THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 advisers.

If you have sold or transferred all your shares in China Railway Group Limited, you should at once hand this circular and the accompanying proxy forms and the reply slip to the purchaser or the 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 the transferee.

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.

This circular is for the sole purpose of the EGM and H Shareholders’ Class Meeting of China Railway Group Limited and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities.

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中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 390)

(1) PROPOSED NON-PUBLIC ISSUANCE OF NEW A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG (3) GENERAL MANDATE TO ISSUE NEW SHARES

(4) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION (5) PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

(6) PROPOSAL REGARDING THE PLAN FOR SHAREHOLDERS’ RETURN FOR 2015–2017

(7) NOTICE OF EXTRAORDINARY GENERAL MEETING AND

(8) NOTICE OF H SHAREHOLDERS’ CLASS MEETING

Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

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A letter from the Board is set out on pages 5 to 24 of this circular. A letter from the Independent Board Committee is set out on page 25 of this circular. A letter from Asian Capital (Corporate Finance) Limited, containing its advice to the Independent Board Committee and the Independent Shareholders of the Company is set out on pages 26 to 41 of this circular.

The Company will convene the EGM at 2:00 p.m. on Tuesday, 31 March 2015, at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, and will convene the A Shareholders’ Class Meeting immediately following the conclusion of the EGM at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, and the H Shareholder’s Class Meeting immediately following the conclusion of the A Shareholders’ Class Meeting at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC. The notice of EGM and notice of H Shareholders’ Class Meeting are set out on pages EGM-1 to EGM-7 and pages H-1 to H-3 of this circular, respectively.

If you intend to appoint a proxy to attend the EGM or H Shareholders’ Class Meeting, you are required to complete and return the accompanying proxy forms in accordance with the instructions printed thereon. For holders of H Shares, the proxy forms should be returned to Computershare Hong Kong Investor Services Limited in person or by post not less than 24 hours before the time appointed for holding the EGM or the H Shareholders’ Class Meeting or any adjourned meetings thereof. Completion and return of the proxy forms will not preclude you from attending and voting in person at the EGM or the H Shareholders’ Class Meeting or at any adjourned meetings should you so wish.

If you intend to attend the EGM or the H Shareholders’ Class Meeting in person or by proxy, you are required to complete and return the reply slip to Computershare Hong Kong Investor Services Limited or to the Company’s Board of Directors’ Office on or before 11 March 2015.

3 March 2015

TABLE OF CONTENTS

	Pages
DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
2 PROPOSED NON-PUBLIC ISSUANCE OF NEW A SHARES . . . . . . . . . . .	7
3 PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG . . . . . . . . . .	16
4 GENERAL MANDATE TO ISSUE NEW SHARES . . . . . . . . . . . . . . . . . . . .	18
5 IMPACT OF THE NON-PUBLIC ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . .	19
6 PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION . . . . . . . .	21
7 PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR
SHAREHOLDERS’ MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
8 INFORMATION ON THE GROUP AND CRECG . . . . . . . . . . . . . . . . . . . .	22
9 IMPLICATIONS UNDER THE HONG KONG LISTING RULES . . . . . . . . .	22
10 EGM AND H SHAREHOLDERS’ CLASS MEETING . . . . . . . . . . . . . . . . . .	23
11 RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
12 FURTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . .	25
LETTER FROM ASIAN CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
APPENDIX I – THE REPORT ON THE USE OF PROCEEDS FROM
PREVIOUS FUND RAISING EXERCISE . . . . . . . . . . .	I-1
APPENDIX II – THE FEASIBILITY ANALYSIS REPORT . . . . . . . . . . . . .	II-1
APPENDIX III – THE PROPOSAL REGARDING THE PLAN FOR
THE SHAREHOLDERS’ RETURN FOR 2015–2017 . . . .	III-1
APPENDIX IV – PROPOSED AMENDMENTS TO ARTICLES OF
ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V – PROPOSED AMENDMENTS TO THE PROCEDURAL
RULES FOR SHAREHOLDERS’ MEETINGS . . . . . . . .	V-1
APPENDIX VI – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	VI-1
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1
NOTICE OF H SHAREHOLDERS’ CLASS MEETING . . . . . . . . . . . . . . . . . . . .	H-1

DEFINITION

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

“A Share(s)”

the domestic share(s) in the ordinary share capital of the Company with a nominal value of RMB1.00 each which are listed on the Shanghai Stock Exchange (stock code: 601390)

“A Shareholder(s)”
holder(s) of A Shares
“A Shareholders’ Class Meeting”
the 2015 first class meeting of the A Shareholders to be convened and held by the Company immediately following the conclusion of the EGM in the afternoon on Tuesday, 31 March 2015 at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, for the purpose of considering, and if thought fit, approving the Non-Public Issuance, the CRECG Subscription Agreement and the transactions contemplated thereunder and other related matters, including any adjournment in respect thereof
“Asian Capital” or “Independent Financial Advisor”

Asian Capital (Corporate Finance) Limited, a licensed corporation to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (assets management) regulated activities under the SFO

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

the board of directors of the Company

“BOT”
the “Build–Operate–Transfer” mode
“BT”
the “Build–Transfer” mode
“Company”

中國中鐵股份有限公司 (China Railway Group Limited), a joint stock limited company incorporated in the PRC and the H Shares and A Shares of which are listed on the Hong Kong Stock Exchange (stock code: 390) and the Shanghai Stock Exchange (stock code: 601390), respectively

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

– 1 –

DEFINITION

“controlling shareholder”
“CRECG”
“CRECG Subscription Agreement”
“CSRC”
“Date of Benchmark Pricing”
“Directors”
“EGM”
“General Mandate”
“Group”
has the meaning ascribed to it under the Hong Kong Listing Rules
中國鐵路工程總公司 (China Railway Engineering Corporation), a state-owned enterprise incorporated in the PRC and the controlling Shareholder of the Company
the subscription agreement relating to the the subscription of new A Shares by CRECG entered into between the Company and CRECG on 10 February 2015
the China Securities Regulatory Commission
11 February 2015, being the date of the announcement regarding the resolution passed at the seventh meeting of the third session of the board of directors of the Company
the directors of the Company
the 2015 first extraordinary general meeting of the Company to be convened and held at 2:00 p.m. on Tuesday, 31 March 2015, at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, for the purpose of considering and, if thought fit, approving the Non-Public Issuance, the CRECG Subscription Agreement and the transactions contemplated thereunder, the grant of the General Mandate, the proposed amendments to the articles of association of the Company, the proposed amendments to the procedural rules of Shareholders’ meetings and other related matters, including any adjournment in respect thereof
an unconditional and general mandate proposed to be granted at the EGM to authorize the Board to, among others, issue and deal with new Shares which shall not exceed 20% of each of the existing issued A Shares and H Shares as at the date of passing the proposed resolution at the EGM
the Company and its subsidiaries

– 2 –

DEFINITION

“H Share(s)”
“H Shareholder(s)”
“H Shareholders’ Class Meeting”
“Hong Kong Listing Rules”
“Hong Kong Stock Exchange”
“Independent Board Committee”
“Independent Shareholders”
“Latest Practicable Date”
“Non-Public Issuance”
“PRC”
“RMB”

the overseas listed share(s) in the ordinary share capital of the Company with a nominal value of RMB1.00 each which are listed on the Hong Kong Stock Exchange (stock code: 390)

holder(s) of H Shares
the 2015 first class meeting of the H Shareholders to be convened and held by the Company immediately following the conclusion of the A Shareholders’ Class Meeting in the afternoon on Tuesday, 31 March 2015 at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, for the purpose of considering, and if thought fit, approving the Non-Public Issuance, the CRECG Subscription Agreement and the transactions thereunder and other related matters, including any adjournment in respect thereof
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
The Stock Exchange of Hong Kong Limited
the independent board committee of the Company established to advise the Independent Shareholders in relation to the CRECG Subscription Agreement and the transactions contemplated thereunder
the Shareholders other than CRECG and its associates, who are neither involved nor interested in the CRECG Subscription Agreement
25 February 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
means the proposed non-public issuance of not more than 1,568,620,000 new A Shares (subject to adjustment) by the Company to not more than ten investors (including CRECG)
the People’s Republic of China
Renminbi, the lawful currency of the PRC

– 3 –

DEFINITION

“SASAC” the State-owned Assets Supervision and Administration Commission of the State Council of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Share(s)” the A Share(s) and/or the H Share(s) “Shareholder(s)” the A Shareholder(s) and/or the H Shareholder(s) “trading day” a day on which the Shanghai Stock Exchange is open for trading in securities “%” per cent.

– 4 –

LETTER FROM THE BOARD

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中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 390)

Executive Directors: LI Changjin (Chairman) YAO Guiqing DAI Hegen

Independent non-executive Directors: GUO Peizhang WEN Baoman ZHENG Qingzhi NGAI Wai Fung

Registered Office: 918, Block 1, No. 128 South 4th Ring Road West Fengtai District Beijing 100070 PRC

Place of Business in Hong Kong: Unit 1201-1203 12th Floor, APEC Plaza 49 Hoi Yuen Road, Kwun Tong Kowloon Hong Kong 3 March 2015

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED NON-PUBLIC ISSUANCE OF NEW A SHARES

(2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG (3) GENERAL MANDATE TO ISSUE NEW SHARES

(4) PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

(5) PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

(6) PROPOSAL REGARDING THE PLAN FOR SHAREHOLDERS’ RETURN FOR 2015–2017

(7) NOTICE OF EXTRAORDINARY GENERAL MEETING AND

(8) NOTICE OF H SHAREHOLDERS’ CLASS MEETING

1 INTRODUCTION

Reference is made to the announcement of the Company dated 11 February 2015.

– 5 –

LETTER FROM THE BOARD

The Board announces that on 10 February 2015, the Board resolved to propose a non-public issuance of A Shares, pursuant to which the Company will issue no more than 1,568,620,000 new A Shares to not more than ten investors, including CRECG. The issue price shall be not less than RMB7.65 per new A Share, which is not less than 90% of the average trading price of the Company’s A Shares over the 20 trading days prior to the Date of Benchmark Pricing (the average trading price of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing = the total turnover of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing/the total trading volume of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing). In the event that there is any ex-dividend or ex-right adjustment on the A Shares during the period from the Date of Benchmark Pricing to the date of issue under the Non-Public Issuance as a result of distribution of dividends, issue of bonus shares, capitalisation issue, issue of new shares or rights issue, the base issue price under the Non-Public Issuance shall be adjusted accordingly.

As part of the Non-Public Issuance, the Company and CRECG entered into the CRECG Subscription Agreement on 10 February 2015, pursuant to which CRECG agreed to subscribe for an aggregate of not less than 20% of the new A Shares to be issued under the Non-Public Issuance. CRECG will not participate in the book-building exercise for the Non-Public Issuance, but has undertaken to accept the results of the price quotations by other target investors and will subscribe at the same price as the other target investors.

As at the Latest Practicable Date, CRECG is the controlling Shareholder of the Company holding 11,950,010,000 A Shares, representing approximately 56.10% of the total issued Shares of the Company, and therefore, is a connected person of the Company. Accordingly, the placing and issue of new A Shares to CRECG pursuant to the CRECG Subscription Agreement constitutes a connected transaction of the Company and is subject to reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules. CRECG and its associates shall abstain from voting on the Shareholders’ resolutions in relation to the CRECG Subscription Agreement and the transactions contemplated thereunder at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting respectively. Furthermore, CRECG, being one of the target subscribers, is considered to have a material interest in the Non-Public Issuance. CRECG and its close associates shall therefore abstain from voting on the resolutions approving the Non-Public Issuance at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting, respectively.

The Independent Board Committee (comprising all the independent non-executive Directors) has, in accordance with the Hong Kong Listing Rules, been formed to advise the Independent Shareholders on terms of the CRECG Subscription Agreement and the transactions contemplated thereunder. In this connection, Asian Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders on the same and make recommendation on voting.

The purposes of this circular is to provide you with information regarding resolutions to be considered at the EGM and the H Shareholders’ Class Meeting and to set out the notices of the EGM and the H Shareholders’ Class Meeting.

– 6 –

LETTER FROM THE BOARD

2 PROPOSED NON-PUBLIC ISSUANCE OF NEW A SHARES

2.1 Terms of the Non-Public Issuance

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

The Shares to be issued under the Non-Public Issuance are RMB denominated ordinary Shares of the Company with a nominal value of RMB1.00 per Share, which will be listed domestically (A Shares).

(2) Method of issuance

All of the A Shares will be issued by way of non-public issuance to specific target investors at a selected time within six months following the approval of the CSRC.

(3) Target subscribers and method of subscription

The Non-Public Issuance will be made to not more than ten target investors (including CRECG). The target investors must be securities investment fund management companies, securities companies, trust and investment companies, financial companies, insurance institutional investors, qualified foreign institutional investors (including the proprietary accounts of, or the investment product accounts under the management of, such investors) or other domestic corporate investors and natural persons complying with the requirements of the CSRC. Any fund management company holding shares with more than one investment account will be deemed as one target investor. The Board and the lead underwriter(s) to be appointed by the Company for the purpose of the Non-Public Issuance will decide on the target investors (other than CRECG) by a book-building exercise based on the principles of, amongst others, price bidding, and in accordance with the relevant requirements of the CSRC and the prices quoted by the target investors after the Company has obtained the approval documents in respect of the Non-Public Issuance.

All investors will subscribe for new A Shares to be issued under the Non-Public Issuance in cash.

As at the Latest Practicable Date, apart from the CRECG Subscription Agreement, the Company has not entered into any agreement with any potential investors in respect of the Non-Public Issuance. The Company currently expects that, with the exception of CRECG, the new A Shares to be issued under the Non-Public Issuance will only be placed to investors who are (and their respective ultimate beneficial owners are also) third parties independent of the Company and connected persons of the Company, and none of them will become substantial shareholders of the Company upon completion of their respective subscriptions of new A Shares under the Non-Public Issuance. The Company will comply with the relevant requirements of the Hong Kong Listing Rules should there be any changes or if otherwise necessary.

– 7 –

LETTER FROM THE BOARD

(4) Number of A Shares to be issued

The total number of new A Shares to be issued under the Non-Public Issuance shall be not more than 1,568,620,000 new A Shares, and the aggregate nominal value of such new A Shares shall be not more than RMB1,568,620,000. CRECG will subscribe for not less than 20% of the new A Shares to be issued under the Non-Public Issuance. The actual number of A Shares to be issued under the Non-Public Issuance and those to be subscribed by CRECG under the CRECG Subscription Agreement will be determined according to the issue price of the A Shares under the Non-Public Issuance. Subject to such maximum number (which may be adjusted in the ex-dividend or ex-right events as disclosed in this circular), the final number of new A Shares to be issued will be determined by the Board and the relevant persons as authorised by the Board upon the authorisation by the Shareholders’ general meeting after consultation with the lead underwriter(s) of the Non-Public Issuance in accordance with the market conditions at the time of the issue.

The 1,568,620,000 new A Shares to be issued under the Non-Public Issuance represent (i) approximately 9.18% of the existing issued A Shares and approximately 7.36% of the existing total issued Shares of the Company as at the Latest Practicable Date; and (ii) approximately 8.41% of the enlarged issued A Shares and approximately 6.86% of the enlarged total issued Shares of the Company upon completion of the Non-Public Issuance (assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance).

In the event that there is any ex-dividend or ex-right adjustment on the A Shares during the period from the Date of Benchmark Pricing to the date of issue under the Non-Public Issuance as a result of distribution of dividends, issue of bonus shares, capitalisation issue, issue of new Shares or rights issue, the maximum number of A Shares to be issued under the Non-Public Issuance shall be adjusted accordingly.

(5) Issue price and pricing principles

The Date of Benchmark Pricing in relation to the new A Shares to be issued under the Non-Public Issuance shall be the date of announcement of the resolutions passed at the seventh meeting of the third session of the Board of Directors of the Company, being 11 February 2015. The issue price shall be not less than RMB7.65 per new A Share, which is not less than 90% of the average trading price of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing (the average trading price of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing = the total turnover of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing/the total trading volume of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing). In the event that there is any ex-dividend or ex-right adjustment on the A Shares during the period from the Date of Benchmark Pricing to the date of issue under the Non-Public Issuance as a result of distribution of dividends, issue of bonus shares, capitalisation issue, issue of new shares or rights issue, the base issue price under the Non-Public Issuance shall be adjusted accordingly.

– 8 –

LETTER FROM THE BOARD

Subject to the above base issue price, the Board and the lead underwriter(s) shall determine the final issue price in accordance with the authorisation by the Shareholders’ general meeting, the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies and the relevant requirements of the CSRC, and will negotiate the price with reference to the prices quoted by the target investors. CRECG will not participate in the book-building exercise for the Non-Public Issuance, but has undertaken to accept the results of the price quotations by other target investors and will subscribe at the same price as the other target investors.

For reference and illustrative purposes only, the closing price of the A Shares and the H Shares on 30 January 2015, i.e. the trading day immediately prior to the date of the Board meeting on 10 February 2015, was RMB8.14 and HK$5.69 per H Share, respectively. Nonetheless, the actual issue price of the new A Shares under the Non-Public Issuance will be determined by the Board according to the pricing principles disclosed in this circular. As the timing for the Non-Public Issuance, the final issue size and the issue price cannot be determined at the date of the circular and are subject to necessary approvals and book-building exercise, the relevant expenses to be incurred in relation to the Non-Public Issuance (which will substantially comprise of underwriting fees) can not be determined at this stage. However, when agreeing the underwriting commission with the underwriters, the Company will consider a number of factors including the underwriting commission of comparable transactions and the Company does not expect that the final underwriting commission will differ substantially from comparable transactions. The net price to the Company of each new A Share to be issued will be determined and disclosed upon completion of the Non-Public Issuance and the determination of relevant expenses incurred or to be incurred in relation to the Non-Public Issuance.

(6) Lock-up arrangement

CRECG must not transfer the new A Shares that it subscribes for pursuant to the CRECG Subscription Agreement within 36 months from the date of completion of the Non-Public Issuance, and the other investors must not transfer the new A Shares that they subscribe for within 12 months from the date of completion of the Non-Public Issuance.

(7) Amount and use of proceeds

The total amount of the total proceeds from the Non-Public Issuance is expected not to exceed RMB12,000 million.

The net proceeds from the Non-Public Issuance after deducting fees and expenses will be used for the following purposes:

		Proposed Amount
		of Proceeds to be
No.	Use of Proceeds	Applied
1	Shenzhen Rail Transit Line 11 BT Project	RMB3,000 million
2	Shijiazhuang Rail Transit Line 1 (Phase I)	RMB1,500 million
	BT Project
3	Guang-Fo-Jiang Expressway (Jiangmen	RMB1,000 million
	Avenue Northbound Lanes) BT Project
4	Huo-Yong Expressway (Yong He to Yong He	RMB1,500 million
	Guan Section) BT Project

– 9 –

LETTER FROM THE BOARD

Proposed Amount of Proceeds to be Applied RMB1,400 million

No. Use of Proceeds

5 Shen-Jia-Mi Expressway (Shenmu-to-Jiaxian RMB1,400 million Section) BOT Project
6 Repayment of bank loans Not more than RMB3,600 million

Total

Not more than RMB12,000 million

In the event that the amount of net proceeds from the Non-Public Issuance is less than the amount of the proceeds proposed to be used for the projects above, adjustments will be made to the specific projects to be invested with the proceeds, the priority of fund use and the specific amount of investment involved in projects respectively, and the Company will make final decisions with reference to the net amount of proceeds so raised and other factors including the importance and urgency of each project, and the Company will make up the shortfall with its own funds or through other financing means.

Before the proceeds from the Non-Public Issuance are made available, the Company will advance its own funds so required based on the actual progress of the projects and, once the proceeds is available, such funds will be replaced with the proceeds so raised in accordance with the procedures required by relevant regulations.

(8) Place of listing

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

(9) Accumulated profit distribution of the Company prior to the Non-Public Issuance

In order to align the interests of the existing Shareholders and the holders of new A Shares following the completion of the Non-Public Issuance, the undistributed profits of the Company accumulated prior to the Non-Public Issuance will be shared amongst the new and existing Shareholders after the Non-Public Issuance.

(10) Valid period of the resolutions regarding the Non-Public Issuance

The resolutions regarding the Non-Public Issuance shall remain effective for a period of 12 months from the date of passing such resolutions at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting.

The Company has submitted the application in relation to the Non-Public Issuance to the SASAC on 11 February 2015. As at the Latest Practicable Date, the Company has not made any applications in relation to the Non-Public Issuance to the CSRC. The Directors consider that a validity period of 12 months for resolutions

– 10 –

LETTER FROM THE BOARD

regarding the Non-Public Issuance is required since there is uncertainty as to the time required to obtain the approval from the CSRC, and that a 12-month period will provide sufficient flexibility to the Directors to select the most suitable timing to determine the issue price and the timing of the issuance.

The Directors are of the view that the terms of the Non-Public Issuance (including the proposed issue price) are on normal commercial terms and are fair and reasonable taking into consideration the prevailing market conditions and are in the interests of the Company and the Shareholders as a whole.

2.2 Conditions Precedent

The Non-Public Issuance is conditional upon, among other things, (i) the passing of the relevant resolutions by the Shareholders at the EGM in respect of the Non-Public Issuance; (ii) the passing of the relevant resolutions by the A Shareholders and H Shareholders in respect of the Non-Public Issuance at the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting, respectively; (iii) obtaining the approval from SASAC; and (iv) obtaining the approval from CSRC.

2.3 Rights of the new A Shares

The new A Shares to be issued pursuant to the Non-Public Issuance, when fully paid and issued, will rank pari passu in all respects amongst themselves and with the A Shares in issue at the time of the issue and allotment of such new A Shares.

2.4 Shareholding Structure of the Company

For reference and illustrative purposes only, assuming the maximum of 1,568,620,000 new A Shares under the Non-Public Issuance are issued, the possible changes to the share capital and shareholding structure of the Company will be as follows:

(i) As at the Latest Practicable Date and prior to completion of the Non-Public Issuance

Name of shareholder Number of Shares held CRECG 11,950,010,000 A Shares Public A Shareholders 5,142,500,000 A Shares Public H Shareholders 4,207,390,000 H Shares Total 21,299,900,000 Shares	Approximate percentage of shareholding in the Company’s total issued A Shares 69.91% 30.09% – 100%	Approximate percentage of shareholding in the Company’s total issued share capital 56.10% 24.15% 19.75%
		100%

– 11 –

LETTER FROM THE BOARD

(ii) Immediately after completion of the Non-Public Issuance (assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance, 20% of which are subscribed by CRECG under the CRECG Subscription Agreement)

Name of shareholder Number of Shares held CRECG 12,263,734,000 A Shares Public A Shareholders 5,142,500,000 A Shares Public H Shareholders 4,207,390,000 H Shares Investors under Non-Public Issuance (other than CRECG) 1,254,896,000 A Shares Total 22,868,520,000 Shares	Approximate percentage of shareholding in the Company’s total issued A Shares 65.72% 27.56% – 6.72% 100%	Approximate percentage of shareholding in the Company’s total issued share capital 53.63% 22.48% 18.40% 5.49%
		100%

(iii) Immediately after completion of the Non-Public Issuance (assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance, all of which are subscribed by CRECG under the CRECG Subscription Agreement)

Name of shareholder Number of Shares held CRECG 13,518,630,000 A Shares Public A Shareholders 5,142,500,000 A Shares Public H Shareholders 4,207,390,000 H Shares Total 22,868,520,000 Shares	Approximately percentage of shareholding in the Company’s total issued A Shares 72.44% 27.56% – 100%	Approximately percentage of shareholding in the Company’s total issued share capital 59.11% 22.49% 18.40%
		100%

– 12 –

LETTER FROM THE BOARD

2.5 Reasons for the Non-Public Issuance

(1) Impact of the projects using the proceeds from the Non-Public Issuance on the Company’s operation and management

All business segments of the Company have grown rapidly, and according to the Company’s overall operation and development strategy, the Company seeks to consolidate its leading position in China’s rapidly developing infrastructure market, and uses the advanced technology capability and equipment to undertake large, complex and highly profitable projects and operate high-profit products, and leverage its strong strength in the infrastructure construction sector to expand BT/BOT infrastructure projects in the areas of urban rail transit, urban highway and expressway and continuously improve its business performance so as to provide better investment returns for its Shareholders.

The proceeds from the Non-Public Issuance will be mainly used for infrastructure investment projects, which are in line with the relevant PRC industry policies and the Company’s overall strategic development in the future and has good market development prospects and economic benefits. Once the projects utilizing the proceeds from the Non-Public Issuance are carried out, the Company will further improve its capability of building urban rail transit lines and expressways and further consolidate its market position and enhance its core competitiveness.

(2) Impact of the projects utilizing the proceeds from the Non-Public Issuance on the Company’s financial conditions

Following the completion of the Non-Public Issuance, the Company’s total assets and net assets will grow and the Company’s debt to asset ratio and finance costs will decrease and the ability of the Company to carry out investment, financing and research and development of key projects will improve considerably, all of which will help raise the Company’s profitability. Following the completion of the Non-Public Issuance, as projects utilizing the proceeds from the Non-Public Issuance need to be constructed over a period of time, the Company’s return on equity may be affected in the short term. However, as the projects utilizing the proceeds from the Non-Public Issuance are expected to generate good economic returns, it is expected that these projects will contribute to a stable increase in the revenue and profits of the Company and the profitability of the Company will strengthen correspondingly.

In view of the above, the proposed use of the proceeds from the Non-Public Issuance of the Company are in line with the relevant PRC industry policies and industry development trends and will generate good economic benefits, which is critical for the Company to improve profitability and core competitiveness and reduce financial risks. Once implemented, the projects utilizing the proceeds from the Non-Public Issuance will lay a solid foundation for the Company’s continuous and stable growth.

– 13 –

LETTER FROM THE BOARD

2.6 Proposal on the Plan of the Non-Public Issuance of A Shares

The Proposal on the Plan of the Non-Public Issuance of A Shares of China Railway Group Limited (the “ Proposal on the Plan of the Non-Public Issuance of A Shares ”) was considered and approved at the seventh meeting of the third session of the Board of the Company convened on 10 February 2015, and will be proposed at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting for approval. CRECG together with its associates will abstain from voting in respect of the relevant resolution at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting.

Major contents of the Proposal on the Plan of the Non-Public Issuance of A Shares have been set out in the relevant sections of this circular. For the full text of the Proposal on the Plan of the Non-Public Issuance of A Shares, please refer to the relevant announcement made by the Company on the website of the Shanghai Stock Exchange on 11 February 2015.

2.7 Fulfilment of the conditions for the Non-Public Issuance by the Company

In accordance with the laws, regulations and regulatory documents of the PRC, such as the Company Law of the People’s Republic of China , the Securities Law of the People’s Republic of China , the Measures Governing the Issue of Securities by Listed Companies and the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies and with reference to the Company’s actual conditions based upon the Company internal review, the Board has confirmed that the Company has satisfied the conditions for non-public issuance of A Shares and has approved the Company’s application for the Non-Public Issuance.

2.8 Reports on the Use of Proceeds from Previous Fund Raising Exercise

The Company has previously made initial public offerings of A Shares and H Shares in November and December in 2007 respectively and has raised net proceeds of RMB22.034 billion and RMB20.376 billion, respectively.

In accordance with relevant requirements, the Company has prepared the report on the use of proceeds from previous fund raising exercise of the Company (the “ Report on the Use of Proceeds from Previous Fund Raising Exercise ”). The Report on the Use of Proceeds from Previous Fund Raising Exercise provides details of the actual use of proceeds previously raised from the initial offering of A Shares and H Shares of the Company, including detailed explanations on the actual projects invested and actual amount invested as well as comparisons of the actual use of proceeds with the use disclosed in the prospectus together with explanations as to the differences in use.

The Report on the Use of Proceeds from Previous Fund Raising Exercise are set out in Appendix I to this circular. The Report on the Use of Proceeds from Previous Fund Raising Exercise is subject to Shareholders’ approval by way of an ordinary resolution pursuant to requirements of the CSRC.

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LETTER FROM THE BOARD

2.9 Feasibility Analysis Report

The net proceeds from the Non-Public Issuance are intended to be used for certain BT and BOT infrastructure investment projects and repayment of bank loans. The relevant details are set out in the feasibility analysis report on the use of proceeds from the non-public issuance of A Shares of the Company (the “ Feasibility Analysis Report ”), which is set out in Appendix II to this circular. The Feasibility Analysis Report is subject to Shareholders’ approval by way of an ordinary resolution pursuant to requirements of the CSRC.

2.10 Proposal Regarding The Plan for Shareholders’ Return for 2015 – 2017

To further enhance the awareness of the importance of returning the Shareholders and to provide them with continuous, stable and reasonable investment returns, the Company has formulated The Plan for Shareholders’ Return for 2015 – 2017 of China Railway Group Limited after taking into account factors such as its strategic development objectives, operation plan, profitability, cash flows and external financing environment, in accordance with the requirements of the Notice Regarding Further Implementation of Cash Dividends Distributions of Listed Companies (Zheng Jian Fa [2012] No. 37) issued by the CSRC, the Notice Regarding Further Optimization of Cash Dividends Distributions of Listed Companies (Jing Zheng Gong Si Fa [2012] No. 101) issued Beijing Branch of the CSRC, the Listed Companies Regulatory Guidance No. 3 – Cash Dividends Distribution of Listed Companies , the Guidance for Cash Dividend Distribution of SSE-listed Companies by Shanghai Stock Exchange as well as the relevant provisions under the articles of association of the Company. Details of the proposal regarding The Plan for Shareholders’ Return for 2015 – 2017 of China Railway Group Limited is set out in Appendix III to this circular. Such proposal is subject to Shareholders’ approval by way of an ordinary resolution pursuant to requirements of the CSRC.

2.11 Authorisations to the Board to Deal with the matters in Relation to the Non-Public Issuance

The Board also proposes to seek the Shareholders’ approval by way of special resolution to grant to the Board, the Chairman and the persons delegated by the Chairman to deal with at their sole discretion matters relating to the Non-Public Issuance. Details of the authorization are set out in the notice of the EGM on pages EGM-3 to EGM-4 of this circular.

Any adjustments to the terms of the Non-Public Issuance and the proposed use of proceeds to be made by the Board shall be subject to and not exceed the authorizations to be granted by Shareholders. Should there be any matters requiring Shareholders’ approval under relevant laws and regulations and the articles of association of the Company, the proposed adjustments in relation to such matters shall then be submitted to the Shareholders for approvals.

– 15 –

LETTER FROM THE BOARD

2.12 Fund raising activities in the past twelve months

The Company has not conducted any fund raising activities involving the issue of Shares within the 12 months immediately prior to the Latest Practicable Date.

3 PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG

As part of the Non-Public Issuance, the Company and CRECG entered into the CRECG Subscription Agreement on 10 February 2015, key terms of which are as follows:

(1) Number of new A Shares to be subscribed for and subscription price

CRECG agreed to subscribe for an aggregate of not less than 20% of the new A Shares to be issued under the Non-Public Issuance. The actual number of the new A Shares to be subscribed by CRECG will be determined with reference to the actual number of the new A Shares to be issued under the Non-Public Issuance.

The minimum number of new A Shares to be subscribed for by CRECG under the CRECG Subscription Agreement represent (i) approximately 1.84% of the existing issued A Shares and approximately 1.47% of the existing total issued Shares of the Company as at the Latest Practicable Date; and (ii) approximately 1.68% of the enlarged total issued A Shares and approximately 1.37% of the enlarged total issued Shares of the Company upon completion of the Non-Public Issuance (assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance).

(2) Subscription price and payment of the subscription price

The subscription price of the new A Shares to be issued under the CRECG Subscription Agreement shall be the same as the issue price of the Non-Public Issuance.

Upon the obtaining of the formal approval of the Non-Public Issuance from CSRC, CRECG will, when requested by the lead underwriter(s), pay the subscription price in full into the special bank account opened by the lead underwriter(s) for the Non-Public Issuance. Upon the payment of the subscription price into such account, the Company shall complete the capital verification procedures and the registration of the new A Shares issued under the Non-Public Issuance as required under relevant laws and regulations as soon as possible.

(3) Lock-up arrangement

CRECG must not transfer the new A Shares that it subscribes for pursuant to the CRECG Subscription Agreement within 36 months from the date of completion of the Non-Public Issuance.

– 16 –

LETTER FROM THE BOARD

(4) Conditions precedent of the CRECG Subscription Agreement

The CRECG Subscription Agreement shall become effective upon the satisfaction of all of the following conditions:

(i) the signing of and affixing the company chop on the CRECG Subscription Agreement by the legal or authorised representative of each of the parties to the CRECG Subscription Agreement;
(ii) the approval by the Board, the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting of all relevant matters in relation to the Non-Public Issuance;
(iii) the approval by the board of directors of CRECG of the CRECG Subscription Agreement and the transactions contemplated thereunder;
(iv) the approval by SASAC of the Non-Public Issuance; and
(v) the approval by CSRC of the Non-Public Issuance.

As at the Latest Practicable Date, (i) the CRECG Subscription Agreement has been signed and affixed with the company chop by the legal or authorised representative of each of the parties to the CRECG Subscription Agreement, (ii) the Non-Public Issuance and the relevant matters in relation to the Non-Public Issuance, the CRECG Subscription Agreement and the transactions contemplated thereunder have been approved by the Board, and (iii) the CRECG Subscription Agreement and the transactions contemplated thereunder have been approved by the board of directors of CRECG.

The participation of CRECG in the Non-Public Issuance demonstrates its confidence in the Company and support of the development of the Company’s business, which is conducive to enhancing the market image of the Company.

All executive Directors, Mr. Li Changjin, Mr. Yao Guiqing and Mr. Dai Hegen, who are interested in the CRECG Subscription Agreement and the transactions contemplated thereunder, have abstained from voting on the relevant Board resolutions approving the aforesaid transactions. Save as disclosed above, none of the Directors have a material interest in the CRECG Subscription Agreement and the transactions contemplated thereunder or is required to abstain from voting on the Board resolutions for considering and approving the aforesaid transactions.

The Directors (including the independent non-executive Directors, after considering the advice from the Independent Financial Adviser) are of the view that the terms of the CRECG Subscription Agreement and the transactions contemplated thereunder are on normal commercial terms and are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole.

– 17 –

LETTER FROM THE BOARD

4 GENERAL MANDATE TO ISSUE NEW SHARES

As at the Latest Practicable Date, the Company has 17,092,510,000 A Shares and 4,207,390,000 H Shares in issue, respectively. On 10 February 2015, the Board resolved to submit to the Shareholders for their consideration and approval a special resolution in respect of the grant of the General Mandate, details of which are as follows:

(i) the Board is unconditionally given approval to exercise, during the Relevant Period (as defined below), all powers of the Company to separately or concurrently issue and deal with new A Shares and new H Shares of the Company which shall not exceed 20% of the respective amounts of existing A shares and H shares of the Company as at the date of passing the relevant resolution;
(ii) pursuant to the approval under paragraph (i) above, the Board is authorised to enter into or make, during the Relevant Period, offers, agreements and/or options, under which the new Shares to be allotted and issued are required or may be required to be allotted and issued during or after the expiry of the Relevant Period, and the Board is authorised to issue and deal with the new Shares that are required or may be required to be allotted and issued under such offers, agreements and options;
(iii) after the issuance of the New Shares pursuant to the General Mandate, the Board is authorised to deal with all matters relating to the increase in the registered capital of the Company and to make such appropriate and necessary amendments to the articles of association of the Company relating to the share capital, the shareholding structure and the registered capital and other relevant things as they think fit and necessary, to complete domestic and overseas statutory procedures for approval, registration, and filing, and to take any other action and complete any formality required to effect the issuance of new Shares pursuant to this special resolution and the increase in the registered capital of the Company. The Board is authorized to re-delegate the authorization herein to the persons delegated by the Board to sign, execute, modify, complete, submit all agreements, contracts and documents in relation to the allotment and issuance of and dealing with the new Shares under the general mandate, unless otherwise stipulated by laws or regulations; and
(iv) “ Relevant Period ” means the period from the date of passing the relevant Shareholders’ resolution in respect of the General Mandate until the earliest of:
(a) the conclusion of the next annual general meeting of the Company;
(b) the expiration of the 12-month period from the date of passing the relevant Shareholders’ resolution; and

– 18 –

LETTER FROM THE BOARD

(c) the date on which the authorization granted to the Board in the relevant resolution is revoked or varied by a special resolution of the Shareholders of the Company in general meeting.

The Directors believe that the General Mandate will allow financial flexibility for the Company to raise further funds for its future business development and expansion. Accordingly, the Directors consider that the approval of the grant of the General Mandate is in the interests of the Company and the Shareholders as a whole.

The Board will only exercise the General Mandate, if granted by the Shareholders, in accordance with the Company Law of the PRC and the Hong Kong Listing Rules or all applicable laws, rules and regulations of any other governmental or regulatory authorities and only if all necessary approvals from CSRC and/or other relevant PRC governmental authorities are obtained. As at the Latest Practicable Date, no definitive plan has been formed by the Board as to when the General Mandate will be exercised, if granted by the Shareholders.

5 IMPACT OF THE NON-PUBLIC ISSUANCE

(1) Changes in the Company’s businesses, articles of association, shareholding structure, senior management personnel structure and revenue structure
(i) Impact on the Company’s businesses and revenue structure

The Non-Public Issuance will not have a material impact on the structures of Company’s core business and revenue, and it will help optimize the Company’s business structure.

The Company’s current business spreads to almost all infrastructure areas, ranging from railway, highway, municipal work, housing construction, urban rail transit, water conservancy and hydropower, airport, port and wharf. The Company has been involved in projects throughout all provinces and autonomous regions of China (Taiwan excluded) and in more than 60 countries and regions. Since its initial public offerings of the A Shares and H Shares, the asset size and profit margins of the Company have achieved substantial growth.

The trend in construction industry is to invest and operate in infrastructure projects, which is considered an important way for top-notch international construction companies to increase their profit margins. In connection with this, the Company intends to invest in such projects with the proceeds raised from the Non-Public Issuance. The Board is of the opinion that the implementation of these investment projects will help optimize the Company’s business structure, boost its presence in infrastructure sector, and increase its profit margins, thereby creating the Company’s competitive advantages in new areas and improving its core competitiveness.

– 19 –

LETTER FROM THE BOARD

As one of the biggest comprehensive multi-functional construction conglomerate in the world, the Company is renowned for its operating history and significant competitive advantages in large and complex projects. As the Company’s business scale grows, so does its demand for funds. The Non-Public Issuance will help expand the Company’s business scale, increase its market share, reduce the Company’s liabilities to assets ratio, and therefore further strengthen the Company’s competitiveness.

(ii) Impact on the Company’s articles of association, shareholding structure, senior management personnel structure

After the completion of the Non-Public Issuance, the Company’s share capital will be increased accordingly, and the Company’s existing shareholding structure will also be changed. The Company will make certain amendments to the articles of association in relation to its share capital to effect the change and complete the change in business registration. The Non-Public Issuance will not result in a significant change to the share capital structure of the Company.

The Non-Public Issuance will not result in changes to the Company’s senior management personnel structure.

(2) Changes in the Company’s financial position, profitability and cash flows

(i) Impact on the Company’s financial position

With the support of the state policies, the Company’s business scale has grown rapidly, which further creates increased demand for funds. After the completion of the Non-Public Issuance, both the Company’s asset scale and net asset scale will increase, which will help improve the Company’s financial strength and provide support for its subsequent development. Furthermore, improved financial strength will lead to increased market share. In addition, the Company’s liabilities-to-assets ratio is expected to decrease after the completion of the Non-Public Issuance, which will facilitate the sound operation of the Company.

(ii) Impact on the Company’s profitability

The Company plans to use the proceeds from the Non-Public Issuance in infrastructure projects (urban rail transit, highway, etc.). In the long-term, the yield rates in these projects are higher than those in building construction projects. Therefore, the Non-Public Issuance will help steadily increase the profit margins, drive the market share of the Company and maximize the interests of Shareholders.

(iii) Impact on the Company’s cash flows

Immediately upon the completion of the Non-Public Issuance, the Company’s cash inflows from financing will increase significantly, but with the investment projects going into operation and bringing returns and the decrease of bank loans, future cash inflows from operating activities and cash outflows into investment activities will increase.

– 20 –

LETTER FROM THE BOARD

(3) Changes in the business relationship, management relationship, connected transactions and competition, etc. between the Company and its controlling shareholder and its affiliates

After the completion of the Non-Public Issuance, there will be no material change in the management relationship, and there will be no new connected transactions and competition generated between the Company and CRECG. At the same time, the Company will strictly abide by relevant rules on connected transactions of listed companies of the CSRC and the stock exchanges where the Company’s stock is listed, to ensure that the Company operates in accordance with laws, and protect rights and interests of the Company and other Shareholders’ rights and interests from being impaired.

(4) After the completion of the Non-Public Issuance, whether there will be circumstances where the funds or assets of the Company will be appropriated by its controlling shareholder and its affiliates or where the Company will provide guarantee to its controlling shareholder and its affiliates

After the completion of the Non-Public Issuance, the funds transfers between the Company and its controlling shareholder, CRECG, will belong to normal business operations. There will be no circumstances where the funds or assets of the Company will be appropriated in a manner in violation of relevant regulations, and there will be no circumstances where the Company will provide guarantee to CRECG in violation of regulations.

(5) Impact on the Company’s liabilities

As at 30 September 2014, the liabilities to assets ratio of the Company (on a consolidated basis) was 84.18%. The completion of the Non-Public Issuance will help decrease the liabilities-to-assets ratio of the Company and further improve the capital structure of the Company.

6 PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

In accordance with the Guidelines for the Articles of Association of Listed Companies (as amended in 2014) , the Listed Companies Regulatory Guidance No. 3 – Cash Dividends of Listed Companies issued by the CSRC, the Guidelines on Cash Dividends Distribution of Listed Companies published by Shanghai Stock Exchange, and relevant laws, administrative regulations and other regulatory documents, and taking into account the actual situation of the Company, the Company proposed to make certain amendments to its existing articles of association, details of which are set out in Appendix IV to this circular.

The proposed amendments to the articles of association of the Company will be subject to the Shareholders’ approval at the EGM by way of special resolution.

– 21 –

LETTER FROM THE BOARD

7 PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

Pursuant to the Rules of General Meetings of Shareholders of Listed Company (2014 second revision) and other laws and regulations, administrative regulations and regulatory documents, and taking into account the actual situation of the Company, the Company proposed to amend certain provisions of The Procedural Rules for Shareholders’ Meetings of China Railway Group Limited , details of which are set out in Appendix V to this circular.

The proposed amendments to The Procedural Rules for Shareholders’ Meetings of China Railway Group Limited will be subject to the Shareholders’ approval at the EGM by way of special resolution.

8 INFORMATION ON THE GROUP AND CRECG

The Group is mainly engaged in infrastructure construction, survey, design and consulting services, engineering equipment and component manufacturing, property development and other businesses.

CRECG, a state-owned enterprise, is the controlling Shareholder of the Company holding approximately 56.10% of the total issued Shares of the Company. CRECG is primarily engaged in equity management and assets management.

9 IMPLICATIONS UNDER THE HONG KONG LISTING RULES

As at the Latest Practicable Date, CRECG is the controlling Shareholder of the Company holding 11,950,010,000 A Shares, representing approximately 56.10% of the total issued Shares of the Company, and therefore, is a connected person of the Company. Accordingly, the placing and issue of new A Shares to CRECG pursuant to the CRECG Subscription Agreement constitutes a connected transaction of the Company and is subject to reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules. CRECG and its associates shall abstain from voting on the Shareholders’ resolutions in relation to the CRECG Subscription Agreement and transactions contemplated thereunder at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting, respectively. Furthermore, CRECG, being one of the target subscribers, is considered to have a material interest in the Non-Public Issuance. CRECG and its close associates shall therefore abstain from voting on the resolutions approving the Non-Public Issuance at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting, respectively.

The Independent Board Committee (comprising all the independent non-executive Directors) has, in accordance with the Hong Kong Listing Rules, been formed to advise the Independent Shareholders on the terms of the CRECG Subscription Agreement and the transactions contemplated thereunder. In this connection, Asian Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders on the same and make recommendation on voting.

– 22 –

LETTER FROM THE BOARD

10 EGM AND H SHAREHOLDERS’ CLASS MEETING

The Company will convene the EGM at 2:00 p.m. on Tuesday, 31 March 2015, at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, and will convene the A Shareholders’ Class Meeting immediately following the conclusion of the EGM at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC, and the H Shareholders’ Class Meeting immediately following the conclusion of the A Shareholders’ Class Meeting at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC. The notice of EGM and notice of H Shareholders’ Class Meeting are set out on pages EGM-1 to EGM-7 and pages H-1 to H-3 of this circular, respectively.

If you intend to appoint a proxy to attend the EGM or the H Shareholders’ Class Meeting, you are required to complete and return the accompanying proxy forms in accordance with the instructions printed thereon. For holders of H Shares, the proxy forms should be returned to Computershare Hong Kong Investor Services Limited in person or by post not less than 24 hours before the time appointed for holding the EGM or the H Shareholders’ Class Meeting. Completion and return of the proxy forms will not preclude you from attending and voting in person at the EGM or the H Shareholders’ Class Meeting should you so wish.

If you intend to attend the EGM or the H Shareholders’ Class Meeting in person or by proxy, you are required to complete and return the reply slip to the Computershare Hong Kong Investor Services Limited or to the Company’s Board of Directors’ Office on or before Wednesday, 11 March 2015.

11 RECOMMENDATION

Asian Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the CRECG Subscription Agreement and the transaction contemplated thereunder. Asian Capital is of the view that the terms of the CRECG Subscription Agreement and the transaction contemplated thereunder, are (i) on normal commercial terms, (ii) fair and reasonable so far as the Company and the Independent H Shareholders are concerned; and (iii) in the interests of the Company and its Shareholders as a whole. Asian Capital therefore advises the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolutions in respect of the CRECG Subscription Agreement and the transactions contemplated thereunder to be proposed at the EGM and the H Shareholders’ Class Meeting.

Your attention is drawn to the letter from the Independent Board Committee set out on page 25 of this circular and the letter of advice from the Independent Financial Adviser set out on pages 26 to 41 of this circular. The Independent Shareholders are advised to read the aforesaid letters before deciding as to how to vote on the resolutions approving the CRECG Subscription Agreement.

– 23 –

LETTER FROM THE BOARD

The Directors consider that all of the aforesaid resolutions are in the best interests of the Company and the Shareholders as a whole, and accordingly, recommend you to vote in favour of all of the aforesaid resolutions to be proposed at the EGM and the H Shareholders’ Class Meeting.

12 FURTHER INFORMATION

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

Yours faithfully, By Order of the Board of China Railway Group Limited Li Changjin Chairman

– 24 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [55 x 56] intentionally omitted <==

中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 390)

3 March 2015

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION –

PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG

We refer to the circular dated 3 March 2015 (the “ Circular ”) to the H Shareholders of China Railway Group Limited (the “ Company ”) of which this letter forms a part. Unless otherwise specified, terms defined in the Circular shall have the same meanings when used in this letter.

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders as to whether the terms of the CRECG Subscription Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Asian Capital (Corporate Finance) Limited (“ Asian Capital ”) has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board on pages 1 to 24 of the Circular and the letter from the Asian Capital set out on pages 26 to 41 of the Circular.

Having considered the advice given by the Independent Financial Adviser, we are of the opinion that the terms of the CRECG Subscription Agreement and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM and the H Shareholders’ Class Meeting.

Yours faithfully,

China Railway Group Limited

Guo Peizhang, Wen Baoman, Zheng Qingzhi and Ngai Wai Fung

Members of the Independent Board Committee

– 25 –

LETTER FROM ASIAN CAPITAL

The following is the text of a letter from Asian Capital (Corporate Finance) Limited for the purpose of incorporation in this circular in connection with its advice to the Independent Board Committee and the Independent H Shareholders in respect of the terms of the CRECG Subscription Agreement and the transaction contemplated thereunder.

==> picture [151 x 47] intentionally omitted <==

Suite 601, Bank of America Tower 12 Harcourt Road Central, Hong Kong

To: The Independent Board Committee and the Independent H Shareholders

3 March 2015

Dear Sirs,

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent H Shareholders in respect of the CRECG Subscription Agreement and the transaction contemplated thereunder, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in this circular dated 3 March 2015 (the “ Circular ”) issued by the Company, of which this letter forms part. Unless otherwise stated, capitalised terms used herein shall have the same meanings as those defined in the Circular.

As set out in the Board Letter, the Board resolved to propose the Non-Public Issuance on 10 February 2015, pursuant to which the Company shall issue a maximum of 1,568,620,000 new A Shares for subscription by not more than ten investors (including CRECG), at an issue price of not less than RMB7.65 (approximately HK$9.56) per new A Share, with a total subscription price of not exceeding RMB12,000 million (approximately HK$15,000 million). As part of the Non-Public Issuance, the Company has entered into the CRECG Subscription Agreement with CRECG on 10 February 2015, pursuant to which, CRECG agreed to subscribe for an aggregate of not less than 20% of the new A Shares to be issued under the Non-Public Issuance. The actual number of the new A Shares to be subscribed by CRECG will be determined with reference to the actual number of the new A Shares to be issued under the Non-Public Issuance. The subscription price of the new A Shares to be issued under the CRECG Subscription Agreement shall be the same as the issue price of the Non-Public Issuance.

– 26 –

LETTER FROM ASIAN CAPITAL

As at the Latest Practicable Date, CRECG is the controlling shareholder of the Company, holding approximately 56.10% of the total issued share capital of the Company. Hence, CRECG is a connected person of the Company for the purpose of the Listing Rules. Accordingly, the placing and issue of new A shares to CRECG pursuant to the CRECG Subscription Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

The EGM, the A Shareholders’ Class Meeting and H Shareholders’ Class Meeting will be convened to approve, amongst other things, the Non-Public Issuance, the CRECG Subscription Agreement and the transaction contemplated thereunder. CRECG and its associates will abstain from voting at the EGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting convened for the purpose of approving, among others, the Non-Public Issuance, the CRECG Subscription Agreement and the transaction contemplated thereunder.

An Independent Board Committee comprising all the independent non-executive Directors, namely Guo Peizhang, Wen Baoman, Zheng Qingzhi and Ngai Wai Fung, has been formed to consider and advise the Independent Shareholders on whether the terms of the CRECG Subscription Agreement and the transaction contemplated thereunder are fair and reasonable so far as the Company and the Independent Shareholders are concerned and are in the interests of the Company and its Shareholders as a whole. We, Asian Capital (Corporate Finance) Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent H Shareholders in these respects.

BASIS OF OUR OPINION

In formulating our advice and opinion, we have considered, among others, (i) the annual reports of the Company for the years ended 31 December 2012 and 2013 (the “ Annual Reports ”); (ii) the interim reports of the Company for the six-month periods ended 30 June 2013 and 2014 (the “ Interim Reports ”); (iii) the Proposal on the Plan of the Non-Public Issuance of A Shares; (iv) the CRECG Subscription Agreement; (v) the Board Letter; and (vi) other available public information. We have also relied on all relevant information, opinions and representations made to us by the Directors and the representatives of the Company.

We have assumed that all information, opinions and representations, which have been provided to us by the Directors or the representatives of the Company, for which the Directors are solely responsible, were true, accurate and complete in all material respects at the time when they were made and will continue to be so as at the date of this Circular. The Company has also confirmed that there are no other material facts not contained in the information provided to us the omission of which would make any statement or opinion contained in the Circular misleading.

We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the representatives of the Company. We have not, however, carried out any independent verification of the

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LETTER FROM ASIAN CAPITAL

information provided to us by the Directors and the representatives of the Company and the information obtained from the public domain, nor have we conducted any independent investigation into the affairs, the businesses and financial position and the future prospects of each member of the Group, CRECG and their respective shareholders and associates. We therefore do not guarantee the accuracy of any of such information. We consider that we have reviewed sufficient information currently available to reach an informed view so as to provide a reasonable basis for our recommendation. We have no obligation to update our advice and opinion to take into account circumstances and events occurring after the date of this letter. As a result, circumstances and events could occur prior to the approval of the Non-Public Issuance and the CRECG Subscription Agreement that, if known to us at the time when we had rendered our advice and opinion, would have altered our advice and opinion.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Independent H Shareholders, we have considered the following principal factors and reasons:

I. Information of the Group

The Group is mainly engaged in infrastructure construction, survey, design and consulting services, engineering equipment and component manufacturing, property development and other businesses.

Set out below is a summary of the financial information of the Group prepared in accordance with the International Financial Reporting Standards (the “ IFRS ”) extracted from the Annual Reports and the Interim Reports.

	For the six months	For the six months	For the year	ended
	ended 30 June		31 December
	2014	2013	2013	2012
	(Unaudited)	(Unaudited)	(Audited)	(Audited)
		_In RMB _	million
Revenue	267,380	238,956	540,394	465,625
Cost of sales	(247,256)	(222,280)	(500,054)	(430,064)
Gross Profit	20,124	16,676	40,340	35,561
Operating expenses	8,658	8,614	16,722	17,257
Profit for the year/period	4,299	3,682	10,075	8,069
Profit for the year/period
attributable to owners of
the Company	4,061	3,488	9,374	7,390

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LETTER FROM ASIAN CAPITAL

	As at
	30 June	As at 31 December
	2014	2013	2012
	(Unaudited)	(Audited)	(Audited)
		In RMB million
Total assets	661,258	628,030	550,661
Total liabilities	561,821	531,400	462,671
Net assets	99,437	96,630	87,990
Equity attributable to owners
of the Company	89,111	86,463	77,793

In 2013, the Group achieved revenue of approximately RMB540,394 million, which represents an year-on-year increase of approximately RMB74,769 million or 16.06%. The increase of the revenue in 2013 was mainly attributable to the promising growth of railway, municipal works, building construction, urban rail and property development businesses. In 2013, the value of new contracts amounted to approximately RMB929,650 million, representing a year-on-year increase of approximately 27.18%, which was especially fueled by the significant increase of approximately 36.25% in value of new contracts for infrastructure business due to the further improvement of the infrastructure market. As of 31 December 2013, the Group’s contract backlog reached a year-on-year increase of approximately 31.84% to approximately RMB1,715,250 million in 2013. In the first half of year 2014, the revenue of the Group was approximately RMB267,380 million, representing an increase of approximately 11.90% from the same period of 2013.

In 2013, the Group’s cost of sales also increased by approximately 16.27% to approximately RMB500,054 million from approximately RMB430,064 million in 2012 primarily due to the increase in construction cost brought by the acceleration of construction of certain railway projects. Meanwhile, the Group achieved a gross profit of approximately RMB40,340 million with a year-on-year increase of approximately RMB4,779 million or 13.44%. The overall gross profit margin for 2013 was approximately 7.46%, a decrease of approximately 0.18% from approximately 7.64% for 2012. This was due to the lower gross profit margin of certain railway projects at initial construction stages and approval of compensation claim from China Railway Corporation for a few projects in which the Group did not receive full amount and in a timely manner. In the first half of 2014, the Group recorded a cost of sales of approximately RMB247,256 million and a gross profit of approximately RMB20,124 million, representing an increase of approximately 11.24% and 20.68% respectively from the same period of 2013.

The operating expenses, which include selling and marketing expenses and administrative expenses, decreased by approximately RMB535 million or 3.10% to approximately RMB16,722 million in 2013 from approximately RMB17,257 million in 2012. The increase of revenue and decrease of operating expenses outweighed the increase of cost of sales, contributing to a profit for the year and a profit for the year attributable to the owners of the Company of approximately RMB10,075 million and RMB9,374 million respectively in 2013, representing an increase of approximately 24.86% and 26.85% over those in 2012. In the first half of 2014, the Group recorded a profit for the period and a profit for the period attributable to the owners of the Company of approximately RMB4,299 million and RMB4,061 million, respectively, representing an increase of approximately 16.76% and 16.43% respectively from the same period of 2013.

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LETTER FROM ASIAN CAPITAL

Equity attributable to owners of the Company increased year-on-year by approximately RMB8,670 million or 11.14% to approximately RMB86,463 million as at 31 December 2013, which was mainly attributable to the Group’s profit in 2013. The equity attributable to owners of the Company as at 30 June 2014 was approximately RMB89,111 million.

II. Information of CRECG

CRECG, a state-owned enterprise, is the Company’s controlling shareholder holding approximately 56.10% of the total issued Share of the Company as at the Latest Practicable Date. CRECG is primarily engaged in equity management and assets management.

III. Reasons for the Non-Public Issuance and use of proceeds

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Based on the Board’s estimation, it is expected that the total proceeds from the Non-Public Issuance will be no more than RMB12,000 million, and the net proceeds after the issuing costs deduction from the gross proceeds will be allocated in the manner set out below:

RMB3,000 million for the Shenzhen Rail Transit Line 11 BT Project;
RMB1,500 million for the Shijiazhuang Rail Transit Line 1 (Phase I) BT Project;
RMB1,000 million for the Guang-Fo-Jiang Expressway (Jiangmen Avenue Northbound Lanes) BT Project;
RMB1,500 million for the Huo-Yong Expressway (Yong He to Yong He Guan Section) BT Project;
RMB1,400 million for Shen-Jia-Mi Expressway (Shenmu-to-Jiaxian Section) BOT Project; and
Not more than RMB3,600 million for the repayment of bank loans.

Before the proceeds from the Non-Public Issuance is available, the Company will advance its own funds so required based on the actual progress of the projects and, once the proceeds is available, such funds will be replaced with the proceeds so raised in accordance with the procedures required by relevant regulations.

As the timing for the Non-Public Issuance, the final issue size and the issue price cannot be determined at the date of the circular and are subject to necessary approvals and book-building exercise, the relevant expenses to be incurred in relation to the Non-Public Issuance (which will substantially comprise of underwriting fees) can not be determined at this stage. However, when agreeing the underwriting commission with the underwriters, the Company will consider a number of factors including the underwriting commission of comparable transactions and the Company does not expect that the final underwriting commission will differ substantially from comparable transactions.

In view of the above, the Board considers that the proposed uses of the proceeds from the Non-Public Issuance of the Company are in line with the relevant PRC industry policies and industry development trends and will generate good economic benefits, which is critical for the Company to improve profitability and core competitiveness and reduce financial risks. Once implemented, the projects utilizing the proceeds from the Non-Public Issuance will lay a solid foundation for the Company’s continuous and stable growth.

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LETTER FROM ASIAN CAPITAL

We also understand from the Board that the raising of funds from the Non-Public Issuance is expected to improve the capital structure of the Group, and lower the Group’s gearing ratio. According to the Company’s quarterly results announcement for the third quarter ended 30 September 2014, the Group’s consolidated gearing ratio was approximately 84.18%. The completion of the Non-Public Issuance and the proposed repayment of no more than RMB3,600 million bank loans as set out above are expected to reduce the Group’s consolidated gearing ratio by approximately 1.56% to approximately 82.62%, which will help improving the Group’s capital structure, reducing financing costs and enhance the Group’s ability to manage risks.

Taking into account of the above, we concur with the view of the Board that the terms of the CRECG Subscription Agreement and the transaction contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

IV. Principal terms of the Non-Public Issuance and the CRECG Subscription Agreement
Non-Public Issuance

As stated in the Board Letter, the number of A Shares to be issued under the Non-Public Issuance shall not exceed 1,568,620,000 and will be made to not more than ten target investors (including CRECG). The target investors other than CRECG must be securities investment fund management companies, securities companies, trust and investment companies, financial companies, insurance institutional investors, qualified foreign institutional investors (including the proprietary accounts of, or the investment product accounts under the management of, such investors) or other domestic corporate investors and natural persons complying with the requirements of the CSRC. Any fund management company holding shares with more than one investment account will be deemed as one target investor.

The Board and the lead underwriter(s) to be appointed by the Company for the purpose of the Non-Public Issuance will decide on the target investors (other than CRECG) by a book-building exercise based on the principle of, among others, price bidding, and in accordance with the relevant requirements of the CSRC and the prices quoted by the target investors after the Company has obtained the relevant approval documents in respect of the Non-Public Issuance. Subject to such maximum number of A Shares to be issued under the Non-Public Issuance of not more than 1,568,620,000 A Shares (which may be adjusted in the ex-dividend or ex-right events as disclosed in this Circular), the final number of new A Shares to be issued will be determined by the Board and the relevant persons as authorised by the Board upon the authorisation by the Shareholders’ general meeting after consultation with the lead underwriter(s) of the Non-Public Issuance in accordance with the market conditions at the time of the issue.

The 1,568,620,000 new A Shares to be issued under the Non-Public Issuance represent: (i) approximately 9.18% of the existing issued A Shares and approximately 7.36% of the existing total issued Shares of the Company as at the

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LETTER FROM ASIAN CAPITAL

Latest Practicable Date; and (ii) approximately 8.41% of the issued A Shares and approximately 6.86% of the total issued Shares of the Company as enlarged by the Non-Public Issuance (assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance).

Please refer to the paragraph headed “Proposed Non-Public Issuance of new A Shares” set out in the Board Letter contained in this Circular for details of the Non-Public Issuance.

• The CRECG Subscription

As part of the Non-Public Issuance, the Company has entered into the CRECG Subscription Agreement with CRECG on 10 February 2015, pursuant to which, CRECG agreed to subscribe for an aggregate of not less than 20% of the new A Shares to be issued under the Non-Public Issuance, which is 313,724,000 new A Shares. The actual number of the new A Shares to be subscribed by CRECG will be determined with reference to the actual number of the new A Shares to be issued under the Non-Public Issuance.

Assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance, among which 313,724,000 new A Shares are subscribed by CRECG, CRECG will hold an aggregate of 12,263,734,000 A Shares, representing approximately 53.63% of the enlarged total issued share capital of the Company, immediately after completion of the CRECG Subscription. Assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance, all of which are subscribed by CRECG, CRECG will hold an aggregate of 13,518,630,000 A Shares, representing approximately 59.11% of the enlarged total issued share capital of the Company, immediately after completion of the CRECG Subscription.

CRECG will not participate in the book-building exercise for the Non-Public Issuance, but has undertaken to accept the results of the price quotations by other target investors and will subscribe for the new A Shares at the same price as the other target investors. In the event that there is any ex-dividend or ex-right

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LETTER FROM ASIAN CAPITAL

adjustment on the A Shares during the period from the Date of Benchmark Pricing to the date of issue under the Non-Public Issuance as a result of distribution of dividends, issue of bonus shares, capitalisation issue, issue of new shares or rights issue, the base issue price under the Non-Public Issuance shall be adjusted accordingly.

The Directors consider that the terms of the CRECG Subscription Agreement, including the subscription price, and the transaction contemplated thereunder are on normal commercial terms, fair and reasonable and are in the interests of the Company and its Shareholders as a whole. Please refer to the paragraph headed “Proposed Subscription of new A Shares by CRECG” set out in the Board Letter contained in this Circular for details of the CRECG Subscription.

V. The issue prices for the Non-Public Issuance and the CRECG Subscription

Under the Non-Public Issuance and the CRECG Subscription Agreement, the issue price shall be not less than RMB7.65 (approximately HK$9.56) per new A Share to be issued (the “ Minimum Issue Price ”), which is not less than 90% of the average trading price of the Company’s A Shares over the 20 trading days prior to the Date of Benchmark Pricing (the average trading price of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing = the total turnover of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing/the total trading volume of the A Shares over the 20 trading days prior to the Date of Benchmark Pricing). In the event that there is any ex-dividend or ex-right adjustment on the A Shares during the period from the Date of Benchmark Pricing to the date of issue under the Non-Public Issuance as a result of distribution of dividends, issue of bonus shares, capitalization issue, issue of new shares or rights issue, the Minimum Issue Price of each new A Share under the Non-Public Issuance shall be adjusted accordingly.

Based on the foregoing Minimum Issue Price, the Board and the lead underwriter(s) shall determine the final issue price in accordance with the authorisation by the Shareholders’ general meeting, the Implementation Rules for the Non-Public Issuance of Shares by Listed Companies and the relevant requirements of the CSRC, and will negotiate the price with reference to the prices quoted by the target investors. As advised by the Directors, the basis in determining the Minimum Issue Price has been determined in compliance with the requirements of the Rules.

The net price to the Company of each new A Share to be issued will be determined and disclosed upon completion of the Non-Public Issuance and the determination of relevant expenses incurred or to be incurred in relation to the Non-Public Issuance.

On 30 January 2015, being the last trading day of the A Shares before the date of the announcement in relation to the Non-Public Issuance (the “ A Share Last Trading Day ”), the closing price of the A Shares was RMB8.14 (approximately HK$10.18).

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LETTER FROM ASIAN CAPITAL

The Minimum Issue Price represents:

(i) a discount of approximately 6.02% to the closing price of RMB8.14 per A Share as quoted on the Shanghai Stock Exchange on the A Share Last Trading Day, being the last trading day immediately prior to the suspension of trading in A Shares on 2 February 2015;
(ii) a discount of approximately 7.16% to the average of the closing prices of RMB8.24 per A Share as quoted on the Shanghai Stock Exchange for the 10 consecutive trading days up to and including the A Share Last Trading Day; and
(iii) a discount of approximately 9.04% to the average of the closing prices of RMB8.41 per A Share as quoted on the Shanghai Stock Exchange for the 20 consecutive trading days up to and including the A Share Last Trading Day.

Given that (i) the Minimum Issue Price is determined in compliance with the relevant requirements of the Rules and (ii) CRECG will not participate in the book-building exercise for the Non-Public Issuance and will subscribe for the new A Shares at the same price as the other target investors, we have no reason to doubt the fairness and appropriateness of the basis in determining for the subscription price for the Non-Public Issuance.

In assessing the Minimum Issue Price, we have compared the Minimum Issue Price with other issues of new A shares for fund raising or mergers in the primary market of the PRC, which have been announced by companies whose H shares are also listed on the Main Board of the Hong Kong Stock Exchange during the past twelve months up to the Latest Practicable Date (the “ Comparable Issues ”), irrespective of whether such issues proceeded or has proceeded to completion or not. We believe a time frame of twelve months as the sampling period is reasonable on the basis that sufficient number of comparables can be identified within a time period prior to the Non-Public Issuance that is not too distance away and at the same time reflecting the market conditions. To our best knowledge, nine Comparable Issues from September 2014 to January 2015 (i.e. within past six months) that meet our criteria for comparison purpose could be identified, details of which are set out as follows:

					Discount	Discount
					(premium) of	(premium) of
					the issue price	the issue price
					to the average	to the average
					trading price of	trading price of
				Discount	A shares for the	A shares for the
				(Premium) of	last 10	last 20
				the issue price	consecutive	consecutive
				to the average	trading days up	trading days up
				trading price of	to and	to and
				A share on the	including the	including the
				last trading day	last trading day	last trading day
				before the	before the	before the
				respective	respective	respective
			Issue price/	announcement	announcement	announcement
Date of			Proposed issue	(“Last Day	(“10-day	(“20-day
announcement	Name of issuer	Stock code	price RMB	Discount”)	Discount”)	Discount”)
2 September 2014	Xinjiang Goldwind	2208.HK/	8.87	18.78%	12.94%	9.93%
	Science &	002202
	Technology Co.,
	Ltd

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LETTER FROM ASIAN CAPITAL

					Discount	Discount
					(premium) of	(premium) of
					the issue price	the issue price
					to the average	to the average
					trading price of	trading price of
				Discount	A shares for the	A shares for the
				(Premium) of	last 10	last 20
				the issue price	consecutive	consecutive
				to the average	trading days up	trading days up
				trading price of	to and	to and
				A share on the	including the	including the
				last trading day	last trading day	last trading day
				before the	before the	before the
				respective	respective	respective
			Issue price/	announcement	announcement	announcement
Date of			Proposed issue	(“Last Day	(“10-day	(“20-day
announcement	Name of issuer	Stock code	price RMB	Discount”)	Discount”)	Discount”)
29 October 2014	China CITIC Bank	998.HK/	4.84	(8.27%)	(3.68%)	(4.73%)
	Corporation	601998
	Limited
31 October 2014	Guangzhou Shipyard	317.HK/	16.48*	3.75%	1.97%	0.04%
	International	600685
	Company Limited
7 November 2014	China Minsheng	1988.HK/	5.68	10.27%	10.09%	9.84%
	Banking Corp., Ltd.	600016
17 December 2014	China Railway	1186.HK/	7.20*	23.41%	16.43%	9.94%
	Construction	601186
	Corporation
	Limited
29 December 2014	Huadian Power	1071.HK/	5.04*	31.24%	16.93%	9.92%
	International	600027
	Corporation
	Limited
30 December 2014	CSR Corporation	1766.HK/	5.63	5.61%	1.93%	0.09%
	Limited	601766
31 December 2014	Luoyang Glass	1108.HK/	6.69*	8.47%	10.92%	9.90%
	Company Limited	600876
12 January 2015	Guangzhou	874.HK/	23.84	11.98%	10.39%	9.96%
	Baiyunshan	600332
	Pharmaceutical
	Holdings Company
	Limited
	Highest			31.24%	16.93%	9.96%
	Lowest			(8.27%)	(3.68%)	(4.73%)
	Average			11.69%	8.66%	6.10%
The Non-Public Issuance (based on the			7.65	7.88%	7.86%	9.93%
Minimum Issue	Price)

The issue price/proposed issue price is the minimum issue price which is not less than 90% of the average trading price of the relevant A shares over the 20 trading days prior to the date of the respective announcement, except for the case of Guangzhou Shipyard International Company Limited, the minimum issue price of which is not less than the average trading price of it’s A shares over the 20 trading days prior to the date of the announcement on 31 October 2014.

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LETTER FROM ASIAN CAPITAL

As shown in the table above, we note that the Last Day Discount, the 10-day Discount and the 20-day Discount of the Non-Public Issuance fall within the range of those of the Comparable Issues.

Having considered the above, we are of the view that the basis in determining for the Minimum Issue Price is fair and reasonable.

VI. Alternative fund raising methods

As advised by the Directors, apart from the Non-Public Issuance, they have considered various fund raising methods, including borrowing, placement of new H Shares, rights issue and open offer.

(i) Borrowing

As referred to the financial information prepared in accordance with the IFRS as set out in the Annual Reports and Interim Reports, the Group’s gearing ratios (calculated as total liabilities divided by total assets) were approximately 84.02% and 84.61% as at 31 December 2012 and 2013 respectively, and the net interest expenses were approximately RMB3,642 million and RMB3,760 million for the year ended 31 December 2012 and 2013 respectively. The Directors consider that the current gearing ratios of the Group is relatively high. In view of the current financial condition of the Group, the Directors believe that obtaining further borrowings or other bank or debt financing would further increase the Group’s gearing ratio and finance costs, which, in turn, will have a negative impact on the performance of the Group’s financial results.

Furthermore, although the size of the Non-Public Issuance is not considered significant relative to the size of the issued share capital of the Group, raising such a sum by way of borrowing would be time consuming and increase the administrative burden to the Group.

(ii) Placement of new H shares in Hong Kong

As advised by the Directors, the proceeds from the Non-Public Issuance will be mainly used to finance the Company’s infrastructure investments in the PRC (details of which have been illustrated in the section “III. Reasons for the Non-Public Issuance and use of proceeds” contained in this letter), it will be in the interests of the Company to issue A Shares to obtain the funding in Renminbi. If the Company finances its new infrastructure investments in the PRC by issuance of new H Shares, the Company is required to convert the foreign currencies raised from such issue to Renminbi, as well as to go through relevant procedures and approvals as required by the relevant PRC rules and regulations to transfer the proceeds back to the PRC for the Group’s uses. Such process will be time consuming and increase the administrative burden to the Group.

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LETTER FROM ASIAN CAPITAL

(iii) Rights issue and open offer

A rights issue is an offer by way of rights to existing holders of securities which enables those holders to subscribe securities in proportion to their existing holdings. An open offer is an offer to existing holders of securities to subscribe securities, whether or not in proportion to their existing holdings, which are not allotted to them on renounceable documents. As rights issues and open offers have to be fully underwritten under Rule 7.19 and Rule 7.24 of the Hong Kong Listing Rules respectively in normal circumstances, and they have to be completed in a relatively short time frame in order to mitigate the market risk to be borne by underwriters.

The Directors consider that there exists certain difficulties for the Company to complete a rights issue or open offer in both Hong Kong and the PRC within a short period of time and in strict adherence with a pre-determined timetable in Hong Kong, taking into account the time for application and approval procedures as required by the CSRC and/or other PRC authorities which varies much from those of the Hong Kong Stock Exchange. In addition, proceeds raised offshore would have to be remitted back to the PRC and would have the H Share issues mentioned above.

In light of the above, we are of the view that it is in the interests of the Company and the Independent H Shareholders as a whole to raise funds by the Non-Public Issuance (and the CRECG Subscription) given that the issue of new A Shares in the Non-Public Issuance will strengthen the capital base and financial position of the Group, and would enable the Company to raise funds in Renminbi in a timely manner.

VII. Rights of the new A Shares and lock-up arrangement of the new A Shares

The new A Shares to be issued pursuant to the Non-Public Issuance, when fully paid and issued, will rank pari passu in all respects amongst themselves and with the A Shares in issue at the time of the issue and allotment of such new A Shares.

The accumulated profits of the Company that remain undistributed prior to the Non-Public Issuance shall be shared amongst the existing Shareholders and the holders of new A Shares following the completion of the Non-Public Issuance in order to align the interests of the existing Shareholders and the holders of new A Shares.

CRECG must not transfer the new A Shares that it subscribes for under the CRECG Subscription Agreement within 36 months from the date of completion of the Non-Public Issuance, and the other investors must not transfer the new A Shares that they subscribe for under the Non-Public Issuance within 12 months from the date of completion of the Non-Public Issuance.

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LETTER FROM ASIAN CAPITAL

VIII. Possible financial effects of the Non-Public Issuance

Assuming the respective target investors (including CRECG) will subscribe for the maximum number of new A Shares at the Minimum Issue Price, the total proceeds from the Non-Public Issuance is expected to be not exceeding RMB12,000 million before deduction of relevant expenses.

(i) Net assets attributable to owners of the Company

Assuming the respective target investors (including CRECG) will subscribe for the maximum number of new A Shares at the Minimum Issue Price, the net assets attributable to owners of the Company will be enhanced by approximately RMB12,000 million upon completion of the Non-Public Issuance.

(ii) Gearing ratio

According to the unaudited financial information of the Company as set up in the quarterly results announcement for the third quarter ended 30 September 2014, the Group’s gearing ratio (calculated as total liabilities divided by total assets) was approximately 84.18% as at 30 September 2014. Assuming the respective target investors (including CRECG) will subscribe for the maximum number of new A Shares at the Minimum Issue Price, and the proposed repayment of a maximum of RMB3,600 million bank loans has been repaid, the gearing ratio of the Group would be lowered to approximately 82.62% upon completion of the Non-Public Issuance based on unaudited financial information of the Company for the third quarter ended 30 September 2014.

In view of the above positive financial effects on the Group arising from the Non-Public Issuance (including the CRECG Subscription), we consider that the CRECG Subscription Agreement and the transaction contemplated thereunder is in the interests of the Company and its Shareholders as a whole given the capital injection will enhance the financial position of the Group.

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LETTER FROM ASIAN CAPITAL

IX. Dilution effect on shareholding	Upon completion of the Non-Public Issuance, it is anticipated that the shareholding structure of the Company will be as follows:	Immediately after completion of the	Non-Public Issuance (assuming full Immediately after completion of the	subscription and a total issue of 1,568,620,000 Non-Public Issuance (assuming full	new A Shares under the Non-Public Issuance, subscription and a total issue of 1,568,620,000	As at the Latest Practicable Date and among which 313,724,000 are new A Shares under the Non-Public Issuance,	prior to completion of the subscribed by CRECG under the all of which are subscribed by CRECG under	Non-Public Issuance CRECG Subscription Agreement) the CRECG Subscription Agreement)	Approximate Approximate Approximate Approximate Approximate Approximate	percentage of percentage of percentage of percentage of percentage of percentage of	shareholding shareholding shareholding shareholding shareholding shareholding	in the in the in the in the in the in the	Company’s Company’s Company’s Company’s Company’s Company’s	Number of total issued total issued Number of total issued total issued Number of total issued total issued	Shares held A Shares share capital Shares held A Shares share capital Shares held A Shares share capital	CRECG –A Shares 11,950,010,000 69.91% 56.10% 12,263,734,000 65.72% 53.63% 13,518,630,000 72.44% 59.11%	Public –A Shares 5,142,500,000 30.09% 24.15% 5,142,500,000 27.56% 22.49% 5,142,500,000 27.56% 22.49%	Investors under the	Non-Public Issuance	(Other than CRECG) –A Shares – – – 1,254,896,000 6.72% 5.49% – – –	Subtotal of A	Shareholders (other	than CRECG) –A Shares 5,142,500,000 30.09% 24.15% 6,397,396,000 34.28% 27.97% 5,142,500,000 27.56% 22.49%	Subtotal –A Shares 17,092,510,000 100.00% 80.25% 18,661,130,000 100.00% 81.60% 18,661,130,000 100.00% 81.60%	Public –H Shares 4,207,390,000 – 19.75% 4,207,390,000 – 18.40% 4,207,390,000 – 18.40%	Total 21,299,900,000 – 100.00% 22,868,520,000 – 100.00% 22,868,520,000 – 100.00%

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LETTER FROM ASIAN CAPITAL

As illustrated in the table above, assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance, among which 313,724,000 are subscribed by CRECG under the CRECG Subscription Agreement, CRECG’s shareholding in the Company will be diluted to approximately 53.63% and the shareholding of the A Shareholders (other than CRECG) will increase from approximately 24.15% to approximately 27.97% immediately upon completion of the Non-Public Issuance. Assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance, all of which are subscribed by CRECG under the CRECG Subscription Agreement, CRECG’s shareholding in the Company will increase to approximately 59.11% and the shareholding of the A Shareholders (other than CRECG) will be diluted to approximately 22.49% immediately upon completion of the Non-Public Issuance. At the same time, the shareholding of the public H Shareholders will be diluted from approximately 19.75% to approximately 18.40% immediately upon completion of the Non-Public Issuance assuming full subscription and a total issue of 1,568,620,000 new A Shares under the Non-Public Issuance.

Having considered that the interest of the public H Shareholders in the Company will only be slightly diluted, the net assets attributable to owners of the Company will increase and the gearing ratio of the Company will decrease upon completion of the Non-Public Issuance, we concur with the Directors’ view that the dilution effect on the shareholding interest of the public H Shareholders arising from the Non-Public Issuance (including the CRECG Subscription) is acceptable.

RECOMMENDATION

Having considered the above principal reasons and factors, we concur with the Directors’ view that the terms of the CRECG Subscription Agreement and the transaction contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Company and the Independent H Shareholders are concerned and in the interests of the Company and its Shareholders as a whole. We therefore advise the Independent Board Committee to recommend the Independent H Shareholders to vote in favour of the resolutions in respect of the CRECG Subscription Agreement and the transaction contemplated thereunder to be proposed at the EGM and the H Shareholders’ Class Meeting, and we recommend the Independent H Shareholders to vote in favour of the resolutions in this regards.

Yours faithfully, For and on behalf of

Asian Capital (Corporate Finance) Limited Larry CHAN Executive Director

In this letter, the translation of RMB to HK$ is based on the exchange rate of HK$1 = RMB0.8 and is for illustration purpose only.

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APPENDIX I THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

A. THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

The Report on the Use of Proceeds from Previous Fund Raising Exercise is written in Chinese, with no official English translation. The English translation is provided solely for reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail. The full version of the Report on the Use of Proceeds from Previous Fund Raising Exercise is as follows:

I. General Information on the Proceeds from Previous Fund Raising Exercise

In accordance with the approval granted by China Securities Regulatory Commission via its document known as Zheng Jian Xu Ke [2007] No. 396, the Company issued 4,675,000,000 RMB-denominated ordinary shares (the A shares) in an initial public offering on 20 November 2007, and was listed on the Shanghai Stock Exchange on 3 December 2007. The issue price was RMB4.80 per share and a total amount of RMB22.440 billion was raised. After deduction of issue cost, the actual net amount of proceeds was RMB22.034 billion (including the then unpaid issue costs of RMB99.7964 million in relation to the public offering) and was remitted into the designated account by 26 November 2007. The proceeds raised was verified by Deloitte Touche Tohmatsu[1] by its issuance of a capital verification report (De Shi Bao (Yan) Zi (07) No. B012).

In accordance with the approval granted by China Securities Regulatory Commission via its document know as Zheng Jian Guo He [2007] No. 35, the Company issued H shares in an initial public offering on 6 December 2007, and was listed on the Hong Kong Stock Exchange on the following day. The Company issued a total number of 3,824,900,000 H shares (including over-allotment) on the Hong Kong Stock Exchange at the issue price of HK$5.78 per share, and raised a total amount of RMB20.972 billion. After deduction of issue cost, the actual net amount of proceeds was RMB20.376 billion (including the then unpaid issue costs of RMB133.6507 million in relation to the public offering). The proceeds raised was verified by Deloitte Touche Tohmatsu by its issuance of a capital verification report (De She Bao (Yan) Zi (08) No. 0010).

The Company has not carried out any fundraisings via rights issues, follow-on placements or convertible corporate bond offerings in the past five years and thus has no proceeds from fund raising.

1 It has been renamed as Deloitte Touche Tohmatsu Certified Public Accountants LLP

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APPENDIX I THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

II. Actual Use of Proceeds from Previous Fund Raising Exercise

As at 31 December 2014, the details of investment made by the Company from the proceeds raised from A share initial public offering on 20 November 2007 are as follows:

Unit: 100 million Currency: RMB

Name of Promised Projects Changes to the Project 1. Supplemental working capital and bank loan repayment1 Yes 2. Underground garage and commercial properties at the West Railway Station No 3. Shijiazhuang City Zhong Jing Si Ji Hua Cheng project No 4. Purchase of equipment No 5. Anqing City Xin Cheng Dong Yuan Garden Yes 6. Technological transformation project for high-speed turnouts No 7. Railway from Taiyuan to Zhongwei (Yinchuan) project No 8. Production base for large steel structures No Total2	Proposed Amount of Investment of Proceeds 139.74 3.77 6.26 41.37 5.00 0.67 20.00 3.53 220.34	Actual Total Amount of Investment of Proceeds 139.74 3.77 6.26 41.37 5.00 0.67 20.00 3.53 220.34	Progress of Project Completed Completed Completed Completed Ongoing Ongoing Completed Ongoing
			–

Note 1 and Note 2: the then unpaid issue costs of RMB99.7964 million in relation to the public offering was included in the item of supplemental working capital and bank loan repayment and the item of total proposed amount of investment of proceeds.

Anqing City Xin Cheng Dong Yuan Garden project needed to be re-planned and there was relatively a high uncertainty in the subsequent capital requirement of the project, and in order to increase the efficiency of the use of the proceeds raised, the use of the amount of RMB540,000,000 was changed to be used as supplemental working capital.

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APPENDIX I THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

This change was approved at the 19th meeting of the first session of the Board of Directors of the Company and approved at the 2008 Annual General Shareholders’ Meeting of the Company.

As at 31 December 2014, the details of investment made by the Company from the proceeds raised from H share initial public offering on 6 December 2007 are as follows:

Unit: 100 million Currency: RMB

Name of Promised Projects Changes to the Project 1. Purchase of equipment (<=66%) Yes 2. Overseas mining operations (<=17%) No 3. Repayment of bank loans (<=7%) No 4. Additional working capital and other general corporate purposes (<=10%) Yes Total3	Proposed Amount of Investment of Proceeds 113.63 34.64 14.26 41.23 203.76	Actual Total Amount of Investment of Proceeds 84.79 34.64 13.24 43.90 176.57	Progress of Project Completed Ongoing Completed Completed
			–

Note 3: the then unpaid issue costs of RMB133.6507 million in relation to the public offering was included in the item of total proposed amount of investment of proceeds. As at 31 December 2014, the remaining balance of proceeds from H shares issuance was RMB116.1144 million. The difference between the net amount of proceeds and the actual total amount of investment of proceeds and the current unused balance mainly results from the foreign exchange profit and loss between 7 December 2007 and 31 December 2014.

In order to the meet the needs of business operation and development of the Company and improve the efficiency of the use of the proceeds raised, to the extent that the interests of the Company and all its shareholders shall not be jeopardised, it was considered and passed by the 36th meeting of the first session of the Board of Directors of the Company and the first extraordinary general meeting in 2011 that the purpose of proceeds in the amount of RMB2,085,000,000 raised from H share offering shall be changed from “purchase of equipment from overseas” to “additional working capital”.

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APPENDIX I THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

III. Explanations on Other Differences

There have been no differences between the actual use of proceeds from previous fund raising exercise of the Company and that disclosed in the periodic reports and other disclosure documents.

The Board of Directors of China Railway Group Limited 11 February 2015

B. FURTHER INFORMATION IN RELATION TO THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

References are made to the notes 1, 2 and 3 of the Report on the Use of Proceeds from Previous Fund Raising Exercise as set out on pages I-2 and I-3 respectively. The then unpaid issue costs of RMB99.7964 million and RMB133.6507 million in relation to the A share and H share initial public offering respectively represent such outstanding issue costs to be paid by the Company as at the date of the respective capital verification reports issued upon completion of the A share and H share initial public offering. Such outstanding issue costs had been paid up by the Company pursuant to the relevant fee arrangement agreements.

– I-4 –

APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

The Feasibility Analysis Report is written in Chinese, with no official English translation. The English translation is provided solely for reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail. Figures in the Feasibility Analysis Report are expressed in accordance with the Accounting Standards for Business Enterprises of the PRC. The full version of the Feasibility Analysis Report is as follows:

Feasibility Analysis Report on the Use of Proceeds from the Non-Public Issuance of A Shares of the Company

In order to consolidate its leading position and increase its share in the market of China infrastructure construction that is developing swiftly, grasp a historic opportunity arising from a significant increase in the investment in the railway industry for the purpose of promoting quick construction of roads and urban rail transit systems and quick realisation of new urbanisation, and improve its core competitiveness and profitability, the Company is planned to raise funds through the non-public issuance of A shares of the Company, the proceeds of which will be used for the investment in five specific projects and the repayment of bank loans. The analysis by the board of directors of the Company on the feasibility of using the proceeds from the non-public issuance of A shares of the Company is set out below:

I PLANNED USE OF THE PROCEEDS FROM THE NON-PUBLIC ISSUANCE OF A SHARES OF THE COMPANY

The aggregate amount of the funds proposed to be raised through the non-public issuance of A shares shall be no more than RMB12 billion. After deducting the cost of the issue, the net amount of the funds raised will be used for the following projects according to its priority:

No Project Name 1 Shenzhen Rail Transit Line 11 BT Project 2 Shijiazhuang Rail Transit Line 1 (Phase I) BT Project 3 Guang-Fo-Jiang Expressway (Jiangmen Avenue Northbound Lanes) BT Project 4 Huoyong Expressway (Yonghe-to-Yonghe Guan Section) BT Project 5 Shen-jia-mi Expressway (Shenmu-to-Jiaxian Section) BOT Project 6 Repayment of bank loans Total	Amount of the proceeds to be used (RMB100 million) 30.00 15.00 10.00 15.00 14.00 No more than 36.00
	No more than 120.00

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

In the event that the net amount of the proceeds from the non-public issuance of A shares of the Company is less than the total amount of the proceeds to be used for the projects set out above, the Company will make some adjustment to and the final decision relating to the specific projects, the priority of fund use and the specific amount of investment involved in the specific projects in accordance with the net amount of the proceeds from the non-public issuance and after taking account the factors (including the prioritization of the projects), and the Company will make up the shortfall with its own funds or otherwise through other financing means.

Prior to the transfer into account of the funds raised through the non-public issuance of A shares of the Company, the Company will advance an amount of its required in accordance with the actual progress of the projects and, after the transfer into account of the funds raised, it will be replaced with the funds so raised pursuant to the provisions of relevant laws and regulations.

II BASIC INFORMATION OF THE INVESTMENT PROJECTS USING THE PROCEEDS FROM THE NON-PUBLIC ISSUANCE OF A SHARES OF THE COMPANY AND ANALYSIS OF THE FEASIBILITY

(I) Shenzhen Rail Transit Line 11 BT Project

1. Project overview

The Shenzhen Rail Transit Line 11 is a northwestbound commuter route in Futian District, Shenzhen. The civil engineering construction started from a site located in the centre of Futian District and along Line 11 having a total length of 51.7 kilometres, the following stations are located: Chegongmiao→ Hongshuwan→Houhai→Nanshan→Qianhaiwan→Bao An→Bihai→Jichang→ Fuyong→Qiaotou→Tangwei→Ma’anshan→Shajing→Houting→Songgang→ Bitou, including underground segments of 39.4 kilometres, representing 76.3% of the total length of Line 11. The form of project financing known as building-transfer method is used for the construction of the project, which commenced in June 2012.

Line 11 will make the communities in the centre of Futian District, Nanshan, Qianhai, Jichang, Fuyong, Shajing or Songgang be linked with each other and operates as an airport expressway. In addition, Line 11 will serve as an express route to connect the urban core area to the western coastal area, along which a lot of passenger gathering and dispersal spots (including large-scale residences, shopping centres, cultural centres and the airport) are located, and will also form a passenger movement corridor from Bao An to the centre of Futian District, Shenzhen and be of significant importance for the development of Shenzhen region.

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

2. Qualifications and approvals

With respect to the Shenzhen Rail Transit Line 11 BT Project, following approvals have been obtained from relevant competent authorities:

(1) The Official Reply of the National Development and Reform Commission regarding the Feasibility Study Report in respect of the Shenzhen Rail Transit Line 11 (Fa Gai Ji Chu [2012] No. 2472) was obtained for the project from the National Development and Reform Commission;
(2) The Review Opinions regarding the Land Use for Shenzhen Rail Transit Line 11 (Futian-to-Chegongmian Section) (Shen Gui Tu Yi Ju [2012] No. 56) was obtained for the project from the No. 1 Administrative Bureau of the Urban Planning Land and Resources Commission of Shenzhen Municipality, and the Official Reply regarding the Pre-approval on Construction Sites for Bitou Station of the Shenzhen Rail Transit Line 11 (Shen Gui Tu Bao Han [2014] No. 1113) and all of other official replies relevant to the pre-approval of land use had been obtained for the project from Bao An Administrative Bureau of the Urban Planning Land and Resources Commission of Shenzhen Municipality;
(3) The Official Reply regarding the Environmental Impact Report in respect of the Shenzhen Rail Transit Line 11 (Huan Shen [2012] No. 81) was obtained for the project from the Ministry of Environmental Protection.

3. Estimated amount for the project and economic benefits

The aggregate contract value under the BT project relating to the Shenzhen Rail Transit Line 11 is RMB20.4 billion, of which, the cumulative amount of investments made is approximately RMB12.5 billion as of 31 December 2014. It is intended to use a sum of RMB3 billion of the proceeds from the non-public issuance of A shares of the Company for the project. In the event that there is a shortfall of the funds in future, it will be settled by the Company by using the funds to be raised by itself. The estimated financial internal rate of return of the project is 12.04%.

(II) Shijiazhuang Rail Transit Line 1 (Phase I) BT Project

1. Project overview

Shijiazhuang Rail Transit Line 1 is the east-west backbone line in the transit line network, and starts from Shangzhuang Town, goes along Zhongshan Road West, Zhongshan Road East, Changjiang Avenue, Qinling Street and the planned Xincheng Avence, ends at Dongyang Station in

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

Wangding New Area. The Line 1 will be built in phases, of which phase I starts from Xiwang Station, goes along the main stem of Zhongshan Road, Changjiang Avenue and Qinling Street, ends at Dongzhaotong Station, covering a length of 23.9 kilometers, all being underground. Shijiazhuang Rail Transit Line 1 is constructed by way of BT, of which phase I commenced construction in July 2013.

The proceeds from the non-public issuance of A shares of the Company will be used for the Line 1 (Phase I) BT Project, a key transport infrastructure that will effectively expand urban space and guide urban development and connect three urban complexes and various commercial centers and cultural centers.

2. Qualifications and approvals

With respect to the Shijiazhuang Rail Transit Line 1 (Phase I) BT Project, following approvals have been obtained from relevant competent authorities:

(1) The Official Reply of the National Development and Reform Commission regarding the Feasibility Study Report in respect of the Shijiazhuang Rail Transit Line 1 (Phase I) (Fa Gai Ji Chu [2013] No. 780) was obtained for the project from the National Development and Reform Commission;
(2) The Official Reply of the Pre-approval on Land Use for Construction in respect of the Shijiazhuang Rail Transit Line 1 (Phase I) (Guo Tu Zi Yu Shen Zi [2012] No. 370) was obtained for the project from the Ministry of Land and Resources;
(3) The Official Reply regarding the Environmental Impact Report in respect of the Shijiazhuang Rail Transit Line 1 (Phase I) (Huan Shen [2013] No. 6) was obtained for the project from the Ministry of Environmental Protection.

3. Estimated investment amount and economic benefits

The primary cost estimate of the Shijiazhuang Rail Transit Line 1 (Phase I) BT Project included in the China Railway BT investment and construction scope is approximately RMB8.56 billion, and the completed investment amount accumulated to approximately RMB3.51 billion as of 31 December 2014. The project intends to use RMB1.5 billion of the proceeds from the non-public issuance of A shares of the Company. Any shortfall will be financed by the Company through its internal resources. The estimated financial internal rate of return of the project is 12.90%.

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

(III) Guang-Fo-Jiang Expressway (Jiangmen Avenue Northbound Lanes) BT Project

1. Project overview

Guang-Fo-Jiang Expressway (Jiangmen Avenue Northbound Lanes) project consists of five parts, namely Guang-Fo-Jiang Expressway Jiangmen section main line, Heshan connecting line, Jiangmen section side road project, Shuanglong avenue to Jiangdu east road overpass reconstruction project, and Longwan road to Wuyi road overpass reconstruction project, and represents an important section in the Guang-Fo-Jiang-Zhu area. The project will be constructed by way of BT and has commenced construction in July 2013.

The completion of the project will mitigate the difficulties caused by the insufficient roads between Jiangmen and other cities in the Pearl River Delta Region, strengthen the connections between Jiangmen and core areas in Guangzhou and Foshan, accelerate the integration process between Jiangmen and core areas in the Pearl River Delta Region, and play an important role in promoting social and economic development in local areas.

2. Qualifications and approvals

(1) The Official Reply Regarding the Feasibility Study in Respect of Guang-Fo-Jiang Expressway Jiangmen Section (K2+720~K44+100) Project (Yue Fa Gai Jiao Tong [2012] No. 524) was obtained for the project from Guangdong Development and Reform Commission;
(2) The Official Reply of the Ministry of Land and Resources Regarding the Land Use for Construction of Guang-Fo-Jiang Expressway Jiangmen Section (Guo Tu Zi Han [2014] No. 663) was obtained for the project from the Ministry of Land and Resources;
(3) The Official Reply Regarding the Environmental Impact Assessment Report in Respect of Guang-Fo-Jiang Expressway Jiangmen Section (K2+720~K44+100) (Jiang Huan Shen [2011] No. 121) was obtained for the project from Jiangmen Environmental Protection Bureau.

3. Estimated amount for the project and economic benefits

The total investment for Guang-Fo-Jiang Expressway (Jiangmen Avenue Northbound Lanes) BT Project is about RMB2.88 billion, and a total amount of RMB620 million has been invested as at 31 December 2014. RMB1 billion of the proceeds is proposed to be used for this project. In the event of any subsequent capital insufficiency, such insufficiency will be filled by the Company on its own. The estimated financial internal rate of return of the project is 11.87%.

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

(IV) Huoyong Expressway (Yonghe-to-Yonghe Guan Section) BT Project

1. Project overview

Huoyong Expressway, which extends from Huozhou City, Shanxi Province in the east to Yonghe Guan in the west, is an integral part of the ninth north-south line of the “three east-west lines, twelve north-south lines and twelve rings” which is the expressway network planned by Shanxi Province, and was included in the national network in 2013. Huoyong Expressway (Xi County-to-Yonghe Guan Section) is named as Huoyong Expressway Western Section and constructed by way of BT, of which Xi County to Yonghe County is Phase 1 while Yonghe to Yonghe Guan is Phase 2. Phase 2 construction covers a length of 23.62 km and has commenced construction in October 2014.

2. Qualifications and approvals

With respect to Huoyong Expressway (Yonghe-to-Yonghe Guan Section) BT Project, following approvals have been obtained from relevant competent authorities:

(1) The Official Reply of the Shanxi Provincial Development and Reform Commission regarding the Feasibility Study Report in respect of the Huoyong Expressway (Yonghe-to-Yonghe Guan Section) (Jin Fa Gai Jiao Tong Fa [2012] No. 22) was obtained for the project from the Shanxi Provincial Development and Reform Commission;
(2) The information regarding the pre-approval on the land use for construction of the project has been accepted by the Ministry of Land and Resources and the relevant process is underway;
(3) The Official Reply regarding the Environmental Impact Report in respect of the Huoyong Expressway (Yonghe-to-Yonghe Guan Section) (Jin Huan Han [2012] No. 1407) was obtained for the project from the Department of Environmental Protection of Shanxi Province.

3. Estimated amount for the project and economic benefits

The total investment for Huoyong Expressway (Yonghe-to-Yonghe Guan Section) BT Project is about RMB3.065 billion, and completed investment amount accumulated to RMB250 million as at 31 December 2014. RMB1.5 billion of the proceeds is proposed to be used for this project. In the event of any subsequent capital insufficiency, such insufficiency will be filled by the Company on its own. The estimated financial internal rate of return of the project is 10.28%.

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

(V) Shen-Jia-Mi Expressway (Shenmu-to-Jiaxian Section) BOT Project

1. Project overview

Shaanxi Province-level Expressway Shenmi Line (Shenmu-to-Mizhi Expressway) is a south-north line of “2637” expressway network planned by Shaanxi Province, and starts from the western side of Shenmu Jinjie Industrial Park, goes along Gujintan→Gaojiabao→Anyazhen→Shanggaozhai→ Wangjiabian→Tongzhen→Jiaxian→Wuzhen→Mizhi. This expressway covers a length of approximately 111.819 km and its construction includes two sections, i.e. Shenmu-to-Jiaxian section (“ Shenjia Section ”) and Jiaxian-to-Mizhi section. The proceeds from the non-public issuance of A shares of the Company will be used for the Shenjia Section which has commenced construction in November 2013.

The project will further optimize the expressway network in Shaanxi Province, build a new south-north channel in the central and eastern region in Shaanxi Province, alleviate the pressure on coal and coke transportation, promote the development of tourist attractions and play an important role in promoting social and economic development in the region.

2. Qualifications and approvals

With respect to Shen-Jia-Mi Expressway (Shenmu-to-Jiaxian Section) BOT Project, the following approvals have been obtained from relevant competent authorities:

(1) The Official Reply of the Shaanxi Provincial Development and Reform Commission regarding the Approval of the Shenmu-Mizhi Expressway Project (Shan Fa Gai Ji Chu [2014] No. 236) was obtained for the project from the Shaanxi Provincial Development and Reform Commission;
(2) The Official Reply Regarding the Pre-approval on Land Use for Construction in respect of the Province-level Expressway Shenmi Line Shenmu-Mizhu Section (Shan Guo Tu Zi Gui Fa [2013] No. 213) was obtained for the project from the Department of Land and Resources of Shaanxi Province;
(3) The Official Reply of Yulin Environmental Protection Bureau regarding the Environmental Impact Report in respect of the Province-level Expressway Shenmi Line Shenmu-Mizhu Section (Yu Zheng Huan Fa [2014] No. 27) was obtained for the project from Shaaxi Provincial Yulin Environmental Protection Bureau.

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

3. Estimated amount for the project and economic benefits

The total investment for the Shen-Jia-Mi Expressway (Shenmu-to-Jiaxian Section) BOT project is about RMB5.856 billion, and the completed investment amount accumulated to RMB2.053 billion as at 31 December 2014. The project intends to use RMB1.400 billion of the proceeds from the non-public issuance of A shares of the Company. In the event of any subsequent capital insufficiency, such insufficiency will be filled by the Company on its own. The estimated financial internal rate of return of the project is 12.54%.

(VI) Repayment of Bank Loans

The proceeds from the non-public issuance of A shares of the Company will, after paying for the issuing fees and project construction, be used solely for the repayment of bank loans.

1. Analysis of the necessity of repaying bank loans

As at the end of 2012, end of 2013 and 30 September 2014, the Company’s short-term borrowings were RMB60.259 billion, RMB62.761 billion and RMB66.443 billion respectively and the Company’s long-term borrowings were RMB60.849 billion, RMB67.111 billion and RMB69.037 billion respectively; while the financial costs of the Company for 2012, 2013 and the first three quarters of 2014 were RMB4.611 billion, RMB3.710 billion and RMB4.101 billion respectively, maintaining a relatively high level.

As at 30 September 2014, the liabilities-to-assets ratio of the Company is 84.18% (on a combined basis), higher than the average liabilities-to-assets ratio of 82.62% of the A share comparable listed companies (including China Railway Construction, China Communications Construction, China State Construction, Metallurgical Corporation of China and Power Construction Corporation of China).

Some of the proceeds from the non-public issuance of A shares of the Company will be used to repay bank loans, which will help lower the liabilities-to-assets ratio of the Company, reduce financial costs and optimize the Company’s capital structure.

2. Impact of Repayment of Bank Loans on Financial Conditions and Operation and Management

After some proceeds from the non-public issuance of A shares of the Company are used to repay bank loans, the Company’s debt size will be reduced while the Company’s net assets will increase, and the liabilities-to-assets ratio will drop, which will help optimize the Company capital structure and enhance the Company’s ability to withstand financial

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APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

risks. The use of some proceeds from the non-public issuance of A shares of the Company to repay bank loans is deemed to have reduced the interest-bearing debt of equivalent amount, which will help the Company reduce financial expenses and further increase its profitability.

III. IMPACT OF THE PROJECTS USING THE PROCEEDS FROM THE NON-PUBLIC ISSUANCE OF A SHARES OF THE COMPANY ON THE COMPANY ON OPERATION AND MANAGEMENT AND FINANCIAL CONDITIONS
(1) Impact of the projects using the proceeds from the non-public issuance of A shares of the Company on the Company’s operation and management

All business segments of the Company have grown steadily, and according to the Company’s overall operation and development strategy, the Company seeks to consolidate its leading position in China’s rapidly developing infrastructure market, and uses the advanced technology capability and equipment to undertake large, complex and highly profitable projects and operate high-profit products, and leverages its strong strength in the infrastructure construction sector to focus on the expansion of BT/BOT construction projects in various sectors including urban railway transit lines, urban highways and expressways and continuously improve its business performance so as to provide better investment returns for shareholders.

The proceeds from the non-public issuance of A shares of the Company will be mainly used for infrastructure investment projects, which is in line with the relevant State industry policies and the Company’s overall strategic development in the future and has good market development prospects and economic benefits. Once the projects using the proceeds from the non-public issuance of A shares of the Company are carried out, the Company will further improve its capability of building urban rail transit lines and expressways and further consolidate its market position and enhance its core competitiveness.

(2) Impact of the projects using the proceeds from the non-public issuance of A shares of the Company on the Company’s financial conditions

Following the completion of the non-public issuance of A shares of the Company, the Company’s total assets and net assets will grow and the Company’s liabilities-to-assets ratio and financial costs will drop and the Company’s capability of carrying out the investment, financing and research and & development of key projects will improve considerably, all of which will help raise the Company’s profitability. Following the completion of the non-public issuance of A shares of the Company, as projects using the proceeds from the non-public issuance of A shares of the Company need to be constructed over a period, the Company’s return on equity may be affected in the short term. However, as the projects using the proceeds from the non-public issuance of A shares of the Company is expected to boost good economic returns and as these projects successively produce economic benefits, the Company’s revenues and profits will rise stably and the Company’s profit and profitability stability will also strengthen gradually.

– II-9 –

APPENDIX II

THE FEASIBILITY ANALYSIS REPORT

In view of the above, the projects utilizing the proceeds from the non-public issuance of A Shares of the Company are in line with the relevant State industry policies and industry development trends and boost good economic benefits, which is of great importance for the Company to improve profitability and core competitiveness and reduce financial risks. Once implemented, the projects using the proceeds from the non-public issuance of A shares of the Company will lay a solid foundation for the Company’s continuous and stable growth and be in the interests of all shareholders. The use of the proceeds from the non-public issuance of A shares of the Company is feasible.

Board of Directors of China Railway Group Limited 11 February 2015

– II-10 –

APPENDIX III

THE PROPOSAL REGARDING THE PLAN FOR THE SHAREHOLDERS’ RETURN FOR 2015–2017

The Proposal Regarding the Plan for the Shareholders’ Return for 2015–2017 of China Railway Group Limited is written in Chinese, with no official English translation. The English translation is provided solely for reference only. In case of any discrepancy between the two versions, the Chinese version shall prevail. The full version of the Proposal Regarding the Plan for the Shareholders’ Return for 2015–2017 of China Railway Group Limited is as follows:

The Shareholders’ Return Plan for 2015-2017 of China Railway Group Limited

To further enhance the awareness of the importance of returning the shareholders and to provide them with continuous, stable and reasonable investment returns, the Company has formulated the shareholders’ return plan for 2015-2017 after considering the factors such as its strategic development objectives, operation plan, profitability, cash flows and external financing environment, in accordance with the relative laws, regulations and regulatory documents including the Company Law of the People’s Republic of China , the Securities Law of the People’s Republic of China , the Notice Regarding Further Implementation of Cash Dividends Distributions of Listed Companies issued by the China Securities Regulatory Commission, the Listed Companies Regulatory Guidance No. 3 – Cash Dividends Distribution of Listed Companies , the Guidance for Cash Dividend Distribution of SSE-listed Companies by Shanghai Stock Exchange and the Notice Regarding Further Improvement of Cash Dividends Distributions of Listed Companies issued by the Beijing Branch of the China Securities Regulatory Commission, as well as the relevant provisions under the Articles of Association of China Railway Group Limited (the “ Articles of Association ”). The specific contents of the shareholders’ return plan are as follows:

I. Factors to be taken into consideration in the formulation of the shareholders’ return plan

The focus of profit distribution of the Company is on the long-term and the sustainable development of the Company while taking the interest of every class of shareholders into account. Based on the Company’s strategic development objectives and the shareholders’ wishes and having considered various factors including the Company’s profitability and cash flow position, the operating development plans and the development phase of the Company, the capital demand, the social capital cost and external financing environment, the Company established a sustainable, stable and scientific return plan and mechanism for investors in accordance with the requirements of the Articles of Association and makes systematic arrangements for the profit distribution in order to ensure the continuity and stability of the profit distribution policies.

II. The principles on which the shareholders’ return plan is formulated

The Company established this plan in accordance with the relevant laws and regulations including the Company Law, the regulatory requirements and the Articles of Association in relation to the requirements of profit distribution.

– III-1 –

APPENDIX III THE PROPOSAL REGARDING THE PLAN FOR THE SHAREHOLDERS’ RETURN FOR 2015–2017

The Company dealt with the short-term interest and the long-term development of the Company after taking the shareholders’ interest into account and established the reasonable profit distribution plan in accordance with the current operating condition and the capital demand plan of the investment project.

III. Details of the shareholders’ return plan for the coming three years (2015-2017)

1. Form of profit distribution

The Company may distribute dividends in cash, in shares or in a combination of both cash and shares. Under conditional circumstances, the Company may make interim profit distribution.

2. Conditions for and proportions of profit distribution

a) Specific conditions for, proportion and intervals of distributing dividends in cash

If the Company’s profit for the year and its cumulative undistributed profit are positive, the Company may distribute profit to the shareholders in cash, the total profit to be distributed in cash in the past three consecutive years will not be less than 30% of the average annual distributable profit realized in the past three years; the profit to be distributed in cash per annum generally will not be less than 10% of the distributable profit realized for that year. In the case of the occurrence of the following special circumstances, the Company shall not make any cash dividend distribution: (1) where the auditing firm issues a non-standard unqualified audit opinion on the financial report of the Company for that financial year; (2) where the net operating cash flow of the Company in that year is negative.

When the aforesaid conditions of cash distribution are met, in principle, cash dividends shall be distributed once a year by the Company. And the Board of the Company can propose a distribution of interim cash dividends according to the Company’s situation of profitability and capital needs.

b) Specific conditions for distributing dividends in shares

Where the Company is in a sound operating condition, and the Board considers that the stock price of the Company does not reflect its scale of share capital and distributing dividend in shares will be in the interests of all shareholders of the Company as a whole, the Company may propose the distribution plan of dividend in shares upon fulfilment of the above conditions concerning cash dividends.

– III-2 –

APPENDIX III

THE PROPOSAL REGARDING THE PLAN FOR THE SHAREHOLDERS’ RETURN FOR 2015–2017

c) Differentiated policies for cash dividend

In the coming three years, the Board of the Company will take various factors into consideration, including its industry features, development stages, business model and profitability as well as whether it has any substantial capital expenditure arrangement, and propose a differentiated policy for distributing cash dividend pursuant to the procedures stipulated in the Articles of Association of the Company.

IV. The period for formulating the shareholders’ return plan and relevant decision-making mechanism
The Company shall review the Shareholders’ Return Plan in the Next Three Years at least every three years and determine any amendment is needed for the existing shareholders’ return plan.
The profit distribution plan of the Company shall be submitted to the board of directors and the supervisory committee for review after it is drafted by the management based on the actual profitability, cash flow, future operating plan and other relevant factors of the Company. The board of directors shall hold a thorough discussion with respect to the reasonableness of the profit distribution plan, and the independent directors shall give their explicit opinions. Upon the review and adoption by the board of directors and the supervisory committee, the profit distribution plan shall be submitted to the general meeting of shareholders for consideration.
While establishing the specific plan of cash dividend, the Board shall study and identify with caution the timing, conditions and minimum proportion, conditions for adjustment and requirements for decision-making procedures involved in implementing the distribution of cash dividends, etc.. Independent directors shall explicitly express their opinions thereon. Independent directors may collect opinions from minority shareholders for putting forward a profit distribution proposal which can be directly submitted to the Board for consideration.
Prior to the review of the profit distribution in the general meeting of the Company, the Company shall also take the initiative to communicate and share information with shareholders in particular minority shareholders by way of various channels so as to take the opinions and demands of minority shareholders into full consideration and respond timely to the concerns of minority shareholders, and provide access to online voting to shareholders in the general meeting.

– III-3 –

APPENDIX III

THE PROPOSAL REGARDING THE PLAN FOR THE SHAREHOLDERS’ RETURN FOR 2015–2017

Where the Company, fails to distribute dividends in cash due to the special circumstances, the board of directors shall make special explanations on the specific reasons for such failure, the accurate usage of the retained profits of the Company, projected investment earnings and other relevant issues, submit such explanations to the general meeting of shareholders for consideration after the independent directors express their opinions, and disclose the same in those media designated by the Company.
The Company may make adjustment on the profit distribution policies in the event of force majeure including the outbreaks of wars, natural disasters, or the material impact on the production and operation of the Company as a result of the external environmental changes, or the substantial changes in the Company’s operating condition.

The Board shall conduct specific detailed discussion over the grounds for the adjustment on the profit distribution policies, form a written report to be considered by the independent directors and then submit the same to the general meeting of shareholders for approval by way of special resolution.

V. Supplementary provisions

Any matters not covered in this plan shall be governed by the relevant laws and regulations, regulatory documents and the Articles of Association. The right to interpret this plan shall vest in the Board of the Company. This plan will come into force as of the date of approval at the general meeting of shareholders.

Board of Directors of China Railway Group Limited 11 February 2015

– III-4 –

APPENDIX IV PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

The articles of association of the Company are written in Chinese and there is no official English translation in respect thereof. The translation into English is for convenience only. In case of any inconsistency between the English and Chinese versions, the Chinese version shall prevail. Details of proposed amendments to the articles of association of the Company are as follows:

Existing Article No. Existing Provisions

Provisions after the Amendment

Basis for the Amendment

Article 18 Upon the establishment of the Company, as approved by the China Securities Regulatory Commission (“ CSRC ”) in its Notice Zhengjianfaxingzi [2007] No. 396 released on 6 November 2007, 4,675,000,000 ordinary shares in RMB were issued in an initial public offering to the general public and the shares were listed on the Shanghai Stock Exchange on 3 December 2007.

Upon the establishment of the Company, as approved by the China Securities Regulatory Commission (“ CSRC ”) in its Notice Zhengjianfaxingzi [2007] No. 396 released on 6 November 2007, 4,675,000,000 ordinary shares in RMB were issued in an initial public offering to the general public and the shares were listed on the Shanghai Stock Exchange on 3 December 2007.

The actual transfer of shares by China Railway Engineering Corporation in September 2009 pursuant to legal requirements.

Upon the listing on the Shanghai Stock Exchange, as approved by the CSRC in its Notice Zhengjianguohezi [2007] No. 35, 3,824,900,000 overseas listed foreign shares (including 498,900,000 over-allotment shares) were issued, and the total number of overseas listed foreign shares was 4,207,390,000 which includes 382,490,000 overseas listed foreign shares converted from the sell-down of relevant state-owned shares.

Upon the completion of the above issues, the composition of the Company’s share capital was: 12,417,510,000 shares held by China Railway Engineering Corporation, representing 58.30%; 4,675,000,000 shares held by domestic public investors, representing 21.95%; and 4,207,390,000 shares held by foreign public investors and the Social Security Fund, representing 19.75%.

– IV-1 –

APPENDIX IV PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article No. Existing Provisions

Article 103 When voting at a general meeting of shareholders, shareholders (including their proxies) shall exercise their voting rights according to the number of voting shares held by them, with each share representing one vote.

Shares of the Company held by the Company do not represent voting rights, which shall not be counted into the total voting shares present at the general meeting of shareholders.

Provisions after the Basis for the Amendment Amendment In September 2009, pursuant to the Implementing Measures for the Transfer of a Part of the State-owned Shares Held by the Domestic Securities Market to Replenish the National Social Security Fund jointly promulgated by the Ministry of Finance, the SASAC, the CSRC and the National Council for Social Security Fund, China Railway Engineering Corporation transferred 467,500,000 A Shares it was holding in the Company to the National Council for Social Security Fund. Upon the completion of the above transfer, the composition of the Company’s share capital was: 11,950,010,000 shares held by China Railway Engineering Corporation, representing 56.10%; 5,142,500,000 shares held by domestic public investors, representing 24.14%; and 4,207,390,000 shares held by foreign public investors, representing 19.75%.

Article 78 of the Guidelines on Articles of Association of Listed Companies

When voting at a general meeting of shareholders, shareholders (including their proxies) shall exercise their voting rights according to the number of voting shares held by them, with each share representing one vote.

When material issues affecting the interests of minority investors are considered at a general meeting, the votes relating to minority investors shall be counted separately. The separate votes counting results shall be disclosed publicly in a timely manner.

– IV-2 –

APPENDIX IV

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article No.

Existing Provisions

Directors, independent directors, and shareholders satisfying relevant required conditions, may solicit shareholders’ voting rights.

According to applicable laws and regulations and the listing rules of the locality where the Company’s shares are listed, if, in relation to any individual resolution, any shareholder must abstain from voting or be restricted to cast only an affirmative or negative vote, the votes casted by the shareholders (or their proxies) in breach of such relevant provisions or restrictions shall not be counted towards the total number of valid voting shares.

Provisions after the Amendment

Shares of the Company held by the Company do not represent voting rights, which shall not be counted into the total voting shares present at the general meeting of shareholders.

Directors, independent directors, and shareholders satisfying relevant required conditions, may solicit shareholders’ voting rights publicly. When soliciting shareholders’ voting rights, sufficient disclosure of information such as the specific voting preference shall be made to the shareholders from which voting rights are being solicited. No consideration or other form of de facto consideration shall be involved in the solicitation of shareholders’ voting right. The Company shall not impose any limitation related to the minimum shareholding ratio on the solicitation of voting rights.

Basis for the Amendment

– IV-3 –

APPENDIX IV

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article

No. Existing Provisions

Article 120

Shareholders present at the general meeting of shareholders shall express one of the following opinions on the proposals submitted for voting: affirmative, negative or abstaining.

Votes without input or with wrong information or illegible scripts, or votes not casted, shall be deemed as the voters having waived their voting rights, and the voting result of the number of shares held by them shall be calculated as “abstaining”.

Provisions after the Amendment

Shareholders present at the general meeting of shareholders shall express one of the following opinions on the proposals submitted for voting: affirmative, negative or abstaining, except that securities registration and clearing organizations, being the nominal holders of shares subject to the Shanghai-Hong Kong stock connect, may express opinions according to the intentions of actual holders.

Basis for the Amendment

Article 89 of the Guidelines on Articles of Association of Listed Companies

– IV-4 –

APPENDIX IV

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article No. Existing Provisions

Article 149 The board of directors shall set up special committees to provide advisory and recommendations for the material decisions to be made by the board of directors. Such special committees shall include strategy committee, audit committee, remuneration committee, nomination committee, safety, health and environmental protection committee and etc. All such special committees shall be accountable to the board of directors and their members shall all comprise of directors, and among which, the majority members and the chairmen on the audit committee and the remuneration committee shall be independent directors and at least one independent director on the audit committee shall be an accounting professional. The board of directors may set up other committees and adjust the existing ones where need arises. The board of directors shall set up the rules of procedures for the special committees with respect to their duties and meeting procedure.

Each special committee may engage intermediaries to provide professional advice at the expense of the Company. When engaging any intermediary, a confidentiality agreement shall be signed with the relevant party.

The major duties of the audit committee of the board of directors shall be:

Article 151

Provisions after the Amendment

The board of directors shall set up special committees to provide advisory and recommendations for the material decisions to be made by the board of directors. Such special committees shall include strategy committee, audit and risk management committee , remuneration committee, nomination committee, safety, health and environmental protection committee and etc. All such special committees shall be accountable to the board of directors and their members shall all comprise of directors, and among which, the majority members and the chairmen on the audit and risk management committee and the remuneration committee shall be independent directors and at least one independent director on the audit and risk management committee shall be an accounting professional. The board of directors may set up other committees and adjust the existing ones where need arises. The board of directors shall set up the rules of procedures for the special committees with respect to their duties and meeting procedure.

The major duties of the audit and risk management committee of the board of directors shall be:

Basis for the Amendment

The proposal for changing the name of board committee from “audit committee of the board of directors” to “audit and risk management committee of the board of directors” at the third meeting of the third session of the board of directors.

– IV-5 –

APPENDIX IV

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article Provisions after the Basis for the No. Existing Provisions Amendment Amendment Article 227 Dividend distribution policies of the Dividend distribution policies of the Article 152 of the Guidelines on Company are to be specified as follows: Company are to be specified as follows: the Articles of Association of Listed Companies

(1) Dividend shall be distributed in (1) Dividend shall be distributed in the following manner: the the following manner: the Company may distribute Company may distribute dividends in cash, in shares or in a dividends in cash, in shares or in a combination of both cash and combination of both cash and shares. Subject to conditions, shares. Subject to conditions, interim profit distribution may be interim profit distribution may be made by the Company. made by the Company.
(2) Specific conditions for and (2) Specific conditions for and proportion of distributing proportion, intervals of dividends in cash: if the distributing dividends in cash: if Company’s profit for the year and the Company’s profit for the year its cumulative undistributed profit and its cumulative undistributed are positive, the Company may profit are positive, the Company distribute dividend in cash, the may distribute dividend in cash, total profit to be distributed in the total profit to be distributed in cash in the past three consecutive cash in the past three consecutive years will not be less than 30% of years will not be less than 30% of the average annual distributable the average annual distributable profit realized in the past three profit realized in the past three years; the profit to be distributed years; the profit to be distributed in cash per annum will not be less in cash per annum will not be less than 10% of the distributable profit than 10% of the distributable profit realized for that year. The realized for that year. The Company may not distribute Company may not distribute dividends in cash in the following dividends in cash in the following exceptional circumstances. exceptional circumstances.

– IV-6 –

APPENDIX IV

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article Provisions after the Basis for the No. Existing Provisions Amendment Amendment

(i) Where the auditing firm (i) Where the auditing firm issues a non-standard issues a non-standard unqualified audit opinion unqualified audit opinion on the financial report of on the financial report of the Company for the year. the Company for the year.
(ii) Where the operating net (ii) Where the operating net cash flow of the Company cash flow of the Company is negative. is negative.
(3) Conditions for distributing When the aforesaid conditions of dividends in shares by the cash distribution are met, in Company: Where the Company’s principle, cash dividends shall be business is in a sound condition, distributed once a year by the and the board of directors Company. And the Board of the considers that the stock price of Company can propose a the Company does not match with distribution of interim cash its share capital size and dividends according to the distributing dividend in shares Company’s situation of will be favourable to all profitability and capital needs. shareholders of the Company as a whole, provided that the above (3) Conditions for distributing conditions for cash dividends are dividends in shares by the fully met, the Company may Company: Where the Company’s propose dividend distribution in business is in a sound condition, shares. and the board of directors considers that the stock price of the Company does not match with its share capital size and distributing dividend in shares will be favourable to all shareholders of the Company as a whole, provided that the above conditions for cash dividends are fully met, the Company may propose dividend distribution in shares.

– IV-7 –

APPENDIX IV PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article No.

Existing Provisions

Article 231 Procedures for considering the profit distribution plan of the Company

(1) The profit distribution plan of the Company shall be submitted to the board of directors and the supervisory committee for review after it is drafted by the management based on the actual profitability, cash flow, future operating plan and other relevant factors of the Company. The board of directors shall hold a thorough discussion with respect to the reasonableness of the profit distribution plan, and the independent directors shall give their explicit opinions. Upon the review and adoption of the board of directors and the supervisory committee, the profit distribution plan shall be submitted to the general meeting of shareholders for review.

Provisions after the Basis for the Amendment Amendment Procedures for considering the profit Article 152 of the distribution plan of the Company the Articles of

Article 152 of the Guidelines on the Articles of Association of Listed Companies and Article 3 of the Regulatory Guidelines No. 3 for Listed Companies — Cash Dividend Distribution by Listed Companies

– IV-8 –

APPENDIX IV

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article No. Existing Provisions

Provisions after the Basis for the Amendment Amendment

(2) The general meeting of shareholders of the Company shall take the opinions and demands of minority shareholders into full consideration when reviewing the profit distribution plan. In addition to collecting shareholders’ opinions at the general meeting of shareholders, the Company shall also take the initiative to communicate with shareholders, in particular minority shareholders by way of shareholders hotline and the interactive investor relationship platform, and respond timely to the concerns of minority shareholders.

(2) When formulating a specific cash distribution plan, the Board shall study and identify with caution the timing, conditions and minimum proportion, conditions for adjustment and requirements for decision-making procedures involved in implementing the distribution of cash dividends, etc. Independent directors shall explicitly express their opinions thereon. Independent directors may collect opinions from minority shareholders for putting forward a profit distribution proposal which can be directly submitted to the Board for consideration.

(3) Where the Company, due to the (3) Prior to considering a profit special circumstances set out distribution plan at the general under Paragraph 2 of Article 227 meeting of shareholders of the above, fails to distribute dividends Company, the Company shall take in cash, the board of directors shall the initiative to communicate make special explanations on the with shareholders, in particular specific reasons for such failure, minority shareholders through the accurate usage of the retained various channels, take the profits of the Company, projected opinions and demands of minority investment earnings and other shareholders into full relevant issues, submit such consideration respond timely to explanations to the general the concerns of minority meeting of shareholders for review shareholders, and provide access after the independent directors to online voting to shareholders express their opinions, and when holding a general meeting disclose the same in those media of shareholders of the Company. designated by the Company.

– IV-9 –

APPENDIX IV PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

Existing Article Provisions after the Basis for the No. Existing Provisions Amendment Amendment (4) Where the Company, due to the special circumstances set out under Paragraph 2 of Article 227 above, fails to distribute dividends in cash, the board of directors shall make special explanations on the specific reasons for such failure, the accurate usage of the retained profits of the Company, projected investment earnings and other relevant issues, submit such explanations to the general meeting of shareholders for review after the independent directors express their opinions, and disclose the same in those media designated by the Company.

Article 235 Unless otherwise provided for in the Unless otherwise provided for in the relevant laws or regulations, if cash relevant laws or regulations, if cash dividends or other amounts are paid in dividends or other amounts are paid in foreign currency, the applicable exchange foreign currency, the applicable exchange rate shall be the average selling rate for the rate shall be the average median rate of the relevant foreign exchange announced by relevant foreign exchange announced by the People’s Bank of China during the the People’s Bank of China during the week prior to the announcement of week prior to the announcement of payment of such dividends and other payment of such dividends and other amounts. amounts.

Special terms used by the People’s Bank of China for foreign exchange business

– IV-10 –

APPENDIX V

PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

The Procedural Rules for Shareholders’ Meeting of the Company are written in Chinese and there is no official English translation in respect thereof. The translation into English is for convenience only. In case of any inconsistency between the English and Chinese versions, the Chinese version shall prevail. Details of proposed amendments to the Procedural Rules for Shareholders’ Meeting of the Company are as follows:

Existing
Article No.
Existing Provisions
Article 22
The Company shall hold the
general meeting at the residence
of corporation or any other place
set out in the notice issued by
the convener of the general
meeting.
The general meeting shall set a
meeting site and be held in the
form of on-the-spot meeting.
The Company will also provide
convenience for shareholders to
participate
in
the
meeting
through the network or other
means.
Shareholders
participating in the general
meeting by aforesaid means will
be deemed to have attended the
meeting.

Provisions after the
Amendment
Basis for the Amendment
The Company shall hold the
general meeting at the residence
of corporation or any other place
set out in the notice issued by
the convener of the general
meeting.
The general meeting shall set a
meeting site and be held in the
form of on-the-spot meeting.
Pursuant to the relevant laws,
administrative
regulations,
CSRC rules and its Articles of
Association, the Company shall
provide
convenience
for
shareholders to participate in
the meeting by using safe,
economic
and
convenient
network
and
other
means.
Shareholders participating in
the general meeting by aforesaid
means will be deemed to have
attended the meeting.
Article 20 of the_Guidelines for the_
Rules of General Meetings of
Shareholders of Listed Company
(2014 October revision), and
articles 68 and 112 of the articles
of association of the Company

The shareholders may attend the general meeting in person, and may also authorize others to attend and exercise the voting right on their behalf within the scope of authorization.

– V-1 –

APPENDIX V

PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

Existing Provisions after the Article No. Existing Provisions Amendment Basis for the Amendment

Article 39 When voting at a general When voting at a general Article 31 of the Guidelines for the meeting of shareholders, meeting of shareholders, Rules of General Meetings of shareholders (including their shareholders (including their Shareholders of Listed Company proxies) shall exercise their proxies) shall exercise their (2014 October revision) , and voting rights according to the voting rights according to the Article 103 of the articles of number of voting shares held by number of voting shares held by association of the Company them, with each share them, with each share representing one vote. representing one vote. Shares of the Company held by When material issues affecting the Company do not represent the interests of minority voting rights, which shall not be investors are considered at a counted into the total voting general meeting, the votes shares present at the general relating to minority investors meeting of shareholders. shall be counted separately. The separate votes counting Directors, independent results shall be disclosed directors, and shareholders publicly in a timely manner. satisfying relevant required conditions, may solicit Shares of the Company held by shareholders’ voting rights. the Company do not represent

Shares of the Company held by the Company do not represent voting rights, which shall not be counted into the total voting shares present at the general meeting of shareholders.

According to applicable laws and regulations and the listing rules of the stock exchange where the Company’s shares are listed, if, in relation to any individual resolution, any shareholder must abstain from voting or be restricted to cast only an affirmative or negative vote, the votes casted by the shareholders (or their proxies) in breach of such relevant provisions or restrictions shall not be counted towards the total number of valid voting shares.

– V-2 –

APPENDIX V

PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

Existing Provisions after the Article No. Existing Provisions Amendment

Basis for the Amendment

Directors, independent directors, and shareholders satisfying relevant required conditions, may solicit shareholders’ voting rights. When soliciting shareholders’ voting rights, sufficient disclosure of information such as the specific voting preference shall be made to the shareholders from which voting rights are being solicited. No consideration or other form of de facto consideration shall be involved in the solicitation of shareholders’ voting right. The Company shall not impose any limitation related to the minimum shareholding ratio on the solicitation of voting rights.

– V-3 –

APPENDIX V

PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

Existing Provisions after the Article No. Existing Provisions Amendment Article 49 Shareholders present at the Shareholders present general meeting of shareholders general meeting of shall express one of the shall express one following opinions on the following opinions proposals submitted for voting: proposals submitted for affirmative, negative or affirmative, abstaining. abstaining, exceptptt

Shareholders present at the general meeting of shareholders shall express one of the following opinions on the proposals submitted for voting: affirmative, negative or abstaining, exceptptt that securities registration and clearing organizations, being the nominal holders of shares subject to the Shanghai-Hong Kong stock connect, may express opinions according to the intentions of actual holders.

Basis for the Amendment

Article 36 of the Guidelines for the Rules of General Meetings of Shareholders of Listed Company (2014 October revision) , and Article 120 of the articles of association of the Company

– V-4 –

APPENDIX V

PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

Existing
Article No.
Existing Provisions
Article 54
......
The directors, secretary to the
board of directors, the person(s)
convening
the
meeting
or
its/their representative(s) and
chairman of the meeting present
at the meeting shall sign the
minutes and ensure the contents
of the minutes are true, accurate
and complete. The minutes shall
be
kept
together
with
the
signature list of shareholders
attending the on-site meeting,
the
proxy
form
and
valid
information concerning voting
through
internet
and
other
methods for a term of at least ten
(10) years.
Article 58
Any resolution of the general
meeting that is in violation of
laws
or
administrative
regulations will be invalid.
If the convening procedures and
voting means of the general
meeting are in violation of the
laws, administrative regulations
or the Articles of Association,
the shareholders are entitled to
petition the people’s court to
rescind the resolutions within 60
days after the resolutions are
made.

Provisions after the
Amendment
Basis for the Amendment
......
The
directors,
supervisors,
secretary
to
the
board
of
directors,
the
person(s)
convening
the
meeting
or
its/their representative(s) and
chairman of the meeting present
at the meeting shall sign the
minutes and ensure the contents
of the minutes are true, accurate
and complete. The minutes shall
be
kept
together
with
the
signature list of shareholders
attending the on-site meeting,
the
proxy
form
and
valid
information concerning voting
through
internet
and
other
methods for a term of at least ten
(10) years.
Article 73 of the Guidelines on
Articles of Association of Listed
Companies
(2014
October
revision), and Article 100 of the
articles of association of the
Company
Any resolution of the general
meeting that is in violation of
laws
or
administrative
regulations will be invalid.
The controlling shareholder(s)
and actual controller(s) of the
Company shall not cause any
restriction or obstruction on the
exercise of their voting rights
by
minority
investors
in
accordance
with
laws
and
should not infringe the legal
rights of the Company and
minority investors.
Article 34 of the Guidelines on
Articles of Association of Listed
Companies
(2014
October
revision), and Article 46 of the
Guidelines for the Rules of General
Meetings of Shareholders of Listed
Company (2014 October revision)

If the convening procedures and voting means of the general meeting are in violation of the laws, administrative regulations or the Articles of Association, the shareholders are entitled to petition the people’s court to rescind the resolutions within 60 days after the resolutions are made.

– V-5 –

APPENDIX VI

GENERAL INFORMATION

1 RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquires, 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 DIRECTORS’, CHIEF EXECUTIVE’S AND SUPERVISORS’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

Save as disclosed below, as at the Latest Practicable Date, none of the Directors, chief executive and supervisors of the Company had any interests or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which will have to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which will be required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers:

				Approximate
		Number of	Approximate	Percentage
		A Shares	Percentage	of Total
Name of		Held (long	of Issued	Issued
Director/Supervisor	Capacity	position)	A Shares	Shares
		(Shares)	(%)	(%)
Directors
Li Changjin	Beneficial owner	105,700	0.0006	0.0005
Yao Guiqing	Beneficial owner	100,112	0.0006	0.0005
Dai Hegen	Beneficial owner	106,000	0.0006	0.0005
Supervisor
Liu Jianyuan	Beneficial owner	1,200	0.00001	0.00001

Save for Mr. Li Changjin (chairman and executive Director of the Company), who also serves as the chairman of CRECG, the controlling shareholder of the Company, Mr. Yao Guiqing (vice chairman and executive Director of the Company), who also serves as the general manager and director of CRECG, DaiHegen (executive Director and president of the Company), who also serves as the director of CRECG, and Liu Jianyuan, supervisor of the Company, who also serves as the director of CRECG, none of the Directors or supervisors of the Company hold any positions with CRECG.

– VI-1 –

APPENDIX VI

GENERAL INFORMATION

Save as disclosed herein, none of the Directors and supervisors of the Company is a director or employee of a company which has, or is deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3 CONSENT AND QUALIFICATION OF EXPERT

Asian Capital has given and has not withdrawn its consent to the issue of this circular with its letter of advice, report and references to its name included in the form and context in which it appears.

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

Name	Qualifications
Asian Capital (Corporate	A licensed corporation for type 1 (dealing in
Finance) Limited	securities), type 4 (advising on securities), type 6
	(advising on corporate finance), type 9 (assets
	management) regulated activities under the SFO

As at the Latest Practicable Date, the above expert has no shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the above expert has no direct or indirect interest in any asset which has been, since 31 December 2013, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to, any member of the Group.

4 NO MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading positions of the Company since 31 December 2013, being the date of the latest published audited financial statements of the Company.

5 DIRECTORS’ AND SUPERVISORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors and supervisors of the Company has entered into or is proposed to enter into a service contract with the Company or its subsidiaries that is not determinable within one year without payment of compensation (other than statutory compensation).

6 COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors nor their respective close associates held any interest in any business that competes or competed or is or was likely to compete, either directly or indirectly, with the Group’s business.

– VI-2 –

APPENDIX VI

GENERAL INFORMATION

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

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had any interest, either directly or indirectly, in any assets which have been, since 31 December 2013, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors nor supervisors of the Company was materially interested, either directly or indirectly, in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

8 MATERIAL LITIGATION

As at the Latest Practicable Date, the Group was a party to certain litigations arising from the ordinary course of business. The likely outcome of such contingent liabilities, obligations or other legal proceedings cannot be ascertained at present, but the management of the Group believes that, any possible legal liability which may incur form such litigation shall not have material adverse effect on the financial position of the Group.

9 MISCELLANEOUS

(a) Mr. Yu Tengqun and Mr. Tam Chun Chung act as joint company secretary of the Company. Mr. Yu is an arbitrator. Mr. Tam is a member of the Hong Kong Institution of Certified Public Accountants and a fellow of the Chartered Association of Certified Accountants.
(b) The registered office of the Company is at 918, Block 1, No. 128, South 4th Ring Road West, Fengtai District, Beijing, the PRC. The principal place of business of the Company in Hong Kong is Unit 1201–1203, 12/F, APEC Plaza, 49 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.
(c) Computershare Hong Kong Investor Services Limited, the H-share registrar of the Company in Hong Kong, is located at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

– VI-3 –

APPENDIX VI

GENERAL INFORMATION

10 DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principle place of business of the Company in Hong Kong during normal business hours on any business day (except public holidays) from the date of this circular up to and including 16 March 2015:

(a) the CRECG Subscription Agreement;
(b) the letter of recommendation from the Independent Board Committee dated 3 March 2015, the text of which is set out on page 25 of this circular;
(c) the letter of advice issued by the Independent Financial Adviser dated 3 March 2015, the text of which is set out on pages 26 to 41 of this circular;
(d) the written consent given by Asian Capital (Corporate Finance) Limited as referred to in the paragraph headed “Consent and qualification of expert” in Appendix VI to this circular;
(e) the Proposal on the Plan of the Non-Public Issuance;
(f) the Feasibility Analysis Report;
(g) the Reports on the Use of Proceeds from Previous Fund Raising Exercise; and
(h) the Proposal Regarding the Plan for the Shareholders’ Return for 2015–2017.

– VI-4 –

NOTICE OF EGM

==> picture [55 x 56] intentionally omitted <==

中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 390)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2015 First Extraordinary General Meeting (the “ EGM ”) of China Railway Group Limited (the “ Company ”), will be held at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC on Tuesday, 31 March 2015 at 2:00 p.m., to consider and, if thought fit, pass the following resolutions. A circular containing details of the following resolutions will be dispatched to the shareholders of the Company in accordance with Rule 19A.39A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Hong Kong Listing Rules ”) on or before 6 March 2015.

By way of special resolutions:

To consider and approve the proposal on granting a general mandate to issue new shares to the board of directors of the Company (the “ Board ”), details of which are as follows:
(i) the Board be and is hereby unconditionally given approval to exercise, during the Relevant Period (as defined below), all powers of the Company to separately or concurrently issue and deal with new A shares and new H shares (collectively, the “ New Shares ”) of the Company which shall not exceed 20% of the respective amounts of existing A shares and H shares of the Company as at the date of passing this special resolution;
(ii) pursuant to the approval under paragraph (i) above, the Board be and is hereby authorised to enter into or make, during the Relevant Period, offers, agreements and/or options, under which the New Shares to be allotted and issued are required or may be required to be allotted and issued during or after the expiry of the Relevant Period, and the Board be and is hereby authorised to issue and deal with the New Shares that are required or may be required to be allotted and issued under such offers, agreements and options;

– EGM-1 –

NOTICE OF EGM

(iii) after the issuance of the New Shares pursuant to this special resolution, the Board be and is hereby authorised to deal with all matters relating to the increase in the registered capital of the Company and to make such appropriate and necessary amendments to the articles of association of the Company relating to the share capital, the shareholding structure and the registered capital and other relevant things as they think fit and necessary, to complete domestic and overseas statutory procedures for approval, registration, and filing, and to take any other action and complete any formality required to effect the issuance of New Shares pursuant to this special resolution and the increase in the registered capital of the Company. The Board be and is hereby authorized to re-delegate the authorization herein to the persons delegated by the Board to sign, execute, modify, complete, submit all agreements, contracts and documents in relation to the allotment and issuance of and dealing with the New Shares under the general mandate, unless otherwise stipulated by laws or regulations; and
(iv) for the purpose of this special resolution, “ Relevant Period ” means the period from the date of passing this special resolution until the earliest of:
- (a) the conclusion of the next annual general meeting of the Company;
- (b) the expiration of the 12-month period from the date of passing of this special resolution; and
- (c) the date on which the authorization granted to the Board in this special resolution is revoked or varied by a special resolution of the shareholders of the Company in general meeting;
To consider and individually approve each of the following items in relation to the proposed non-public issuance of A shares of the Company to target investors (the “ Non-Public Issuance ”) (Note 1) :
(i) Class and nominal value of the shares to be issued
(ii) Method of issuance
(iii) Target subscribers and method of subscription
(iv) Number of A shares to be issued
(v) Issue price and pricing principles
(vi) Lock-up arrangement

– EGM-2 –

NOTICE OF EGM

(vii) Amount and use of proceeds
(viii) Place of listing
(ix) Accumulated profit distribution prior to the Non-Public Issuance
(x) Valid period of the resolutions regarding the Non-Public Issuance
To consider and approve the proposal on the plan of the non-public issuance of A shares of the Company (Note 2) ;
To consider and approve the proposal of entering into a conditional subscription agreement by the Company with China Railway Engineering Corporation (“ CRECG ”) (the “ CRECG Subscription Agreement ”) (Note 3) ;
To consider and approve the proposal on the matters relating to the connected transactions in respect of the non-public issuance of A shares of the Company (Note 4) ;
To consider and approve the proposal to authorize the Board, the Chairman and the relevant authorized persons to deal with at their sole discretion matters in connection with the Non-Public Issuance, including but not limited to:
(i) to authorize the Chairman and the persons delegated by the Chairman to be responsible for all the matters in relation to the Non-Public Issuance, including but not limited to the determination of the timing, actual number of A shares to be issued, commencement and completion dates of the issue, issue price and target placee(s), and the appointment of the sponsor, the joint lead underwriters, domestic and overseas legal advisers and other relevant professional agencies;
(ii) to authorize the Chairman and the persons delegated by the Chairman to open a special account for the proceeds from the Non-Public Issuance and to sign any material contracts in relation to the investment projects to be funded with the net proceeds from the Non-Public Issuance;
(iii) to authorize the Chairman and the persons delegated by the Chairman to be responsible for all matters in relation to the submission to, and obtaining all the approvals from, the relevant domestic and overseas regulatory authorities in respect of the Non-Public Issuance, the production, preparation, modification, perfection and execution of all the relevant documents and files in relation to the Non-Public Issuance, the execution of all relevant contracts, agreements and any other documents in relation to the Non-Public Issuance (including but not limited to the entering into of the engagement agreements with relevant professional agencies);

– EGM-3 –

NOTICE OF EGM

(iv) to authorize the Board to make adjustments to the specific arrangements in relation to the investment projects to be funded by the net proceeds from the Non-Public Issuance pursuant to the resolutions to be passed at the EGM;
(v) to authorize the Chairman and the persons delegated by the Chairman to be responsible for the capital verification procedures in relation to the Non-Public Issuance;
(vi) to authorize the Chairman and the persons delegated by the Chairman to be responsible for the relevant procedures in relation to the subscription, registration, lock-up of shares and the listing of shares on the Shanghai Stock Exchange following completion of the Non-Public Issuance;
(vii) to authorize the Board to make adjustments to the terms of the Non-Public Issuance and the proposed use of proceeds from the Non-Public Issuance in accordance with relevant rules and regulations of the PRC, the requirements of the governmental and securities regulatory authorities (including their review opinions and feedback on the terms of the Non-Public Issuance), market conditions and actual operating conditions of the Company and continue to handle the matters in relation to the Non-Public Issuance, in the event there are any changes in laws, regulations, the policies in relation to the Non-Public Issuance to be made by securities regulatory authorities and the market conditions (unless such matters should be approved by the Shareholders in general meeting pursuant to the relevant laws and regulations and the articles of association of the Company);
(viii) to authorize the Chairman and the persons delegated by the Chairman to make consequential amendments to the articles of association of the Company following the completion of the Non-Public Issuance and to be responsible for dealing with the procedures in relation to obtaining necessary approvals and permissions and all procedures in relation to the registration of the change of the registered capital of the Company;
(ix) to authorize the Chairman and the persons delegated by the Chairman to be responsible for any other relevant matters in relation to the Non-Public Issuance; and
(x) the above authorizations shall be valid for a term of 12 months from the date of passing this special resolution.
To consider and approve the proposal on proposed amendments to The Articles of Association of China Railway Group Limited (Note 5) ;

– EGM-4 –

NOTICE OF EGM

To consider and approve the proposal on proposed amendments to The Procedural Rules for Shareholders’ Meeting of China Railway Group Limited (Note 5) ;

By way of ordinary resolutions:

To consider and approve the proposal on the fulfilment of the conditions for the non-public issuance of A shares by the Company (Note 6) ;
To consider and approve the reports on the use of proceeds from previous fund raising exercise of the Company (Note 5) ;
To consider and approve the feasibility analysis report on use of proceeds from the non-public issuance of A shares of the Company (Note 5) ; and
To consider and approve the proposal regarding The Plan for Shareholders’ Return for 2015–2017 of China Railway Group Limited (Note 5) .

By order of the Board Yu Tengqun Tam Chun Chung Joint Company Secretaries

Beijing, the PRC 11 February 2015

Notes:

1. The Non-Public Issuance is conditional upon, among others, obtaining necessary approvals from the State-owned Assets Supervision and Administration Commission of the State Council of the PRC (“ SASAC ”) and the China Securities Regulatory Commission (“ CSRC ”).

2. Major contents of the proposal on the plan of the non-public issuance of A shares by the Company have been set out in relevant sections of the announcement of the Company dated 11 February 2015. For the full text of the proposal on the plan of the non-public issuance of A shares by the Company, please refer to the relevant announcement made by the Company on the websites of the Shanghai Stock Exchange and the Company on 11 February 2015.

3. Proposed subscription for new A Shares by CRECG and the CRECG Subscription Agreement

Reference is made to the announcement dated 11 February 2015.

CRECG holds 11,950,010,000 A shares of the Company, representing approximately 56.10% of the total issued shares of the Company as at the date of this notice, and therefore, is a connected person of the Company. Accordingly, the placing and issue of new A shares to CRECG pursuant to the CRECG Subscription Agreement constitutes a connected transaction of the Company and is subject to the announcement, circular and shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules. CRECG and its associates shall abstain from voting on the above special resolutions numbered 4 and 5 at the EGM. Furthermore, CRECG, being one of the target subscribers, is considered to have a material interest in the Non-Public Issuance. CRECG and its close associates shall therefore abstain from voting on the above special resolutions numbered 2 and 3 at the EGM.

This resolution shall not be implemented without obtaining necessary approvals from SASAC and CSRC.

– EGM-5 –

NOTICE OF EGM

4. For the full text of the proposal on the matters relating to the connected transactions in respect of the non-public issuance of A shares of the Company, please refer to the relevant overseas regulatory announcement of the Company dated 11 February 2015.

5. A circular containing further details in relation to the relevant resolutions will be despatched to shareholders as soon as practicable and in any event by no later than 6 March 2015.

6. For the full text of the proposal on the fulfilment of the conditions for the non-public issuance of A shares by the Company, please refer to the relevant overseas regulatory announcement of the Company dated 11 February 2015.

7. Closure of register of members and eligibility for attending the EGM

Shareholders who submit their share transfer application forms to the Company’s share registrar before close of business on Wednesday, 11 March 2015 and become registered shareholders on the register of members of the Company are entitled to attend the EGM.

Holders of the Company’s H shares are advised that the register of members will be closed from Thursday, 12 March 2015 to Tuesday, 31 March 2015 (both days inclusive). Holders of H shares whose names appear on the register of members of the Company maintained in Hong Kong at the close of business on Wednesday, 11 March 2015 are entitled to attend the EGM.

Holders of H shares who wish to attend the EGM but have not registered the transfer documents are required to deposit the transfer document together with the relevant share certificates at the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong at or before 4:30 p.m., Wednesday, 11 March 2015.

8. Registration procedures for attending the EGM

Shareholders or their proxies attending the EGM shall present their identity certification. If a legal person shareholder of the Company appoints its corporate representative to attend the EGM, such representative shall present his identity certification and a copy of the relevant resolution passed by the board or other decision making authority appointing him as its representative before he can attend the EGM on behalf of such company.

9. Notice of attendance

Shareholders who intend to attend the EGM in person or by proxy shall return the reply slip in person, by post or by facsimile to the Company’s Board of Directors’ Office or Computershare Hong Kong Investor Services Limited on or before Wednesday, 11 March 2015.

The Company’s Board of Directors’ Office is located at Room 511, Building A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing 100039, PRC (Contact Persons: Ms. DUAN Yinhua/Mr. LI Qiang, Tel: (8610) 5187 8069/5187 8061, Fax: (8610) 5187 8417).

The address of Computershare Hong Kong Investor Services Limited is 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (Tel: (852) 2862 8555, Fax: (852) 2865 0990).

10. Proxy

Shareholders entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on their behalf. A proxy need not be a shareholder of the Company.

The instrument appointing a proxy must be signed by the shareholder appointing the proxy or his attorney duly authorised by such shareholder in writing.

If the shareholder is a corporate body, the proxy form must be either executed under its common seal or by its director(s) or duly authorised attorney(s). If the proxy form is executed by the shareholder’s attorney, the power of attorney authorising that attorney to execute the proxy form on the shareholder’s behalf or other authorisations document must be notarised.

– EGM-6 –

NOTICE OF EGM

In order to be valid, the instrument appointing a proxy (and if such instrument is signed by the person under a power of attorney or other authorisation documents, then together with such power of attorney or authorisation documents, or a copy thereof certified by a notary) must be delivered to Computershare Hong Kong Investor Services Limited (for holders of H shares) not less than 24 hours before the designated time for the holding of the EGM.

Completion and return of a proxy form shall not preclude a shareholder from attending in person and voting at the EGM if he so wishes, in which event the instrument appointing a proxy shall be deemed to have been revoked.

11. Other business

Shareholders and their proxies attending the EGM shall be responsible for their own travelling and accommodation expenses.

– EGM-7 –

NOTICE OF H SHAREHOLDERS’ CLASS MEETING

==> picture [55 x 56] intentionally omitted <==

中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 390)

NOTICE OF H SHAREHOLDERS’ CLASS MEETING

NOTICE IS HEREBY GIVEN that the 2015 first class meeting of H Shareholders (the “ H Shareholders’ Class Meeting ”) of the Company will be held at Conference Room, Block A, China Railway Square, No. 69 Fuxing Road, Haidian District, Beijing, PRC on Tuesday, 31 March 2015 in the afternoon immediately following the conclusion of the class meeting of the holders of A shares of the Company or any adjournment thereof, to consider and approve the following as appropriate. A circular containing details of the following resolutions will be dispatched to the shareholders of the Company in accordance with Rule 19A.39A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Hong Kong Listing Rules ”) on or before 6 March 2015.

By way of special resolutions:

To consider and individually approve each of the following items in relation to the proposed non-public issuance of new A shares of the Company to target investors (the “ Non-Public Issuance ”) (Note 1) :
(i) Class and nominal value of the shares to be issued
(ii) Method of issuance
(iii) Target subscribers and method of subscription
(iv) Number of A shares to be issued
(v) Issue price and pricing principles
(vi) Lock-up arrangement
(vii) Amount and use of proceeds
(viii) Place of listing
(ix) Accumulated profit distribution prior to the Non-Public Issuance
(x) Valid period of the resolutions regarding the Non-Public Issuance

– H-1 –

NOTICE OF H SHAREHOLDERS’ CLASS MEETING

To consider and approve the proposal on the plan of the non-public issuance of A shares of the Company (Note 2) ; and
To consider and approve the proposal of entering into a conditional subscription agreement by the Company with China Railway Engineering “

Corporation (“ CRECG ”) (the CRECG Subscription Agreement ”) (Note 3) .

By order of the Board Yu Tengqun Tam Chun Chung Joint Company Secretaries

Beijing, the PRC 11 February 2015

Notes:

2. Major contents of the proposal on the plan of the non-public issuance of A shares by the Company have been set out in relevant sections of the announcement of the Company dated 11 February 2015. For the full text of the proposal on, please refer to the relevant announcement made by the Company on the websites of the Shanghai Stock Exchange and the Company on 11 February 2015.

3. Proposed subscription for new A shares by CRECG and the CRECG Subscription Agreement

Reference is made to the announcement dated 11 February 2015.

CRECG holds 11,950,010,000 A shares of the Company, representing approximately 56.10% of the total issued shares of the Company as at the date of this notice, and therefore, is a connected person of the Company. Accordingly, the placing and issue of new A shares to CRECG pursuant to the CRECG Subscription Agreement constitutes a connected transaction of the Company and is subject to the announcement, circular and shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules. CRECG and its associates shall abstain from voting on the above special resolution numbered 3 at the H Shareholders’ Class Meeting. Furthermore, CRECG, being one of the target subscribers, is considered to have a material interest in the Non-Public Issuance. CRECG and its close associates shall therefore abstain from voting on the above special resolutions numbered 1 and 2 at the H Shareholders’ Class Meeting.

This resolution shall not be implemented without obtaining necessary approvals from SASAC and CSRC.

4. Closure of register of members and eligibility for attending the H Shareholders’ Class Meeting

H Shareholders who submit their share transfer application forms to the Company’s share registrar before close of business on Wednesday, 11 March 2015 and become registered shareholders on the register of members of the Company are entitled to attend the H Shareholders’ Class Meeting.

– H-2 –

NOTICE OF H SHAREHOLDERS’ CLASS MEETING

Holders of H shares who wish to attend the H Shareholders’ Class Meeting but have not registered the transfer documents are required to deposit the transfer document together with the relevant share certificates at the H share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong at or before 4:30 p.m., Wednesday, 11 March 2015.

5. Registration procedures for attending the H Shareholders’ Class Meeting

Shareholders or their proxies attending the H Shareholders’ Class Meeting shall present their identity certification. If a legal person shareholder of the Company appoints its corporate representative to attend the H Shareholders’ Class Meeting, such representative shall present his identity certification and a copy of the relevant resolution passed by the board or other decision making authority appointing him as its representative before he can attend the H Shareholders’ Class Meeting on behalf of such company.

6. Notice of attendance

Shareholders who intend to attend the H Shareholders’ Class Meeting in person or by proxy shall return the reply slip in person, by post or by facsimile to the Company’s Board of Directors’ Office or Computershare Hong Kong Investor Services Limited on or before Wednesday, 11 March 2015.

The address of Computershare Hong Kong Investor Services Limited is 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (Tel: (852) 2862 8555, Fax: (852) 2865 0990).

7. Proxy

Shareholders entitled to attend and vote at the H Shareholders’ Class Meeting may appoint one or more proxies to attend and vote on their behalf. A proxy need not be a shareholder of the Company.

The instrument appointing a proxy must be signed by the shareholder appointing the proxy or his attorney duly authorised by such shareholder in writing.

Completion and return of a proxy form shall not preclude a shareholder from attending in person and voting at the H Shareholders’ Class Meeting if he so wishes, in which event the instrument appointing a proxy shall be deemed to have been revoked.

8. Other business

Shareholders and their proxies attending the H Shareholders’ Class Meeting shall be responsible for their own travelling and accommodation expenses.

– H-3 –

AI assistant

China Railway Group Limited — Proxy Solicitation & Information Statement 2015

49185_rns_2015-03-02_ac9e451a-9772-46ab-9ebd-6eb6b2c9dc45.pdf

中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

DEFINITION

中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(Stock Code: 390)

1 INTRODUCTION

2 PROPOSED NON-PUBLIC ISSUANCE OF NEW A SHARES

2.1 Terms of the Non-Public Issuance

(4) Number of A Shares to be issued

(5) Issue price and pricing principles

(6) Lock-up arrangement

(7) Amount and use of proceeds

No. Use of Proceeds

Total

(8) Place of listing

(9) Accumulated profit distribution of the Company prior to the Non-Public Issuance

(10) Valid period of the resolutions regarding the Non-Public Issuance

2.2 Conditions Precedent

2.3 Rights of the new A Shares

2.4 Shareholding Structure of the Company

2.5 Reasons for the Non-Public Issuance

2.6 Proposal on the Plan of the Non-Public Issuance of A Shares

2.7 Fulfilment of the conditions for the Non-Public Issuance by the Company

2.8 Reports on the Use of Proceeds from Previous Fund Raising Exercise

2.9 Feasibility Analysis Report

2.10 Proposal Regarding The Plan for Shareholders’ Return for 2015 – 2017

2.11 Authorisations to the Board to Deal with the matters in Relation to the Non-Public Issuance

2.12 Fund raising activities in the past twelve months

3 PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG

(1) Number of new A Shares to be subscribed for and subscription price

(2) Subscription price and payment of the subscription price

(3) Lock-up arrangement

(4) Conditions precedent of the CRECG Subscription Agreement

4 GENERAL MANDATE TO ISSUE NEW SHARES

5 IMPACT OF THE NON-PUBLIC ISSUANCE

(2) Changes in the Company’s financial position, profitability and cash flows

(ii) Impact on the Company’s profitability

(iii) Impact on the Company’s cash flows

(5) Impact on the Company’s liabilities

6 PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

7 PROPOSED AMENDMENTS TO THE PROCEDURAL RULES FOR SHAREHOLDERS’ MEETINGS

8 INFORMATION ON THE GROUP AND CRECG

9 IMPLICATIONS UNDER THE HONG KONG LISTING RULES

10 EGM AND H SHAREHOLDERS’ CLASS MEETING

11 RECOMMENDATION

12 FURTHER INFORMATION

中國中鐵股份有限公司 CHINA RAILWAY GROUP LIMITED

(Stock Code: 390)

CONNECTED TRANSACTION –

PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG

Yours faithfully,

China Railway Group Limited

Guo Peizhang, Wen Baoman, Zheng Qingzhi and Ngai Wai Fung

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF NEW A SHARES BY CRECG

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Information of the Group

II. Information of CRECG

III. Reasons for the Non-Public Issuance and use of proceeds

• The CRECG Subscription

V. The issue prices for the Non-Public Issuance and the CRECG Subscription

VI. Alternative fund raising methods

(i) Borrowing

(ii) Placement of new H shares in Hong Kong

(iii) Rights issue and open offer

VII. Rights of the new A Shares and lock-up arrangement of the new A Shares

VIII. Possible financial effects of the Non-Public Issuance

(ii) Gearing ratio

RECOMMENDATION

A. THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

I. General Information on the Proceeds from Previous Fund Raising Exercise

II. Actual Use of Proceeds from Previous Fund Raising Exercise

III. Explanations on Other Differences

B. FURTHER INFORMATION IN RELATION TO THE REPORT ON THE USE OF PROCEEDS FROM PREVIOUS FUND RAISING EXERCISE

Feasibility Analysis Report on the Use of Proceeds from the Non-Public Issuance of A Shares of the Company

I PLANNED USE OF THE PROCEEDS FROM THE NON-PUBLIC ISSUANCE OF A SHARES OF THE COMPANY

II BASIC INFORMATION OF THE INVESTMENT PROJECTS USING THE PROCEEDS FROM THE NON-PUBLIC ISSUANCE OF A SHARES OF THE COMPANY AND ANALYSIS OF THE FEASIBILITY

China Railway Group Limited Proxy Solicitation & Information Statement 2015