers to the Company

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Guotai Junan Capital Limited

A letter from the Board of China Resources and Transportation Group Limited is set out on pages 6 to 30 of this circular. A notice convening an extraordinary general meeting (the “ EGM ”) of the shareholders of the Company to be held at the Oasis Room, 8th Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wanchai, on Monday, 26 August 2013 at 10:30 a.m. is set out on pages N-1 to N-7 of this circular.

Whether or not you are able to attend the meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s share registrars and transfer office in Hong Kong, Tricor Progressive Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable and in any event not later than 48 hours before the time designated for holding the EGM or any adjournment thereof. Completion and return of the relevant forms of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish.

30 July 2013

CONTENTS

						Pages
Definitions	. . . . . . . .		. . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	1
Letter from the Board			. . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	6
Appendix I		–	Financial Information	of the Group . . . . . .	. . . . . . . . . . .	I-1
Appendix II		–	Financial Information	of the Project Group	. . . . . . . . . . .	II-1
Appendix III		–	Unaudited Pro Forma Financial Information
			of the Group . . . . .	. . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	III-1
Appendix IV		–	Management Discussion and Analysis
			of the Project Group	. . . . . . . . . . . . . . . . .	. . . . . . . . . . .	IV-1
Appendix V		–	General Information	. . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	V-1
Notice of EGM		. . . . .	. . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	N-1

– i –

DEFINITIONS

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

“2014 Convertible Bonds”
9% unlisted convertible bonds due 2014 in the aggregate principal amount of HK$2,000,000,000 issued by the Company;
“2015 Convertible Bonds” the First Convertible Bonds, the Second Convertible Bonds, the Third Convertible Bonds, the Fourth Convertible Bonds, the Fifth Convertible Bonds, the Sixth Convertible Bonds and the Seventh Convertible Bonds;
“associate”
has the meanings ascribed to it under the Listing Rules;
“Board” the board of Directors of the Company;
“Bondholders” holders of the 2015 Convertible Bonds;
“Capital Increase” the increase in the equity interest in the Project Company by Cheer Luck, pursuant to the Capital Increase Agreement;
“Capital Increase Agreement”
an agreement dated 10 June 2013 between Cheer Luck, Shu Ren Wood and the JV Partners in relation to the increase in the registered capital in the amount of RMB1,611,898,040 of the Project Company by the Group;
“CB Agreements” the First CB Agreement, the Second CB Agreement, the Third CB Agreement, the Fourth CB Agreement, the Fifth CB Agreement, the Sixth CB Agreement and the Seventh CB Agreement;
“CB Subscribers”
the First CB Subscriber, the Second CB Subscriber, the Third CB Subscriber, the Fourth CB Subscriber, the Fifth CB Subscriber, the Sixth CB Subscriber and the Seventh CB Subscriber;
“CB Subscription”
the subscription of the 2015 Convertible Bonds by the CB Subscribers;
“Cheer Luck”
Cheer Luck Technology Limited (展裕科技有限公司), a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company;

– 1 –

DEFINITIONS

“Company”
China Resources and Transportation Group Limited, a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the Stock Exchange;
“connected person“ has the meaning ascribed to it under the Listing Rules;
“Consideration” the total consideration of RMB1,611,898,040 for the Capital Increase;
“Conversion Shares”
new Shares to be issued upon conversion of the 2015 Convertible Bonds;
“Directors”
the directors of the Company;
“EGM”
the extraordinary general meeting of the Company to be convened and to consider and, if thought fit, approve, among other things, the Capital Increase, the CB Agreements and the Share Agreements;
“First CB Agreement”
the agreement dated 14 June 2013 entered into between the Company and the First CB Subscriber;
“First CB Subscriber”
Li Ka Shing (Canada) Foundation;
“First Convertible Bonds”
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$1,300 million to be subscribed by the First CB Subscriber;
“First Share Agreement”
the agreement dated 14 June 2013 entered into between the Company and the First Share Subscriber;
“First Share Subscriber”
Turbo View Investment Limited;
“First Subscription Shares”
1,500,000,000 new Shares subscribed by the First Share Subscriber;
“Fifth CB Agreement”
the agreement dated 14 June 2013 entered into between the Company and the Fifth CB Subscriber;
“Fifth CB Subscriber”
Guotai Junan Investments (Hong Kong) Limited;
“Fifth Convertible Bonds”
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$32 million to be subscribed by the Fifth CB Subscriber;
“Fourth CB Agreement”
the agreement dated 14 June 2013 entered into between the Company and the Fourth CB Subscriber;

– 2 –

DEFINITIONS

“Fourth CB Subscriber”

Grand Version Investments Limited;

“Fourth Convertible Bonds”
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$160 million to be subscribed by the Fourth CB Subscriber;
“Group” the Company and its subsidiaries;
“HK$” Hong Kong dollar, the lawful currency of Hong Kong;
“HKFRS” the Hong Kong Financial Reporting Standard;
“Hong Kong” the Hong Kong Special Administrative Region of the PRC;
“JV Partners” the existing equity holders of the Project Company (other than Cheer Luck and Shu Ren Wood), namely, Xinjiang Shougang Investment Co. Ltd. (新彊首鋼投資有限公司), Fujian Xinrong Industries Group Co., Ltd. (褔建信融實業有限公司) and Fujian Ding Feng Sheng Chuang Xin Investment Limited* (褔建鼎豐盛創新投資有限公司), all being established in the PRC;
“Latest Practicable Date” 25 July 2013, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;
“PRC”
the People’s Republic of China, excluding Hong Kong, the Macau Special Administrative Region and Taiwan;
“Project Company”
Inner Mongolia Zhunxing Heavy Haul Expressway Company Limited* (內蒙古准興重載高速公路有限責任公司), a 55.9% subsidiary of the Group;
“Project Group”
The Project Company and its subsidiaries;
“RMB”
Renminbi, the lawful currency of the People’s Republic of China;
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

– 3 –

DEFINITIONS

“Second CB Agreement”
“Second CB Subscriber”
“Second Convertible Bonds”
“Second Share Agreement”
“Second Share Subscriber”
“Second Subscription Shares”
“Seventh CB Agreement”
“Seventh CB Subscriber”
“Seventh Convertible Bonds”
“Shareholders”
“Shares”
“Share Agreements”
“Share Subscribers”
“Share Subscription”
“Shu Ren Wood”
“Sixth CB Agreement”
the agreement dated 14 June 2013 entered into between the Company and the Second CB Subscriber;
China Life Insurance (Overseas) Company Limited;
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$800 million to be subscribed by the Second CB Subscriber;
the agreement dated 14 June 2013 entered into between the Company and the Second Share Subscriber;
Wisdom Accord Limited;
1,000,000,000 new Shares subscribed by the Second Share Subscriber;
the agreement dated 14 June 2013 entered into between the Company and the Seventh CB Subscriber;
VMS Investment Group Limited;
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$160 million to be subscribed by the Seventh CB Subscriber;
registered holders of Shares from time to time;
shares of HK$0.01 each in the capital of the Company;
the First Share Agreement and the Second Share Agreement;
the First Share Subscriber and the Second Share Subscriber;
the subscription of the Subscription Shares by the First Share Subscriber and the Second Share Subscriber;
Shu Ren Wood (Shenzhen) Limited* (樹人木業（深圳）有限公司), a company established in the PRC and a wholly-owned subsidiary of the Company;
the agreement dated 14 June 2013 entered into between the Company and the Sixth CB Subscriber;

– 4 –

DEFINITIONS

“Sixth CB Subscriber”

Cross-Strait Capital Limited;

“Sixth Convertible Bonds”
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$32 million to be subscribed by the Sixth CB Subscriber;
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“Subscription Shares” the First Subscription Shares and the Second Subscription Shares;
“Third CB Agreement” the agreement dated 14 June 2013 entered into between the Company and the Third Subscriber;
“Third CB Subscriber”
Dr. Lo Ka Shui;
“Third Convertible Bonds”
9% unlisted convertible bonds due 2015 in the aggregate principal amount of HK$100 million to be subscribed by the Third CB Subscriber;
“Zhunxing Expressway”
a 265-kilometer heavy haul toll expressway in Inner Mongolia, the PRC; and
“%” per cent.
for identification purposes only

– 5 –

LETTER FROM THE BOARD

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CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED 中國資源交通集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 269)

Executive Directors: Mr. Cao Zhong (Chairman) Mr. Fung Tsun Pong (Vice-chairman) Mr. Duan Jingquan (Chief Executive Officer) Mr. Tsang Kam Ching, David (Finance Director) Mr. Gao Zhiping

Independent non-executive Directors: Mr. Yip Tak On Mr. Jing Baoli Mr. Bao Liang Ming

Registered Office: Caledonian Trust (Cayman) Limited Caledonian House, 69 Dr. Roy’s Drive, P.O. Box 1043, Grand Cayman, KY1-1102, Cayman Islands

Principal Place of Business in Hong Kong: Room 1801-07, 18/F., China Resources Building, 26 Harbour Road, Wanchai, Hong Kong

30 July 2013

To: the Shareholders

Dear Sir or Madam,

(1) MAJOR TRANSACTION IN RELATION TO ENTERING INTO THE CAPITAL INCREASE AGREEMENT; (2) PROPOSED ISSUE OF 9% CONVERTIBLE BONDS DUE 2015; AND

(3) PROPOSED ISSUE OF NEW SHARES

INTRODUCTION

Reference is made to the announcement of the Company dated 14 June 2013 in relation to the entering into of the Capital Increase Agreement to increase the Group’s interest in the Project Company, the proposed issued of 9% convertible bonds due 2015 and the proposed issue of new Shares, respectively.

– 6 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information in respect of, among other things, (a) further information about the Capital Increase and the financial information on the Group and the Project Group, (b) further details of the CB Subscription and the Share Subscription, and (c) the notice of the EGM.

THE CAPITAL INCREASE

The Capital Increase Agreement

Date

10 June 2013

Parties

(1) Cheer Luck, which is a wholly owned subsidiary of the Company and is principally engaged in the business of investment holding with its principal asset being its equity interest in the Project Company;
(2) Shu Ren Wood, which is a wholly owned subsidiary of the Company and is principally engaged in the business of investment holding with its principal assets being its equity interest in the Project Company and the Group’s property development arm, Yichang Xinshougang Property Development Company Limited; and
(3) the JV Partners:
(a) Xinjiang Shougang Investment Co., Ltd., which is a subsidiary of Shougang Corporation, a State-owned enterprise engaged in steel production. The principal interest of Xinjiang Shougang Investment Co. Ltd. is its holding in the Project Company;
(b) Fujian Xinrong Industries Group Co., Ltd., which is principally engaged in the business of investment holding with its principal asset being its equity interest in the Project Company; and
(c) Fujian Ding Feng Sheng Chuang Xin Investment Limited, which is principally engaged in the business of investment holding with its principal asset being its equity interest in the Project Company.

Xinjiang Shougang Investment Co. Ltd. is interested in 39.20% of the registered capital of the Project Company and is a substantial shareholder of a non-wholly owned subsidiary of the Company. Save for their shareholding interests in the Project Company, to the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, each of the JV Partners and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

Capital Increase

As at the Latest Practicable Date, Cheer Luck and Shu Ren Wood were respectively interested in 51% and 4.9% of the equity interest in the Project Company and all the registered capital of the Project Company has been fully paid up. Pursuant to the Capital Increase Agreement, Cheer Luck has conditionally agreed to subscribe for the additional registered capital of RMB1,611,898,040 at a total cash consideration of RMB1,611,898,040 and Fujian Xinrong Industries Group Co., Ltd., one of the JV Partners, has agreed to subscribe for the additional registered capital of RMB85,696,030 at a total cash consideration of RMB85,696,030.

– 7 –

LETTER FROM THE BOARD

Following completion of the Capital Increase, the Company, through Cheer Luck and Shu Ren Wood, will indirectly hold a 82.27% equity interest in the Project Company. The Project Company will continue to be accounted as a subsidiary of the Company. Details to the changes in the shareholdings of the Project Company before and after the Capital Increase are set out below:

Shareholders Cheer Luck Shu Ren Wood Sub-total for the Group Xinjiang Shougang Investment Co. Ltd. (新彊首鋼投資有限公司) Fujian Xinrong Industries Group Co., Ltd. (褔建信融實業有限公司) Fujian Ding Feng Sheng Chuang Xin Investment Limited (褔建鼎豐盛創新投資有限公司) Total	Existing shareholding in the Project Company RMB % 416,326,530 51.00% 40,000,000 4.90% 456,326,530 55.90% 320,000,000 39.20% 30,000,000 3.675% 10,000,000 1.225% 816,326,530 100%	Shareholding in the Project Company upon completion of the Capital Increase RMB % 2,028,224,570 80.68% 40,000,000 1.59% 2,068,224,570 82.27% 320,000,000 12.73% 115,696,030 4.60% 10,000,000 0.40% 2,513,920,600 100%	Shareholding in the Project Company upon completion of the Capital Increase RMB % 2,028,224,570 80.68% 40,000,000 1.59% 2,068,224,570 82.27% 320,000,000 12.73% 115,696,030 4.60% 10,000,000 0.40% 2,513,920,600 100%
			82.27% 12.73% 4.60% 0.40%
			100%

Pursuant to the Capital Increase Agreement, the Consideration of RMB1,611,898,040 is payable by Cheer Luck as follows:

(i) the first installment of RMB322,379,608 equivalent to 20% of the Consideration is payable by Cheer Luck within 20 working days of obtaining the approvals of the Capital Increase by the PRC department of commerce and the Shareholders;
(ii) the second installment of RMB805,949,020 equivalent to 50% of the Consideration is payable by Cheer Luck to the Project Company within 3 months from the date of issuance of the new business license of the Project Company (the new business license of the Project Company is expected to be issued within one month from the receipt of the first installment stated in paragraph (i) above);
(iii) the third installment of RMB402,974,510 equivalent to 25% of the Consideration is payable by Cheer Luck to the Project Company within 6 months from the date of issuance of the new business license of the Project Company; and
(iv) the fourth installment of RMB80,594,902 equivalent to 5% of the Consideration is payable by Cheer Luck to the Project Company within 12 months from the date of issuance of the new business license of the Project Company.

– 8 –

LETTER FROM THE BOARD

The terms of the Capital Increase Agreement including the Consideration were based on normal commercial terms and determined after arm’s length negotiations between the Company and the JV Partners with reference to a number of factors, including but not limited to, (i) the existing shareholding of each of the shareholders of the Project Company; (ii) the current status of the construction of the Zhunxing Expressway by the Project Company as described below and the capital needs of the Project Company, and (iii) the future growth potential of the Project Company.

Conditions precedent

The obligations of Cheer Luck under the Capital Increase Agreement are conditional upon satisfaction of the following conditions:

(a) the board of directors of the Project Company has duly approved the Capital Increase and the amendment to the articles of association and joint venture contract of the Project Company;
(b) the PRC department of commerce has issued the approval for the Capital Increase and the relevant approval certificate for foreign investment;
(c) Cheer Luck, Shu Ren Wood and the JV Partners have duly signed a supplemental agreement to the joint venture contract of the Project Company as a result of the Capital Increase;
(d) Cheer Luck, Shu Ren Wood and the JV Partners have duly signed the proposal to amend the articles of association of the Project Company as a result of the Capital Increase; and
(e) the Company has obtained the approval of the Shareholders on the Capital Increase and the transactions contemplated under the Capital Increase Agreement.

Information on the Project Company

The Project Company is a company incorporated in the PRC with limited liability, and is principally engaged in expressway and auxiliary facility investment, operation, management and maintenance.

Set out below is the audited consolidated financial information of the Project Company for the years ended 31 March 2012 and 2013 prepared in accordance with HKFRS:

		For the year	For the year
		ended	ended
		31 March 2012	31 March 2013
		RMB’000	RMB’000
(Loss)/profit	before tax	(62,007)	1,570
(Loss)/profit	after tax	(62,007)	1,570

The net assets of the Project Company as at 31 March 2013 and 2012 were RMB2,296.5 million and RMB1,927.6 million respectively.

The financial information of the Project Group for the three financial years ended 31 March 2013 is set out in Appendix II to this circular.

– 9 –

LETTER FROM THE BOARD

Reasons for the Capital Increase

The Group was principally engaged in expressway and auxiliary facility investment, expressway operation, management and maintenance, property development and asset management and forest operation and management.

The Project Company has the exclusive right to build, and operate for 30 years (excluding construction period) the Zhunxing Expressway, the first PRC heavy-duty toll expressway designed for coal transportation in the Inner Mongolia Autonomous Region that will run from the Jungar Banner (准格爾旗) which is the major coal production area located south of Hohhot (呼和浩特) in the Ordos (鄂爾多斯), towards northeast for 265 km to Xinghe County (興和縣) which is a major logistics hub for coal distribution in Northern China.

The Group has made an all-out effort to ensure the construction of the Zhunxing Expressway is in full gear. By the end of March 2013, the Project Company completed around 60% of the gross output value of the construction of the Zhunxing Expressway and approximately 145 km (60%) out of 253 km of the total roadbed have been completed and handed over to government for acceptance check. It is expected that a further amount of approximately RMB7,900 million would need to be incurred to complete the Zhunxing Expressway. Other than the additional capital injections as a result of the Capital Increase, the remaining construction cost of the Zhunxing Expressway will be funded by the syndicated loan facility of RMB8.82 billion provided by several PRC banks. The Directors expect that the Zhunxing Expressway will commence operation in the 4th quarter of 2013. The Directors consider that the Capital Increase is a valuable opportunity for the Group to further expand its interest in the Project Company and is an appropriate occasion to bring the most benefits to the Shareholders, which is in conformity with the Group’s development directions and commitment on the expressway business.

Having considered the aforesaid factors, the Board believes that the terms of the Capital Increase Agreement (including the Consideration) are fair and reasonable and the entering into the Capital Increase Agreement is in the interests of the Company and the Shareholders as a whole.

The Company intends to fund the Consideration by the proceeds of the CB Subscription, the Share Subscription and further issue of equity or debt securities or borrowings. As at the Latest Practicable Date, the Company has no concrete proposal on any further issue of equity or debt securities or the obtaining of further borrowings to raise fund. If the CB Subscription and/or the Share Subscription cannot be completed, the Company will consider other alternate means, including the issue of equity or debt securities or through borrowings, to raise funds to meet the Company’s commitment to the Capital Increase.

Financial effects to the Group as a result of the Capital Increase

The Capital Increase will be funded from part of the proceeds of the CB Subscription and the Share Subscription. Upon completion of the Capital Increase, the Group’s aggregate holding in the Project Company will be increased to 82.27%. The use of the proceeds from the CB Subscription and the Share Subscription to fund the Capital Increase will lead to a decrease in the Group’s current assets and a corresponding increase in the Group’s long-term investments. As the financial results of the Project Company are already consolidated into the accounts of the Company, the Capital Increase will not have any effects on the financial position and earnings of the Group. The equity attributable to owners of the Company will be increased by approximately HK$1,189.1 million as a result of the Capital Increase.

The earning base of the Group will be substantially strengthened after the Zhunxing Expressway commencing to open for traffic in the 4th quarter of 2013 as the Project Company and its subsidiaries will continue to be accounted as indirect subsidiaries of the Company with their financial results being consolidated into those of the Company.

– 10 –

LETTER FROM THE BOARD

Listing Rules implications

No connected person of the Company at the Company level is interested in 10% or more of the equity capital of the Project Company. Accordingly, the Project Company is not a connected person of the Company for the purpose of Rule 14A.11(5). In addition, Fujian Xinrong Industries Group Co., Ltd. is not a substantial shareholder of the Project Company and hence is not a connected person of the Company at the subsidiary level. The Capital Increase therefore does not constitute a connected transaction for the Company under Chapter 14A of the Listing Rules.

As one of the ratios set out in the Listing Rules for the Capital Increase exceeds 25% but is less than 100%, the Capital Increase constitutes a major transaction for the Company under the Listing Rules and is subject to the announcement and shareholders’ approval requirements under the Listing Rules.

THE CB SUBSCRIPTION

On 14 June 2013, the Company entered into an agreement with each of the CB Subscribers pursuant to which the Company has agreed to issue the First Convertible Bonds, the Second Convertible Bonds, the Third Convertible Bonds, the Fourth Convertible Bonds, the Fifth Convertible Bonds, the Sixth Convertible Bonds and the Seventh Convertible Bonds to the First CB Subscriber, the Second CB Subscriber, the Third CB Subscriber, the Fourth CB Subscriber, the Fifth CB Subscriber, the Sixth CB Subscriber and the Seventh CB Subscriber respectively.

The First CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) Li Ka Shing (Canada) Foundation, a company incorporated in Canada, is a private foundation registered with the Minister of National Revenue as a registered charity within the meaning of the Income Tax Act (Canada).

As at the Latest Practicable Date, the First CB Subscriber holds HK$1,300 million of the 2014 Convertible Bonds. Save for such interest, to the best knowledge, information and belief of the Directors, having made all reasonable enquires, the First CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

– 11 –

LETTER FROM THE BOARD

Principal terms of the First Convertible Bonds

Principal amount HK$1,300 million Maturity date The date falling on the second anniversary of the issue date.

Interest

The First Convertible Bonds bear interest from the issue date of the First Convertible Bonds at the rate of 9% per annum on the principal amount of the First Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price

HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the First Convertible Bonds.

Number of Conversion Shares issuable
4,062,500,000 new Shares will be issued upon full conversion of the First Convertible Bonds based on the initial conversion price of HK$0.32.

The Second CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) China Life Insurance (Overseas) Company Limited, a wholly-owned subsidiary of China Life Insurance (Group) Company. Its main business covers insurance, investment, and provident fund service in Hong Kong and Macau. With “China Life” branding reputation and strong support of the parent group, China Life Insurance (Overseas) Company Limited has been rapidly growing into a leading local insurance company in Hong Kong and Macau.

– 12 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Second CB Subscriber holds 1,189,900,000 Shares, representing approximately 4.65% of the issued share capital of the Company and HK$600 million of the 2014 Convertible Bonds. Save for such interests, to the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Second CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

Principal terms of the Second Convertible Bonds

Principal amount HK$800 million Maturity date The date falling on the second anniversary of its issue date. Interest The Second Convertible Bonds bear interest from the issue date of the Second Convertible Bonds at the rate of 9% per annum on the principal amount of the Second Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears. Conversion price HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the Second Convertible Bonds. Number of Conversion Shares 2,500,000,000 new Shares will be issued upon full issuable conversion of the Second Convertible Bonds based on the initial conversion price of HK$0.32.

The Third CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) Dr. Lo Ka Shui, who is the chairman and managing director of Great Eagle Holdings Limited and a non-executive director and the chairman of Eagle Asset Management (CP) Limited (manager of the publicly listed Champion Real Estate Investment Trust), and a non-executive director and the chairman of Langham Hospitality Investments Limited.

As at the Latest Practicable Date, the Third CB Subscriber holds HK$100 million of the 2014 Convertible Bonds. Save for such interest, to the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Third CB Subscriber is an independent third party not connected with the Company or any of its connected persons.

– 13 –

LETTER FROM THE BOARD

Principal terms of the Third Convertible Bonds

HK$100 million

Principal amount HK$100 million Maturity date The date falling on the second anniversary of its issue date.

Interest

The Third Convertible Bonds bear interest from the issue date of the Third Convertible Bonds at the rate of 9% per annum on the principal amount of the Third Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price

HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the Third Convertible Bonds.

Number of Conversion Shares issuable

312,500,000 new Shares will be issued upon full conversion of the Third Convertible Bonds based on the initial conversion price of HK$0.32.

The Fourth CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) Grand Version Investments Limited, which is principally engaged in investment holding.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Fourth CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

– 14 –

LETTER FROM THE BOARD

Principal terms of the Fourth Convertible Bonds

Principal amount

HK$160 million

Maturity date The date falling on the second anniversary of its issue date.

Interest

The Fourth Convertible Bonds bear interest from the issue date of the Fourth Convertible Bonds at the rate of 9% per annum on the principal amount of the Fourth Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price

HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the Fourth Convertible Bonds.

Number of Conversion Shares issuable

500,000,000 new Shares will be issued upon full conversion of the Fourth Convertible Bonds based on the initial conversion price of HK$0.32.

The Fifth CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) Guotai Junan Investments (Hong Kong) Limited, which is principally engaged in investment holding.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Fifth CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

– 15 –

LETTER FROM THE BOARD

Principal terms of the Fifth Convertible Bonds

HK$32 million

Principal amount HK$32 million Maturity date The date falling on the second anniversary of its issue date.

Interest

The Fifth Convertible Bonds bear interest from the issue date of the Fifth Convertible Bonds at the rate of 9% per annum on the principal amount of the Fifth Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price

HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the Fifth Convertible Bonds.

Number of Conversion Shares issuable

100,000,000 new Shares will be issued upon full conversion of the Fifth Convertible Bonds based on the initial conversion price of HK$0.32.

The Sixth CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) Cross-Strait Capital Limited, which is principally engaged in investment holding.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Sixth CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

– 16 –

LETTER FROM THE BOARD

Principal terms of the Sixth Convertible Bonds

HK$32 million

Principal amount HK$32 million Maturity date The date falling on the second anniversary of its issue date.

Interest The Sixth Convertible Bonds bear interest from the issue date of the Sixth Convertible Bonds at the rate of 9% per annum on the principal amount of the Sixth Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price

HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the Sixth Convertible Bonds.

Number of Conversion Shares issuable
100,000,000 new Shares will be issued upon full conversion of the Sixth Convertible Bonds based on the initial conversion price of HK$0.32.

The Seventh CB Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) VMS Investment Group Limited, which is principally engaged in proprietary investments, asset management, securities brokerage and corporate finance advisory services.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Seventh CB Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

– 17 –

LETTER FROM THE BOARD

Principal terms of the Seventh Convertible Bonds

HK$160 million

Principal amount HK$160 million Maturity date The date falling on the second anniversary of its issue date.

Interest The Seventh Convertible Bonds bear interest from the issue date of the Seventh Convertible Bonds at the rate of 9% per annum on the principal amount of the Seventh Convertible Bonds outstanding. The interest will be payable by the Company annually in arrears.

Conversion price HK$0.32 per Conversion Share, subject to adjustment in accordance with the terms of the Seventh Convertible Bonds.
Number of Conversion Shares 500,000,000 new Shares will be issued upon full issuable conversion of the Seventh Convertible Bonds based on the initial conversion price of HK$0.32.

Other terms of the 2015 Convertible Bonds

Set out below is a summary of the other common principal terms of the 2015 Convertible Bonds:

Issue price 100% of the principal amount of the 2015 Convertible Bonds, payable in full at completion of the CB Agreements.

Adjustment of conversion price

The conversion price per Conversion Share may be adjusted in accordance with the terms of the relevant 2015 Convertible Bonds including, among other things, subdivision or consolidation of Shares, the making of a free distribution of Shares, bonus issue, the declaration of a dividend in Shares, capital distribution, issuance of options, rights or warrants, and the issue of new Shares at less than current market price.

– 18 –

LETTER FROM THE BOARD

Issues of Shares at less than current market price

If and whenever the Company shall issue wholly for cash any Shares or on the grant of options, warrants or other rights to subscribe for or purchase Shares in each case at a price per Share which is less than 90% of the current market price of the Share on the trading day last preceding the date of announcement of the terms of such issue, the conversion price of the 2015 Convertible Bonds will be adjusted by multiplying the conversion price in force immediately prior to such issue or grant by the following fraction:

A + B C

where:

A is the number of Shares in issue immediately before the issue of such additional Shares or the issue or grant of such options, warrants or other rights to subscribe for or purchase any Shares;

B is the number of Shares which the aggregate consideration receivable for the issue of such additional Shares would purchase at such current market price per Share; and

C is the number of Shares in issue immediately after the issue of such additional Shares.

– 19 –

LETTER FROM THE BOARD

Issues of convertible securities at less than current market price

Save in the case of an issue of securities arising from a conversion or exchange of other securities in accordance with the terms applicable to such securities, if and whenever the Company or any subsidiary shall issue wholly for cash any convertible securities which by their terms of issue carry rights of conversion into, or exchange or subscription for Shares (or grant any such rights in respect of any existing securities so issued) to be issued by the Company upon conversion, exchange or subscription at a consideration per Share which is less than 90 per cent. of the current market price per Share on the last trading day preceding the date of announcement of the terms of issue of such securities, the conversion price will be adjusted, by multiplying the conversion price in force immediately prior to such issue (or grant) by the following fraction:-

A + B A + C

where:

A is the number of Shares in issue immediately before such issue (or grant);

B is the number of Shares which the aggregate consideration receivable by the Company for the Shares to be issued upon conversion or subscription for or exchange of or upon exercise of the right of subscription attached to such securities would purchase at such current market price per Share; and

C is the maximum number of Shares to be issued upon conversion into or subscription for exchange of such securities or upon the exercise of such rights of subscription attached thereto at the initial conversion, exchange or subscription price or rate.

– 20 –

LETTER FROM THE BOARD

Conversion period

Redemption at maturity

Mandatory Conversion

Redemption at the option of the Company

Each Bondholder has the right to convert the 2015 Convertible Bonds in whole or in part into Conversion Shares at any time on or after the issue date of the 2015 Convertible Bonds up to the maturity date.

Each 2015 Convertible Bond will be redeemed on maturity at a value equal to the aggregate of (1) 100% of the outstanding principal amount of the 2015 Convertible Bonds; and (2) all outstanding interest accrued thereon.

If, at any time prior to the maturity date, the current market price of the Shares is more than HK$0.60 (such cut-off amount being subject to adjustment in the event of any subdivision or consolidation of the Shares) for 60 consecutive trading days, then the Company may give not less than seven business days’ notice to the Bondholders to mandatorily convert all or any part of the 2015 Convertible Bonds.

The Company may, at any time and from time to time, purchase the 2015 Convertible Bonds at any price in the open market or otherwise in compliance with applicable laws and regulations.

The Company may also, at any time up to (and excluding) the commencement of the seven calendar day period ending on (and including) the maturity date, when the principal amount of the 2015 Convertible Bonds outstanding is equal to or less than 10% of the original aggregate principal amount issued by the Company, by written notice to the Bondholders elect to redeem the whole or part of the then outstanding principal amount of the 2015 Convertible Bonds at an amount equal to 100% of the principal amount of the 2015 Convertible Bonds sought to be redeemed as specified in the redemption notice and all unpaid interest thereon.

Transferability

The 2015 Convertible Bonds will be transferable.

– 21 –

LETTER FROM THE BOARD

Status The 2015 Convertible Bonds will represent direct, unconditional, unsubordinated and unsecured obligations of the Company and will at all times rank pari passu with all existing and future unsubordinated and unsecured obligations of the Company. Voting A Bondholder will not be entitled to vote at any general meetings of the Company by reason only of it being a Bondholder. Listing No application will be made for the listing of the 2015 Convertible Bonds on the Stock Exchange or any other exchange.

Comparison of conversion price

The initial conversion price of HK$0.32 per Conversion Share was arrived at after arm’s length negotiation between the Company and the CB Subscribers and represents:

(i) a premium of approximately 4.92% to the closing price of the Shares of HK$0.305 as quoted on the Stock Exchange on the last trading day prior to the date of the CB Agreements;
(ii) a premium of approximately 7.38% to the average closing price of HK$0.298 per Share for the last 5 consecutive trading days up to and including 10 June 2013, the last trading day prior to the date of the CB Agreements;
(iii) a premium of approximately 7.74% to the average closing price of HK$0.297 per Share for the last 30 consecutive trading days up to and including 10 June 2013, the last trading day prior to the date of the CB Agreements; and
(iv) a discount of approximately 3.03% to the closing price of HK$0.330 per Share as at the Latest Practicable Date.

As the 2015 Convertible Bonds carry an annual interest at 9% and the option for the Bondholders to convert the 2015 Convertible Bonds into Conversion Shares within a period of two years, the conversion price was determined at HK$0.32 per Share, higher than the subscription price of HK$0.30 per Share under the Share Subscription.

Conversion Shares

Assuming full conversion of the 2015 Convertible Bonds at the conversion price of HK$0.32 per Conversion Share, the 2015 Convertible Bonds will be convertible into approximately 8,075,000,000 new Shares, representing (i) approximately 31.54% of the existing issued share capital of the Company, (ii) approximately 23.98% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares and (iii) approximately 22.32% of the issued share capital as enlarged by the issue of the Subscription Shares and the Conversion Shares.

– 22 –

LETTER FROM THE BOARD

The Conversion Shares have a nominal value of HK$80,750,000 and a market value of approximately HK$2,462.9 million based on the closing price of the Shares of HK$0.305 on 10 June 2013, the last trading day prior to the date of the CB Agreements.

The Conversion Shares will rank pari passu in all respects with the Shares then in issue on the relevant conversion date.

Conditions precedent

The obligations of each of the CB Subscribers under the relevant CB Agreement are conditional upon:

(i) the Shareholders passing a resolution in general meeting to authorise the Directors to allot and issue the Conversion Shares and to issue the relevant 2015 Convertible Bonds in connection therewith;
(ii) the Stock Exchange having granted the listing of, and permission to deal in, the Conversion Shares with respect to the 2015 Convertible Bonds;
(iii) the representations and warranties of the Company set out in the relevant CB Agreement not having been breached and remaining true and accurate in all material respects and not misleading in any material respect as at the closing date;
(iv) there being no event existing or having occurred and no condition being in existence which would (had the relevant 2015 Convertible Bonds already been issued) constitute an event of default and no event or act having occurred which would constitute an event of default; and
(v) the Capital Increase Agreement becoming unconditional in accordance with its terms thereof.

– 23 –

LETTER FROM THE BOARD

The CB Subscribers may waive all or any of the conditions precedent other than conditions (i) and (ii). To the best knowledge of the Company, the CB Subscribers currently have no intention of waiving any of the conditions to the CB Agreements. Completion of each of the CB Agreements will take place on the third business day following the date upon receipt of a notice from the Company notifying the relevant CB Subscriber of condition (ii) to the conditions precedent have been fulfilled. If the conditions precedent cannot be fulfilled or waived by 31 October 2013 or such later date as the Company and the relevant CB Subscriber may agree in writing, the relevant CB Agreement will terminate and cease to have any effect.

Each of the CB Agreements is independent of the other and completion of each of the CB Agreements is not inter-conditional on completion of the other CB Agreements.

Application for Listing

An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares which may fall to be issued upon conversion of the 2015 Convertible Bonds. No application will be made for the listing of the 2015 Convertible Bonds on the Stock Exchange or any other stock exchange.

Reasons for the CB Agreements and use of proceeds

The issue of the 2015 Convertible Bonds will fund the additional investment in the Project Company under the Capital Increase Agreement. The estimated net proceeds from the issue of the 2015 Convertible Bonds would be approximately HK$2,581.0 million, which will be used as to approximately HK$581 million to fund the Capital Increase and as to HK$2,000 million to repay the 2014 Convertible Bonds. As at the Latest Practicable date, outstanding 2014 Convertible Bonds held by the First CB Subscriber and the Third CB Subscriber were HK$1,300 million and HK$100 million, respectively. The Company has already received notices from the First CB Subscriber and the Third CB Subscriber that they will surrender their 2014 Convertible Bonds as set-off against payment for the 2015 Convertible Bonds that they have subscribed.

The Directors (including the independent non-executive Directors) consider that the terms of the CB Agreements are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

THE SHARE SUBSCRIPTION

On 14 June 2013, the Company entered into an agreement with each of the Share Subscribers pursuant to which the Company has agreed to issue the First Subscription Shares and the Second Subscription Shares to the First Share Subscriber and the Second Share Subscriber respectively.

– 24 –

LETTER FROM THE BOARD

The First Share Agreement

Date

14 June 2013

Parties

(1) the Company; and
(2) Turbo View Investment Limited, which is principally engaged in investment holding. To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the First Share Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

The First Share Subscription

Pursuant to the terms of the First Share Agreement, the First Share Subscriber will subscribe for the First Subscription Shares.

The Second Share Agreement

Date

14 June 2013

Parties

(1) The Company; and
(2) Wisdom Accord Limited, which is principally engaged in investment holding.

To the best knowledge, information and belief of the Directors, having made all reasonable enquires, the Second Share Subscriber and its ultimate beneficial owners are independent third parties not connected with the Company or any of its connected persons.

The Second Share Subscription

Pursuant to the terms of the Second Share Agreement, the Second Share Subscriber will subscribe for the Second Subscription Shares.

– 25 –

LETTER FROM THE BOARD

Subscription Price

The subscription price of HK$0.30 per Subscription Share under each of the Share Agreements represents:

(i) a discount of approximately 1.64% to the closing price of HK$0.305 per Share as quoted on the Stock Exchange on 10 June 2013, being the last trading day prior to the date of the Share Agreements;
(ii) a premium of approximately 0.67% to the average of the closing prices per Share as quoted on the Stock Exchange for the 5 consecutive trading days prior to the date of the Share Agreements of approximately HK$0.298 per Share; and
(iii) a discount of approximately 9.09% to the closing price of HK$0.330 per Share as at the Latest Practicable Date.

The subscription price was determined with reference to the prevailing market price of the Shares and was negotiated on an arm’s length basis between the Company and the Share Subscribers. The Directors (including the independent non-executive Directors) consider that the terms of the Share Agreements are fair and reasonable and that the Share Subscription is in the interests of the Company and the Shareholders as a whole.

Subscription Shares

The Subscription Shares represent (i) approximately 9.76% of the existing issued share capital of the Company, (ii) approximately 8.89% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares, and (iii) approximately 6.91% of the issued share capital of the Company as enlarged by the issue of the Subscription Shares and the Conversion Shares.

Based on the closing price of HK$0.305 per Share on 10 June 2013, the last trading day prior to the date of the Share Agreements, the Subscription Shares have a market value of HK$762.5 million and an aggregate nominal value of HK$25 million. The net price per Subscription Share is approximately HK$0.299.

Ranking of the Subscription Shares

All the Subscription Shares will, when issued, rank pari passu among themselves and with the Shares then in issue.

Conditions precedent

Completion of each the Share Agreements is conditional upon:

(i) the Shareholders passing a resolution in general meeting to authorise the Directors to allot and issue the Subscription Shares;
(ii) the Stock Exchange having granted the listing of, and permission to deal in, the Subscription Shares; and

– 26 –

LETTER FROM THE BOARD

(iii) the Capital Increase Agreement becoming unconditional in accordance with its terms.

None of the conditions to the Share Agreements can be waived. Completion of the Share Subscription will take place on the third business day following the date upon receipt of a notice from the Company notifying the relevant Share Subscriber of the conditions precedent having been fulfilled. If the conditions cannot be satisfied by 31 October 2013 or such later date as the Company and the relevant Share Subscriber may agree in writing, the relevant Share Agreements will terminate and cease to be of any effect.

Each of the Share Agreements is independent of the other and completion of each of the Share Agreements is not inter-conditional on completion of the other Share Agreement.

Application for listing

An application will be made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

Reasons of the Share Subscription and use of proceeds

The Directors consider that the Share Subscription represents an opportunity to raise additional capital for the Company. The estimated net proceeds from the Share Subscription will be approximately HK$747.0 million. The Company intends to apply as to approximately HK$727 million from the net proceeds of the Share Subscription to fund the Capital Increase and as to approximately HK$20 million as general working capital of the Group. The Company intends to meet any shortfall of the Capital Increase through further issue of equity or debt securities or borrowings. As at the Latest Practicable Date, no concrete proposal with regard to such further fund raising exercise has been formulated. The Company will make further announcement in compliance with the requirements of the Listing Rules if and when definite agreements in relation to any such further fund raising exercise have been executed.

The Directors (including the independent non-executive Directors) consider that the terms of the Share Agreements are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

– 27 –

LETTER FROM THE BOARD

SHAREHOLDING OF THE COMPANY

The table below sets out the Company’s shareholding structure as at the Latest Practicable Date and upon the issue of the Subscription Shares and full conversion of the 2015 Convertible Bonds:

China Alliance International Holding Group Limited Vivid Beyond Securities Limited Fresh Generation Development Limited Directors Mr. Cao Zhong_(Note 2) Mr. Fung Tsun Pong(Note 3)_ CB Subscribers First CB Subscriber Second CB Subscriber Third CB Subscriber Fourth CB Subscriber Fifth CB Subscriber Sixth CB Subscriber Seventh CB Subscriber Share Subscribers First Share Subscriber Second Share Subscriber Public Shareholders Total	Shareholding as at the Latest Practicable Date No. of Shares % 4,275,862,068 16.70 2,500,000,000 9.76 1,350,000,000 5.27 2,194,500,000 8.57 2,356,662,449 9.20 4,551,162,449 17.77 – – 1,189,900,000 4.65 – – – – – – – – – – 1,189,900,000 4.65 – – – – – – 11,738,859,378 45.84 25,605,783,895 100.0	Shareholding immediately upon full conversion of the 2015 Convertible Bonds (Note 1) No. of Shares % 4,275,862,068 12.70 2,500,000,000 7.42 1,350,000,000 4.01 2,194,500,000 6.52 2,356,662,449 7.00 4,551,162,449 13.51 4,062,500,000 12.06 3,689,900,000 10.96 312,500,000 0.93 500,000,000 1.48 100,000,000 0.30 100,000,000 0.30 500,000,000 1.48 9,264,900,000 27.51 – – – – – – 11,738,859,378 34.85 33,680,783,895 100.0	Shareholding immediately after completion of the Share Subscription(Note 1) No. of Shares % 4,275,862,068 15.21 2,500,000,000 8.89 1,350,000,000 4.80 2,194,500,000 7.81 2,356,662,449 8.38 4,551,162,449 16.19 – – 1,189,900,000 4.23 – – – – – – – – – – 1,189,900,000 4.23 1,500,000,000 5.34 1,000,000,000 3.56 2,500,000,000 8.89 11,738,859,378 41.77 28,105,783,895 100.0	Shareholding immediately upon full conversion of the 2015 Convertible Bonds and after completion of the Share Subscription (Note 1) No. of Shares % 4,275,862,068 11.82 2,500,000,000 6.91 1,350,000,000 3.73 2,194,500,000 6.07 2,356,662,449 6.51 4,551,162,449 12.58 4,062,500,000 11.23 3,689,900,000 10.20 312,500,000 0.86 500,000,000 1.38 100,000,000 0.28 100,000,000 0.28 500,000,000 1.38 9,264,900,000 25.61 1,500,000,000 4.15 1,000,000,000 2.76 2,500,000,000 6.91 11,738,859,378 32.45 36,180,783,895 100.0	Shareholding immediately upon full conversion of the 2015 Convertible Bonds and after completion of the Share Subscription (Note 1) No. of Shares % 4,275,862,068 11.82 2,500,000,000 6.91 1,350,000,000 3.73 2,194,500,000 6.07 2,356,662,449 6.51 4,551,162,449 12.58 4,062,500,000 11.23 3,689,900,000 10.20 312,500,000 0.86 500,000,000 1.38 100,000,000 0.28 100,000,000 0.28 500,000,000 1.38 9,264,900,000 25.61 1,500,000,000 4.15 1,000,000,000 2.76 2,500,000,000 6.91 11,738,859,378 32.45 36,180,783,895 100.0
					12.58 11.23 10.20 0.86 1.38 0.28 0.28 1.38
					25.61 4.15 2.76
					6.91 32.45
					100.0

Notes:

Assuming no further conversion of the 2014 Convertible Bonds or warrants of the Company.
Mr. Cao Zhong, the chairman and executive Director is interested in 124,200,000 Shares personally and 2,070,300,000 Shares through Champion Rise International Limited, a company wholly owned by him.
Mr. Fung Tsun Pong, the vice chairman and an executive Director, holds 1,242,362,449 Shares personally and 1,114,300,000 Shares through Ocean Gain Limited, a company wholly owned by him.

– 28 –

LETTER FROM THE BOARD

FUND RAISING ACTIVITIES OF THE COMPANY IN THE LAST 12 MONTHS

The Company issued conditional warrants in the amount of HK$960,000,000 expiring 20 December 2015 to Joint Gain Holdings Limited pursuant to the agreement dated 20 December 2012. The warrants were conditional warrants and may only be exercised after the Company has exercised the call option to require Joint Gain Holdings Limited to sell to the Company all of the interests in the project company that holds the development and operating rights to the petrol and gas stations of the service areas of the Zhunxing Expressway. As at the Latest Practicable Date, the warrants have not been exercised and no proceeds have been received. Save for such warrants, the Company has not carried out any equity fund raising exercise in the 12 months immediately preceding the date of the CB Agreements and the Share Agreements.

GENERAL

The Conversion Shares and the Subscription Shares will be issued under a specific mandate to be sought from the Shareholders.

EGM

A notice convening the EGM to be held at the Oasis Room, 8th Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wanchai, on Monday, 26 August 2013 at 10:30 a.m. is set out on pages N-1 to N-7 of this circular for the purpose of considering and, if thought fit, passing the ordinary resolutions to approve the Capital Increase, the CB Agreements and the Share Agreements, as set out therein.

A form of proxy for use by the Shareholders at the EGM is enclosed herewith. Whether or not you are able to attend the EGM in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and deposit with the Company’s share registrars and transfer office in Hong Kong, Tricor Progressive Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof (as the case may be) should you so wish.

As at the Latest Practicable Date, the Second CB Subscriber was interested in approximately 4.65% of the issued share capital of the Company. As it is the subscriber to the Second CB Agreement, it will be required to abstain from voting for the resolution proposed at the EGM to approve the Second CB Agreement. As completion of the CB Agreements is conditional, among others, the Capital Increase Agreement becoming unconditional, the Second CB Subscriber is also considered to be interested in the Capital Increase Agreement and will be required to abstain from voting for the resolution proposed at the EGM to approve the Capital Increase Agreement. Save for the Second CB Subscriber, to the best of the knowledge, information and belief of the Directors, no other Shareholders will be required to abstain from voting on the resolutions to be proposed at the EGM.

– 29 –

LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the terms of the Capital Increase Agreement, the CB Agreements and the Share Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Capital Increase Agreement, the CB Agreements and the Share Agreements.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

By Order of the Board CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED Cao Zhong Chairman

– 30 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(A) FINANCIAL INFORMATION INCORPORATED BY REFERENCE

The audited consolidated financial statements of the Group for each of the three years ended 31 March 2011, 2012 and 2013 together with the relevant notes to the accounts, which are incorporated by reference in this circular, could be found in the Company’s website in section of “Financial Report” under the section of “Investor Relations”. Please refer to the following link for the respective annual reports:

The audited consolidated financial statements of the Group for the year ended 31 March 2013 are set out from page 27 in the Annual Report 2013 of the Company, which was published on 22 July 2013. The audited consolidated financial statements of the Group for the year ended 31 March 2013 comprised financial information of continuing and discontinued operations. The discontinued operation represented the property development and asset management business of the Group (the “Disposal Group”) that would be sold to an independent third party. Details have been disclosed in the Company’s announcements dated 16 September 2012, 2 January 2013, 28 March 2013 and 2 July 2013.

http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0722/LTN20130722219.pdf

The audited consolidated financial statements of the Group for the year ended 31 March 2012 are set out from page 33 in the Annual Report 2012 of the Company, which was published on 6 July 2012.

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0706/LTN20120706309.pdf

The audited consolidated financial statements of the Group for the year ended 31 March 2011 are set out from page 27 in the Annual Report 2011 of the Company, which was published on 8 July 2011.

http://www.hkexnews.hk/listedco/listconews/SEHK/2011/0708/LTN20110708496.pdf

(B) STATEMENT OF INDEBTEDNESS

As at the close of business on 31 May 2013, being the latest practicable date for the purpose of this indebtedness statement prior to the despatch of the circular of the Company,

(a) Borrowings

As at 31 May 2013, the Group had outstanding borrowings of approximately HK$13,545,484,000. The outstanding borrowings represented unsecured borrowings which included the liability component of convertible bond of approximately HK$1,892,186,000 with outstanding principal amount of approximately HK$2,000,000,000, the promissory note of approximately HK$294,194,000, secured and interest-bearing bank borrowing of HK$10,237,500,000 and other unsecured borrowings of HK$1,121,604,000 of which approximately HK$1,115,354,000 is interest bearing.

– I-1 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

As at 31 May 2013, the Disposal Group had outstanding borrowings of approximately HK$121,250,000 which is secured and interest bearing.

(b) Securities

As at 31 May 2013, bank deposits with carrying amount of approximately HK$425 million of the Group had been pledged to secure the bank borrowing of the Group.

Certain properties under development with carrying value of approximately HK$233 million of the Disposal Group had been pledged to secure the bank borrowing of the disposal group.

(c) Contingent Liabilities

As at 31 May 2013, the Group did not have any contingent liabilities.

The Disposal Group has guarantees in respect of mortgage facilities for certain purchasers. As at 31 May 2013, the outstanding guarantees amounted to HK$126,944,000.

(d) Capital Commitment

As at 31 May 2013, the Group has the following capital commitments:

i. The Group has capital commitment of HK$141 million in relation to a coal processing large scale comprehensive logistics base proposed to be built close to the Yingpanliang exit of the Project Company coal expressway currently being constructed by the Project Company.

The Disposal Group has capital commitment of HK$71 million for the investment on properties under development for sale. The Disposal Group has agreed with the respective PRC authorities that the total investment for a project development would be approximately HK$813 million. Up to 31 May 2013, the total investment cost incurred in the property development was HK$526 million.

ii. The Project Group has capital commitment of HK$5,244 million for the construction of the expressway located in Inner Mongolia.

Save as aforesaid, and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debentures, loan capital, bank overdrafts, loans debt securities or other similar indebtedness, finance leases or hire purchases commitments, liabilities under acceptance or acceptance credits or any guarantee or other material contingent liabilities outstanding as at 31 May 2013.

For the purpose of this indebtedness statement, RMB amounts have been translated into Hong Kong dollars at the approximate rate of exchange of RMB1.00 = HK$1.25.

– I-2 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Directors have confirmed that there has been no material change in the indebtedness and contingent liabilities of the Group since 31 May 2013 up to the Latest Practicable Date.

(C) WORKING CAPITAL SUFFICIENCY

Taking into account the expected completion of the Capital Increase and the financial resources available to the Group, including the internally generated funds and the available banking and other facilities and the proceeds from issue of the 2015 Convertible Bonds and the Subscription Shares, the Directors are of the opinion that the Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

(D) MATERIAL CHANGES

The Directors confirm that there has been no material change in the financial or trading position of the Group since 31 March 2013, the date to which the latest published audited annual financial statements of the Group were made up.

(E) FINANCIAL AND TRADING PROSPECTS

(a) Financial Review

For the year ended 31 March 2013, the continuing and discontinued operations of the Group recorded a turnover of approximately HK$4,659.25 million, representing a substantial increase of 3,261% during the year (2012: HK$138.63 million), which was mainly attributable to a significant increase in income generated from construction revenue in respect of service concession arrangement amounting to HK$4,562.04 million (2012: HK$128.66 million). The three reportable segments classified as continuing operations of the Group, namely timber logging and trading, other timber operation and construction and operation of expressway contributed approximately HK$2.69 million (0.06%), HK$4.85 million (0.10%) and HK$4,562.04 million (97.92%) (2012: HK$1.14 million, HK$8.83 million and HK$128.66 million) respectively to the Group’s consolidated turnover. The property development and asset management business, the reportable segment classified as discontinued operations of the Group, contributed approximately HK$89.68 million (1.92%) (2012: HK$Nil) to the Group’s consolidated turnover.

– I-3 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Cost of sales under continuing operations for the year was approximately HK$4,491.44 million (2012: HK$148.34 million) which was mainly contributed by service cost for the construction of the Zhunxing Expressway. As a result, the Group recorded a gross profit of approximately HK$78.13 million (2012: gross loss of HK$9.71 million) under continuing operations in this year. Cost of sales under discontinued operations for the year was approximately HK$80.35 million (2012: HK$Nil), resulting in a gross profit of approximately HK$9.33 million (2012: HK$Nil).

During the year, the Group’s property development arm, Yichang Xinshougang Property Development Company Limited (“Yichang Xinshougang”), has achieved the sale of a total of approximately 15,465 square metres gross floor area at the price of approximately RMB4,721 (HK5,900) per square metre, i.e. income receivable of approximately RMB73.0 million (HK$91.25 million). The sales turnover of approximately HK$89.68 million (2012: HK$Nil) has been recorded during the year upon delivery of the properties to the purchasers. Distributable profit from sales of the residential properties was shared by Yichang Xinshougang and Hubei Province Dafang Properties Development Co., Ltd. (湖北省大方房地產綜合開發公司), its strategic property development partner, on a 60:40 basis.

The loss before income tax expenses from continuing operations was approximately HK$221.60 million (2012: HK$434.77 million) and net loss from continuing and discontinued operations was approximately HK$260.54 million (2012: HK$449.44 million). The loss was mainly attributed by a loss on change in fair value of the early redemption option component of the convertible bond of approximately HK$21.76 million (2012: HK$191.33 million), the selling and administrative expenses of approximately HK$164.28 million (2012: HK$185.71 million) mainly due to the costs incurred in the construction of the Zhunxing Expressway not being capitalised, finance costs of approximately HK$56.02 million (2012: HK$Nil) due to the default interest on promissory note under continuing operations and other income and other gains or losses of approximately HK$42.09 million (2012: HK$5.11 million). Other income and other gains or losses mainly arose from the impairment loss on forest concession rights of approximately HK$28.79 million (2012: HK$Nil) and the compensation claims amounted to approximately HK$22.04 million (2012: HK$Nil), which were compensations claimed by contractors and suppliers due to the suspension of construction work before the Project Company was acquired by the Group. The loss attributable to owners of the Company from continuing and discontinued operations for the period was approximately HK$271.66 million (2012: HK$419.40 million). The loss per share for the year reduced to HK1.262 cents as compared with HK2.081 cents for the last corresponding year.

– I-4 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Liquidity Review

As at 31 March 2013, the Group’s net assets amounted to approximately HK$5,114.40 million, representing an increase of 1.08%. Besides, the current assets of the Group were HK$4,152.10 million (2012: HK$1,819.48 million) which mainly include assets of a disposal group classified as held for sale of approximately HK$1,823.68 million (2012: HK$Nil), inventories of approximately HK$120.81 million (2012: HK$127.45 million), trade and other receivables of approximately HK$34.25 million (2012: HK$53.65 million), pledged deposits for expressway construction of approximately HK$117.41 million (2012: HK$Nil) and cash and cash equivalents of approximately HK$2,033.05 million (2012: HK$196.29 million). The significant increase in cash and cash equivalents was attributable to the cash and bank deposits in RMB, which were drawn down loans obtained from several PRC banks.

The current liabilities increased from approximately HK$2,051.32 million to approximately HK$9,027.03 million during the year mainly due to the contribution by borrowings of approximately HK$5,827.08 million (2012: HK$107.26 million), trade and other payables of approximately HK$2,188.91 million (2012: HK$1,173.88 million) and liabilities of a disposal group classified as held for sale of approximately HK$710.11 million (2012: HK$Nil). The increase in trade and other payables of 86% during the year was mainly due to the increase in construction cost payable for the construction of the Zhunxing Expressway.

As at 31 March 2013, the Group had an outstanding borrowing of HK$7,495.49 million (2012: HK$716.47 million), of which RMB5,050 million (approximately HK$6,241.09 million), representing almost 83%, consists of short term and long term secured bank loans charged with interest from 5.7% to 8.5% per annum provided by several PRC banks mainly for the investment in the construction of the Zhunxing Expressway. The short term secured bank loans of RMB3,700 million (approximately HK$4,572.68 million) will be refinanced by part of the long term syndicated loan facility of RMB8,820 million (approximately HK$11 billion) upon maturity.

The remaining outstanding borrowings were unsecured loans of HK$1,136.99 million (2012: HK$615.61 million) repayable within one year and bill payables of HK$117.41 million (2012: HK$Nil) secured by bank deposits for payments of construction materials and construction fees of the Zhunxing Expressway. An unsecured loan of RMB495.3 million (approximately HK$612.06 million) was owed by the Project Company to an authorized financial institution with interest bearing at 0.0288% per day. The said loan was unconditionally assigned by one of the former non-controlling equity holders of the Project Company to the authorized financial institution on 6 February 2012 which was also agreed by the Group. The rest of the unsecured loans of HK$524.93 million, obtained from two independent third parties with interest bearing at 20% per annum, were utilized as general working capital and to finance its capital contribution to registered capital of Zhunxing.

The gearing ratio of the Group, measured as total liabilities to total assets, was 71.05% (2012: 47.05%).

– I-5 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group’s capital commitments (apart from the disposal group) outstanding as at 31 March 2013 was approximately HK$5,733.39 million (2012: HK$7,691.69 million), of which HK$5,594.35 million, representing almost 97.6%, was the investment on concession intangible asset representing the construction cost of the Zhunxing Expressway.

The Group’s business operations, assets and liabilities are denominated mainly in Hong Kong dollars, Renminbi and US dollars, thus appreciation in Renminbi has resulted in a net exchange gain. Save as aforesaid, the Board considered foreign exchange risk being minimal. The management will review from time to time of the potential foreign exchange exposure and will take appropriate measures to minimise the risk of foreign exchange exposure in the future.

The Group did not use any financial instruments for hedging purposes and did not have foreign currency investments being hedged by foreign currency borrowings and other hedging instruments.

(c) Prospect

The Company expects that the Zhunxing Expressway could be opened for traffic in the fourth quarter of 2013. The Zhunxing Expressway will have five lanes with road width of about 28 meters and is designed to sustain the passing of heavy haul vehicles in high frequency and high proportion. The estimated annual traffic capacity of the Zhunxing Expressway is about 150 million tons. The Board believes that the opening of the Zhunxing Expressway will broaden revenue base and maintain sustainable growth of the Company in the future.

– I-6 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

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==> picture [90 x 52] intentionally omitted <==

30 July 2013

The Board of Directors China Resources and Transportation Group Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding 內蒙古准興重載高速公路有限責任公司 (Inner Mongolia Zhunxing Heavy Haul Expressway Company Limited, the “Project Company”) and its subsidiaries (hereafter collectively referred to as the “Project Group”), which comprises the Project Group’s consolidated statements of financial position and the Project Company’s statements of financial position as at 31 March 2011, 2012 and 2013 and the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows of the Project Group for each of the years ended 31 March 2011, 2012 and 2013 (the “Relevant Periods”) and a summary of significant accounting policies and other explanatory information, prepared on the basis set out in Note 3 of Section B below, for inclusion in the circular of China Resources and Transportation Group Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) dated 30 July 2013 (the “Circular”) in connection with the Group’s proposed subscription of the additional 26.37% equity interest of the Project Company.

The Project Company was established in The People’s Republic of China (the “PRC”) with limited liability on 6 June 2006 with a registered capital of RMB100 million. At 31 March 2013, the registered capital of the Project Company is RMB2,513,920,600. The Project Company is principally engaged in expressway and auxiliary facility investment, operation, management and maintenance.

As at the date of this report, the Project Company has the following subsidiaries:

		Percentage of
		equity
		directly held
	Place of	by the Project
Name of companies	incorporation	Company	Principal activities
Beijing Zhunxing Longbo	PRC	100%	Provision of
Management Consulting			management
Company Limited*			services
(“北京市准興隆博管理咨詢
有限責任公司”)

for identification purposes only

– II-1 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

Percentage of equity directly held Place of by the Project

Name of companies

Inner Mongolia Zhunxing Expressway Service Area Management Company Limited*

incorporation Company Principal activities PRC 100% Not yet commenced operation

PRC

(“內蒙古准興高速服務區管理有限責任公司”)

For the purpose of this report, the directors of the Project Company have prepared the Project Group’s consolidated statements of financial position and the Project Company’s statements of financial position as at 31 March 2011, 2012 and 2013, and the consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows of the Project Group for the Relevant Periods (collectively the “Underlying Financial Statements”), in accordance with the basis of preparation set out in Note 3 of Section B below and significant accounting policies set out in Note 4 of Section B below which conform with the Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

The Financial Information has been prepared by the directors of the Project Company based on the Underlying Financial Statements with no adjustment made thereon and in accordance with the basis of preparation set out in Note 3 of Section B below.

DIRECTOR’S RESPONSIBILITY

The directors of the Project Company are responsible for the preparation and the true and fair presentation of the Financial Information in accordance with the basis of preparation set out in Note 3 of Section B below and the significant accounting policies set out in Note 4 of Section B below, the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), and for such internal control as the directors of the Project Company determine is necessary to enable the preparation of the Financial Information that is free from material misstatement, whether due to fraud or error. The directors of the Company are responsible for the contents of the Circular in which this report is included.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to form an opinion on the Financial Information based on our procedures and to report our opinion to you.

For the purpose of this report, we have carried out audit procedures in respect of the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have examined the Financial Information and carried out appropriate procedures as we considered necessary in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

– II-2 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

OPINION

In our opinion, for the purpose of this report, the Financial Information prepared on the basis set out in Note 3 of Section B below and in accordance with the accounting policies set out in Note 4 of Section B below, gives a true and fair view of the state of affairs of the Project Group and the Project Company as at 31 March 2011, 2012 and 2013, and of the consolidated results and cash flows of the Project Group for the Relevant Periods.

EMPHASIS OF MATTER

Without qualifying our opinion, we draw attention to Note B(3b) to the Financial Information which indicates that the Project Group’s current liabilities exceeded its current assets by approximately RMB1,866 million, RMB777 million and RMB4,148 million as at 31 March 2011, 2012 and 2013 respectively. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Project Group’s ability to continue as a going concern.

A. FINANCIAL INFORMATION

1. Consolidated Statements of Comprehensive Income

Notes Turnover 6 Cost of sales Gross profit Other income Administrative expenses Other operating expenses 8 Finance costs 7 (Loss)/profit before income tax 8 Income tax 11 (Loss)/profit for the year and total comprehensive income for the year	For the 2011 RMB’000 118,422 (116,672) 1,750 – (8,462) – – (6,712) – (6,712)	year ended 31 March 2012 2013 RMB’000 RMB’000 277,088 3,701,350 (272,993) (3,646,650) 4,095 54,700 97 4,135 (66,380) (39,454) – (17,896) – – (62,188) 1,485 – – (62,188) 1,485

– II-3 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

2. Consolidated Statements of Financial Position

Notes Non-current assets Property, plant and equipment 12 Concession intangible asset 13 Long term prepayment and other receivables Available-for-sale investments 15 Total non-current assets Current assets Investments held for trading Other receivables and deposits 16 Prepayments 17 Amount due from a non-controlling shareholder 21(c) Amount due from a former shareholder 21(c) Amount due from a fellow subsidiary 21(c) Bank and cash balances Total current assets Total assets Current liabilities Other payables and accruals 18 Amounts due to former shareholders 21(d) Amount due to a former related party 21(d) Amount due to a former fellow subsidiary 21(d) Amount due to a fellow subsidiary 21(e) Borrowings 19 Total current liabilities Net current liabilities	2011 RMB’000 1,092 1,682,654 221,031 – 1,904,777 – 3,236 196 – – – 2,664 6,096 1,910,873 1,783,634 82,637 3,618 2,015 – – 1,871,904 (1,865,808)	At 31 March 2012 RMB’000 6,784 1,986,739 1,206,062 – 3,199,585 – 4,594 1,192 – 31,202 870 78,422 116,280 3,315,865 893,224 – – – – – 893,224 (776,944)	2013 RMB’000 7,184 5,911,452 1,787,758 88,000 7,794,394 5,000 5,552 2,483 13,000 – 870 1,638,417 1,665,322 9,459,716 1,516,244 – – – 6,947 4,290,256 5,813,447 (4,148,125)

– II-4 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

Notes Non-current liabilities Borrowings 19 Total liabilities Net assets Capital and reserves Paid-up capital 20 Reserves Total equity	2011 RMB’000 – 1,871,904 38,969 400,000 (361,031) 38,969	At 31 March 2012 RMB’000 495,256 1,388,480 1,927,385 742,183 1,185,202 1,927,385	2013 RMB’000 1,350,000 7,163,447 2,296,269 2,513,921 (217,652) 2,296,269

– II-5 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

3. Statements of Financial Position

Notes Non-current assets Property, plant and equipment 12 Concession intangible asset 13 Long term prepayment and other receivables Interests in subsidiaries 14 Available-for-sale investments 15 Total non-current assets Current assets Other receivables and deposits 16 Prepayments 17 Amount due from a non-controlling shareholder 21(c) Amount due from a former shareholder 21(c) Amount due from a fellow subsidiary 21(c) Amount due from a subsidiary 21(c) Bank and cash balances Total current assets Total assets Current liabilities Other payables and accruals 18 Amounts due to former shareholders 21(d) Amount due to a former related party 21(d) Amount due to a former fellow subsidiary 21(d) Amount due to a fellow subsidiary 21(e) Borrowings 19 Total current liabilities Net current liabilities	2011 RMB’000 1,092 1,682,654 221,031 2,000 – 1,906,777 3,236 196 – – – – 664 4,096 1,910,873 1,783,634 82,637 3,618 2,015 – – 1,871,904 (1,867,808)	At 31 March 2012 RMB’000 6,163 1,986,739 1,206,062 2,000 – 3,200,964 4,594 1,192 – 31,202 870 611 73,527 111,996 3,312,960 890,138 – – – – – 890,138 (778,142)	2013 RMB’000 6,733 5,911,452 1,787,758 12,000 88,000 7,805,943 5,551 2,362 13,000 – 870 3,550 1,628,095 1,653,428 9,459,371 1,515,634 – – – 6,947 4,290,256 5,812,837 (4,159,409)

– II-6 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

Notes Non-current liabilities Borrowings 19 Total liabilities Net assets Capital and reserves Paid-up capital 20 Reserves Total equity	2011 RMB’000 – 1,871,904 38,969 400,000 (361,031) 38,969	At 31 March 2012 RMB’000 495,256 1,385,394 1,927,566 742,183 1,185,383 1,927,566	2013 RMB’000 1,350,000 7,162,837 2,296,534 2,513,921 (217,387) 2,296,534

– II-7 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

4. Consolidated Statements of Changes in Equity

At 1 April 2010 Total comprehensive income for the year At 31 March 2011 Total comprehensive income for the year Capital injection At 31 March 2012 Total comprehensive income for the year Capital injection Transfer from/(to) reserves At 31 March 2013	Paid up capital (Note 20) RMB’000 400,000 – 400,000 – 342,183 742,183 – 74,144 1,697,594 2,513,921	Share Premium Accumulated losses RMB’000 RMB’000 – (354,319) – (6,712) – (361,031) – (62,188) 1,608,421 – 1,608,421 (423,219) – 1,485 293,255 – (1,697,594) – 204,082 (421,734)	Total RMB’000 45,681 (6,712) 38,969 (62,188) 1,950,604 1,927,385 1,485 367,399 – 2,296,269

– II-8 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

5. Consolidated Statements of Cash Flows

Cash flows from operating activities (Loss)/profit before income tax Adjustments for: Depreciation of property, plant and equipment Property, plant and equipment write off Loss on disposal of property, plant and equipment Interest income Operating loss before working capital changes Increase in long term prepayment and other receivables Increase in other receivables and prepayments Increase/(decrease) in other payables and accruals Increase in amount due to a fellow subsidiary Increase in amount due from a fellow subsidiary Increase in investments held for trading Decrease in amount due to a former fellow subsidiary Increase/(decrease) in amount due to a former related party Net cash generated from/(used in) operating activities	For the 2011 RMB’000 (6,712) 500 134 – – (6,078) (81,743) (1,814) 175,910 – – – – 276 86,551 - - - - - - - - - - -	year ended 31 March 2012 2013 RMB’000 RMB’000 (62,188) 1,485 683 1,282 – – – 110 (97) (3,343) (61,602) (466) (985,031) (581,696) (2,354) (2,249) (890,410) (169,044) – 6,947 (870) – – (5,000) (2,015) – (3,618) – (1,945,900) (751,508) - - - - - - - - - - - - - - - - - - - - - -

– II-9 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Purchase of available-for-sale investments Additions of concession intangible asset Interest received Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from capital injection Advance to a non-controlling shareholder Repayment/(advance) to former shareholders Net cash generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year, represents cash and bank balances	For the 2011 RMB’000 (78) – – (121,178) – (121,256) - - - - - - - - - - - – – – 37,362 37,362 - - - - - - - - - - - 2,657 7 2,664	year ended 31 March 2012 2013 RMB’000 RMB’000 (6,375) (2,051) – 259 – (88,000) (304,085) (3,132,649) 97 3,343 (310,363) (3,219,098) - - - - - - - - - - - - - - - - - - - - - - 495,256 5,145,000 1,950,604 367,399 – (13,000) (113,839) 31,202 2,332,021 5,530,601 - - - - - - - - - - - - - - - - - - - - - - 75,758 1,559,995 2,664 78,422 78,422 1,638,417

– II-10 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

B. NOTES TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Project Company was established in the PRC on 6 June 2006 with limited liability. The address of the registered office and principal place of business is 烏蘭察布市集寧區民建路96號 (No. 96, Min Jian Road, Jining District, Wulanchabu*).

The principal activities of the Project Company are expressway and auxiliary facility investment, operation, management and maintenance. Particulars of the Project Company’s subsidiaries are set out in note 14 to the Financial Information.

2. NEW/REVISED HKFRSs ISSUED BUT NOT YET EFFECTIVE AND NOT EARLY ADOPTED

The following new/revised HKFRSs, potentially relevant to the Financial Information, have been issued, but are not yet effective and have not been early adopted by the Project Group.

HKAS 1 (Amendments)	Presentation of Items of Other Comprehensive Income1
HKAS 19 (2011)	Employee Benefits2
HKAS 27 (2011)	Separate Financial Statements2
HKAS 32 (Amendments)	Presentation – Offsetting Financial Assets and Financial
	Liabilities3
HKFRSs (Amendments)	Annual Improvements to HKFRS 2009-2011 Cycle2
HKFRS 7 (Amendments)	Disclosures – Offsetting Financial Assets and Financial Liabilities2
HKFRS 9	Financial Instruments4
HKFRS 10	Consolidated Financial Statements2
HKFRS 12	Disclosure of Interests in Other Entities2
HKFRS 13	Fair Value Measurement2

1 Effective for annual periods beginning on or after 1 July 2012.
2 Effective for annual periods beginning on or after 1 January 2013.
3 Effective for annual periods beginning on or after 1 January 2014. 4 Effective for annual periods beginning on or after 1 January 2015.

The Project Group is in the process of making an assessment of the potential impact of these pronouncements. The directors of the Project Company so far concluded that the application of these pronouncements will have no material impact on the Project Group’s results of operations and financial position.

3. BASIS OF PREPARATION

(a) Statement of compliance

The Financial Information has been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (the “HKFRSs”), which collective terms includes Hong Kong Financial Reporting Standards (“HKFRSs”), Hong Kong Accounting Standards (“HKAS”) and Interpretations (collectively referred to as “HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

(b) Basis of measurement and going concern assumption

The Financial Information has been prepared on the historical cost basis.

In preparing the Financial Information, the directors of the Project Company have given careful consideration to the future liquidity of the Project Group in light of the net current liabilities of RMB1,866 million, RMB777 million and RMB4,148 million respectively at 31 March 2011, 2012, and 2013. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Project Group’s ability to continue as a going concern and therefore, the Project Group may not be able to realise its assets and discharge its liabilities in the normal course of business. The directors of Project Company are of the opinion that taking into account the

– II-11 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

estimated future funds generated from the operation, the Project Group has sufficient financial resources to meet its financial obligation as they fall due for the foreseeable future.

In addition, the Project Company obtained bank facility of RMB8,820 million from China Development Bank Corporation. As disclosed in Note 19(i), RMB5,050 million has been utilized as at 31 March 2013, including short term loans of RMB3,700 million and long term loans of RMB1,350 million. However, the Project Company obtained a declaration from China Development Bank Corporation which confirmed that long term loans will be granted to the Project Company to replace the short term loans when they fall due.

The Directors of the Project Company have prepared the cash flow forecast of the Project Group. Based on the forecast which has taken into account of the above bank facility, the directors of the Project Company are of the opinion that the Project Group will have sufficient working capital to meet its financial obligations as and when they fall due in the next twelve months from 31 March 2013. Accordingly, the financial information have been prepared on a going concern basis.

(c) Functional and presentation currency

The Financial Information are presented in Renminbi (“RMB”), which is the functional currency of the Project Company.

4. SIGNIFICANT ACCOUNTING POLICIES

(a) Business combination and basis of consolidation

The Financial Information comprises the financial statements of the Project Company and its subsidiaries. Inter-company transactions and balances between group companies together with unrealised profits are eliminated in full in preparing the Financial Information. Unrealised losses are also eliminated unless the transaction provides evidence of impairment on the asset transferred, in which case the loss is recognised in profit or loss.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated statements of comprehensive income from the dates of acquisition or up to the dates of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Project Group.

Acquisition of subsidiaries or businesses is accounted for using the acquisition method. The cost of an acquisition is measured at the aggregate of the acquisition-date fair value of assets transferred, liabilities incurred and equity interests issued by the Project Group, as the acquirer. The identifiable assets acquired and liabilities assumed are principally measured at acquisition-date fair value. The Project Group’s previously held equity interest in the acquiree is re-measured at acquisition-date fair value and the resulting gains or losses are recognised in profit or loss. The Project Group may elect, on a transaction-by-transaction basis, to measure the non-controlling interests that represent present ownership interests in the subsidiary either at fair value or at the proportionate share of the acquiree’s identifiable net assets. All other noncontrolling interests are measured at fair value unless another measurement basis is required by HKFRS. Acquisition-related costs incurred are expensed unless they are incurred in issuing equity instruments in which case the costs are deducted from equity.

When the Project Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interest. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of.

Subsequent to acquisition, the carrying amount of non-controlling interests that represent present ownership interests in the subsidiary is the amount of those interests at initial recognition plus such non-controlling interest’s share of subsequent changes in equity. Total comprehensive income is attributed to such noncontrolling interests even if this results in those non-controlling interests having a deficit balance.

– II-12 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

(b) Subsidiaries

A subsidiary is an entity over which the Project Company is able to exercise control. Control is achieved where the Project Company, directly or indirectly, has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into account.

In the Project Company’s statement of financial position, investments in subsidiaries are stated at cost less impairment loss, if any. The results of subsidiaries are accounted for by the Project Company on the basis of dividend received and receivable.

(c) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

The cost of property, plant and equipment includes its purchase price and the costs directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Project Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as an expense in profit or loss during the period in which they are incurred.

Property, plant and equipment are depreciated so as to write off their cost net of expected residual value over their estimated useful lives on a straight-line basis. The useful lives, residual value and depreciation method are reviewed, and adjusted if appropriate, at the end of each reporting period. The useful lives of property, plant and equipment are as follows:

Leasehold improvements 5 years Motor vehicles 5 years Office equipment 5 years

An asset is written down immediately to its recoverable amount if its carrying amount is higher than the asset’s estimated recoverable amount.

The gain or loss on disposal of an item of property, plant and equipment is the difference between the net sale proceeds and its carrying amount, and is recognised in profit or loss on disposal.

(d) Concession intangible assets

Concession intangible asset represent the rights to charge users of the public service, that the Project Group obtained under the service concession arrangements. Concession intangible asset are stated at cost, that is, the fair value of the consideration received or receivable in exchange for the construction services provided under the service concession arrangements, less accumulated amortisation and any impairment losses.

Amortisation for concession intangible asset with finite useful lives is provided on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

It is the Group’s policy to review regularly the projected total traffic volume throughout the concession periods of the respective concession intangible asset. If it is considered appropriate, independent professional traffic studies will be performed. Appropriate adjustment will be made should there be a material change in the projected total traffic volume.

– II-13 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

Costs incurred during the period of construction of underlying concession intangible asset are recorded in concession intangible asset and will be amortised upon the commencement of operation of the concession intangible asset.

(e) Financial instruments

(i) Financial assets

The Project Group classifies its financial assets at initial recognition, depending on the purpose for which the asset was acquired. Financial assets at fair value through profit or loss are initially measured at fair value and all other financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets. Regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. Financial assets are subsequently accounted for as follows, depending on their classification:

Financial assets at fair value through profit or loss

These assets include financial assets held for trading. Financial assets are classified as held for trading if they are acquired for the purpose of sale in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with changes in fair value recognised in profit or loss in the period in which they arise.

Loans and receivables

Loans and receivables are initially measured at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets. Subsequent to initial recognition, they are carried at amortised cost using the effective interest method, less any identified impairment losses.

Available-for-sale financial assets

These assets are non-derivative financial assets that are designated as available-for-sale or are not included in other categories of financial assets. Subsequent to initial recognition, these assets are carried at fair value with changes in fair value recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses on monetary instruments, which are recognised in profit or loss.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairment losses.

(ii) Impairment loss on financial assets

The Project Group assesses, at the end of each reporting period, whether there is any objective evidence that financial asset is impaired. Financial asset is impaired if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. Evidence of impairment may include:

significant financial difficulty of the debtor;
a breach of contract, such as a default or delinquency in interest or principal payments;

– II-14 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

granting concession to a debtor because of debtor’s financial difficulty; and
it becoming probable that the debtor will enter bankruptcy or other financial reorganisation.

For loans and receivables

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognised in respect of trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Project Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade and other receivables directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in profit or loss.

For available-for-sale financial assets

Where a decline in the fair value constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognised in profit or loss.

For available-for-sale equity investment, any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.

For available-for-sale equity investment that is carried at cost, the amount of impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss is not reversed.

(iii) Financial liabilities

The Project Group has one category of financial liabilities being financial liabilities at amortised cost. These liabilities, including trade and other payables and borrowings are initially recognised at fair value, net of directly attributable transaction costs incurred and are subsequently measured at amortised cost, using the effective interest method. The related interest expense is recognised in profit or loss.

Gains or losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

(iv) Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial asset or liability, or where appropriate, a shorter period.

(v)

Equity instruments

Equity instruments issued by the Project Group are recorded at the proceeds received, net of direct issue costs.

– II-15 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

(vi) Derecognition

The Project Group derecognises a financial asset when the contractual rights to the future cash flows in relation to the financial asset expire or when the financial asset has been transferred and the transfer meets the criteria for derecognition in accordance with HKAS 39.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires.

(f) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to lessee. All other leases are classified as operating leases.

The Project Group as lessee

The total rentals payable under the operating leases are recognised in profit or loss on a straight-line basis over the lease term. Lease incentives received are recognised as an integrated part of the total rental expense, over the term of the lease.

(g) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customers returns and other similar allowances.

(i) The Project Group recognises income and expenses associated with construction services provided under the service concession arrangements in accordance with HKAS 11 Construction Contracts.

Revenue generated by construction services rendered by the Project Group is measured at fair value of the consideration received or receivable. The consideration represents the rights to attain an intangible asset.

The Project Group uses the percentage of completion method to determine the appropriate amount of income and expenses to be recognised in a given period, provided that the revenue, the costs incurred and the estimated costs to completion can be measured reliably. The stage of completion is measured by reference to the construction costs of the related infrastructure incurred up to the end of the reporting period as a percentage of the total estimated costs for each contract. Provision is made for foreseeable losses as soon as they are anticipated by management.

(ii) Interest income is accrued on a time basis on the principal outstanding at the applicable interest rate.

(h) Income taxes

Income taxes for the Relevant Periods comprise current tax and deferred tax.

Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purposes and is calculated using tax rates that have been enacted or substantively enacted at the end of reporting period.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for tax purposes. Except for goodwill and recognised assets and liabilities that affect neither accounting nor taxable profits, deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is measured at the

– II-16 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

tax rates expected to apply in the period when the liability is settled or the asset is realised based on tax rates that have been enacted or substantively enacted at the end of reporting period.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Project Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Income taxes are recognised in profit or loss except when they relate to items recognised in other comprehensive income in which case the taxes are also directly recognised in other comprehensive income.

(i) Employee benefits

The Project Group makes monthly contribution to a state-sponsored defined contribution scheme for the local staff. The contributions are made at a specific percentage on the standard salary pursuant to laws of the PRC and relevant regulation issued by local social security authorities.

(j) Impairment of tangible and intangible assets

At the end of each reporting period, the Project Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss or an impairment loss previously recognised no longer exists or may have decreased.

If the recoverable amount (i.e. the greater of the fair value less costs to sell and value in use) of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

(k) Capitalisation of borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Borrowing costs consists of interest and other costs that an entity incurs in connection with the borrowing of funds.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(l) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Project Group has a legal or constructive obligation arising as a result of a past event, which will probably result in an outflow of economic benefits that can be reasonably estimated.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, the existence of which will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

– II-17 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

(m) Related parties

(a) A person or a close member of that person’s family is related to the Project Group if that person:
(i) has control or joint control over the Project Group;
(ii) has significant influence over the Project Group; or
(iii) is a member of key management personnel of the Project Group or the Project Company’s parent.
(b) An entity is related to the Project Group if any of the following conditions apply:
(i) The entity and the Project Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of the employees of the Project Group or an entity related to the Project Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include:

(i) that person’s children and spouse or domestic partner;
(ii) children of that person’s spouse or domestic partner; and
(iii) dependents of that person or that person’s spouse or domestic partner.

5. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing the Financial Information. The principal accounting policies are set forth in Note 4. The Project Group believes the following critical accounting policies involve the most significant judgements and estimates used in the preparation of the Financial Information.

Percentage of completion of construction services provided under service concession arrangements

In accordance with Hong Kong (IFRIC) Interpretation 12 “Service Concession Arrangements”, income and expenses associated with construction work and project management provided under the concession service arrangement are recognised as per Hong Kong Accounting Standards 11 “Construction

– II-18 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

Contracts” using the percentage of completion method. Revenue generated by construction services rendered by the Project Group is measured at the fair value of the consideration received or receivable.

Due to the fact that there was no real cash inflow realised/realisable during the construction phase of the infrastructure assets under the service concession arrangement, in order to determine the construction revenue to be recognised during the year, the directors of the Project Company made estimates of the respective amounts by making reference to the service rendered by other relevant competitors on similar industry for construction of toll road for respective PRC local government without the corresponding grant of the related toll road operating rights and entitlement to future toll revenues. The directors of the Project Group have drawn an analogy of the construction of toll road under the service concession arrangement as if the Project Group were providing construction and management services. Accordingly, construction revenue under the respective service concession arrangement is recognised at the total expected construction costs of the toll road plus management fees, computed at an estimated percentage of the costs.

In ascertaining the total construction costs, the directors of the Project Company made estimates based on information available such as budgeted project costs, actual project costs incurred/settled to date, and relevant independent party evidence such as signed construction contracts and their supplements, the related variation orders placed and the underlying construction and design plans. In ascertaining the amount of management fee, the directors have made reference to the practice for determining management fees for management construction contracts transacted by the Project Group, whereby the fee is determined as an estimated percentage on the total budgeted costs of the project. Actual outcomes in terms of total cost or revenue may be higher or lower than estimated at the end of the reporting period, which would affect the revenue and profit recognised in future years as an adjustment to the amounts recorded to date.

6. TURNOVER

Turnover represents the revenue from construction under the service concession arrangement.

7. FINANCE COSTS

Interest expenses on bank and other borrowings and charged by former shareholder Less: Amount capitalised in concession intangible asset	For the 2011 RMB’000 2,756 (2,756) –	year ended 31 March 2012 2013 RMB’000 RMB’000 26,997 223,363 (26,997) (223,363) – –	year ended 31 March 2012 2013 RMB’000 RMB’000 26,997 223,363 (26,997) (223,363) – –
			–

8. LOSS BEFORE INCOME TAX

Loss before income tax is arrived at after charging:

	For the year ended 31	For the year ended 31	March
	2011	2012		2013
	RMB’000	RMB’000	RMB’000
Auditor’s remuneration	260	37		83
Depreciation of property, plant and equipment	500	683		1,282
Operating lease rentals in respect of office premises	651	1,101		3,027
Impairment loss of trade and other receivables	–	30,000		–
Other operating expenses (Note)	–	–		17,896

Note: Other operating expenses represent the compensation claimed by contractors and suppliers arising from the suspension of construction of the expressway due to lack of funding occurred in previous years.

– II-19 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

9. STAFF COST

	For the year ended 31	For the year ended 31	March
	2011	2012		2013
	RMB’000	RMB’000	RMB’000
Staff costs (including directors) comprise:
Salaries and bonus	3,557	10,067		12,010
Contributions to defined contribution pension
plans	104	587		680

10. DIRECTORS’ AND EMPLOYEES’ REMUNERATION

(a) Directors’ remuneration

The aggregate amounts of directors’ remuneration are as follows:

Year ended 31 March 2011 Executive directors 姜輝(Jiang Hui) 陳立軍(Chen Li Jun) 高志平(Gao Zhiping) 齊鴻杰(Qi Hong Jie) 周宇(Zhou Yu) Year ended 31 March 2012 Executive directors 曹忠(Cao Zhong) 馮浚榜(Fung Tsun Pong) 段景泉(Duan Jingquan) 高志平(Gao Zhiping) 陳立軍(Chen Li Jun) Independent non-executive director 周宇(Zhou Yu)	Salaries RMB$’000 – – – – – – – – – – – – –	Other emoluments RMB$’000 175 130 276 25 32 638 – – – 753 379 138 1,270	Total RMB$’000 175 130 276 25 32
			638

			– – – 753 379 138
			1,270

– II-20 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

Year ended 31 March 2013 Executive directors 曹忠(Cao Zhong) 馮浚榜(Fung Tsun Pong) 段景泉(Duan Jingquan) 高志平(Gao Zhiping) 陳立軍(Chen Li Jun) 趙鵬(Zhao Peng) Independent non-executive director 周宇(Zhou Yu)	Salaries Other emoluments RMB$’000 RMB$’000 – – – – – – – 1,422 – – – – – 249 – 1,671	Pension RMB$’000 – – – 72 – – – 72	Total RMB$’000 – – – 1,494 – – 249
			1,743

There was no arrangement under which a director waived or agreed to waive any remuneration during the Relevant Periods.

None of the directors received compensation for the loss of office as a director of Project Company in connection with the management of the affairs for the Relevant Periods.

(b) Five highest paid individuals

Only one, two and one directors were included in the five highest paid individuals during the year ended 31 March 2011, 2012 and 2013, details of whose emoluments are set out in Note 10(a). The aggregate of the emoluments paid or payable to the remaining four, three and four individuals during the years ended 31 March 2011, 2012 and 2013 are as follows:

Salaries and bonus Contributions to defined contribution pension plans	For the 2011 RMB’000 1,153 33 1,186	year ended 31 March 2012 2013 RMB’000 RMB’000 1,564 3,036 94 48 1,658 3,084	year ended 31 March 2012 2013 RMB’000 RMB’000 1,564 3,036 94 48 1,658 3,084
			3,084

The number of highest paid individuals for the Relevant Periods whose emoluments fall within the band set out below is as follows:

			For the year ended 31 March	For the year ended 31 March
			2011	2012	2013
Nil	to	RMB$1,000,000	4	3	4

– II-21 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

11. INCOME TAX

The Project Company is entitled to a two-year exemption from corporate income tax followed by a 50% reduction in corporate income tax for subsequent three years. As the Project Company is still in the preparation stage, the exemption period has not commenced.

12. PROPERTY, PLANT AND EQUIPMENT

The Project Group

Cost At 1 April 2010 Additions Disposal/write off At 31 March 2011 Additions At 31 March 2012 Additions Disposal/write off At 31 March 2013 Accumulated depreciation At 1 April 2010 Charge for the year Disposal/write off At 31 March 2011 Charge for the year At 31 March 2012 Charge for the year Disposal/write off At 31 March 2013 Carrying amount At 31 March 2011 At 31 March 2012 At 31 March 2013	Leasehold improve- ments RMB’000 – – – – 68 68 – – 68 – – – – 17 17 24 – 41 – 51 27	Office equipment RMB’000 920 78 (591) 407 549 956 164 – 1,120 535 200 (457) 278 118 396 147 – 543 129 560 577	Motor vehicles RMB’000 2,019 – – 2,019 5,758 7,777 1,887 (400) 9,264 756 300 – 1,056 548 1,604 1,111 (31) 2,684 963 6,173 6,580	Total RMB’000 2,939 78 (591)
				2,426 6,375
				8,801 2,051 (400)
				10,452
				1,291 500 (457)
				1,334 683
				2,017 1,282 (31)
				3,268
				1,092

				6,784

				7,184

– II-22 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

The Project Company

Cost At 1 April 2010 Additions Disposal/write off At 31 March 2011 Additions At 31 March 2012 Additions Disposal/write off At 31 March 2013 Accumulated depreciation At 1 April 2010 Charge for the year Disposal/write off At 31 March 2011 Charge for the year At 31 March 2012 Charge for the year Disposal/write off At 31 March 2013 Carrying amount At 31 March 2011 At 31 March 2012 At 31 March 2013	Office equipment RMB’000 920 78 (591) 407 549 956 164 – 1,120 535 200 (457) 278 118 396 148 – 544 129 560 576	Motor vehicles RMB’000 2,019 – – 2,019 5,188 7,207 1,887 (385) 8,709 756 300 – 1,056 548 1,604 979 (31) 2,552 963 5,603 6,157	Total RMB’000 2,939 78 (591)
			2,426 5,737
			8,163 2,051 (385)
			9,829
			1,291 500 (457)
			1,334 666
			2,000 1,127 (31)
			3,096
			1,092

			6,163

			6,733

– II-23 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

13. CONCESSION INTANGIBLE ASSET

The Project Group and Project Company

At beginning of year Additions At end of year	2011 RMB’000 1,561,476 121,178 1,682,654	At 31 March 2012 RMB’000 1,682,654 304,085 1,986,739	2013 RMB’000 1,986,739 3,924,713
			5,911,452

The Project Company entered into a service concession arrangement with the local government whereby the Project Company is required to build the infrastructure of a heavy duty toll expressway designed for coal transportation in the Inner Mongolia Autonomous Region and is granted an exclusive operating right for collecting tolls from drivers using the expressway for a term of 30 years.

According to the relevant government’s approval documents and the relevant regulations, the Project Company is responsible for the construction of the toll road and the acquisition of the related facilities and equipment and it is also responsible for the operations and management, maintenance and overhaul of the toll roads during the approved operating period. The Project Company is entitled to operate the toll road upon completion for a specified concession period of 30 years by charging drivers, which amounts are contingent on the extent that the public uses the expressway. The relevant toll road assets are required to be returned to the local government authorities when the operating rights periods expire without any payments to be made to the Project Company. As such, the arrangement is accounted for as a concession intangible asset under Hong Kong (IFRIC) Interpretation 12 “Service Concession Arrangement”.

The right to charge the users of the public service is recognised as an intangible asset. The Project Company estimates the fair value of the intangible asset to be equal to the construction costs plus certain margin by management estimation with reference to the information in similar industry and management’s experience.

Construction revenue of RMB118,422,000, RMB277,088,000 and RMB3,701,350,000 and construction cost of RMB116,672,000, RMB272,993,000 and RMB3,646,650,000 were recognised during the years ended 31 March 2011, 2012 and 2013 respectively in respect of the construction service provided by the Project Group for the expressway. That construction revenue was included in additions to concession intangible asset which will be amortised upon the commencement of operation.

No amortisation charge for the Relevant Periods as the expressway is still under construction.

Additions to concession intangible asset include interest capitalised in respect of short term and long term borrowings amounting to RMB2,756,000, RMB26,997,000 and RMB223,363,000 during the years ended 31 March 2011, 2012 and 2013 respectively.

For the purpose of the impairment testing, the concession intangible asset is allocated to the cash generating unit (“CGU”) which contains the expressway.

The recoverable amount of the CGU has been determined by value in use calculated based on cash flow projections up to the end of the service concession arrangement period, and a pre-tax discount rate of 12.09% adopted in the valuation report issued by Jones Lang LaSalle Corporate Appraisal and Advisory Limited. As at 31 March 2013, no impairment was required based on the valuation report.

Key assumptions used for the value in use calculation are as follows:

Period of operation	30 years
Discount rate	12.09%
Average toll revenue growth rate over	2.2%
concession period

– II-24 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

Discount rate

The discount rate is a pre-tax measure estimated using the Capital Asset Pricing Model based on the industry average ratios and the CGU’s specific risks.

Average toll revenue growth rate over concession period

The toll revenue growth rate was determined based on forecasted traffic volume growth and the increase in toll rates. The average traffic volume growth rate is estimated to be 2.2% per annum over the concession period.

14. INTERESTS IN SUBSIDIARIES

				The	Project Company
					At 31 March
				2011	2012	2013
				RMB’000	RMB’000	RMB’000
Unlisted	shares,	at	cost	2,000	2,000	12,000

Particulars of the subsidiaries as at 31 March 2013 are as follows:

		Percentage of
		equity directly
	Place of	held by the
Name of companies	incorporation	Project Company	Principal activities
Beijing Zhunxing Longbo	PRC	100%	Provision of management
Management Consulting			services
Company Limited*
(“北京市准興隆博管理咨詢
有限責任公司”)
Inner Mongolia Zhunxing	PRC	100%	Not yet commenced
Expressway Service Area			operation
Management Company
Limited*
(“內蒙古准興高速服務區
管理有限責任公司”)

15. AVAILABLE-FOR-SALE INVESTMENTS

					The Project	Group and Project	Company
						At 31 March
					2011	2012	2013
					RMB’000	RMB’000	RMB’000
Unlisted	equity	shares,	at	cost	–	–	88,000

– II-25 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

The details are as follows:

Name Place of incorporation and operation Registered capital Guo Kai Rui Ming (Beijing) Investment Fund Co., Limited (“國開瑞明（北京）投資基金有限公司”) PRC RMB3,300 million Inner Mongolia Boyuan New Energy Co., Limited (“內蒙古博源新型能源有限公司”) PRC RMB200 million	Proportion of ownership interest Held by the Project Company/ subsidiaries Attributable to the Project Group Principal activity % % 1.52 1.52 Investment holding 19 19 Develop railway line and coal processing large scale comprehensive logistics base in Xinghe Coal Circulation Economic Industrial Base* (“興和煤炭循環經濟產業園”)

Both companies have not commenced operation as at 31 March 2013. All unquoted long-term equity investments are measured at cost less accumulated impairment losses at the end of reporting period as the directors of the Project Company are of the opinion that their fair value cannot be measured reliably.

16. OTHER RECEIVABLES AND DEPOSITS

The carrying amounts of other receivables and deposits at the end of each reporting date approximate their fair values.

17. PREPAYMENTS

The amounts represented prepayments to non-related contractors. The Project Group made prepayments to contractors in relation to the construction of the expressway.

The carrying amounts of prepayments at the end of each reporting date approximate their fair values.

18. OTHER PAYABLES AND ACCRUALS

As at 31 March 2011, 2012 and 2013, other payables mainly comprised construction cost payable of RMB505 million, RMB183 million and RMB792 million; retention and guarantee deposit of RMB684 million, RMB564 million and RMB461 million and compensation payable of RMB329 million, RMB30 million and RMB18 million relating to litigation claims from certain contracts arising from suspension of construction of expressway.

The carrying amounts of other payables and accruals at the end of each reporting date approximate their fair values.

– II-26 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

19. BORROWINGS

Secured – Current portion (i) – Bills payable (ii) – Non-current portion (i) Unsecured – Current portion (iii) – Non-current portion (iii) At end of year	The Project Group and Project Company At 31 March 2011 2012 2013 RMB’000 RMB’000 RMB’000 – – 3,700,000 – – 95,000 – − 1,350,000 – – 495,256 – 495,256 – – 495,256 5,640,256	The Project Group and Project Company At 31 March 2011 2012 2013 RMB’000 RMB’000 RMB’000 – – 3,700,000 – – 95,000 – − 1,350,000 – – 495,256 – 495,256 – – 495,256 5,640,256
		5,640,256

Total borrowings were repayable as follows:

On demand or within one year included in current liabilities Over one year and included in non-current liabilities	The Project Group and Project Company At 31 March 2011 2012 2013 RMB’000 RMB’000 RMB’000 – – 4,290,256 – 495,256 1,350,000 – 495,256 5,640,256	The Project Group and Project Company At 31 March 2011 2012 2013 RMB’000 RMB’000 RMB’000 – – 4,290,256 – 495,256 1,350,000 – 495,256 5,640,256
		5,640,256

(i) During the year ended 31 March 2013, the Project Company entered into a loan agreement with China Development Bank Corporation, as the leading bank, Hua Xia Bank Co., Limited and China Merchant Bank Co., Limited, as the participating banks, (together the “Lenders”) to obtain loan facilities amounted to RMB8,820 million (the “Loan”) at an initial annual interest rate of 6.8775% on normal commercial terms, of which RMB3,600 million of the Loan will be for a term of 15 years, RMB2,770 million of the Loan will be for a term of 20 years and RMB2,450 million of the Loan will be for a term of 21 years. The loans are for the construction of the heavy-haul toll expressway built by the Project Company. As at 31 March 2013, the Project Company has drawn down loans of RMB5,050 million from the Lenders, including short term loans of RMB3,700 million and long term loans of RMB1,350 million.

As at 31 March 2013, the loans are guaranteed by the Project Company’s receivables of toll fee income of the expressway, the Company and the former non-controlling shareholder and bear interest at the respective fixed rates ranging from 5.7% to 8.5% per annum.

(ii) Bills payables were issued from bank to suppliers for payables of construction materials and payments of construction fees for expressway construction with a total of RMB95 million were secured by bank deposits of same amount.
(iii) As at 31 March 2013, the loan is unsecured, interest bearing at 0.0288% per day and repayable within one year. The Project Company entered into the assignment of loan agreement with an authorised financial institution and its former non-controlling shareholders under which all parties agreed that the amount due to its former non-controlling shareholder of RMB495 million (2012: RMB495 million) was unconditionally assigned to the authorised financial institution on 6 February 2012. The bank loan is guaranteed by the Company and a former non-controlling shareholder of the Project Company.

– II-27 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

The loan was unsecured, interest bearing at 0.0288% per day and repayable within two years as at 31 March 2012.

20. PAID-UP CAPITAL

Registered capital: At beginning of year Addition At end of year Paid-up capital: At beginning of year Capital injection At end of year	2011 RMB’000 400,000 – 400,000 2011 RMB’000 400,000 – 400,000	At 31 March 2012 RMB’000 400,000 416,327 816,327 At 31 March 2012 RMB’000 400,000 342,183 742,183	2013 RMB’000 816,327 1,697,594
			2,513,921

			2013 RMB’000 742,183 1,771,738
			2,513,921

Note: During the years ended 31 March 2012 and 2013, the registered capital of the Project Company was increased from RMB400,000,000 to RMB816,326,530 and RMB816,326,530 to RMB2,513,920,600 respectively. During the years ended 31 March 2012 and 2013, the paid-up capital of the Project Company was increased from RMB400,000,000 to RMB742,183,000 and RMB742,183,000 to RMB2,513,921,000 respectively.

21. RELATED PARTY TRANSACTIONS

(a) Related parties of the Project Group

During the Relevant Periods, for the purpose of this report, the directors of the Project Company are of the view that the following parties are related parties of the Project Group:

Name of related parties

Relationship

China Resources and Transportation Group Ultimate holding company Limited (incorporated in the Cayman Islands) Cheer Luck Technology Limited Immediate holding company (incorporated in Hong Kong) 首鋼控股有限責任公司 Former shareholder

首鋼控股有限責任公司 Former shareholder (Shougang Holding Co., Ltd.) 北方通和控股有限公司 Former shareholder (Bei Fang Tong He Holdings Limited ) 北京坤鵬偉業有限公司 Former related party (Beijing Kun Peng Weiye Company Limited ) Inner Mongolia Zhunda Heavy Haul Former fellow Expressway Company Limited (內蒙古准達重載高速公路有限公司)

Former fellow subsidiary

– II-28 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

(b) Transactions with related parties

	For the year ended 31	For the year ended 31	March
	2011	2012	2013
	RMB’000	RMB’000	RMB’000
Interest expenses charged by a former
shareholder	2,756	26,997	–

(c) Amounts due from a non-controlling shareholder, a former shareholder, a fellow subsidiary and a subsidiary are unsecured, interest free and repayable on demand.
(d) Amounts due to former shareholders, a former related party and a former fellow subsidiary were unsecured, interest free and repayable on demand except for an amount of RMB37,110,000 due to a former shareholder which was interest bearing at 10% per annum and was repayable within one year as at 31 March 2011.
(e) Amount due to a fellow subsidiary is unsecured, interest free and repayable on demand.
(f) Key management personnel of the Project Group are the directors of the Project Company whose remuneration is set out in Note 10 to the Financial Information.

22. CAPITAL MANAGEMENT POLICY

The Project Group’s objective of managing capital is to safeguard its ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce cost of capital. The Project Group’s overall strategy remains unchanged for the Relevant Periods.

The capital structure of the Project Group consists of equity attributable to shareholders of the Project Company only, comprising paid-up capital and reserves.

The directors of the Project Company review the capital structure regularly. The Project Group considers the cost of capital and the risks associated with each class of capital, and will balance its overall capital structure through the payment of dividends, new share issues as well as raising of new debt or the repayment of existing debt.

23. FINANCIAL RISK MANAGEMENT

Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the Project Group’s business. The main risks arising from the Project Group’s financial instruments in the normal course of the Project Group’s business are interest rate risk, foreign currency risk, liquidity risk and credit risk. These risks are limited by the Project Group’s financial management policies and practices described below. Generally, the Project Group introduces conservative strategies on its risk management.

(a) Interest rate risk

The Project Group’s interest rate risk arises primarily from borrowings as disclosed in note 19. Borrowings are issued at fixed rates which expose the Project Group to fair value interest risk. The Project Group has no cash flow interest rate risk as there are no borrowing which bear floating interest rates. The Target Group has not used any financial instruments to hedge potential fluctuations in interest rates.

(b) Foreign currency risk

The Project Group mainly operates in the PRC with most of the transactions denominated and settled in RMB and did not have significant exposure to risk resulting from changes in the foreign currency exchange rates.

– II-29 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

(c) Liquidity risk

The Group’s policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The following table details the remaining contractual maturities at the end of reporting period of the Group’s and the Company’s non-derivative financial liabilities and derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates, or if floating, based on rates current at the end of reporting period) and the earliest date the Group and the Company can be required to pay:

The Project Group

Carrying amount At 31 March 2011 Other payables and accruals Amounts due to former shareholding companies Amount due to a former related party Amount due to a former fellow subsidiary At 31 March 2012 Other payables and accruals Borrowings At 31 March 2013 Other payables and accruals Amount due to a fellow subsidiary Borrowings	Carrying amount Total contractual undiscounted cash flow RMB’000 RMB’000 1,783,634 1,783,634 82,637 109,634 3,618 3,618 2,015 2,015 1,871,904 1,898,901 893,224 893,224 495,256 591,819 1,388,480 1,485,043 1,516,244 1,516,244 6,947 6,947 5,640,256 6,772,306 7,163,447 8,295,497	Within 1 year or on demand RMB’000 1,783,634 109,634 3,618 2,015 1,898,901 893,224 52,061 945,285 1,516,244 6,947 4,613,951 6,137,142	More than 1 year but less than 2 years RMB’000 – – – – – – 539,758 539,758 – – 92,846 92,846	More than 2 years but less than 5 years RMB’000 – – – – – – – – – – 235,566 235,566	More than 5 years RMB’000 – – – –
					–

					– –
					–

					– – 1,829,943
					1,829,943

– II-30 –

APPENDIX II

FINANCIAL INFORMATION OF THE PROJECT GROUP

The Project Company

At 31 March 2011 Other payables and accruals Amounts due to former shareholders Amount due to a former related party Amount due to a former fellow subsidiary At 31 March 2012 Other payables and accruals Borrowings At 31 March 2013 Other payables and accruals Amount due to a fellow subsidiary Borrowings	Carrying amount Total contractual undiscounted cash flow RMB’000 RMB’000 1,783,634 1,783,634 82,637 109,634 3,618 3,618 2,015 2,015 1,871,904 1,898,901 890,138 890,138 495,256 591,819 1,385,394 1,481,957 1,515,634 1,515,634 6,947 6,947 5,640,256 6,772,306 7,162,837 8,294,887	Within 1 year or on demand RMB’000 1,783,634 109,634 3,618 2,015 1,898,901 890,138 52,061 942,199 1,515,634 6,947 4,613,951 6,136,532	More than 1 year but less than 2 years RMB’000 – – – – – – 539,758 539,758 – – 92,846 92,846	More than 2 years but less than 5 years RMB’000 – – – – – – – – – – 235,566 235,566	More than 5 years RMB’000 – – – –
					–

					– –
					–

					– – 1,829,943
					1,829,943

(d) Credit risk

The credit risk on bank deposits is limited because the counterparties are banks with high credit-ratings assigned by state-owned banks in the PRC.

– II-31 –

APPENDIX II FINANCIAL INFORMATION OF THE PROJECT GROUP

24. COMMITMENTS

Operating lease commitments – lessee

The Project Group leases certain office premises under operating leases. The duration of lease ranges from one to five years. Lease payments are usually negotiated to reflect market rentals.

The Project Group had future aggregate minimum lease payments under non-cancelable operating leases in respect of the premises as follows:

Within one year Within two to five years At beginning of year and end of year Capital Commitments Contracted for but not provided for	The Project Group and Project Company At 31 March 2011 2012 2013 RMB’000 RMB’000 RMB’000 – 425 425 – 545 120 – 970 545 The Project Group and Project Company At 31 March 2011 2012 2013 RMB’000 RMB’000 RMB’000 7,228,684 6,140,453 4,526,687

25. SUMMARY OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES BY CATEGORY

The carrying amounts of the Project Group’s financial assets and financial liabilities as recognised at the end of each reporting period may be categorised as follows:

Financial assets Loans and receivables (including bank and cash balances) Available-for-sales investments Investments held for trading Financial liabilities Financial liabilities measured at amortised cost	2011 RMB’000 5,900 – – 1,871,904	At 31 March 2012 RMB’000 115,088 – – 1,388,480	2013 RMB’000 1,657,839 88,000 5,000

			7,163,447

– II-32 –

FINANCIAL INFORMATION OF THE PROJECT GROUP

APPENDIX II

The following table provides an analysis of financial instruments carried at fair value by level of fair value hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

31 March 2013	Level 1	Level 2	Level 3	Total
	HK$’000	HK$’000	HK$’000	HK$’000
Assets
Investment held for trading	–	5,000	–	–

C. SUBSEQUENT FINANCIAL STATEMENTS

No audited consolidated financial statements have been prepared for the Project Group in respect of any period subsequent to 31 March 2013.

Yours faithfully,

BDO Limited Certified Public Accountants Cheung Sai Kit

Practising Certificate Number P05544

Hong Kong

– II-33 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. Introduction to the unaudited pro forma financial information

The information set out below is for illustrative purpose only and does not form part of the accountants’ report prepared by the reporting accountants of the Company, BDO Limited, Certified Public Accountants, Hong Kong, as set out in Appendix II to this circular.

To provide additional financial information, the unaudited pro forma consolidated statement of assets and liabilities (the ‘‘Unaudited Pro Forma Financial Information’’) of the Group as at 31 March 2013 has been prepared based on:

(a) the historical audited consolidated statement of financial position of the Group as at 31 March 2013 which has been extracted from the annual report of the Company for the year ended 31 March 2013;
(b) after taking into account of the unaudited pro forma adjustments as described in the notes thereto to demonstrate how the proposed subscription might have affected the historical financial information in respect of the Group as if the proposed subscription was completed on 31 March 2013.

The Unaudited Pro Forma Financial Information of the Group should be read in conjunction with the financial information contained in this circular and the Accountants’ Report as set out in Appendix II to this circular.

The Unaudited Pro Forma Financial Information of the Group is for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Group as at 31 March 2013 or at any future date.

– III-1 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

2. Unaudited pro forma consolidated statement of assets and liabilities of the Group as at 31 March 2013

NON-CURRENT ASSETS Investment property Property, plant and equipment Prepaid lease payments Biological assets Forest concession rights Concession intangible asset Long term deposit and prepayments Available-for-sale investments TOTAL NON-CURRENT ASSETS CURRENT ASSETS Investments held for trading Inventories Trade and other receivables Prepaid lease payments Amount due from a non-controlling shareholder of a subsidiary Pledged deposit and restricted cash Cash and cash equivalents Assets of a disposal group classified as held for sale TOTAL CURRENT ASSETS TOTAL ASSETS	The Group as at 31 March 2013 Unaudited Pro Forma Adjustment HK$’000 Note HK$’000 44,100 137,872 29,806 76,745 361,456 10,546,874 2,209,418 108,756 13,515,027 6,179 120,806 34,251 665 16,066 117,407 2,033,045 2,328,419 1,823,685 4,152,104 17,667,131	Unaudited Pro Forma of the Group as at 31 March 2013 HK$’000 44,100 137,872 29,806 76,745 361,456 10,546,874 2,209,418 108,756
		13,515,027
		6,179 120,806 34,251 665 16,066 117,407 2,033,045
		2,328,419 1,823,685
		4,152,104
		17,667,131

– III-2 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

CURRENT LIABILITIES Trade and other payables Promissory note Deferred government grants Borrowings Liabilities of a disposal group classified as held for sale TOTAL CURRENT LIABILITIES NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities Convertible bonds Borrowings Acreage fees payable TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS	The Group as at 31 March 2013 Unaudited Pro Forma Adjustment HK$’000 Note HK$’000 2,188,910 293,458 7,471 5,827,081 8,316,920 710,105 9,027,025 (4,874,921) 8,640,106 9,561 1,836,870 1,668,411 10,867 3,525,709 12,552,734 5,114,397	Unaudited Pro Forma of the Group as at 31 March 2013 HK$’000 2,188,910 293,458 7,471 5,827,081 8,316,920 710,105 9,027,025 (4,874,921) 8,640,106 9,561 1,836,870 1,668,411 10,867 3,525,709 12,552,734 5,114,397

– III-3 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Reserves Equity attributable to owners of the Company Non-controlling interests TOTAL EQUITY	The Group as at 31 March 2013 Unaudited Pro Forma Adjustment HK$’000 Note HK$’000 256,058 2,427,791 2 1,189,115 2,683,849 2,430,548 2 (1,189,115) 5,114,397	Unaudited Pro Forma of the Group as at 31 March 2013 HK$’000 256,058 3,616,906
		3,872,964 1,241,433
		5,114,397

– III-4 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

As the Project Company is a subsidiary of the Company as at 31 March 2013, the investment in the Project Company has been consolidated into the consolidated financial statements of the Group. For the purpose of this Unaudited Pro Forma Financial Information, the financial information of the Project Group is therefore not separately presented.
According to the Capital Increase Agreement dated 14 June 2013, the Group and Fujian Xinrong Industries Group Co., Ltd. (“Xinrong”) have agreed to subscribe for the additional registered capital of RMB1,611,898,040 and RMB85,696,030 of the Project Company at total cash consideration of RMB1,611,898,040 and RMB85,696,030 (the “Subscription”) respectively. Upon Completion, the Group’s equity interest in the Project Company will be increased from 55.9% to 82.27%. The Project Company will continue to be accounted as a subsidiary of the Company.

In accordance with Hong Kong Accounting Standard 27 (Revised) ‘‘Consolidated and separate financial statements’’, the changes in ownership interests while retaining control are accounted for as transactions with equity shareholders in their capacity as equity shareholders. Accordingly, the subscription of the additional equity interest in the Project Company should be accounted for as equity transaction. Any change in the non-controlling interests shall be recognised directly in equity and attributed to the owners of the Company.

The adjustment represents the share of the non-controlling interests transferred to the Group and directly to equity attributable to the owners of the Company as calculated below:

Net assets value of the Project Group before the Subscription by reference to Appendix II Fair value adjustment to concession intangible asset arising from previous acquisition by the Group Adjusted net assets value of the Project Group before the Subscription Cash consideration to be paid by the Group Cash consideration to be paid by Xinrong Share of non-controlling interests transferred to the Group Net assets value of the Project Group after the Subscription	Total Share of non-controlling interests HK$’000 HK$’000 2,864,038 1,263,040 2,663,373 1,174,548 5,527,411 2,437,588 2,010,037 – 106,863 106,863 – (1,189,115) 7,644,311 1,355,336	Total Share of non-controlling interests HK$’000 HK$’000 2,864,038 1,263,040 2,663,373 1,174,548 5,527,411 2,437,588 2,010,037 – 106,863 106,863 – (1,189,115) 7,644,311 1,355,336
		2,437,588 – 106,863 (1,189,115)
		1,355,336

For the purpose of this unaudited proforma financial information, RMB amounts have been translated into Hong Kong dollars at the approximate rate of exchange of RMB1.00 = HK$1.247.

– III-5 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, from the independent reporting accountants, BDO Limited, Certified Public Accountants, Hong Kong.

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==> picture [90 x 51] intentionally omitted <==

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

To the Directors of

China Resources and Transportation Group Limited

We have completed our assurance engagement to report on the compilation of pro forma financial information of China Resources and Transportation Group Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company for illustrative purposes only. The pro forma financial information consists of the pro forma statement of assets and liabilities as at 31 March 2013 and related notes as set out on pages III-2 to III-5 of the circular issued by the Company dated 30 July 2013 (the “Circular”). The applicable criteria on the basis of which the directors of the Company have compiled the pro forma financial information are described on Section A of Appendix III.

The pro forma financial information has been compiled by the directors of the Company to illustrate the impact of the subscription of additional 26.37% equity interest in Inner Mongolia Zhunxing Heavy Haul Expressway Company Limited on the Group’s financial position as at 31 March 2013 as if the transaction had taken place at 31 March 2013. As part of this process, information about the Group’ s financial position has been extracted by the directors of the Company from the Group’s consolidated financial statements for the year ended 31 March 2013, on which an audit report issued by BDO Limited has been published.

Directors’ Responsibilities for the Pro Forma Financial Information

The directors of the Company are responsible for compiling the pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

– III-6 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountant comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the directors of the Company have compiled the pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purpose of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purpose of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 31 March 2013 would have been as presented.

A reasonable assurance engagement to report on whether the pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors of the Company in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

The related pro forma adjustments give appropriate effect to those criteria; and
The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

– III-7 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

a. the pro forma financial information has been properly compiled on the basis stated;
b. such basis is consistent with the accounting policies of the Group; and
c. the adjustment is appropriate for the purposes of the pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

BDO Limited

Certified Public Accountants

Cheung Sai Kit

Practising Certificate number P05544 Hong Kong 30 July 2013

– III-8 –

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PROJECT GROUP

The Project Company engages in toll road and Zhunxing Expressway operation and management in Inner Mongolia with an exclusive right to build and operate the first heavy-duty toll Zhunxing Expressway designed for coal transportation in the Inner Mongolia for 30 years (excluding the construction period).

RESULTS

The results of operations of the Project Group for each of the three years ended 31 March 2013 (the “Relevant Periods”) are contained in Appendix II – Financial Information of Project Group of this circular.

Turnover

During the Relevant Periods, the Project Group recorded a turnover of approximately RMB118.4 million, RMB277.1 million and RMB3,701.4 million for the years ended 31 March 2011, 2012 and 2013, respectively. The significant rise in turnover during the year ended 31 March 2013 was due to the increase in the percentage of completion of construction services provided under the service concession arrangements.

Administrative expenses and other operating expenses

The Project Group incurred administrative expenses of approximately RMB8.5 million, RMB66.4 million and RMB39.5 million for the years ended 31 March 2011, 2012 and 2013, respectively. The high level of administrative expenses during the year ended 31 March 2012 was mainly due to the bad debts written off in relation to a former equity holder of the Project Company.

The Project Group incurred other operating expenses of approximately RMBNil, RMBNil and RMB17.9 million for the years ended 31 March 2011, 2012 and 2013, respectively. These other operating expenses represent the compensation claimed by contractor and suppliers arising from the suspension of construction of the Zhunxing Expressway due to lack of funding before the Project Company was acquired by the Group.

Profit or loss for the year and total comprehensive income for the year

The Project Group recorded a loss of approximately RMB6.7 million, RMB62.2 million and a profit of approximately RMB1.5 million for the years ended 31 March 2011, 2012 and 2013, respectively. The substantial loss for the year ended 31 March 2012 was primarily contributed by the administrative expenses due to the costs incurred upon the resumption of the expressway construction.

– IV-1 –

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PROJECT GROUP

Capital Structure, Liquidity and Financial Resources

For the years ended 31 March 2011 and 2012, losses before taxation of the Project Group were approximately RMB6.7 million and RMB62.2 million, respectively. The profit before taxation of the Project Group during the year ended 31 March 2013 was approximately RMB1.5 million.

As at 31 March 2011, 2012 and 2013, the net assets of the Project Group were approximately RMB39.0 million, RMB1,927.4 million and RMB2,296.3 million, respectively. The net assets increased substantially during the years ended 31 March 2012 and 2013 as the construction of the Zhunxing Expressway resumed in full gear.

The cash and cash equivalents held by the Project Group were approximately RMB2.7 million, RMB78.4 million and RMB1,638.4 million as at 31 March 2011, 2012, 2013, respectively. The high level of cash and bank balances in the year ended 31 March 2013 was due to drawn down loans obtained from several PRC banks.

As at 31 March 2013, the Project Group had outstanding borrowings of RMB5,640.3 million, of which RMB5,050 million, representing almost 89%, consisted of short term and long term secured bank loans bearing interest from 5.7% to 8.5% per annum provided by several PRC banks mainly for the investment in the construction of the Zhunxing Expressway. The short term secured bank loans of RMB3,700 million will be refinanced by part of the long term syndicated loan facility of RMB8.82 billion upon maturity. The remaining outstanding secured borrowings of RMB95 million were bill payables secured by bank deposits of the same amount for the payments of construction materials and construction fees of the Zhunxing Expressway.

The unsecured loan of RMB495.3 million (2012: RMB495.3 million) repayable within one year was owed by the Project Company to an authorized financial institution bearing interest at 0.0288% per day. The loan was unconditionally assigned by one of the former non-controlling shareholders of the Project Company to the authorized financial institution on 6 February 2012. Other than the said loan of RMB495.3 million repayable within two years, no other borrowings were incurred as at 31 March 2012. The Project Group has not incurred any borrowings as at 31 March 2011.

The Project Group has not used any financial instrument for hedging purposes during the Relevant Periods.

Significant Investments

There was no significant investment held by the Project Group during the Relevant Periods except the Expressway.

There was no material acquisitions and disposals of subsidiaries and associated companies during the Relevant Periods.

– IV-2 –

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PROJECT GROUP

Employees and Retirement Benefit Obligations

The Project Group had approximately 46, 107 and 145 employees in the PRC as at 31 March 2011, 2012 and 2013, respectively. The Project Group implements remuneration and retirement benefit policy in accordance with the laws of the PRC.

The costs, including but not limited to salaries and bonus, contributions to defined contribution pension plans, paid by the Project Group to its staff were approximately RMB3.6 million, RMB10.1 million and RMB12.0 million for the years ended 31 March 2011, 2012 and 2013, respectively. The staff costs for the years ended 31 March 2012 and 2013 were comparatively higher due to the resumption of the expressway construction and higher directors’ remuneration during both years.

The directors of the Project Company consider that they are the only key management personnel of the Project Group. There was no arrangement under which a director waived or agreed to waive any remuneration during the Relevant Periods. Further, none of the directors received compensation for the loss of office as a director of the Project Group in connection with the management of the affairs for the Relevant Periods.

Charges on Project Group’s Assets

As at 31 March 2011 and 2012, there were no charges on any assets of the Project Group. As at 31 March 2013, pledged deposits amounted to RMB95 million were cash deposited in certain banks for issuing bill payables for the purchases of construction materials and payments of construction fees for the Zhunxing Expressway.

Gearing Ratio

The gearing ratio of the Project Group as at 31 March 2011, 2012 and 2013, measured as total liabilities to total assets, were 98.0%, 41.9% and 75.7%, respectively.

Foreign Exchange Exposure

The Project Group business operations, assets and liabilities are denominated mainly in RMB, thus foreign exchange risk is minimal.

Contingent Liabilities

The Project Group has no contingent liabilities during the Relevant Periods.

Material Investment and Future Prospect

The Project Company has been granted the exclusive right to build, and operate for 30 years (excluding construction period), the first PRC heavy-duty toll Zhunxing Expressway designed for coal transportation in the Inner Mongolia which is about 265 km.

– IV-3 –

APPENDIX IV

MANAGEMENT DISCUSSION AND ANALYSIS OF THE PROJECT GROUP

The Zhunxing Expressway is designed to sustain the passing of heavy haul vehicles in high frequency and high proportion. The Project Company estimates that the construction of the Zhunxing Expressway will cost about RMB15.0 billion which may be financed by capital injection, bank borrowings or other sources.

Up to 31 March 2013, the Project Group has incurred approximately RMB7.1 billion in construction costs for the Zhunxing Expressway and the remaining construction costs to be incurred before completion by the 4th quarter of 2013 is estimated to be approximately RMB7.9 billion.

Apart from the Group’s capital commitment in respect of the Capital Increase, the Group does not have any additional financial commitment to the Project Group.

It is the plan of the Project Company to finance the construction costs through internal resources and bank loans. As at the Latest Practicable Date, China Development Bank Corporation, as leading bank, and Hua Xia Bank Co., Limited and China Merchants Bank Co., Limited, as the participating banks, have granted a syndicated loan facility of approximately RMB8.82 billion to the Project Company.

The proposed toll fee for the Zhunxing Expressway is RMB0.15 per ton per km as stipulated in the Concession Agreement. The Zhunxing Expressway is currently under construction and expected to be opened for traffic in the 4th quarter of 2013. Upon opening, the Project Company will contribute substantially to the turnover of the Group.

– IV-4 –

APPENDIX V

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This 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 Group. 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. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and immediately following the issue of the Conversion Shares and the Subscription Shares will be as follows (assuming no further Shares are issued under the 2014 Convertible Bonds or the warrants of the Company and no Shares are repurchased by the Company after the Latest Practicable Date up to the date of issue of the Conversion Shares and the Subscription Shares):

Authorised

HK$

50,000,000,000 Shares as at the Latest Practicable Date 500,000,000.00

Issued and fully paid or credited as fully paid:

25,605,783,895	existing Shares in issue	256,057,838.95
8,075,000,000	new Shares to be issued upon the exercise of the	80,750,000.00
	2015 Convertible Bonds in full
2,500,000,000	new Shares to be issued upon completion of the	25,000,000.00
	Share Subscription
36,180,783,895	Shares in issue following the issue of the	361,807,838.95
	Conversion Shares (assuming that the 2015
	Convertible Bonds have been exercised in full)
	and the Subscription Shares

The Conversion Shares and the Subscription Shares shall rank pari passu in all aspects, including all rights as to dividend, voting and interest in capital, among themselves and with all other Shares in issue on the date of issue.

– V-1 –

APPENDIX V

GENERAL INFORMATION

3. DISCLOSURE OF INTERESTS

(a) Directors and Chief Executive

Save as disclosed below, as at the Latest Practicable Date, according to the register of interest kept by the Company under Section 336 of the Securities and Future Ordinance (the “ SFO ”) and so far as was known to the Directors, none of the Directors and chief executive of the Company held any interest or short positions on the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which (i) where required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “ Model Code ”) of the Listing Rules, to be notified to the Company and the Stock Exchange:

Long positions in shares and underlying shares of the Company

					Total number	Approximate
	Number of Shares		Number of underlying Shares		of Shares and	percentage (%)
	Personal	Corporate	Personal	Corporate	underlying	of issued share
Name of Director	interest	interest	interest	interest	Shares held	capital
Mr. Cao Zhong_(Note 1)_	124,200,000	2,070,300,000	Nil	Nil	2,194,500,000	8.57
Mr. Fung Tsun Pong_(Note 2)_	1,242,362,449	1,114,300,000	Nil	Nil	2,356,662,449	9.20
Mr. Tsang Kam Ching, David	51,624,499	Nil	Nil	Nil	51,624,499	0.20

Notes:

Champion Rise International Limited (“ CRIL ”) is wholly owned by Mr. Cao Zhong and was interested in 2,070,300,000 Shares, representing approximately 8.08% in the issued share capital of the Company. CRIL is a substantial shareholder of the Company and its shareholding in the Company is set out in the section headed “Substantial Shareholders” of this section.
Ocean Gain Limited (“ OGL ”) is wholly owned by Mr. Fung Tsun Pong and was interested in 1,114,300,000 Shares, representing approximately 4.35% in the issued share capital of the Company.

– V-2 –

APPENDIX V

GENERAL INFORMATION

(b) Substantial Shareholders

Save as disclosed below and not taking into account the interests in the 2015 Convertible Bonds and the Subscription Shares, as at the Latest Practicable Date, according to the register of interest kept by the Company, under Section 336 of the SFO and so far as was known to the Directors, no other person or companies had any interest or short positions in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company under the provision of Divisions 2 and 3 of Part XV of the SFO or who were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other members of the Group.

Long positions in Shares

					Total number of	Approximate
	Number of Shares		Number of underlying Shares		Shares and	percentage (%)
	Personal	Corporate	Personal	Corporate	underlying	of issued share
Name of Shareholder	interest	interest	interest	interest	Shares held	capital
中聚國際控股集團有限公司(China Alliance	Nil	4,275,862,068	Nil	Nil	4,275,862,068	16.70
International Holding Group Limited)
(Note a)
Champion Rise International Limited	Nil	2,070,300,000	Nil	Nil	2,070,300,000	8.08
(Note b)
Vivid Beyond Securities Limited_(Note c)_	Nil	2,500,000,000	Nil	Nil	2,500,000,000	9.76
Fresh Generation Development Limited	Nil	1,350,000,000	Nil	Nil	1,350,000,000	5.27
(Note d)
China Life Insurance (Overseas) Company	Nil	1,189,900,000	Nil	1,500,000,000	2,689,900,000	10.50
Ltd.(Note e)
China Life Insurance (Group) Company	Nil	1,189,900,000	Nil	1,500,000,000	2,689,900,000	10.50
(Note f)
Li Ka Shing (Canada) Foundation_(Note g)_	Nil	Nil	Nil	3,250,000,000	3,250,000,000	12.69
Joint Gain Holdings Limited_(Note h)_	Nil	Nil	Nil	2,000,000,000	2,000,000,000	7.81
Jiao Xuding_(Note i)_	1,000,000	Nil	Nil	2,000,000,000	2,001,000,000	7.81

Notes:

a. China Alliance International Holding Group Limited is wholly owned by Ms. Zhang Lei.
b. Champion Rise International Limited is wholly owned by Mr. Cao Zhong, the Chairman and an executive Director whose interest in shares or underlying shares of the Company is set out in the above section headed “(a) Directors and Chief Executive” of this section.
c. Vivid Beyond Securities Limited is wholly owned by Hu Wei.
d. Fresh Generation Development Limited is wholly owned by Hu Bing Zhuo.

– V-3 –

APPENDIX V

GENERAL INFORMATION

e. China Life Insurance (Overseas) Company Ltd. was interested in HK$600,000,000 convertible bonds issued by the Company which are convertible into 1,500,000,000 Shares at HK$0.40 per Share and it is interested in 1,189,900,000 Shares held by its wholly owned subsidiary, China Life Trustees Limited.
f. China Life Insurance (Group) Company is the holding company of China Life Insurance (Overseas) Company Limited.
g. Li Ka Shing (Canada) Foundation (“ LKSCF ”) was interested in HK$1,300,000,000 convertible bonds issued by the Company which are convertible into 3,250,000,000 Shares at HK$0.40 per Share. Each of Mr. Li Ka-Shing and Mr. Li Tzar Kuoi, Victor may be regarded as having the ability to exercise or control the exercise of one-third or more of the voting power at the general meetings of LKSCF, thus is deemed to be interested in the underlying Shares held by LKSCF.
h. Joint Gain Holdings Limited (“ Joint Gain ”) is interested in 2,000,000,000 conditional warrants issued by the Company on 19 April 2013 which are exercisable at HK$0.48 per Shares within three years. Mr. Ho Kee Cheung Louis and Mr. Tsang Ka Lun are deemed to be interested in the warrants held by Joint Gain as trustees.
i. Mr. Jiao Xuding is the beneficial owner of 1,000,000 Shares and is deemed to be interested in the 2,000,000,000 conditional warrants held by Joint Gain as a beneficiary of a trust.

Save as disclosed above, as at the Latest Practicable Date, no other persons had any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations as recorded in the register required to be kept by the Company under Section 336 of the SFO.

4. DIRECTORS’ INTERESTS IN ASSETS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset which had been since 31 March 2013, being the date to which the latest published audited financial statement of the Company were made up, acquired or disposed of by or leased to, or are proposed to be acquired or disposed of by or lease to any member of the Group.

As at the Latest Practicable Date, none of the Directors or the directors of the Project Group is materially interested in any contract or arrangement which is significant in relation to the business of the Group.

5. DIRECTORS’ COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors nor their respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group other than those businesses to which the Directors and their associates were appointed to represent the interests of the Company and/or the Group.

6. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business) were entered into by members of the Group within the two years immediately preceding the date of this circular and are, or may be, material:

– V-4 –

APPENDIX V

GENERAL INFORMATION

(a) the subscription agreement dated 2 August 2011 between the Company and the First CB Subscriber pursuant to which the First CB Subscriber has subscribed the 2014 Convertible Bonds with a principal amount of HK$1,300 million;
(b) the subscription agreement dated 2 August 2011 between the Company and the Second CB Subscriber pursuant to which the Second CB Subscriber has subscribed the 2014 Convertible Bonds with a principal amount of HK$600 million;
(c) the subscription agreement dated 2 August 2011 between the Company and the Third CB Subscriber pursuant to which the Third CB Subscriber has subscribed the 2014 Convertible Bonds with a principal amount of HK$100 million;
(d) the agreement dated 15 September 2012 between the Company and China International Holdings Limited (“ CIHL ”) pursuant to which the Company agreed to sell a 55% interest in Triumph Kind Investment Limited (凱恩投資有限公司) to CIHL for HK$550 million;
(e) the agreement dated 20 December 2012 between the Company and Joint Gain Holdings Limited (“ Joint Gain ”) pursuant to which the Company agreed to sell the entire equity interest in the project company that holds the development and operating rights to the petrol and gas stations of the service areas of the Zhunxing Expressway to Joint Gain for RMB301,000,000, and to grant to Joint Gain 2,000,000,000 conditional warrants exchangeable to 2,000,000,000 Shares at an exercise price of HK$0.48 per Share;
(f) the Capital Increase Agreement;
(g) the First CB Agreement;
(h) the Second CB Agreement;
(i) the Third CB Agreement;
(j) the Fourth CB Agreement;
(k) the Fifth CB Agreement;
(l) the Sixth CB Agreement;
(m) the Seventh CB Agreement;
(n) the First Share Agreement; and
(o) the Second Share Agreement.

– V-5 –

APPENDIX V

GENERAL INFORMATION

7. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any member of the Group which is not expiring and determinable by the Group within one year without payment of compensation other than statutory compensation.

8. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration proceedings of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against any member of the Group.

9. EXPERT AND CONSENT

Name Qualification

BDO Limited Certified Public Accountants

As at the Latest Practicable Date, BDO Limited did not have any direct or indirect 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.

BDO Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which they are included.

BDO Limited does not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2013, the date to which the latest published financial statements of the Company were made up.

The letter and report from BDO Limited included herein are given as of the date of this circular.

10. GENERAL

(a) The registered office of the Company is at Caledonian Trust (Cayman) Limited, Caledonian House, 69 Dr. Roy’s Drive, P.O. Box 1043, Grand Cayman, KY1-1102, Cayman Islands and the principal place of business of the Company in Hong Kong is at Room 1801-07, 18/F, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong.

– V-6 –

APPENDIX V

GENERAL INFORMATION

(b) The Company’s Hong Kong branch share registrar and transfer office is Tricor Progressive Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(c) Having made reasonable enquiries and to the best knowledge of the Directors, as at the Latest Practicable Date, there was (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon any Shareholders; and (ii) no obligation or entitlement of any Shareholders, whereby he/she/it has or may have temporarily or permanently passed control over the exercise of the voting rights in respect of his/her/its Shares to a third party, either generally or on a case-by-case basis.
(d) Having made reasonable enquiries and to the best knowledge of the Directors, as at the Latest Practicable Date, there was no discrepancy between any Shareholder’s beneficial shareholding interest in the Company as disclosed in this circular and the number of Shares in respect of which it will control or will be entitled to exercise control over the voting rights at the EGM.
(e) The company secretary of the Company is Miss Ngan Wai Kam, Sharon, who is practicing solicitor admitted in Hong Kong.
(f) The English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents shall be available for inspection at the principal office of the Company at Room 1801-07, 18/F, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong, during normal business hours on any weekday, except public holidays, from the date of this circular up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;
(b) the memorandum and Amended and Restated Articles of Association of the Project Company;
(c) the annual reports of the Company for three years ended 31 March 2011, 2012 and 2013;
(d) the accountants’ report on the Project Group, the text of which is set out in Appendix II to this circular;
(e) the accountants’ report in respect of the unaudited pro forma financial information of the Group, the text of which is set out in Appendix III to this circular;
(f) the material contracts referred to in the section headed “Material Contracts” of this appendix;

– V-7 –

APPENDIX V

GENERAL INFORMATION

(g) a copy of this circular; and
(h) the written consent of the expert referred to in the section headed “Expert and Consent” of this appendix.

– V-8 –

NOTICE OF EGM

==> picture [176 x 61] intentionally omitted <==

CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED 中國資源交通集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 269)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of China Resources and Transportation Group Limited (the “ Company ”) will be held at the Oasis Room, 8th Floor, Renaissance Harbour View Hotel Hong Kong, 1 Harbour Road, Wanchai, on Monday, 26 August 2013 at 10:30 a.m. for the purpose of considering and, if thought fit, passing the following resolution as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT :
(a) the agreement (the “ Capital Increase Agreement ”) dated 10 June 2013 between Cheer Luck Technology Limited (“ Cheer Luck ”) and Shu Ren Wood (Shenzhen) Limited (樹人木業（深圳）有限公司), both being wholly-owned subsidiaries of the Company, Xinjiang Shougang Investment Co., Ltd. (新彊首鋼投資有限公司), Fujian Xinrong Industries Group Co., Ltd. (褔建信融實業有限公司) and Fujian Ding Feng Sheng Chuang Xin Investment Limited (褔建鼎豐盛創新投資有限公司) in relation to the subscription by Cheer Luck of additional registered capital in Inner Mongolia Zhunxing Heavy Haul Expressway Company Limited (內蒙古准興重載高速公路有限責任公司) in the amount of RMB1,611,898,040, a copy of which is tabled at the meeting and marked “ A* ” and initialed by the chairman of the meeting for identification purpose, be and is hereby approved, confirmed and ratified; and
(b) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated under the Capital Increase Agreement”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ First CB Agreement ”) entered into between the Company and Li Ka Shing (Canada) Foundation (the “ First CB Subscriber ”), a copy of which is tabled at the meeting and marked “ B ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the First CB Subscriber has agreed to subscribe 9% unlisted

– N-1 –

NOTICE OF EGM

convertible bonds due 2015 of the Company in the principal amount of HK$1,300 million (the “ First Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;

(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the First Convertible Bonds (the “ First Conversion Shares ”), the allotment and the issue of the First Conversion Shares and the issue of the First Convertible Bonds pursuant to the terms of the First CB Agreement be and are hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Second CB Agreement ”) entered into between the Company and China Life Insurance (Overseas) Company Limited (the “ Second CB Subscriber ”), a copy of which is tabled at the meeting and marked “ C ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the Second CB Subscriber has agreed to subscribe 9% unlisted convertible bonds due 2015 of the Company in the principal amount of HK$800 million (the “ Second Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the Second Convertible Bonds (the “ Second Conversion Shares ”), the allotment and the issue of the Second Conversion Shares and the issue of the Second Convertible Bonds pursuant to the terms of the Second CB Agreement be and are hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”

– N-2 –

NOTICE OF EGM

“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Third CB Agreement ”) entered into between the Company and Dr. Lo Ka Shui (the “ Third CB Subscriber ”), a copy of which is tabled at the meeting and marked “ D ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the Third CB Subscriber has agreed to subscribe 9% unlisted convertible bonds due 2015 of the Company in the principal amount of HK$100 million (the “ Third Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the Third Convertible Bonds (the “ Third Conversion Shares ”), the allotment and the issue of the Third Conversion Shares and the issue of the Third Convertible Bonds pursuant to the terms of the Third CB Agreement be and are hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Fourth CB Agreement ”) entered into between the Company and Grand Version Investments Limited (the “ Fourth CB Subscriber ”), a copy of which is tabled at the meeting and marked “ E ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the Fourth CB Subscriber has agreed to subscribe 9% unlisted convertible bonds due 2015 of the Company in the principal amount of HK$160 million (the “ Fourth Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the Fourth Convertible Bonds (the “ Fourth Conversion Shares ”), the allotment and the issue of the Fourth Conversion Shares and the issue of the Fourth Convertible Bonds pursuant to the terms of the Fourth CB Agreement be and are hereby confirmed and approved; and

– N-3 –

NOTICE OF EGM

(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Fifth CB Agreement ”) entered into between the Company and Guotai Junan Investments (Hong Kong) Limited (the “ Fifth CB Subscriber ”), a copy of which is tabled at the meeting and marked “ F ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the Fifth CB Subscriber has agreed to subscribe 9% unlisted convertible bonds due 2015 of the Company in the principal amount of HK$32 million (the “ Fifth Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the Fifth Convertible Bonds (the “ Fifth Conversion Shares ”), the allotment and the issue of the Fifth Conversion Shares and the issue of the Fifth Convertible Bonds pursuant to the terms of the Fifth CB Agreement be and are hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Sixth CB Agreement ”) entered into between the Company and Cross-Strait Capital Limited (the “ Sixth CB Subscriber ”), a copy of which is tabled at the meeting and marked “ G ” and initialed by the Chairman of the meeting for identification purpose, pursuant to which the Sixth CB Subscriber has agreed to subscribe 9% unlisted convertible bonds due 2015 of the Company in the principal amount of HK$32 million (the “ Sixth Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;

– N-4 –

NOTICE OF EGM

(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the Sixth Convertible Bonds (the “ Sixth Conversion Shares ”), the allotment and the issue of the Sixth Conversion Shares and the issue of the Sixth Convertible Bonds pursuant to the terms of the Sixth CB Agreement be and are hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Seventh CB Agreement ”) entered into between the Company and VMS Investment Group Limited (the “ Seventh CB Subscriber ”), a copy of which is tabled at the meeting and marked “ H ” and initialed by the Chairman of the meeting for identification purpose, pursuant to which the Seventh CB Subscriber has agreed to subscribe 9% unlisted convertible bonds due 2015 of the Company in the principal amount of HK$160 million (the “ Seventh Convertible Bonds ”), which entitled the holders to convert the principal amount outstanding into shares of the Company at the initial conversion price of HK$0.32 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the shares of the Company to be issued pursuant to the conversion of the Seventh Convertible Bonds (the “ Seventh Conversion Shares ”), the allotment and the issue of the Seventh Conversion Shares and the issue of the Seventh Convertible Bonds pursuant to the terms of the Seventh CB Agreement be and are hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”

– N-5 –

NOTICE OF EGM

9. “ THAT :

(a) the subscription agreement dated 14 June 2013 (the “ First Share Agreement ”) entered into between the Company and Turbo View Investment Limited (the “ First Share Subscriber ”), a copy of which is tabled at the meeting and marked “ I ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the First Share Subscriber has agreed to subscribe 1,500,000,000 new shares of the Company (the “ First Subscription Shares ”) at the subscription price of HK$0.30 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the First Subscription Shares, the allotment and the issue of the First Subscription Shares pursuant to the terms of the First Share Agreement be and is hereby confirmed and approved; and
(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”
“ THAT :
(a) the subscription agreement dated 14 June 2013 (the “ Second Share Agreement ”) entered into between the Company and Wisdom Accord Limited (the “ Second Share Subscriber ”), a copy of which is tabled at the meeting and marked “ J ” and initialed by the chairman of the meeting for identification purpose, pursuant to which the Second Share Subscriber has agreed to subscribe 1,000,000,000 new shares of the Company (the “ Second Subscription Shares ”) at the subscription price of HK$0.30 per share, be and is hereby approved, confirmed and ratified;
(b) conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the Second Subscription Shares, the allotment and the issue of the Second Subscription Shares pursuant to the terms of the Second Share Agreement be and is hereby confirmed and approved; and

– N-6 –

NOTICE OF EGM

(c) any one director of the Company be and is hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents (if any) and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated hereunder.”

By Order of the Board CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED Cao Zhong Chairman

Hong Kong, 30 July 2013

Registered Office: Principal Place of Business in Hong Kong: Caledonian Trust (Cayman) Limited Room 1801-07, 18/F., Caledonian House, China Resources Building, 69 Dr. Roy’s Drive, 26 Harbour Road, P.O. Box 1043, Wanchai, Grand Cayman, Hong Kong KY1-1102, Cayman Islands

Notes:

(a) A member entitled to attend and vote at the above meeting is entitled to appoint one or more than one proxies to attend and vote on his behalf. A proxy need not be a member of the Company but must be present in person to represent the member.
(b) If the appointer is a corporation, the form of proxy must be under its common seal, or under the hand of an officer or attorney duly authorized on its behalf.
(c) In order to be valid, a form of proxy must be deposited at the Company’s Hong Kong branch share registrar, Tricor Progressive Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. The completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting if you so wish. In the event that you attend the meeting after having lodged the form of proxy, the form of proxy will be deemed to have been revoked.
(d) Where there are joint registered holders of any share, anyone of such persons may vote at the meeting, either personally or by proxy, in respect of such shares as if he was solely entitled thereto; but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote and will be accepted to the exclusion of other joint registered holders in respect hereof.
(e) The EGM is expected not to exceed half an hour, and all member and proxies shall be responsible for their own traveling expenses.

As at the date of this notice, the Board comprises five executive Directors, namely Mr. Cao Zhong, Mr. Fung Tsun Pong, Mr. Duan Jingquan, Mr. Tsang Kam Ching, David and Mr. Gao Zhiping; and three independent non-executive Directors, namely Mr. Yip Tak On, Mr. Jing Baoli and Mr. Bao Liang Ming.

For identification purpose only

– N-7 –

AI assistant

Central Development Holdings Limited — Proxy Solicitation & Information Statement 2013

49236_rns_2013-07-29_1f2f0a08-05c5-4fee-b515-21da119e797d.pdf

CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED 中國資源交通集團有限公司

(1) MAJOR TRANSACTION IN RELATION TO ENTERING INTO THE CAPITAL INCREASE AGREEMENT; (2) PROPOSED ISSUE OF 9% CONVERTIBLE BONDS DUE 2015; AND (3) PROPOSED ISSUE OF NEW SHARES

CHINA RESOURCES AND TRANSPORTATION GROUP LIMITED 中國資源交通集團有限公司

(Stock Code: 269)

(1) MAJOR TRANSACTION IN RELATION TO ENTERING INTO THE CAPITAL INCREASE AGREEMENT; (2) PROPOSED ISSUE OF 9% CONVERTIBLE BONDS DUE 2015; AND

(3) PROPOSED ISSUE OF NEW SHARES

INTRODUCTION

THE CAPITAL INCREASE

The Capital Increase Agreement

Date

Parties

Capital Increase

Conditions precedent

Information on the Project Company

Reasons for the Capital Increase

Financial effects to the Group as a result of the Capital Increase

Listing Rules implications

THE CB SUBSCRIPTION

The First CB Agreement

Date

Parties

Principal terms of the First Convertible Bonds

The Second CB Agreement

Date

Parties

LETTER FROM THE BOARD

Principal terms of the Second Convertible Bonds

The Third CB Agreement

Date

Parties

Principal terms of the Third Convertible Bonds

The Fourth CB Agreement

Date

Parties

Principal terms of the Fourth Convertible Bonds

The Fifth CB Agreement

Date

Parties

Principal terms of the Fifth Convertible Bonds

The Sixth CB Agreement

Date

Parties

Principal terms of the Sixth Convertible Bonds

The Seventh CB Agreement

Date

Parties

Principal terms of the Seventh Convertible Bonds

Other terms of the 2015 Convertible Bonds

Issues of Shares at less than current market price

A + B C

A + B A + C

Comparison of conversion price

Conversion Shares

Conditions precedent

LETTER FROM THE BOARD

Application for Listing

Reasons for the CB Agreements and use of proceeds

THE SHARE SUBSCRIPTION

The First Share Agreement

Date

Parties

The First Share Subscription

The Second Share Agreement

Date

Parties

The Second Share Subscription

Subscription Price

Subscription Shares

Ranking of the Subscription Shares

Conditions precedent

Application for listing

Reasons of the Share Subscription and use of proceeds

SHAREHOLDING OF THE COMPANY

FUND RAISING ACTIVITIES OF THE COMPANY IN THE LAST 12 MONTHS

GENERAL

EGM

RECOMMENDATION

Central Development Holdings Limited Proxy Solicitation & Information Statement 2013