Water Oasis Group Limited - Proxy Solicitation & Information Statement 2024

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shenzhen Expressway Corporation Limited , you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or 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.

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

(Stock Code: 00548)

(1) PROPOSED EXTENSION OF THE VALIDITY PERIOD OF THE RESOLUTIONS AND THE SPECIFIC MANDATE IN RELATION TO THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS; (2) CONNECTED TRANSACTION: A SHARES SUBSCRIPTION AGREEMENT; (3) PLAN ON SHAREHOLDERS’ RETURN; AND (4) NOTICES OF THE THIRD EXTRAORDINARY GENERAL MEETING 2024 AND THE CLASS MEETINGS

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

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A letter from the Independent Board Committee is set out on pages 20 to 21 of this circular. A letter from the Independent Financial Adviser, is set out on pages 22 to 49 of this circular.

The third extraordinary general meeting 2024 (“ EGM ”), the first class meeting 2024 of holders of A Shares (“ ACM ”) and the first class meeting 2024 of holders of H Shares (“ HCM ”, together with the ACM referred to as the “ Class Meetings ”) of Shenzhen Expressway Corporation Limited (the “ Company ”) are to be held consecutively at the conference room of the Company at 10:00 a.m. on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC on Friday, 20 September 2024. The notices of the EGM and the HCM are set out on pages EGM-1 to EGM-2 and HCM-1 to HCM-2 of this circular. The respective proxy forms for the EGM and HCM are enclosed hereto. For the notice of the ACM, please refer to the notice separately published by the Company on 23 August 2024.

Whether or not you intend to attend the said meetings, you are requested to complete the relevant proxy forms in accordance with the instructions printed thereon and return the same to the registrar of H Shares of the Company, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for H Shareholders) or to the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC (for A Shareholders) as soon as possible and in any event not less than 24 hours before the time appointed for the holding of the relevant meetings. Completion and return of the proxy forms will not preclude you from attending and voting in at the EGM and/or Class Meetings thereof in person if you so wish.

23 August 2024

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix I : Proposal of the Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II : Principal terms of the A Shares Subscription Agreement . . . . . . . . . . . .	II-1
Appendix III :General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1
Notice of the HCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	HCM-1

DEFINITIONS

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

“ACM”	the first class meeting 2024 of the holders of A Shares to be
	convened by the Company on 20 September 2024 or any adjourned
	meeting(s) thereof
“A Share(s)”	the domestic share(s) with nominal value of RMB1.00 each in the
	ordinary share capital of the Company, which are listed on the SSE
	and traded in RMB (Stock Code: 600548)
“A Shareholder(s)”	holder(s) of A Shares
“A Share Subscription Agreement”	the share subscription agreement dated 14 July 2023 entered into
	between the Company and XTC Company in relation to the XTC
	Company A Share Subscription
“Articles of Association”	the articles of association of the Company
“associate(s)”	has the meaning ascribed thereto under the Listing Rules
“Board”	the board of directors of the Company
“Class Meetings”	the ACM and the HCM
“Company”	Shenzhen Expressway Corporation Limited, a joint stock limited
	company incorporated in the PRC with limited liability, the H
	Shares of which are listed on the Hong Kong Stock Exchange and
	the A Shares of which are listed on the SSE
“connected person(s)”	has the meaning ascribed thereto under the Listing Rules
“controlling shareholder”	has the meaning ascribed thereto under the Listing Rules
“CSRC”	China Securities Regulatory Commission
“Director(s)”	director(s) of the Company
“EGM”	the third extraordinary general meeting 2024 to be convened by the
	Company on 20 September 2024 or any adjourned meeting(s)
	thereof
“Group”	the Company and its subsidiaries

DEFINITIONS

“HCM” the first class meeting 2024 of the holders of H Shares to be convened by the Company on 20 September 2024 or any adjourned meeting(s) thereof “H Share(s)” the overseas listed foreign share(s) with nominal value of RMB1.00 each in the ordinary share capital of the Company, which are listed on the main board of the Hong Kong Stock Exchange and traded in HK$ (Stock Code: 00548) “H Shareholder(s)” holder(s) of H Shares “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “Independent Board Committee” an independent board committee comprising all the independent non-executive directors of the Company “Independent Financial Adviser” or Lego Corporate Finance Limited, a corporation licensed to carry on “Lego” Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the XTC Company A Share Subscription “Independent Shareholder(s)” the Shareholders other than the Specific Targets and their associates; as at the Latest Practicable Date, being Shareholders other than Shenzhen International and its associates

“Issuance of A Shares to Specific the proposed issuance of no more than 654,231,097 (inclusive) new Targets” or “Issuance” A Shares to no more than 35 (inclusive) Specific Targets (including XTC Company) by the Company at the final issue price under the Issuance with an expected proceeds (before deducting relevant issuance expenses) of no more than RMB6.5 billion “Latest Practicable Date” 19 2024, the latest date for

19 August 2024, being the latest practicable date for ascertaining certain information for inclusion in this circular

“Listing Rules”

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

DEFINITIONS

“Outer Ring Expressway (Shenzhen the Shenzhen section of Outer Ring Expressway in Shenzhen with a section)” or “Outer Ring Project” total length of approximately 77 km and is being implemented in three phases, among which, the 35.58 km from Shajing to Guanlan and the 15.07 km from Longcheng to Pingdi, totaling approximately 51km (referred to as Outer Ring Phase I ), opened to traffic on 29 December 2020. The 9.35 km from Pingdi to Kengzi (referred to as Outer Ring Phase II ) opened to traffic on 1 January 2022. The 16.8 km from Kengzi to Dapeng (referred to as Outer Ring Phase III ) which has commenced construction in the end of 2023
“PRC” the People’s Republic of China
“Pricing Benchmark Date” the first day of the issuance period of the Issuance of A Shares to Specific Targets
“Resolutions” the resolutions in relation to the issue of new A Shares in accordance with the proposal of the Issuance and other related matters passed in the extraordinary general meeting and class meetings convened by the Company on 20 September 2023, details of which are set out in the Company’s circular dated 24 August 2023
“RMB” Renminbi, the lawful currency of the PRC
“Specific Mandate”
the specific mandate in relation to the issue of new A Shares in accordance with the proposal of the Issuance which was granted to the Directors by Shareholders in the Company’s extraordinary general meeting and class meetings convened on 20 September 2023 pursuant to Chapter 19A of the Listing Rules and its articles of association, details of which are set out in the Company’s circular dated 24 August 2023

“SFO”

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Shareholder(s)” shareholder(s) of the Company
“Shenzhen International” Shenzhen International Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Hong Kong Stock Exchange (stock code: 00152)
“Specific Target(s)” no more than 35 (inclusive) specific investors (including XTC Company), which meet the criteria required by the CSRC, and will subscribe A Shares from the Company under the Issuance
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DEFINITIONS

“SSE” Shanghai Stock Exchange “substantial shareholder” has the meaning ascribed thereto under the Listing Rules “Supervisory Committee” the supervisory committee of the Company “Trading Day” a day on which the SSE is open for dealing or trading in securities “Wind” Wind Information Co., Ltd., a financial data and information data provider incorporated in the PRC “XTC Company” Xin Tong Chan Development (Shenzhen) Co., Ltd.* (新通產實業開發（深圳）有限公司), a limited liability company established in the PRC and a wholly-owned subsidiary of Shenzhen International “XTC Company A Share the proposed subscription for new A Shares of the Company in the Subscription” amount of no more than RMB1.51 billion by XTC Company pursuant to the A Share Subscription Agreement as part of the Issuance “%” percentage

Note:

In this circular, certain English names of Chinese entities are translation of their Chinese names, and are included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall prevail.

LETTER FROM THE BOARD

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

Executive Directors: Mr. LIAO Xiang Wen (President) Mr. YAO Hai Mr. WEN Liang

Legal Address: Fumin Toll Station, Fucheng Street, Longhua District, Shenzhen, the PRC

Non-executive Directors: Mr. DAI Jing Ming Ms. LI Xiao Yan Mr. LÜ Da Wei

Place of Business in the PRC: 46th Floor, Hanking Center Tower, No.9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC

Independent Non-executive Directors: Mr. LI Fei Long Mr. MIAO Jun Mr. XU Hua Xiang Mr. YAN Yan

Principal Place of Business in Hong Kong Room 1603, 16/F, China Building, 29 Queen’s Road Central, Central, Hong Kong

23 August 2024

To the Shareholders of the Company

Dear Sirs or Madams,

(1) PROPOSED EXTENSION OF THE VALIDITY PERIOD OF THE RESOLUTIONS AND THE SPECIFIC MANDATE IN RELATION TO THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS;

(2) CONNECTED TRANSACTION: A SHARES SUBSCRIPTION AGREEMENT; (3) PLAN ON SHAREHOLDERS’ RETURN; AND

(4) NOTICES OF THE THIRD EXTRAORDINARY GENERAL MEETING 2024 AND THE CLASS MEETINGS

LETTER FROM THE BOARD

(I) INTRODUCTION

Reference is made to (i) the joint announcement published by the Shenzhen International and the Company on 26 July 2024 in relation to, among others, the Company’s proposed extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription); and (ii) the circular of the Company dated 4 June 2021 in relation to the 3-year plan on Shareholders’ return which has been completed.

The purpose of this circular is to provide you with details of the above matters to enable the Shareholders to make an informed decision on voting on the resolutions proposed at the EGM and/or the Class Meetings.

(II) PROPOSED EXTENSION OF THE VALIDITY PERIOD OF THE RESOLUTIONS AND THE SPECIFIC MANDATE IN RELATION TO THE ISSUANCE

Reference is made to (i) the joint announcement of Shenzhen International and the Company (a subsidiary owned as to approximately 51.56% by Shenzhen International) dated 14 July 2023; and (ii) the circular of the Company dated 24 August 2023 (together with (i) referred to as the “ Announcement and Circulars ”) in relation to, among others, the Company’s proposal to issue no more than 654,231,097 (inclusive) A Shares (representing no more than 30% of the total number of issued shares of the Company immediately prior to the Issuance of A Shares to Specific Targets) to no more than 35 (inclusive) Specific Targets (including XTC Company, a wholly-owned subsidiary of Shenzhen International) with an expected proceeds (before deducting relevant issuance expenses) of no more than RMB6.5 billion. XTC Company agreed to subscribe for A Shares under the Issuance in the amount of no more than RMB1.51 billion.

The Company has already obtained its shareholders’ approval on the Resolutions in relation to the Issuance in the extraordinary general meeting and class meetings held on 20 September 2023, and the validity period of the Resolutions and the Specific Mandate was 12 months from the date of shareholders’ approval. Shenzhen International has also obtained its shareholders’ approval on the major transaction in relation to the deemed disposal of its equity interest in the Company arising from the Issuance at its special general meeting held on 14 September 2023.

As the relevant work for the Issuance is still ongoing and the validity period of the Resolutions and the Specific Mandate will expire on 20 September 2024, in order to ensure the smooth implementation of the Issuance, the Board reviewed and resolved to extend the validity period of the Resolutions and the Specific Mandate by 12 months from the date of expiry (i.e. extend to 20 September 2025) on 26 July 2024, and will propose the above resolution(s) to the EGM and the Class Meetings for the Shareholders’ consideration and approval.

Pursuant to the Specific Mandate approved by the Shareholders, on 25 January 2024, the Board agreed to reduce the total proceeds to be raised from the Issuance from not exceeding RMB6.5 billion to not exceeding RMB4.9 billion, and correspondingly reduce the amount of funds to be used for repaying interest-bearing debts from RMB1.9 billion to RMB0.3 billion. Such reduction of total proceeds to be raised was made by the Board within the discretion granted to it by the Specific Mandate. It would not affect the maximum limit of the proceeds to be raised (i.e. no more than

LETTER FROM THE BOARD

RMB6.5 billion (inclusive)) under the proposal of the Issuance, which the extension of the validity period is subject to the approval of the Shareholders at the EGM and Class Meetings. For details, please refer to the joint announcement of Shenzhen International and the Company dated 25 January 2024. Within the scope of the Specific Mandate approved by the Shareholders, the Board may, based on a comprehensive consideration of various factors such as the external market environment and the actual situation of the Company, appropriately adjust the plan of the Issuance at its discretion.

Details of the Proposal of the Issuance and the A Share Subscription Agreement are set out in the Announcement and Circulars. Except for extending the validity period of the Resolutions and the Specific Mandate by 12 months, there is no material change to the proposal of the Issuance, and the A Share Subscription Agreement entered into between XTC Company and the Company on 14 July 2023 is still effective and remains unchanged. Details of the proposal of the Issuance and the A Share Subscription Agreement are re-illustrated in Appendix I and Appendix II to this circular, respectively.

EFFECT OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the Latest Practicable Date, the total number of shares of the Company in issue was 2,180,770,326 shares, comprising 1,433,270,326 A Shares and 747,500,000 H Shares.

Assuming that (1) there is no other change in the number of shares in issue of the Company from the Latest Practicable Date to the completion of the Issuance of A Shares to Specific Targets; (2) the number of A Shares issued to the Specific Targets is the maximum number of shares proposed to be issued under the Issuance of A Shares to Specific Targets, i.e. 654,231,097 shares (inclusive); (3) Upon the completion of the Issuance, the percentage of the total number of shares of the Company held by Shenzhen International through its wholly-owned subsidiaries will be diluted to 45% of the total number of issued shares of the Company.

The shareholding structure of the Company as at the Latest Practicable Date and immediately after completion of the Issuance of A Shares to Specific Targets is set out below:

LETTER FROM THE BOARD

As at the Latest Practicable Date Number of shares Approximate percentage of the total number of shares of the Company in issue 1,066,239,887 48.89% – – 367,030,439 16.83%	As at the Latest Practicable Date Number of shares Approximate percentage of the total number of shares of the Company in issue 1,066,239,887 48.89% – – 367,030,439 16.83%	Immediately after completion of the Issuance of A Shares to Specific Targets Number of shares Approximate percentage of the total number of shares of the Company in issue 1,217,633,111 42.95% 502,837,873 17.74% 367,030,439 12.95%	Immediately after completion of the Issuance of A Shares to Specific Targets Number of shares Approximate percentage of the total number of shares of the Company in issue 1,217,633,111 42.95% 502,837,873 17.74% 367,030,439 12.95%
1,433,270,326	65.72%	2,087,501,423	73.63%
58,194,000 689,306,000	2.67% 31.61%	58,194,000 689,306,000	2.05% 24.31%
747,500,000	34.28%	747,500,000	26.37%
2,180,770,326	100%	2,835,001,423	100%

Note: As at the Latest Practicable Date,(1) 654,780,000 A Shares were directly held by XTC Company as beneficial owner; (2) 411,459,887 A Shares were directly held by Shenzhen Shen Guang Hui Highway Development Company Limited as beneficial owner; and (3) 58,194,000 H Shares were directly held by Advance Great Limited as beneficial owner. All these companies are wholly-owned subsidiaries of Shenzhen International, therefore Shenzhen International indirectly owns approximately 51.56% interests of the Company.

Upon completion of the Issuance, the registered share capital and the shareholding structure of the Company will change and therefore the corresponding provisions in the Articles of Association will be required to be amended to reflect the relevant changes.

The Company expects that upon completion of the Issuance, it will continue to be able to comply with the requirement of minimum public float under Rules 8.08 and 13.32 of the Listing Rules.

LETTER FROM THE BOARD

PRICING OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS

According to the proposal of the Issuance of A Shares to Specific Targets, the issue price of the Issuance shall not be lower than the higher of the below (subject to the adjustment in the event that the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital) (the “ Minimum Issue Price ”):

The Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period prior to the Issuance;
80% of the average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date (excluding the Pricing Benchmark Date).

According to the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” issued by the CSRC, the issue price shall not be lower than 80% of the average trading price of A shares in 20 Trading Days prior to the pricing benchmark date (exclusive of the pricing benchmark date). This requirement is a mandatory requirement of the CSRC, and it is also the floor price generally adopted by listed companies which issue A shares to specific targets.

According to the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” issued by the CSRC, when listed companies issue shares to specific targets, such shares subscribed by the specific target cannot be transferred within 6 months or 18 months (depending on whether the specific target is the de facto controller of the listed company or an enterprise controlled by the de facto controller). The specific target needs to bear the risk of share price fluctuations and liquidity restrictions during the above-mentioned period. As such, the Board believes that a certain discount to the issue price is reasonable.

The Board fully awares a higher Minimum Issue Price will increase the difficulty of the Issuance. However, in order to protect the rights and interests of the existing Shareholders, the Board further clarifies that the Minimum Issue Price should not be lower than the Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period (after adjustment of any ex-dividend and ex-rights conditions), in order to reduce the risk of dilution of the equity of the existing Shareholders (net assets per share) after the Issuance.

After the Minimum Issue Price is determined, the Company and the sponsor (the lead underwriter) will arrange the bidding of the Issuance in accordance with the provisions of relevant laws and regulations and the requirements of regulatory authorities. The final issue price shall be determined by negotiations between the Board or its authorised person(s) and the sponsor (the lead underwriter) according to the price bidding results, under the authorisation to be granted at the general meeting and the class meetings. The Company believes that a competitive determination of the final issue price is conducive to fully reflecting the long-term investment value of the Company.

The Company has, through Wind collected data from available market precedents regarding issuance of A shares to specific targets by listed companies in around the past 12 months, and reviewed the ratios of the actual issue price to the average trading price for the 20 trading days prior to the pricing

LETTER FROM THE BOARD

benchmark date. The average ratio of the entire A-share market is approximately 86.86%, and the average ratio of the A-share Main Board market is approximately 87.17%, which is higher than the lower limit of the 80% stipulated in the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” issued by the CSRC.

In light of the above, based on the actual performance of the Company’s share price, the implementation of the issuance of shares in the A-share market, and the Company’s additional conditions required for the Minimum Issue Price, the Board believes that the pricing mechanism of the Issuance has given reasonable protection to the rights and interests of the existing Shareholders.

PROGRESS IN THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

The Company started the application process after obtaining shareholders’ approval on the relevant resolutions such as the proposal of the Issuance at extraordinary general meeting and class meetings held on 20 September 2023. In this process, taking into account the external market environment and the actual situation of the Company, on 25 January 2024, within the discretion granted to it by the Specific Mandate, the Board agreed to reduce the total proceeds to be raised from the Issuance from no more than RMB6.5 billion to no more than RMB4.9 billion, and updated the application documents accordingly.

On 22 May 2024, the SSE considered that the application documents were complete and in line with the statutory form, and decided to accept it and review it in accordance with the law. The SSE has already conducted the first round of inquiries during the review process, and the Company provided explanations, argumentative analysis and item-by-item responses to the relevant inquiries on 3 July 2024. As at the latest practicable date, the review of the SSE is still in progress.

The implementation of Issuance of A Shares to Specific Targets is subject to the review of the SSE and the consent for registration of the CSRC. The validity period of the Resolutions and the Specific Mandate will soon expire on 20 September 2024. In order to ensure the smooth implementation of the Issuance, the Board proposes to extend the validity period of the Resolutions and the Specific Mandate in relation to the Issuance of A Shares to Specific Targets.

LISTING RULES IMPLICATIONS

Pursuant to Chapter 19A of the Listing Rules and the Articles of Association, the Company will seek for approval for the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance from its Independent Shareholders by way of special resolution(s). Thereafter, it will proceed with the Issuance of A Shares to Specific Targets.

As at the Latest Practicable Date, Shenzhen International indirectly holds 1,066,239,887 A Shares and 58,194,000 H Shares of the Company, representing approximately 51.56% of the issued shares of the Company, and is the controlling shareholder of the Company. Hence, Shenzhen International and its associates are connected persons of the Company, and the XTC Company A Share Subscription constitutes a connected transaction of the Company and is subject to the announcement, reporting and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

The Independent Board Committee comprising the independent non-executive directors of the Company has been formed to advise the Independent Shareholders on the terms of the XTC Company A Share Subscription. Lego has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the same.

REASONS FOR AND BENEFITS OF THE EXTENSION OF THE VALIDITY PERIOD OF THE RESOLUTIONS AND THE SPECIFIC MANDATE IN RELATION TO THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS (INCLUDING THE XTC COMPANY A SHARE SUBSCRIPTION)

As disclosed in the Announcement and the Circulars, the proceeds from the Issuance will be used mainly for the construction of Outer Ring Phase III. The Outer Ring Expressway (Shenzhen Section) has obvious advantages in terms of road network, making it a high-quality core asset of the Company. Since the opening to traffic of Outer Ring Phase I and Outer Ring Phase II, they have performed well in terms of operational performance, with rapid growth in traffic volume and toll revenue, and contributed approximately 13% and 21% to the revenue and profit (before interest and tax) of the Company in 2023, which is an important cornerstone for the sustainable development of the Company. Upon completion of Outer Ring Phase III, all the phases of Outer Ring Expressway (Shenzhen Section) will be completed and connected, which will bring about the overall benefits of the project on the one hand, and improve the layout of the road network on the other hand. The Board believe the Outer Ring Project has important strategic significance for the sustainable development of the Company. Completion of the construction of Outer Ring Phase III can expand the scale of the Company’s high-quality highway assets, enhance the future development of the Company’s toll highway business and further consolidate the Company’s core advantages in the investment, construction and operation of toll highways. Based on preliminary calculations, assuming that the Guangdong Provincial Government approves a 25-year concession period for the Outer Ring Project, being the longest concession period that the Company may apply for pursuant to “Regulations on the Management of Toll Highways”, the financial internal rate of return (after tax) on the entire Outer Ring Project will be approximately 6.76%, which is generally better than the average return in the market.

As the business of the Company is capital-intensive, capital is an important foundation for its sustainable development. As at the Latest Practicable Date, the capital expenditure of the Group approved by the Shareholders and/or the Board mainly includes expenditure on construction projects such as Outer Ring Phase III and Jihe Expressway R& E Project, with a total amount of approximately RMB26.8 billion. The Guangzhou-Shenzhen section of Beijing-Hong Kong-Macao Expressway (G4), which is jointly invested by the Company’s subsidiary Shenzhen Investment Holdings Bay Area Development Company Limited and other partner, is also facing the demand for reconstruction and expansion, and capital investment from the Group is required accordingly. It is expected that the capital expenditure of the Group in recent years will exceed RMB30 billion. The aforesaid capital expenditure will continue to replenish the quality highway assets of the Group and effectively extend the combined concession period of the toll highway assets of the Group, thereby laying a solid foundation for sustainable development of the Group, and at the same time, the Group is required to raise a substantial amount of capital for this purpose.

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LETTER FROM THE BOARD

The H Shares of the Company were listed in 1997. Since the listing of A Shares of the Company in 2001, except for the increase of 70,326 ordinary shares through the exercise of a small amount of conversion option attached to convertible bonds in 2009, its share capital has not been increased. Since the Company mainly relied on debt financing to raise funds in the past, its debt level has been rising. As at 31 December 2023, the Company’s total asset-liability ratio (calculated by total liabilities divided by total assets) was approximately 58.53% (while the average ratio of listed companies in the same industry is approximately 46%), and the net asset interest-bearing debt ratio (calculated by total interest-bearing liabilities divided by total equity of shareholders) was approximately 113%. If the Company continues to rely solely on debt financing to raise funds, the level of debt of the Company is expected to rise further in the future. The ever-rising level of debt would lead to an increase in the cost of debt financing and increase the difficulty in financing, which may force the Company to forgo investment opportunities of high-quality projects and miss the development opportunity in the industry, which is not in the long-term interests of the Company and its shareholders.

The use of external financing by the Company to promote the development of its core business and new growth businesses is of great significance in enhancing the overall strength of the enterprise and achieving higher returns to shareholders. The Company intends to raise funds for investment in the toll highway as a principal business and repayment of interest-bearing liabilities through the Issuance. The Board is of the view that the Issuance will be beneficial to the Company in further enhancing its capital strength, optimising its capital structure, reducing its financial costs, strengthening its anti-risk capability and competitiveness, further expanding the Company’s future investment and financing scope, supporting its future business development and enhancing its sustainable profitability and market competitiveness, which is in line with the long-term development strategy of the Company and in the interests of the Company and its shareholders as a whole.

In light of the above, the Board proposed the Issuance plan, convened the EGM and the Class Meetings and obtained approval from its Shareholders on the resolutions in relation to the Issuance and related matters on 20 September 2023. In accordance with the guidelines of the CSRC, resolutions approved in the general meeting should have a clear validity period, generally one year, and the validity period should be extended before the expiration of the resolutions of the general meeting.

The Board proposed to extend the validity period of the Resolutions and the Specific Mandate in relation to the Issuance of A Shares to Specific Targets with an aim to implement the Resolutions approved in its extraordinary general meeting and class meetings in accordance with the actual progress of the related work of the Issuance and the guidelines of the CSRC. Extending the validity period of the Resolutions and the Specific Mandate in relation to the Issuance will help the Company to obtain the approval of the SSE and the registration approval from the CSRC, allows the Company to select a better time for determining the price and obtain better issuance conditions, which is in the interests of the Company and its shareholders as a whole.

Since Mr. Dai Jing Ming is a director of both Shenzhen International and the Company, he has abstained from voting on the relevant resolutions in connection with extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Shares Subscription) in the board meeting of the Company. Save for Mr. Dai Jing Ming, none of

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LETTER FROM THE BOARD

the directors of the Company has material interest in the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Shares Subscription) and is required to abstain from voting in the relevant board meeting.

In respect of the XTC Company A Share Subscription, the Board is of the view that the terms of the A Shares Subscription Agreement are on normal commercial terms, fair and reasonable and in the interest of the Company and its Shareholders as a whole after having considered the reasons above.

MEASURES IN PROTECTING SHAREHOLDERS’ INTERESTS

In terms of issuance pricing, as described in “Pricing of Issuance of A Shares to Specific Targets” above, the Company set up a reasonable pricing mechanism for the Issuance by measures such as reducing the risk of dilution of the equity of existing Shareholders (net asset value per share) by increasing the Minimum Issue Price not lower than the net asset value per share at the end of the most recent period, negotiates with the sponsor (lead underwriter) to determine the final issue price based on the price bidding results, which provides reasonable protection to the interests of existing Shareholders.

In terms of shareholder return, the Company attaches importance to the principle of reasonable returns to Shareholders, takes into account the needs of sustainable operation and development, and implements an active cash dividend policy. The Company has been distributing cash dividends for 27 consecutive years since its listing, with an accumulated cash dividend of approximately RMB14.4 billion. The Shareholders’ Return Proposal for 2021-2023, which is approved in the general meeting of the Company, has been completed. The cash dividend for each year of 2021-2023 representing 56%, 55% and 56% of the net profits attributable to owners of the parent company in the consolidated financial statements for the respective year, net of distribution payable to the holders of other equity instruments such as perpetual bonds (if any). The Company continues pursuing to providing returns to Shareholders, and on the basis of fully listening to the views of Shareholders, has prepared the Shareholders’ Return Proposal for 2024-2026, which will be proposed to the EGM for approval. The Board has proposed that, subject to the conditions for cash dividend distribution be satisfied and the capital requirements for the normal operation and development of the Company be ensured, the annual cash dividend distribution of the Company from 2024 to 2026 shall not be less than 55% of the net profits attributable to owners of the parent company in the consolidated financial statements for the respective year, net of distribution payable to the holders of other equity instruments such as perpetual bonds (if any). The stability of the dividend policy was maintained.

In terms of the scale of the issuance, the Company has reduced the scale of proceeds to be raised in the Issuance within the scope of the authorization approved by the Shareholders. After the Shareholders approve the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance of A Shares to specific targets, the Company will have the opportunity to choose a better timing and obtain better issuance conditions. In line with the principle of protecting the interests of Shareholders, the Company will continue to prudently determine the final issuance plan (including the total amount of funds raised, the number of shares issued, etc.) in light of the actual situation of the Company, taking into account the external market environment and other factors, so as to effectively safeguard the interests of shareholders.

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LETTER FROM THE BOARD

In light of the above, although the Issuance will have a potential dilutive effect on the shareholding of the existing Shareholders (including minority Shareholders) of the Company, considering it will provide long-term capital and strengthen the investment and financing capability of the Company, the Outer Ring Project (where the proceeds will be invested) is a rare high-quality toll highway asset, the Company’s long-standing and stable dividend policy, and effective measures in protecting Shareholders’ interests will benefit all Shareholders (including existing Shareholders), the Company believes the benefits of the Issuance will outweigh the potential dilutive impact on the shareholding of existing Shareholders. Shenzhen International’s subscription for A Shares of no more than RMB1.51 billion through XTC Company which will maintain its controlling interest of no less than 45% demonstrates its good expectation of the future of the Company and its support for the longterm development of the Company. The Company will remain as a subsidiary of Shenzhen International upon completion of the Issuance.

FUND-RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any equity fund raising activities during the twelve months immediately before the Latest Practicable Date.

Since the Issuance does not result in a theoretical dilution effect of 25% or more on its own, the theoretical dilution effect of the Issuance is in compliance with the requirements under Rule 7.27B of the Listing Rules.

GENERAL INFORMATION OF THE PARTIES

The Company

the Company and its subsidiaries are principally engaged in the investment, construction, operation and management of toll highways and general-environmental protection business. At present, the general-environmental protection business mainly includes solid waste resource treatment and clean energy power generation.

Shenzhen International

Shenzhen International and its subsidiaries are principally engaged in logistics, toll road, port and general-environmental protection businesses. Shenzhen International perceives the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta, the Beijing-Tianjin-Hebei areas and major logistics gateway cities as key strategic regions. Through investment, mergers and acquisitions, restructuring and consolidation, it focuses on the investment, construction and operation of logistics infrastructure in the four major areas of “Inland Port Networking, Logistics Parks, Air Cargo and Railway Freight Logistics Infrastructure” (including inland ports, urban integrated logistics parks, air cargo terminals and railway logistics terminals) and toll roads. It provides its customers with valueadded logistics services including intelligent warehouse and integrated cold chain warehousing, and also expanded its business segments to include the comprehensive development of land related to the “logistics + commerce” industries as well as the investment in and operation of general-environmental protection business.

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LETTER FROM THE BOARD

XTC Company

XTC Company is a wholly-owned subsidiary of Shenzhen International and is principally engaged in the investment and development of logistics infrastructure.

(III) PLAN ON SHAREHOLDERS’ RETURN FOR 2024-2026

As the Company’s previous plan on Shareholders’ Return for 2021-2023 has already been expired, the Company has formulated “Shenzhen Expressway Corporation Limited Plan on Shareholders’ Return in Next Three Years (2024-2026)” (the “ Plan ”) to establish a scientific, sustainable and stable dividend payment mechanism, actively reward its investors in accordance with requirements under the Notice of the China Securities Regulatory Commission on Issues Relating to Further Implementation of Cash Dividends by Listed Companies (Zheng Jian Fa 2012 No.37), Guidelines No. 3 on the Supervision and Administration of Listed Companies – Distribution of Cash Dividends of Listed Companies (amended in 2023) (CSRC Notice 2023 No.61) as well as the Articles of Association after taking into account the actual circumstances of the Company. The details of which are as follows:

(A) Major consideration factors in formulating the Plan

The Company formulated the Plan after comprehensively considered various factors including the Shareholders’ requirements and willingness on their return, the Company’s strategic development plan and actual development stage, current and future profitability, financial status and cash flow status, capital demand, social capital costs and the financing environment, etc. The Company aimed to establish a plan and mechanism which is sustainable, stable and can actively returns to its investors, so as to ensure the continuity and stability of its profit distribution policies.

(B) Basic principles in formulating the Plan

The Plan should be formulated in compliance with the relevant laws, regulations, normative documents and the profit distribution provision under the Articles of Association, and should have fully considered the opinions from the Shareholders (especially the medium and minority Shareholders), the independent Directors and the Supervisory Committee. The Company should implement a continuous, stable and active profit distribution policy in line with the principles of focusing on reasonable investment return to the Shareholders, taking into account the long-term sustainable development and reasonable capital needs of the Company, conforming to the overall interests of all the Shareholders.

(C) The Company’s Plan on Shareholders’ return for 2024-2026

For 2024-2026, the Company will adhere to a “toll highways + general environmental protection” dual-main business strategy, and consolidate and enhance the competitive advantages of its expressway business by focusing on investments in construction of new expressways, reconstruction and expansion of expressways, and seeking out opportunities for mergers and acquisitions of quality projects. The Company will also focus on the sub-sectors of the environmental protection industry such as solid waste recycling treatment and clean energy power generation, work to improve the quality and profitability of its existing projects, comprehensively enhancing the operating quality and

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LETTER FROM THE BOARD

profitability of its environmental protection business, in order to promote the healthy and sustainable development of the Company. After comprehensive consideration of various factors, the Company has formulated the plan on Shareholders’ return for the next three years (2024-2026) as follows:

1. Method of profit distribution

The Company shall distribute its dividends in cash, stock, or both cash and stock, or other means permitted by laws and regulations, and priority is given to profit distribution in cash.

2. Conditions and ratio of cash dividend distribution by the Company

Under the conditions that the distributable profit realized by the Company during the year is positive, the Company has sufficient cash, the distribution of cash dividends will not affect the subsequent normal business development of the Company, the financial situation of the Company is good, and the auditors have issued the Company’s annual financial report without reservation; the Company will, in principle, distribute cash dividend once in such year. The Company may also distribute interim cash dividends.

If the conditions for cash dividend distribution can be fulfilled and the funding needs for the Company’s normal operation and development are ensured, the Company will distribute profit of not less than 55% of the net profit attributable to Shareholders of the parent company pursuant to the consolidated statement of the year in cash, net of profit distributable to holders of other equity securities such as perpetual bonds (if any) (the “ Distributable Profit Realised for the Year ”).

3. Conditions for distribution of stock dividend by the Company

Base on the annual profitability and performance growth of the Company, and subject to fulfillment of the aforesaid conditions on cash dividend distribution ratio and the reasonable equity structure and equity scale of the Company, the Company can distribute its dividend in stocks to match its equity scale with its performance growth.

(D) Decision-making mechanism of the Plan and the proposal of annual profit distribution

The Plan should be formulated by the management of the Company, approved by the Board, and then proposed for consideration and approval by the Supervisory Committee and Shareholders at the general meeting. The Board should carefully study and demonstrate the profit distribution method, the conditions and ratio for distribution of cash dividends, etc. when considering the profit distribution proposal for each year. After the Board has approved the resolution on the aforesaid matters, it shall propose the resolution to the Supervisory Committee and the Shareholders at the general meeting for consideration and approval.

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LETTER FROM THE BOARD

(E) Adjustment to the Plan on Shareholders’ return

If the Company is required to adjust the Plan on Shareholders’ return due to material changes such as changes in laws, regulations, the operating environment or conditions of the Company, the Board shall, with an ultimate aim on protecting the interest of the Shareholders, formulate an adjustment plan after detailed evaluation and propose the same for Shareholders’ consideration approval at general meeting by way of special resolution. The independent Directors and Supervisory Committee should also issue their review opinions on the adjustment to the plan on Shareholders’ return. When the adjustments to the plan on Shareholders’ return are proposed for Shareholders’ consideration and approval at the general meeting, the Company shall actively communicate with its Shareholders (especially the medium and minority Shareholders) through various channels, comprehensively consider the opinions and demands from the Shareholders, respond their concerns in a timely manner, and guarantee their rights to participate in the general meeting.

(F) Effective mechanism of the Plan

The Plan shall come into force and be implemented from the date of consideration and approval by the general meeting of the Company.
The outstanding matters of the Plan shall be resolved in accordance with relevant laws, regulations, rules, the relevant provisions of China Securities Regulatory Commission and the Articles of Association.
The Plan shall be interpreted by the Board.

(IV) THE EGM AND THE HCM

The Company will convene the EGM at the conference room of the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC at 10:00 a.m. on Friday, 20 September 2024, to consider and, if thought fit, approve (i) the special resolution in relation to the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription) and the ordinary resolution in relation to the plan on Shareholders’ return for 2024-2026 as detailed in this circular; and (ii) the ordinary resolutions in relation to the three construction contracts (the “ Construction Contracts ”) dated 26 July 2024 entered between the Company and the relevant constructors in relation to the construction work of sections 1, 5 and 6 of the reconstruction and expansion project of Jihe Expressway as detailed in the circular of the Company dated 23 August 2024 (the “ Other Circular ”). The Company will also consecutively convene the Class Meetings at the same venue immediately following the conclusion of the EGM to consider, and if thought fit, approve the special resolution in relation to the extension of the validity period of the Resolutions and Specific Mandate in relation to the Issuance. The notices of the EGM and the HCM are set out on pages EGM-1 to EGM-2 and HCM-1 to HCM-2 of this circular. The respective proxy forms for the EGM and HCM are enclosed hereto. For the notice of the ACM, please refer to the notice separately published by the Company on 23 August 2024.

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LETTER FROM THE BOARD

Whether or not you intend to attend the said meetings, you are requested to complete the relevant proxy forms in accordance with the instructions printed thereon and return the same to the registrar of H Shares of the Company, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for H Shareholders) or to the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC (for A Shareholders) as soon as possible and in any event not less than 24 hours before the time appointed for the holding of the relevant meetings. Completion and return of the proxy forms will not preclude you from attending and voting in at the EGM, Class Meetings or any adjourned meeting(s) thereof in person if you so wish.

(V) CLOSURE OF REGISTER OF HOLDERS OF H SHARES

The register of holders of H Shares will be closed from Friday, 13 September 2024 to Friday, 20 September 2024, both days inclusive, during which period no transfer of H Shares will be effected. In order to qualify for attending the EGM and the Class Meetings, all transfer documents of H Shares accompanied by the relevant share certificates must be lodged with the Hong Kong Registrars Limited at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Thursday, 12 September 2024.

(VI) VOTING BY POLL

Pursuant to Rule 13.39(4) of the Listing Rules and the Articles of Association, the EGM and the Class Meetings shall vote by poll on the resolutions set out in the notices of the EGM and the Class Meetings. Therefore, all resolutions as set out in the notices of EGM and the Class Meetings will be voted by poll. The poll results will be published on the HKEXnews website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk and the website of the Company at www.sz-expressway.com upon the conclusion of the EGM and the Class Meetings.

As at the Latest Practicable Date, Shenzhen International and its associates indirectly hold 1,066,239,887 A Shares and 58,194,000 H Shares, representing approximately 51.56% of the issued shares of the Company. Since Shenzhen International has a material interest in the XTC Company A Shares Subscription, Shenzhen International and its associates have to abstain from voting on the resolution in relation to the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription) at the EGM and the Class Meetings.

Save for the aforesaid, to the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, none of the other Shareholders has a material interest in the resolution in relation to the plan on the Shareholders’ Return proposed at the EGM and the Class Meetings and is required to abstain from voting at the EGM or the Class Meetings. Please refer to the Other Circular as to whether any Shareholder has material interest in the Construction Contracts and has to abstain from voting at the EGM on the related resolutions.

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LETTER FROM THE BOARD

(VII) RECOMMENDATION

In light of the factors and conclusion disclosed in this circular (including but not limited to Letter from the Board – “ (II) Proposed extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance” – “Reasons for and Benefits of the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance of A Shares to Specific Targets”), the Board considers the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription) is conducted on normal commercial terms, fair and reasonable and in the interests of the Group and the Shareholders as a whole. Besides, the Board also considers the plan on Shareholders’ return for 20242026 is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that Shareholders to vote in favour of the special resolution to be proposed at the EGM and the Class Meetings in respect of the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription), and the ordinary resolution to be proposed at the EGM in relation to the plan on Shareholders’ return for 2024-2026.

Having taken into account the advice of Independent Financial Adviser, the Independent Board Committee considers that the terms of the A Shares Subscription Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Group and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings in respect of the A Shares Subscription Agreement.

Please refer to the Other Circular for the Board’s views and recommendation on the voting actions that the Shareholders should take in respect of the resolutions in relation to the Construction Contracts.

(VIII) FURTHER INFORMATION

Your attention is drawn to (1) the letter from the Independent Board Committee set out on pages 20 to 21 of this circular, containing its recommendation in respect of the A Shares Subscription Agreement and the transactions contemplated thereunder; and (2) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out on pages 22 to 49 of this circular, containing its recommendation in respect of the A Shares Subscription Agreement and the transactions contemplated thereunder.

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

Yours faithfully, By Order of the Board of Shenzhen Expressway Corporation Limited Liao Xiang Wen

Executive Director and President

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [314 x 96] intentionally omitted <==

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

23 August 2024

To the Independent Shareholders

CONNECTED TRANSACTION – A SHARES SUBSCRIPTION AGREEMENT

Dear Sirs or Madams,

We refer to the circular of Shenzhen Expressway Corporation Limited (the “ Company ”) dated 23 August 2024 (the “ Circular ”), of which this letter forms a part. Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the A Shares Subscription Agreement and the transactions contemplated thereunder, details of which are set out in the “Letter from the Board” in the Circular. Lego Corporate Finance Limited has been appointed as the Independent Financial Adviser with our approval 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 5 to 19 of the Circular and the “Letter from the Independent Financial Adviser” on pages 22 to 49 of the Circular and the additional information contained in the appendix to this Circular.

Having taken into account, among other things, the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in the “Letter from the Independent Financial Adviser” contained in the Circular, we concur with the view of the Independent Financial Adviser and consider that although the connected transaction under the A Shares Subscription Agreement is not in the ordinary and usual course of business of the Group, the terms of the A Shares Subscription Agreement are on normal commercial terms, and are fair and reasonable so far as the Independent Shareholders are concerned, and that the A Shares Subscription Agreement and the transactions contemplated thereunder is in

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

the interest of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the resolutions to be proposed at the EGM and the Class Meetings for approving the A Shares Subscription Agreement and the transactions contemplated thereunder.

Yours faithfully, Li Fei Long Miao Jun Xu Hua Xiang Yan Yan

Independent Board Committee

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter of advice from Lego Corporate Finance Limited to the Independent Board Committee and the Independent Shareholders in respect of the XTC Company A Share Subscription, which has been prepared for the purpose of inclusion in this circular.

==> picture [447 x 47] intentionally omitted <==

23 August 2024

To: The Independent Board Committee and the Independent Shareholders of Shenzhen Expressway Corporation Limited

Dear Sirs or Madams,

CONNECTED TRANSACTION IN RESPECT OF THE XTC COMPANY A SHARE SUBSCRIPTION

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the XTC Company A Share Subscription, details of which are set out in the letter from the Board (the “ Letter from the Board ”), Appendix I and Appendix II contained in the circular issued by the Company to the Shareholders dated 23 August 2024 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless otherwise defined or the context requires otherwise.

Reference is made to the circular issued by the Company dated 24 August 2023 (the “ 2023 Circular ”) that, on 14 July 2023, the Board approved the Issuance, pursuant to which the Company proposed to issue no more than 654,231,097 (inclusive) A Shares (representing no more than 30% of the total number of issued shares of the Company immediately prior to the Issuance) to no more than 35 (inclusive) Specific Targets (including XTC Company, a wholly-owned subsidiary of Shenzhen International) with an expected proceeds (before deducting relevant issuance expenses) of no more than RMB6.5 billion. XTC Company agreed to subscribe for A Shares in the amount of no more than RMB1.51 billion.

The Company has already obtained Shareholders’ approval on the Resolutions in relation to the Issuance (including the XTC Company A Share Subscription) in the extraordinary general meeting and class meetings held on 20 September 2023, and the validity period of the Resolutions and the Specific Mandate (including the XTC Company A Share Subscription) was 12 months from the date of Shareholders’ approval.

As disclosed in the Company’s announcement dated 25 January 2024, the Board agreed to reduce the total proceeds to be raised from the Issuance from not exceeding RMB6.5 billion to not exceeding RMB4.9 billion, and correspondingly reduce the amount of funds to be used for repaying interest-bearing debts from RMB1.9 billion to RMB0.3 billion. Such reduction of total proceeds to be raised was made by the Board within the discretion granted to it by the Specific Mandate. It would not affect the maximum limit of the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

proceeds to be raised (i.e. no more than RMB6.5 billion (inclusive)) under the proposal of the Issuance, which the extension of the validity period is subject to the approval of the Shareholders at the EGM and Class Meetings.

As disclosed in the Letter from the Board, as the relevant work for the Issuance is still ongoing and the validity period of the Resolutions and the Specific Mandate will expire on 20 September 2024, in order to ensure the smooth implementation of the Issuance, the Board reviewed and resolved to extend the validity period of the Resolutions and the Specific Mandate by 12 months from the date of expiry (i.e. extend to 20 September 2025) on 26 July 2024, and will propose the above resolution(s) to the EGM and Class Meetings of the Company for Shareholders’ consideration and approval.

Except for extending the validity period of the Resolutions and the Specific Mandate by 12 months, there is no material change to the proposal of the Issuance, and all other terms of the A Share Subscription Agreement entered into between XTC Company and the Company on 14 July 2023 remain unchanged and are in full force.

As at the Latest Practicable Date, Shenzhen International indirectly holds 1,066,239,887 A Shares and 58,194,000 H Shares, representing approximately 51.56% of the issued shares of the Company, and is the controlling shareholder of the Company. Hence, Shenzhen International and its associates are connected persons of the Company, and the XTC Company A Share Subscription constitutes a connected transaction of the Company and is subject to the announcement, reporting and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely, Mr. Li Fei Long, Mr. Miao Jun, Mr. Xu Hua Xiang and Mr. Yan Yan, has been established to advise the Independent Shareholders as to (i) whether the terms of the A Share Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned; and (ii) whether the XTC Company A Share Subscription is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole. We, Lego Corporate Finance Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. In the last two years prior to the Latest Practicable Date, we had acted as the independent financial adviser to the then independent board committee and independent shareholders of the Company in respect of the XTC Company A Share Subscription, details of which were disclosed in the 2023 Circular. Apart from normal professional fees paid or payable to us in connection with the previous engagement and this appointment as the Independent Financial Adviser, no arrangement exists whereby we had received or will receive any fees or benefits from the Company. Accordingly, we consider that we are eligible to give independent advice in respect of the XTC Company A Share Subscription.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

In formulating our opinion and recommendations to the Independent Board Committee and the Independent Shareholders, we have relied on the information, facts and representations contained or referred to in the Circular and the information, opinions and representations provided or expressed to us by the Directors and/ or the management of the Company (the “ Management ”). We have assumed that all the information, facts and representations contained or referred to in the Circular, and all the information, opinions and representations provided or expressed by the Directors and/or the Management, were true, accurate and complete in all material respects at the time when they were provided and continue to be so as at the Latest Practicable Date and that they may be relied upon in formulating our opinion. We have also assumed that all such opinions and statements of intention or belief expressed by the Directors and/or the Management and those as set out or referred to in the Circular were reasonably made after due and careful enquiries.

The Directors have confirmed to us that no material facts have been withheld or omitted from the information provided, representations made or opinions expressed. We have no reason to suspect that any relevant information has been withheld or omitted, nor are we aware of any facts or circumstances which would render the information provided, representations made or opinions expressed to us untrue, inaccurate or misleading. We consider that we have been provided with, and have reviewed, sufficient information currently available, and that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided, representations made or opinions expressed by the Directors and/or the Management, nor have we conducted any form of in-depth investigation into the businesses, affairs, operations, financial position or future prospects of the Group. Our opinion is necessarily based on the financial, economic, market and other conditions in effect, and the information made available to us, as at the Latest Practicable Date.

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the XTC Company A Share Subscription. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in respect of the XTC Company A Share Subscription, we have considered the following principal factors and reasons:

1. Information on the Company, Shenzhen International and XTC Company

1.1. The Company

The Company is a joint stock limited liability company incorporated in the PRC on 30 December 1996. The H Shares have been listed on the Stock Exchange since 12 March 1997 (stock code: 00548) and the A Shares have been listed on the Shanghai Stock Exchange since 25 December 2001 (stock code: 600548).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Headquartered in Shenzhen, the Group is principally engaged in the investment, construction, operation and management of toll highways and roads, as well as the general-environmental protection business. At present, the general-environmental protection business mainly includes solid waste resource treatment and clean energy power generation. According to the annual report of the Company for the year ended 31 December 2023 (the “ 2023 Annual Report ”), as of 31 December 2023, the Group operated and invested in a total of 16 toll highway projects and the total mileage of the high-grade highways invested in or operated by the Group (on equity basis) was approximately 660 km. The Group has also actively participated in various projects in the field of environmental protection, clean energy and industrial finance.

Set out below is a summary of the financial results of the Group for the year ended 31 December 2022 (“ FY2022 ”) and the year ended 31 December 2023 (“ FY2023 ”) as extracted from the 2023 Annual Report:

	FY2022	FY2023	Change
	RMB million	RMB million	%
	(audited and
	restated)	(audited)
Operating income	9,372.6	9,295.3	(0.8)
Operating profit	2,487.1	3,013.4	21.2
Profit for the year	2,484.5	2,915.6	17.4
Profit attributable to equity shareholders
of the Company	2,016.5	2,327.2	15.4

As disclosed in the 2023 Annual Report, the Group’s total operating income slightly decreased by approximately 0.8% from approximately RMB9,372.6 million for FY2022 to approximately RMB9,295.3 million for FY2023. Among which, the Group’s toll revenue amounted to approximately RMB5,374.9 million for FY2023, representing an increase of approximately RMB396.6 million or 8.0% as compared to that of approximately RMB4,978.3 million for FY2022, which was mainly due to the combined effect of (i) the increase in revenue from the restorative growth in traffic volume of the ancillary toll highways; and (ii) the decrease in revenue arising from the expiry of the concession rights of the Group’s expressway in Wuhuang in December 2022.

For FY2023, the Group recorded net profit attributable to its equity holders of approximately RMB2,327.2 million, representing an increase of approximately RMB310.7 million or 15.4% as compared to that of approximately RMB2,016.5 million for FY2022. Such increase was mainly attributable to (i) the decrease in financial expenses, which was mainly due to the combined effect of the increase in interest expenses resulting from the rise in the interest rates of foreign currency loan arising from the increase in overseas HIBOR interest rates; the

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decrease in interest income with declining cash on hand; and the decrease in exchange losses as a result of the lower depreciation of RMB in the current period than the same period last year; and (ii) the increase in income from investment in associates and joint ventures.

Set out below is a summary of the financial position of the Group as at 31 December 2022 and 2023 as extracted from the 2023 Annual Report, respectively:

	As at	As at
	31 December	31 December
	2022	2023	Change
	RMB million	RMB million	%
	(audited and
	restated)	(audited)
Total assets	69,204.7	67,507.5	(2.5)
Non-current assets	59,907.6	60,555.7
Current assets	9,297.1	6,951.8
– Cash at banks and on hand	3,635.9	2,152.4
Total liabilities	41,840.6	39,508.8	(5.6)
Non-current liabilities	18,597.2	19,682.3
Current liabilities	23,243.4	19,826.5
Net current liabilities	13,946.3	12,874.7	(7.7)
Total equity	27,364.1	27,998.7	2.3
Total equity attributable to
shareholders of the Company	21,348.5	22,358.0	4.7
Current ratio (times) Note 1	0.40	0.35	–
Debt-to-asset ratio Note 2	60.5%	58.5%	–
Net borrowings-to-equity ratio Note 3	110.1%	106.2%	–

Notes:

Calculated as current assets divided by current liabilities
Calculated as total liabilities divided by total assets
Calculated as total borrowings (excluding cash and cash equivalents) divided by total equity attributable to shareholders of the Group

As at 31 December 2023, the Group’s non-current assets amounted to approximately RMB60,555.7 million, which mainly comprised (i) intangible assets of approximately RMB26,809.1 million; (ii) long-term equity investments of approximately RMB18,715.8 million; (iii) fixed assets of approximately RMB7,328.9 million; (iv) other non-current assets of approximately RMB3,216.6 million; and (v) long-term receivables of approximately

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RMB2,334.9 million. Meanwhile, the Group’s current assets mainly consisted of (i) cash at banks and on hand of approximately RMB2,152.4 million; (ii) inventories of approximately RMB1,355.6 million; and (iii) other receivable of approximately RMB602.2 million.

As at 31 December 2023, the Group’s non-current liabilities amounted to approximately RMB19,682.3 million, which mainly comprised (i) long-term borrowings of approximately RMB9,567.7 million; (ii) bonds payable of approximately RMB7,159.1 million; (iii) deferred tax liabilities of approximately RMB1,148.5 million; and (iv) long-term payables of approximately RMB907.3 million. Meanwhile, the Group’s current liabilities mainly consisted of (i) short-term borrowings of approximately RMB11,105.6 million; (ii) accounts payable of approximately RMB2,588.5 million; (iii) non-current liabilities due within one year of approximately RMB2,392.0 million; and (iv) other current liabilities of approximately RMB1,534.5 million.

The Group recorded net asset value of approximately RMB27,364.1 million and RMB27,998.7 million as at 31 December 2022 and 2023, respectively. Furthermore, the Group was in net current liabilities position of approximately RMB13,946.3 million and RMB12,874.7 million as at 31 December 2022 and 2023, respectively, with a current ratio of approximately 0.40 times and 0.35 times as at 31 December 2022 and 2023, respectively. As at 31 December 2023, the Group’s debt-to-asset ratio was approximately 58.5% and its net borrowings-toequity ratio was approximately 106.2%.

1.2. Shenzhen International

Shenzhen International is a company incorporated in Bermuda with limited liability, the shares of which have been listed on the Stock Exchange since 25 September 1972 (stock code: 00152) and is ultimately controlled by State-owned Assets Supervision and Administration Commission of the People’s Government of Shenzhen Municipality.

Shenzhen International and its subsidiaries are principally engaged in logistics, toll road, port and general-environmental protection businesses. Shenzhen International perceives the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta, the BeijingTianjin-Hebei areas and major logistics gateway cities as key strategic regions. Through investment, mergers and acquisitions, restructuring and consolidation, it focuses on the investment, construction and operation of logistics infrastructure in the four major areas of “Inland Port Networking, Logistics Parks, Air Cargo and Railway Freight Logistics Infrastructure” (including inland ports, urban integrated logistics parks, air cargo terminals and railway logistics terminals) and toll roads. It provides its customers with value-added logistics services including intelligent warehouse and integrated cold chain warehousing, and also expanded its business segments to include the comprehensive development of land related to the “logistics + commerce” industries as well as the investment in and operation of generalenvironmental protection business.

Shenzhen International is the controlling shareholder of the Company which indirectly holds approximately 51.56% of the total issued shares of the Company as at the Latest Practicable Date.

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1.3. XTC Company

XTC Company is a company incorporated in the PRC with limited liability and is a whollyowned subsidiary of Shenzhen International. XTC Company is the largest shareholder of the Company which holds approximately 30.03% of the total issued shares of the Company as at the Latest Practicable Date, and is principally engaged in the business of investment and development of logistics infrastructure.

2. Reasons for and benefits of the Issuance (including the XTC Company A Share Subscription) and use of proceeds

2.1. Reinforcing the advantages of toll highways as a principal business

As disclosed in the Annual Report 2023, the Company has dedicated to the transport infrastructure industry for over two decades and has accumulated extensive experience in areas such as highway investment, construction, operation and management. As at the end of 2023, the Company invested and operated in a total of 16 toll highway projects. The mileage of the high-grade highways invested or operated by the Company (on equity basis) is approximately 660 km. They are mainly located in Shenzhen and the Guangdong-Hong Kong-Macao Greater Bay Area and economically developed regions with favourable geographical advantages.

As further disclosed in the Letter from the Board and the 2023 Circular, the proceeds from the Issuance will be used mainly for the construction of Outer Ring Phase III. The Outer Ring Project has obvious advantages in terms of road network, making it a high-quality core asset of the Company. Since the opening to traffic of the Outer Ring Phase I and Outer Ring Phase II, they have performed well in terms of operational performance, with rapid growth in traffic volume and toll revenue, and contributed approximately 13% and 21% to the revenue and profit (before interest and tax) of the Company in 2023, respectively, which is an important cornerstone for the sustainable development of the Company. Outer Ring Phase III passes through Pingshan District and Dapeng New District, and improving the infrastructure in these areas is in line with the government-led strategies of the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen-Dongguan-Huizhou Integration, etc. Upon completion of Outer Ring Phase III, all the phases of Outer Ring Project will be completed and connected, which the Directors believe will bring about the overall benefits of the project on the one hand, and improve the layout of the road network on the other hand.

The Directors are of the view that the Outer Ring Project is a rare high-quality toll highway project. Investing in Outer Ring Phase III is conducive to obtaining the best overall economic and social benefits of the Outer Ring Project, which is in the best interests of the Company and its shareholders. Based on the geographical advantages, significant contributions and ideal returns of the Outer Ring Project, the Directors believe the Outer Ring Project has important strategic significance for the sustainable development of the Company. Completion of the construction of Outer Ring Phase III can expand the scale of the Company’s high-quality highway assets, enhance the future development of the Company’s toll highway business and further consolidate the Company’s core advantages in the investment, construction and operation of toll highways.

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Based on our market research regarding the toll highway business in the PRC, it is noted that the National People’s Congress passed the Outline of the 14th Five-Year Plan for National Economic and Social Development (the “ 14[th] Five-Year Plan ”) and the Long-Term Goals for the Year 2035, which set out major goals of economic and social development for the period, in particular, to accelerate the establishment of China’s strength in transportation and to promote the development of the Guangdong-Hong Kong-Macao Greater Bay Area. In January 2022, the State Council issued the “14[th] Five-Year Development Planning for Modern Integrated Transportation System” 《( “十四五”現代綜合交通運輸體系發展規劃》), which highlighted the development goal of the modern integrated transportation system during the 14[th] Five-Year Plan period. For the road transportation sector, it proposed to improve the structure and function of the road network and the national expressway network, to expand and reconstruct busy and congested sections of the main line of the national expressway, to accelerate the construction of parallel lines, connection lines and road sections to be connected, to strengthen infrastructure maintenance, develop and regulate road maintenance market, and gradually to increase the purchase of maintenance services from the society. By 2025, it is one of the goals of the 14[th] Five-Year Plan that China shall have realised integrated development in comprehensive transportation, where the total mileage of nationwide expressways shall be 190,000 km.

Based on the abovementioned factors, the Directors are of the view, and we concur with the Directors, that the Issuance is in line with the long-term development strategy and the actual situation of the Company, and the use of the proceeds is in line with the relevant national policies and the overall future development direction of the Company, which is conducive to optimising the capital structure of the Company, reducing financial costs, enhancing sustainable profitability, further expanding the scope of investment and financing of the Company in the future and enhancing the core competitiveness of its principal business.

2.2. Improving capital structure and enhancing long-term shareholders’ returns

As disclosed in the Letter from the Board, as the business of the Company is capital-intensive, capital is an important foundation for its sustainable development. The use of external financing by the Company to promote the development of its core business and new growth businesses is of great significance in enhancing the overall strength of the enterprise and achieving higher returns to Shareholders.

Since the Company mainly relied on debt financing to raise funds in the past, its debt level has been rising. According to the 2023 Annual Report, it is noted that cash and cash equivalents of the Group amounted to approximately RMB2,152.4 million as at 31 December 2023. The Group had total outstanding interest-bearing liabilities of approximately RMB31,684.7 million as at 31 December 2023. As at 31 December 2023, approximately 46.8% of Group’s total borrowings shall be repayable within one year. The debt-to-asset ratio and the net borrowingsto-equity ratio of the Group reached approximately 58.5% and 106.2%, respectively, as at 31 December 2023.

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As at the Latest Practicable Date, the total capital expenditure of the Group approved by the Shareholders and/or the Board mainly includes expenditure on construction projects such as Outer Ring Phase III and Jihe Expressway R& E Project, with a total amount of approximately RMB26.8 billion. Furthermore, as disclosed in the Letter from the Board, the GuangzhouShenzhen section of Beijing-Hong Kong-Macao Expressway (G4), which is jointly invested by the Company’s subsidiary Shenzhen Investment Holdings Bay Area Development Company Limited and other partner, is also facing the demand for reconstruction and expansion, and capital investment from the Group is required accordingly. It is expected that the capital expenditure of the Group in recent years will exceed RMB30 billion. The aforesaid capital expenditure will continue to replenish the quality highway assets of the Group and effectively extend the combined concession period of the toll highway assets of the Group, thereby laying a solid foundation for sustainable development of the Group, and at the same time, the Group is required to raise a substantial amount of capital for this purpose.

In view of the aforementioned financial position and capital expenditure plan of the Group, the Directors consider that the Issuance offers a good opportunity for the Group to raise further capital by equity financing and to fulfil its working capital requirements for the capital expenditure plan and the repayment of interest-bearing liabilities of the Group. As disclosed in the Letter from the Board, the net proceeds expected to be raised upon the completion of the Issuance will improve the overall capital structure and debt repayment capability of the Group through the increase in its total assets and net assets. The net proceeds from the Issuance will provide funding to support the construction of Outer Ring Phase III.

The Directors are of the view, and we concur, that the Issuance will be beneficial to the Company in further enhancing its capital strength, optimising its capital structure, reducing its financial costs, strengthening its anti-risk capability and competitiveness, further expanding the Company’s future investment and financing scope, supporting its future business development and enhancing its sustainable profitability and market competitiveness, which is in line with the long-term development strategy of the Company and in the interests of the Company and its shareholders. Furthermore, the intended subscription for the new A Shares under the Issuance by the controlling shareholder of the Company, Shenzhen International, through XTC Company demonstrates its confidence in and support for the long-term development of the Group. The Company will remain as a subsidiary of Shenzhen International upon completion of the Issuance.

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2.3. Use of Proceeds

As disclosed in the announcement of the Company dated 25 January 2024 and the Letter from the Board, the total proceeds expected to be received from the Issuance have been reduced from the original of no more than RMB6.5 billion to no more than RMB4.9 billion (inclusive). The Company intends to apply the net proceeds from the Issuance as to:

(i) no more than approximately RMB4.6 billion will be allocated to finance Outer Ring Phase III. The total amount of capital investment of the Outer Right Project is approximately RMB29.4 billion, of which approximately RMB8.45 billion is required for capital investment in relation to the construction of expressway that covers the 16.8 km section from Kengzi to Dapeng (referred to as Outer Ring Phase III ); and
(ii) no more than approximately RMB0.3 billion will be allocated to repay the interestbearing liabilities of the Group.

As discussed with the Management and according to the 2023 Annual Report, we are given to understand that the Outer Ring Project has been approved by the Development and Reform Commission of Guangdong Province and has commenced since 2014. The Outer Ring Project is the densified line of the skeleton of the “12 vertical, 8 horizontal and 2 rings” expressway network in Guangdong Province, and an important component of the “8 horizontal and 13 vertical” trunk road network in Shenzhen. It is an important transportation infrastructure in the Guangdong- Hong Kong-Macau Greater Bay Area. The Outer Ring Project has obvious advantages in terms of road network. After completion of the Outer Ring Project, it will be interconnected with 10 expressways and 8 first-class highways in Shenzhen region, making it a high-quality core asset of the Company.

The Shenzhen section of the expressway of the Outer Ring Project consists of three phases of construction and development. Outer Ring Phase I and Outer Ring Phase II were invested by the Group together with the Shenzhen Municipal Government. Outer Ring Phase I and Outer Ring Phase II have commenced operation for traffic since the end of 2020 and 1 January 2022, respectively. As abovementioned, since the opening to traffic of Outer Ring Phase I and Outer Ring Phase II, they have performed well in terms of operational performance with rapid growth in traffic volume and toll revenue, and the year-on-year average daily traffic volume and toll revenue of the Outer Ring Project grew by 26.9% and 25.0%, respectively, in 2023.

According to the 2023 Annual Report, the Outer Ring Project contributed approximately 13% and 21% to the revenue and profit (before interest and tax) of the Company in 2023, respectively. The average daily toll revenue generated by the Outer Ring Project amounted to approximately RMB2.6 million and approximately RMB3.3 million for FY2022 and FY2023, respectively. The unaudited average daily toll revenue generated by the Outer Ring Project amounted to approximately RMB3.5 million for the month of June 2024 as disclosed in the announcement of the Company dated 30 July 2024. The Directors believe that Outer Ring Phase I and Outer Ring Phase II are important cornerstones of the sustainable development of the Group.

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Outer Ring Phase III passes through Pingshan District and Dapeng New District, and improving the infrastructure in these areas is in line with the government-led strategies of the Guangdong Hong Kong Macao Greater Bay Area and Shenzhen-Dongguan-Huizhou Integration, etc. The estimated total investment of Outer Ring Phase III is approximately RMB8.45 billion, and the Company intends to apply RMB4.6 billion of the proceeds from the Issuance to invest in Outer Ring Phase III. The remaining investment of Outer Ring Phase III will be financed by internal resources and/or external financing of the Group. Upon completion of Outer Ring Phase III, all the phases of Outer Ring Expressway (Shenzhen Section) will be completed and connected, which will bring about the overall benefits of the project on the one hand, and bring traffic flow to the other expressways of the Group by improving the layout of the road network on the other hand.

For our due diligence purpose, we have obtained and reviewed the “Approval on the Adjustments of Construction and Investment Size of the Outer Ring Phase III” 《粵發改核准( [2023]7號:關於調整深圳外環高速公路深圳段三期（坑梓至大鵬段）工程建設和投資規模的批覆》) issued by the Development and Reform Commission of Guangdong Province on 10 April 2023. It is noted from such document that the Development and Reform Commission of Guangdong Province has duly approved the construction of the Outer Ring Phase III to be conducted by the Company, with the estimated capital investment for the Outer Ring Phase III to be approximately RMB8.447 billion.

As advised by the Management, from November 2023 to March 2024, each contract section of the main project of Outer Ring Phase III has completed the construction bidding. As at the Latest Practicable Date, the construction of each contract section had commenced.

As disclosed in the 2023 Annual Report, the Group continues to position itself as an urban and transport infrastructure constructor and operator, which aims to consolidate and upgrade its core business of toll highways. The Directors are of the view that investing in Outer Ring Phase III is conducive to obtaining the best and overall economic and social benefits of the Outer Ring Project, which is in the best interests of the Company and its shareholders. Based on the geographical advantages of the Outer Ring Project, the Directors believe the Outer Ring Project has important strategic significance for the sustainable development of the Company, which will result in considerable revenue contribution, and thus enhance the business performance and profitability of the Group in the foreseeable future. Thus, the Directors are of the view, and we concur with the Directors, that the intended use of the major portion of the net proceeds from the Issuance to finance Outer Ring Phase III is in line with the principal business and strategic development plan of the Group.

2.4. Progress of the registration approval to be received from the CSRC and the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription)

Based on our discussion with the Management, we noted that pursuant to the “Guidelines for Application of Regulatory Rules – Issuance Category No. 6” 《監管規則適用指引( – 發行類第 6號》) issued by the CSRC on 17 February 2023, for listed companies which intend to apply for refinancing, they are required to propose the relevant resolution(s) to the shareholders’

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meeting for consideration and approval. Such resolution(s) of the shareholders’ meeting is/are required to be specified with the validity period. In practice, except for the issuance of preference shares in instalments, the validity period shall generally be 12 months.

As disclosed in the Letter from the Board and understood from the Management, the Company has started the application process after obtaining Shareholders’ approval on the Resolutions. On 22 May 2024, the Shanghai Stock Exchange considered that the application documents were complete and in line with the statutory form, and decided to accept it and review it in accordance with the law. The Shanghai Stock Exchange has already conducted the first round of inquiries during the review process, and the Company has provided explanations, argumentative analysis and item-by-item responses to the relevant inquiries on 3 July 2024. As at the Latest Practicable Date, the review of the Shanghai Stock Exchange is still in progress.

Further, the implementation of Issuance is subject to the review of the Shanghai Stock Exchange and the consent for registration of the CSRC. The validity period of the Resolutions and the Specific Mandate will soon expire on 20 September 2024. In order to ensure the smooth implementation of the Issuance, the Board proposes to extend the validity period of the Resolutions and the Specific Mandate in relation to the Issuance for an additional 12 months from 20 September 2024 to 19 September 2025.

As disclosed in the above sections, the current high debt-to-asset ratio and net borrowings-toequity ratio of the Group suggested there is a need for the Group to alleviate its funding pressure to satisfy its capital expenditure plans and financial obligations in repaying its interest-bearing liabilities. The Directors are of the view, and we concur, that the utilisation of the remaining portion of the net proceeds from the Issuance to repay the interest-bearing liabilities of the Group will be beneficial to the Group to alleviate its liquidity pressure and to optimise its overall capital structure.

Having considered (i) the above reasons for and benefits of the Issuance; (ii) the intended use of proceeds from the Issuance being justifiable as discussed above; (iii) the reasonableness of extending the validity period of the Resolutions and the Specific Mandate, in the light of the progress of the application as discussed above; and (iv) the terms of the A Share Subscription Agreement being on normal commercial terms and fair and reasonable as discussed below, we are of the view that although the XTC Company A Share Subscription (which forms part of the Issuance) is not in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole.

3. Other financing alternatives available to the Group

As disclosed in Letter from the Board, the Company has not conducted any fundraising activities involving issue of equity securities in the past twelve months immediately preceding the Latest Practicable Date. As advised by the Management, the Company has considered the feasibility of various financing methods such as debt financing and equity financing, and proposed the Issuance after comparison.

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In view of the current high gearing level of the Group, the key objectives of the fundraising exercise are to provide funding for investing the Group’s principal toll highway business, improve the liquidity position and to diversify the financing channels of the Group and to optimise the overall capital structure of the Group. However, debt financing by bank loans or other debt financing instruments will inevitably incur additional finance costs and increase the financial risks of the Group, which will contradict with the original intentions of the Company of fundraising as compared to the Issuance. According to the 2023 Annual Report, the Group had total outstanding interest-bearing liabilities of approximately RMB31,684.7 million as at 31 December 2023. As at 31 December 2023, approximately 46.8% of the Group’s total borrowings shall be repayable within one year. The debt-to-asset ratio and the net borrowings-to-equity ratio of the Group reached approximately 58.5% and 106.2%, respectively, as at 31 December 2023.

If the Company continues to rely solely on debt financing to raise funds, the level of debt of the Company is expected to rise further in the future. The ever-rising level of debt would lead to an increase in the cost of debt financing and increase the difficulty in financing, which may render the Company to forgo investment opportunities of high-quality projects and the development opportunity in the industry, which is not in the long-term interests of the Company and its Shareholders.

On the other hand, the Company intends to use no more than RMB0.3 billion of the proceeds from the Issuance to repay its interest-bearing liabilities, which will further improve its financial structure, reduce financial risks and enhance its overall anti-risk capability, thereby providing strong protection for its subsequent development. Based on the audited financial results of the Company for the year ended 31 December 2023, assuming the proceeds raised from the Issuance amount to RMB4.9 billion and RMB0.3 billion of the proceeds have been applied for repayment of interest-bearing liabilities upon completion of the Issuance, the equity attributable to the owners of the Company will increase by RMB4.9 billion, while the Company’s liabilities will decrease by RMB0.3 billion and the total assets will increase by RMB4.6 billion. Accordingly, the Company’s total asset-liability ratio will be decreased to approximately 54.4%. Based on the reasons stated above, the Board believes that in addition to debt financing, the Company needs to raise funds through equity financing at this stage to promote a better development of the Company.

Based on the expected net proceeds of no more than approximately RMB4.9 billion from the fundraising exercise, the Directors are of the view, and we concur with the Directors that, the gearing level would further climb and liquidity position would further be affected should the Group had opted for debt financing. This would lead to an increase in the cost of debt financing and increase the difficulty in financing, and may render the Company to forgo investment opportunities of high-quality projects and the development opportunity in the industry, which is not favourable to the Group.

The Management consider that equity financing is more in line with the long-term interests of the Company as compared to debt financing. For rights issue, the existing Shareholders are targeted, which the same price shall be implemented simultaneously to the equity holders of A Shares and H Shares. Given the A Shares trading on the Shanghai Stock Exchange have been trading at a significant premium over the share price of the H Shares being traded on the Stock Exchange, it is difficult for the Management to determine a suitable price for A Shares and H Shares. As a result, the Management did not consider rights issue to be an appropriate way of fund raising for the Group.

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With the expected fundraising size of the Issuance to be no more than approximately RMB4.9 billion, should the Company had conducted the fund raising by issuance of H Shares under the same pricing mechanism, a comparatively greater number of H Shares would be required to be issued, which in turn would lead to more substantial dilution effect to the shareholding of the existing Shareholders.

Furthermore, as substantial portion of business activities of the Group are conducted in the PRC, where RMB is the denominated currency being used in day-to-day transactions, additional administrative costs and procedures, approvals from authorities and foreign exchange risk may be resulted from the conversion of the proceeds to be received from the issuance of H Shares from Hong Kong dollars to RMB, if the Company decides to conduct fund raising activities by issuance of H Shares.

In light of the above, the Directors consider that the Issuance is comparatively more efficient and cost-effective, and we concur with the Directors’ view that the Issuance is the most preferred means of fundraising for the Group under the current circumstances.

4. A Share Subscription Agreement

4.1 Principal terms of the A Share Subscription Agreement

Save for the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription), there is no other change to the terms of A Share Subscription Agreement previously disclosed by the Company.

The principal terms of the A Share Subscription Agreement are identical to the terms of the proposal for the Issuance of A Shares to Specific Targets as disclosed in Appendix I – Proposal of the Issuance to the Circular. Independent Shareholders’ attention is drawn to the details of such proposal which are set out in Appendix I – Proposal of the Issuance to the Circular.

Under the proposal for the Issuance, other principal terms and conditions of the A Share Subscription Agreement are summarised as follows:

(1) Parties: (i) the Company (as issuer); and (ii) XTC Company, a wholly-owned subsidiary of Shenzhen International (as subscriber). (2) Date: 14 July 2023 (3) Subscription price and The subscription price and pricing principles are payment: consistent with the final issue price and pricing principles for the Issuance of A Shares to Specific Targets as described in the paragraph headed “ (10) Issue price and pricing method” below.

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XTC Company will not participate in the price bidding process, and will accept the price bidding results and subscribe the A Shares of the Issuance at the same issue price as other Specific Targets.

If there is no quotation for the Issuance or the final issue price cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

Upon receipt of the payment notice for the subscription, XTC Company shall promptly pay the full amount to the designated bank account.

(4) Lock-up Period:
The shares subscribed by XTC Company under the Issuance are refrained from being transferred for a period of eighteen (18) months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the shares to be issued under the Issuance of A Shares to Specific Targets, such regulations shall be followed. During the period from the completion date of the Issuance until the lock-up release date of such Shares, any extra Shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the shares subscribed by XTC Company under the Issuance shall also subject to the above lock-up arrangement.
(5) Number of A Shares to XTC Company shall subscribe the A Shares to be issued be subscribed for: under the Issuance in the amount of no more than RMB1.51 billion. The number of A Shares to be subscribed is calculated by dividing the total subscription amount by the final issue price of the Issuance and rounded down to the nearest integer.

The final number of A Shares to be issued is subject to adjustment in the manner as set forth in the paragraph headed “ (11) Number of A Shares to be issued” below.

Upon completion of the Issuance, Shenzhen International will hold no less than 45% (inclusive) of the total issued shares of the Company through its wholly-owned subsidiaries.

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(6) Conditions precedent:
The A Share Subscription Agreement will become effective after having been executed and sealed by the legal representative or authorized representative of the parties and satisfaction of all the following conditions:
the A Share Subscription Agreement, the Issuance, the XTC Company A Share Subscription and all related matters have been approved by/at the Board, the EGM and the Class Meetings (if required) and the board of directors and general meeting (if required) of the controlling shareholder of the Company (i.e. Shenzhen International);
the Issuance, the XTC Company A Share Subscription and the related matters have been approved by the entity(ies) supervising and managing State-owned assets in accordance with the requirements of the laws and regulations; and
the CSRC has provided its consent for registration in respect of the Issuance.

As at the Latest Practicable Date, the above conditions have not been fully satisfied.

(7) Class and nominal value of shares to be issued:
A Shares with nominal value of RMB1.00 each.

The aggregate nominal value of the A Shares to be issued to the Specific Targets will be no more than RMB654,231,097.

The new A Shares to be issued will rank pari passu with the existing A Shares in all respects.

(8) Method and timing of the The Issuance will be conducted by way of issuance of issuance: shares to Specific Targets.

The Company will issue A Shares to the Specific Targets at an appropriate time upon having obtained approval from the Shanghai Stock Exchange and within the effective registration period consent by the CSRC.

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(9) Target subscribers and method of subscription:

The subscribers under the Issuance of A Shares to Specific Targets include no more than 35 (inclusive) Specific Targets (including XTC Company), which meet the criteria required by the CSRC. All Specific Targets shall subscribe the A Shares under the Issuance in cash, among which, XTC Company agreed to subscribe for A Shares under the Issuance in the amount of no more than RMB1.51 billion.

Apart from XTC Company, the scope of the other Specific Targets includes securities investment fund management companies, securities companies, trust companies, finance companies, insurance institutional investors, qualified foreign institutional investors and other legal persons, natural persons or other qualified institutions which satisfy the investor requirements of the CSRC. Among them, securities investment fund management companies, securities companies, qualified foreign institutional investors, and RMB qualified foreign institutional investors who subscribe for the shares through two or more products under their management shall be deemed as one Specific Target. Specific Targets who are trust investment companies shall only subscribe with their own funds.

Upon the Company having obtained approval from the Shanghai Stock Exchange and the CSRC having provided its consent for the relevant registration, the board of directors of the Company or its authorised person(s) will identify the Specific Targets (other than XTC Company) upon negotiations with its sponsor (the lead underwriter) in accordance with the bidding results and pursuant to the authorisation granted at the EGM and the Class Meetings.

As Shenzhen International is the controlling shareholder of the Company as at the Latest Practicable Date, the XTC Company A Share Subscription to be conducted upon the extension of the validity period of the Resolutions and the Specific Mandate constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. The Company shall comply with the relevant regulatory rules and be subject to the approval and disclosure requirements in respect of the transaction accordingly.

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As at the Latest Practicable Date, save for the A Share Subscription Agreement, the Company has not entered into any agreement with any potential subscriber in relation to the Issuance. The Board is not aware of any Specific Targets (other than XTC Company and its associates) of the Issuance and their respective ultimate beneficial owners is a connected person of the Company, or any of such Specific Targets will become a substantial shareholder of the Company after completion of the subscription under the Issuance. If any Specific Target (other than XTC Company) is a connected person of the Company, the Company will take all reasonable measures to comply with the relevant requirements under Chapter 14A of the Listing Rules.

(10) Issue price and pricing method:
The pricing benchmark date shall be the first day of the issuance period of the Issuance.

The issue price of the Issuance shall not be lower than the higher of (the “ Minimum Issue Price ”):

The Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period prior to the Issuance.

In the event that the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the balance sheet date of the latest audited financial report up to the issuance date, the value of the above net assets per share shall be adjusted accordingly.

As disclosed in the 2023 Annual Report of the Company, as at the Latest Practicable Date, the audited net assets value per share of the Company attributable to the ordinary shareholders of the parent company as at the end of the most recent period is RMB8.42 per share. The Company distributed dividend of RMB0.55 per share in 2024. Accordingly, the adjusted net asset value per share is RMB7.87 per share. The above information is for reference only.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

80% of the average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date (excluding the Pricing Benchmark Date). The average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date = the total trading value of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date/the total trading volume of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date.

In the event that the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital, which result in adjustment of its share price during the 20 Trading Days prior to the Pricing Benchmark Date, the trading prices of the Trading Days prior to such price adjustment shall be calculated according to the prices as adjusted by the relevant ex-dividend and ex-right activities.

On the basis of the aforementioned Minimum Issue Price, the final issue price shall be determined by negotiations between the board of directors of the Company or its authorised person(s) and the sponsor (the lead underwriter) according to the price bidding results, under the authorisation to be granted at the EGM and the Class meetings, and in compliance with the relevant laws and regulations and requirements of regulatory authority, after the Company having obtained approval from the Shanghai Stock Exchange and the CSRC having provided its consent for the relevant registration.

In case the Company carries out ex-dividend and exright activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the Pricing Benchmark Date to the issuance date, the final issue price shall be adjusted in accordance with the following formula:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Assuming P0 denotes the issue price before the adjustment, N denotes the ratio of bonus shares or the conversation rate of capital reserve, D denotes the amount of cash dividends payable per share, and P1 denotes the new issue price after adjustment, then:

In the case of distribution of cash dividends: P1=P0-D

In the case of grant of bonus shares or conversion of capital reserve into share capital: P1=P0/(l+N)

In case both of the above occur simultaneously: P1=(P0D)/(1+N)

XTC Company will not participate in the market price bidding process for determining the issue price of the Issuance, and undertook that it will subscribe the A Shares at the price determined by the price bidding, which will be same as the price to be offered to the other Specific Targets. If the final issue price of the Issuance cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

(11) Number of A Shares to be issued:

The number of A Shares to be issued under the Issuance shall be no more than 30% of the total number of issued shares of the Company immediately prior to the Issuance, i.e. no more than 654,231,097 shares (inclusive). Number of shares to be subscribed = subscription amount/final issue price per share, and the number of shares to be subscribed is rounded down to the nearest integer.

In the event the Company grants bonus shares, convert its capital reserve into share capital, or carries out any other activities leading to changes in its total share capital during the period from the approval date of its board resolutions in relation to the Issuance up to the issuance date, the maximum number of A Shares to be issued under the Issuance shall be adjusted accordingly.

The final number of A Shares to be issued shall be determined by the negotiations between the board of directors of the Company or its authorised person(s) and its sponsor (the lead underwriter) pursuant to the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

authorisation to be granted at the EGM and the Class meetings, subject to the then actual circumstances, and within maximum limit of the A Shares to be issued upon the approval from the Shanghai Stock Exchange and the consent for registration from the CSRC.

(12) Amount and use of proceeds:

The proceeds to be raised from the Issuance will be no more than RMB6.5 billion (inclusive). After deducting relevant issuance expenses, all of the net proceeds to be raised are intended to be used in the following projects:

			Total outstanding
			investment	Proposed amount
		Total project	(Kengzi to Dapeng	of net proceeds to
No.	Name of project	investment	Section)	be applied
		(RMB100 million)	(RMB100 million)	(RMB100 million)
1	Outer Ring Expressway	294.04	84.47	46.00
	(Shenzhen Section)
2	Repayment of interest-bearing	–	–	19.00
	liabilities
	Total	294.04	84.47	65.00

To ensure the smooth implementation of the projects to be funded by the proceeds and safeguard the interests of all shareholders of the Company, before receiving the proceeds of the Issuance, the Company may utilise its self-raised funds to advance investments in the projects to be funded by proceeds based on the implementation progress and actual circumstances of such projects, and replace such funds according to the relevant regulations and regulatory documents after receipt of the proceeds. If the actual amount of net proceeds (after deducting relevant issuance expenses) falls short of the proposed amount of proceeds to be applied to the aforesaid projects, the board of directors of the Company or its authorised person(s) will, based on circumstances such as the actual amount of net proceeds and the urgency of the projects, adjust and determine the application of the proceeds including determining the project to be invested with the proceeds, prioritise and determine specific amount of proceeds to be applied to each project. The shortage of funds will be self-financed by the Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

On 25 January 2024, the Board agreed to reduce the total proceeds to be raised from the Issuance from not exceeding RMB6.5 billion to not exceeding RMB4.9 billion, and correspondingly reduce the amount of funds to be used for repaying interest-bearing debts from RMB1.9 billion to RMB0.3 billion. Such reduction of total proceeds to be raised was made by the Board within the discretion granted to it by the Specific Mandate. It would not affect the maximum limit of the proceeds to be raised (i.e. no more than RMB6.5 billion (inclusive)) under the proposal of the Issuance, which the extension of the validity period is subject to the approval of the Shareholders at the EGM and Class Meetings. The Board may, within the scope of the Specific Mandate approved by its shareholders, based on a comprehensive consideration of various factors such as the external market environment and the actual situation of the Company, appropriately adjust the plan of the Issuance at its discretion.

(13) Arrangement of Both new shareholders and existing shareholders are accumulated entitled to the accumulated undistributed profits of the undistributed profits Company before the Issuance according to their before the Issuance: respective shareholdings.
(14) Validity of the resolutions:
The resolutions in relation to the Issuance should remain valid for twelve (12) months from 20 September 2023, being the date on which relevant resolutions were considered and approved by the EGM and the Class meetings of the Company.

If the respective shareholders of Shenzhen International and the Company approve the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance at the forthcoming special general meeting of Shenzhen International, the EGM and the Class Meetings, the validity period will be extended for 12 months from 20 September 2024.

4.2 Analysis of the principal terms of the A Share Subscription Agreement

In order to assess the fairness and reasonableness of the pricing mechanism under the A Share Subscription Agreement, we have performed an analysis by identifying an exhaustive list of comparable transactions in relation to (i) the issuance of A shares to specific targets by the companies listed on the main board of Shanghai Stock Exchange, which are not involved in

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

risk caution raised by Shanghai Stock Exchange regarding delisting; and (ii) the price determination date shall be the first day of the issuance period of the respective A share issuance to specific targets, as first announced by the respective listed companies during the period from 1 February 2024 (being approximately six months prior to the Latest Practicable Date) and up to and including the Latest Practicable Date (the “ Review Period ”). Under the aforesaid criteria, we have identified 16 transactions (the “ Comparable Transactions ”).

Considering (i) the Review Period is able to illustrate the recent market practice regarding the issuance of A shares to specific targets by the companies listed on the main board of Shanghai Stock Exchange; and (ii) the number of Comparable Transactions represents a fair and representative sample size for the present comparison purpose in light of the similarity of transaction nature, we are of the view that the coverage of the Review Period is fair and reasonable for the selection of Comparable Transactions. Despite the fact that the principal businesses and scale of operations of the listed companies involved in the Comparable Transactions are not identical to that of the Group, the Comparable Transactions are considered sufficient and appropriate to demonstrate the recent market practices regarding the issuance of A shares to specific targets by the companies listed on the main board of the Shanghai Stock Exchange. The table below summarised the 16 identified Comparable Transactions under the abovementioned criteria:

	Date of
	publication of			Bases for the determination
	announcement	Company name	Stock code	of issue price of A share
1	26 February 2024	Huaneng Lancang River Hydropower Inc.	SH600025	Not less than (i) 80% of the 20-day average trading
		(華能瀾滄江水電股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period); and (ii) the company’s latest
				audited net asset value per share attributable to
				ordinary shareholders of the listed company
2	18 March 2024	Baotou Huazi Industry Co., Ltd.	SH600191	Not less than 80% of the 20-day average trading
		(包頭華資實業股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
3	27 March 2024	Zhejiang Xinzhonggang Thermal Power	SH605162	Not less than 80% of the 20-day average trading
		Co., LTD.		price of the A-shares immediately preceding the
		(浙江新中港熱電股份有限公司)		pricing benchmark date (i.e. the first day of the
				issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of
	publication of			Bases for the determination
	announcement	Company name	Stock code	of issue price of A share
4	25 April 2024	Bluestar Adisseo Company	SH600299	Not less than (i) 80% of the 20-day average trading
		(藍星安迪蘇股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period); and (ii) the company’s latest
				audited net asset value per share attributable to
				ordinary shareholders of the listed company
5	28 April 2024	iRay Technology Company Limited	SH688301	Not less than 80% of the 20-day average trading
		(上海奕瑞光電子科技股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
6	9 May 2024	Yantai North Andre Juice Co., Ltd.	SH605198	Not less than 80% of the 20-day average trading
		(煙臺北方安德利果汁股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
7	16 May 2024	Guilin Fuda Co., Ltd.	SH603166	Not less than 80% of the 20-day average trading
		(桂林福達股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
8	24 May 2024	ADD Industry (Zhejiang) Co., Ltd.	SH603089	Not less than 80% of the 20-day average trading
		(浙江正裕工業股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
9	30 May 2024	Shang Hai Qi Fan Cable Co., Ltd.	SH605222	Not less than 80% of the 20-day average trading
		(上海起帆電纜股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
10	4 June 2024	Yunnan Shennong Agricultural Industry	SH605296	Not less than 80% of the 20-day average trading
		Group Co., Ltd.		price of the A-shares immediately preceding the
		(雲南神農農業產業集團股份有限公司)		pricing benchmark date (i.e. the first day of the
				issuance period)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	Date of
	publication of			Bases for the determination
	announcement	Company name	Stock code	of issue price of A share
11	8 June 2024	Zhejiang Meilun Elevator Co., Ltd.	SH603321	Not less than 80% of the 20-day average trading
		(浙江梅輪電梯股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
12	14 June 2024	Leshan Electric Power Co., Ltd.	SH600644	Not less than 80% of the 20-day average trading
		(樂山電力股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
13	10 July 2024	Shanghai Smith Adhesive New Material	SH603683	Not less than 80% of the 20-day average trading
		Co., Ltd.		price of the A-shares immediately preceding the
		(上海晶華膠粘新材料股份有限公司)		pricing benchmark date (i.e. the first day of the
				issuance period)
14	11 July 2024	Shan Dong Lu Bei Chemical Co., Ltd. (山	SH600727	Not less than 80% of the 20-day average trading
		東魯北化工股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)
15	15 July 2024	Xiamen King Long Motor Group Co., Ltd.	SH600686	Not less than (i) 80% of the 20-day average trading
		(廈門金龍汽車集團股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period); and (ii) the company’s latest
				audited net asset value per share attributable to
				ordinary shareholders of the listed company
16	23 July 2024	Jiangsu Lianhuan Pharmaceutical Co., Ltd.	SH600513	Not less than 80% of the 20-day average trading
		(江蘇聯環藥業股份有限公司)		price of the A-shares immediately preceding the
				pricing benchmark date (i.e. the first day of the
				issuance period)

Source: cninfo.com.cn

Based on the identified results as presented in the table above, we are of the view that the pricing mechanism under the Issuance (including the XTC Company A Share Subscription) is consistent with that of the Comparable Transactions, and thus it is considered generally in line with recent market practice.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on our discussion with the Directors, we are given to understand that the pricing mechanism of the issue price under the Issuance are in compliance with the “Administrative Measures for the Registration of Securities Issuance by Listed Companies” 《上市公司證券發( 行註冊管理辦法》) issued by the CSRC on 17 February 2023 (the “ Administrative Measures ”), which requires (i) the issue price shall not be lower than 80% of the average trading price for the period of last 20 trading days preceding the pricing benchmark date; and (ii) the pricing benchmark date is defined as the first day of the issuance period of the issuance of A Shares to specific targets. In addition, the pricing mechanism has been further enhanced and restrained the issued price shall not be less than the Company’s latest audited net asset value per share attributable to ordinary shareholders of the listed company either.

Based on the abovementioned factors, it is noted that, in particular, (i) the pricing mechanism under the Issuance (including the XTC Company A Share Subscription) is generally in line with recent market practice; (ii) the pricing mechanism and the issue price are in compliance with the Administrative Measures; (iii) except for the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription), there is no material change to the proposal of the Issuance, and all other terms of the A Share Subscription Agreement remain unchanged and are in full force; and (iv) all of the subscribers will subscribe for the A Shares underlying the Issuance at the same subscription price, we are of the opinion that the terms of the A Share Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

5. Possible financial effects of the Issuance (including the XTC Company A Share Subscription)

5.1 Liquidity

As at 31 December 2023, the Group had cash at banks and on hand of approximately RMB2,152.4 million and recorded a net current liabilities position of approximately RMB12,874.7 million. As the net proceeds to be raised from the Issuance will be utilised to finance Outer Ring Phase III and to repay interest-bearing borrowings of the Group, it is expected that the cash position and working capital of the Group will be improved upon completion of the Issuance, and thereby the liquidity pressure of the Group will be relieved.

5.2 Net asset value

As at 31 December 2023, the audited consolidated net asset value of the Group amounted to approximately RMB27,998.7 million. The Issuance is expected to bring a positive impact on the consolidated net asset value of the Group subject to the availability of the net proceeds from the Issuance. Furthermore, as the issue price under the Issuance will not be lower than the net assets per share attributable to ordinary shareholders of the Company, the net assets per share attributable to ordinary shareholders of the Company will not be worse off.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5.3 Gearing level

As at 31 December 2023, the Group’s debt-to-asset ratio and the net borrowings-to-equity ratio have reached approximately 58.5% and 106.2%, respectively. Upon completion of the Issuance, the total assets and equity base of the Group will be increased and certain borrowings of the Group will be repaid by a portion of the net proceeds from the Issuance. Accordingly, the gearing level of the Group is expected to be reduced.

Based on the above, the Issuance (including the XTC Company A Share Subscription) would have an overall positive impact on the financial position of the Group in terms of cash flows, net asset value and gearing upon completion. On such basis, we are of the view that the XTC Company A Share Subscription as part of the Issuance is in the interests of the Company and the Shareholders as a whole.

Shareholders are reminded that the above analysis is for illustrative purposes only and does not purport to represent how the financial position of the Group would be upon completion of the Issuance.

6. Potential dilution effect on the shareholding of the Company

As illustrated in the table under the section headed “EFFECT OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY” contained in the Letter from the Board, assuming that (1) there is no other change in the number of shares in issue of the Company from the Latest Practicable Date to the completion of the Issuance of A Shares to Specific Targets; (2) the number of A Shares issued to the Specific Targets is the maximum number of shares proposed to be issued under the Issuance of A Shares to Specific Targets, i.e. 654,231,097 (inclusive) A Shares; (3) the percentage of the total number of shares of the Company held by Shenzhen International through its wholly-owned subsidiaries will be diluted to 45% of the total number of issued shares of the Company upon completion of the Issuance, the shareholding of the existing public A Shareholders will be decreased from approximately 16.83% to approximately 12.95% and the shareholding of the existing public H Shareholders will be decreased from approximately 31.61% to approximately 24.31%, with an overall dilution effect of approximately 11.18% immediately after completion of the Issuance of A Shares to Specific Targets.

Nevertheless, taking into account (i) the reasons for and benefits of the XTC Company A Share Subscription as discussed in the section headed “2. Reasons for and benefits of the Issuance (including the XTC Company A Share Subscription) and use of proceeds” above; (ii) the appropriateness of raising capital by way of the Issuance as discussed in the section headed “3. Other financing alternatives available to the Group” above; (iii) the fairness and reasonableness of the terms of the A Share Subscription Agreement as discussed in the section headed “4. A Share Subscription Agreement” above; and (iv) the overall positive impact on the financial position of the Group arising from the Issuance as discussed in the section headed “5. Possible financial effects of the Issuance (including the XTC Company A Share Subscription)” above, we are of the view that the aforementioned dilution effect on the shareholding of the existing public Shareholders as a result of the Issuance is acceptable so far as the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that (i) except for the abovementioned extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription), all other terms of the A Share Subscription Agreement remain unchanged and are in full force; (ii) the terms of the A Share Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned; and (iii) although the XTC Company A Share Subscription is not in the ordinary and usual course of business of the Group, it is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the relevant resolution(s) to be proposed at the EGM and the Class Meetings to approve the extension of the validity period of the Resolutions and the Specific Mandate in relation to the Issuance (including the XTC Company A Share Subscription).

Yours faithfully, For and on behalf of Lego Corporate Finance Limited Kristie Ho Managing Director

Ms. Kristie Ho is a licensed person registered with the Securities and Futures Commission and a responsible officer of Lego Corporate Finance Limited to carry out Type 6 (advising on corporate finance) regulated activity under the Securities Futures Ordinance. She has over 20 years of experience in the securities and investment banking industries.

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PROPOSAL OF THE ISSUANCE

APPENDIX I

A summary of the proposal for the Issuance of A Shares to Specific Targets is set out as follows:

(1) Class and nominal value A Shares with nominal value of RMB1.00 each of shares to be issued:

The aggregate nominal value of the A Shares to be issued to the Specific Targets will be no more than RMB654,231,097.

The new A Shares to be issued will rank pari passu with the existing A Shares in all respects.

(2) Method and timing of The Issuance will be conducted by way of issuance of shares to the issuance: Specific Targets.

The Company will issue A Shares to the Specific Targets at an appropriate time upon having obtained approval from the SSE and within the effective registration period consent by the CSRC.

(3) Target subscribers and method of subscription:
The targets of the Issuance include no more than 35 (inclusive) Specific Targets (including XTC Company), which meet the criteria required by the CSRC. All Specific Targets shall subscribe the A Shares under the Issuance in cash, among which, XTC Company agreed to subscribe for A Shares under the Issuance in the amount of no more than RMB1.51 billion.

Upon the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration, the Board or its authorised person(s) will identify the Specific Targets (other than XTC Company) upon negotiations with its sponsor (the lead underwriter) in accordance with the bidding results and pursuant to the authorisation granted at the extraordinary general meeting and class meetings.

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PROPOSAL OF THE ISSUANCE

APPENDIX I

As at the Latest Practicable Date, save for the A Share Subscription Agreement, the Company has not entered into any agreement with any potential subscriber in relation to the Issuance. The Board is not aware any Specific Targets (other than XTC Company and its associates) of the Issuance and their respective ultimate beneficial owners is a connected person of the Company, or any of such Specific Targets will become a substantial shareholder of the Company after completion of the subscription under the Issuance. If any Specific Target (other than XTC Company) is a connected person of the Company, the Company will take all reasonable measures to comply with the relevant requirements under Chapter 14A of the Listing Rules.

(4) Issue price and pricing method:
The pricing benchmark date shall be the first day of the issuance period of the Issuance.

The issue price of the Issuance shall not be lower than the higher of (the “ Minimum Issue Price ”):

the Company’s audited net assets per share attributable to the ordinary shareholders of the parent company as at the end of the most recent period prior to the Issuance.

In the event that the Company carries out ex-dividend and exright activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the balance sheet date of the latest audited financial report up to the issuance date, the value of the above net assets per share shall be adjusted accordingly.

As disclosed in the 2023 annual report of the Company, as at the Latest Practicable Date, the audited net assets value per share of the Company attributable to the ordinary shareholders of the parent company as at the end of the most recent period is RMB8.42 per share. the Company distributed dividend of RMB0.55 per share in 2024. Accordingly, the adjusted net

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PROPOSAL OF THE ISSUANCE

APPENDIX I

asset value per share is RMB7.87 per share. The above information is for reference only.

80% of the average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date (excluding the Pricing Benchmark Date). The average trading price of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date = the total trading value of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date/the total trading volume of the Company’s A Shares in the 20 Trading Days prior to the Pricing Benchmark Date.

In the event that the Company carries out ex-dividend and exright activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital, which result in adjustment of its share price during the 20 Trading Days prior to the Pricing Benchmark Date, the trading prices of the Trading Days prior to such price adjustment shall be calculated according to the prices as adjusted by the relevant ex-dividend and ex-right activities.

On the basis of the aforementioned Minimum Issue Price, the final issue price shall be determined by negotiations between the Board or its authorised person(s) and the sponsor (the lead underwriter) according to the price bidding results, under the authorisation to be granted at the extraordinary general meeting and class meetings, and in compliance with the relevant laws and regulations and requirements of regulatory authority, after the Company having obtained approval from the SSE and the CSRC having provided its consent for the relevant registration.

In case the Company carries out ex-dividend and ex-right activities such as distribution of dividend, bonus share issue, allotment of shares, conversion of capital reserve into share capital during the period from the Pricing Benchmark Date to the issuance date, the final issue price shall be adjusted in accordance with the following formula:

In the case of distribution of cash dividends: P1=P0-D

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PROPOSAL OF THE ISSUANCE

APPENDIX I

In the case of grant of bonus shares or conversion of capital reserve into share capital: P1=P0/(l+N)

In case both of the above occur simultaneously: P1=(P0-D)/(1+N)

(5) Number of A Shares to The number of A Shares to be issued under the Issuance shall be no be issued: more than 30% of the total number of issued shares of the Company immediately prior to the Issuance, i.e. no more than 654,231,097 shares (inclusive). Number of shares to be subscribed = subscription amount/ final issue price per share, and the number of shares to be subscribed is rounded down to the nearest integer.

The final number of A Shares to be issued shall be determined by the negotiations between the Board or its authorised person(s) and its sponsor (the lead underwriter) pursuant to the authorisation to be granted at the extraordinary general meeting and class meetings, subject to the then actual circumstances, and within maximum limit of the A Shares to be issued upon the approval from the SSE and the consent for registration from the CSRC.

(6) Lock-up arrangement: Upon completion of the Issuance, the shares to be subscribed by XTC Company under the Issuance shall be refrained from being transferred within eighteen (18) months from the completion date of the Issuance, and the shares subscribed by the other Specific Targets under the Issuance shall be refrained from being transferred within six (6) months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the shares to be issued under the Issuance, such regulations shall be followed. Upon expiration of the lock-up period, the disposal of the
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PROPOSAL OF THE ISSUANCE

APPENDIX I

shares by the Specific Targets shall be carried out in accordance with the Company Law, the Securities Law, the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange, other laws, regulations, departmental rules, regulatory documents and the articles of association.

Upon completion of the Issuance, any extra shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the shares obtained by the Specific Targets under the Issuance shall also comply with the above lock-up arrangement.

(7) Place of listing:
(8) Amount and use of proceeds:

The Company will apply to the SSE for the listing of, and permission to deal in, the A Shares to be issued pursuant to the Issuance.

			Total
			outstanding	Proposed
			investment	amount of
		Total	(Kengzi to	net proceeds
		project	Dapeng	to be
No.	Name of project	investment	Section)	applied
		(RMB100	(RMB100	(RMB100
		million)	million)	million)
1	Outer Ring	294.04	84.47	46.00
	Expressway
	(Shenzhen
	Section)
2	Repayment of	–	–	19.00
	interest-bearing
	liabilities
	Total	294.04	84.47	65.00

I-5 -

PROPOSAL OF THE ISSUANCE

APPENDIX I

proceeds. If the actual amount of net proceeds (after deducting relevant issuance expenses) falls short of the proposed amount of proceeds to be applied to the aforesaid projects, the Board or its authorised person(s) will, based on circumstances such as the actual amount of net proceeds and the urgency of the projects, adjust and determine the application of the proceeds including determining the project to be invested with the proceeds, prioritise and determine specific amount of proceeds to be applied to each project. The shortage of funds will be self-financed by the Company.

(9) Arrangement of accumulated undistributed profits before the Issuance:
(10) Validity period of the resolutions:

Both new shareholders and existing shareholders are entitled to the accumulated undistributed profits of the Company before the Issuance according to their respective shareholdings.

The resolutions in relation to the Issuance should remain valid for twelve (12) months from 20 September 2023, being the date on which relevant resolutions were considered and approved by the extraordinary general meeting and class meetings of the Company.

I-6 -

PROPOSAL OF THE ISSUANCE

APPENDIX I

(11) Conditions precedent of the Issuance of A Shares to Specific Targets:

Completion of the Issuance of A Shares to Specific Targets is conditional upon satisfaction of the following conditions:

(1) the relevant resolutions have been passed at the extraordinary general meeting and class meetings of the Company;
(2) the relevant resolution(s) has/have been passed at the SGM of Shenzhen International; and
(3) the entity(ies) responsible supervising and managing State-owned assets of the Company having granted its approval, the SSE having passed its review, and the CSRC having provided its consent for the relevant registration.
(12) Principal terms of the underwriting and sponsor arrangement:

the Company has appointed CITIC Securities Co., Ltd. (“ CITIC Securities ”) as the sponsor and lead underwriter for the Issuance. The principal terms of the underwriting and sponsor agreement to be entered into between the Company and CITIC Securities are as follows:

(1) Major rights and obligations of the Company

CITIC Securities will provide its underwriting and sponsor services to the Company, the Company should fully cooperate with CITIC Securities on its due diligence work; ensure the authenticity, accuracy, and completeness of information disclose to CITIC Securities; provide authentic, accurate, and complete financial accounting materials and other materials to CITIC Securities in a timely manner; and pay the underwriting and sponsor fees; and cooperate with CITIC Securities in its continuous supervision.

(2) Major rights and obligations of CITIC Securities

CITIC Securities will be responsible for recommending the Issuance by the Company and the listing of A Shares to be issued to the SSE and the CSRC; issue the sponsor letter and listing sponsor letter and other documents in relation to the Issuance; and appoint 2 sponsor representatives to be responsible for the sponsor work; assist the Company in formulating the proposal and organising works in relation to the Issuance; complete the underwriting work; assist the Company in the application for the Issuance and listing. It has the right to conduct due diligence and carry out prudent inspection on the Company, its subsidiaries, affiliated institutions, controlling shareholders, directors, supervisors and senior management, and to conduct further visits to the Company and inspect materials.

I-7 -

APPENDIX II

PRINCIPAL TERMS OF THE A SHARES SUBSCRIPTION AGREEMENT

The principal terms of the A Share Subscription Agreement are identical to the terms of the proposal for the Issuance of A Shares to Specific Targets disclosed above. Other principal terms of the A Share Subscription Agreement are as follows:

(1) Parties:
(i) the Company (as issuer); and
(ii) XTC Company, a wholly-owned subsidiary of Shenzhen International (as subscriber).
(2) Date: 14 July 2023
(3) Subscription Price and The subscription price and pricing principles are consistent with the final Payment: issue price and pricing principles for the Issuance of A Shares to Specific Targets as described above.

XTC Company will not participate in the price bidding process, and will accept the price bidding results and subscribe the A Shares of the Issuance at the same issue price as other Specific Targets.

If there is no quotation for the Issuance or the final issue price cannot be determined through bidding, XTC Company will not participate in the subscription of the A Shares under the Issuance.

Upon receipt of the payment notice for the subscription, XTC Company shall promptly pay the full amount to the designated bank account.

(4) Lock-up Period:

The shares subscribed by XTC Company under the Issuance are refrained from being transferred for a period of eighteen (18) months from the completion date of the Issuance. If relevant laws, regulations and regulatory documents have other regulations on the lock-up periods for the shares to be issued under the Issuance of A Shares to Specific Targets, such regulations shall be followed. During the period from the completion date of the Issuance until the lock-up release date of such shares, any extra shares derived from events such as the grant of bonus shares, conversion of capital reserve into share capital, etc. by the Company for the shares subscribed by XTC Company under the Issuance shall also subject to the above lock-up arrangement.

(5) Number of A Shares to be subscribed for:
XTC Company shall subscribe the A Shares to be issued under the Issuance in the amount of no more than RMB1.51 billion. The number of A Shares to be subscribed is calculated by dividing the total subscription amount by the final issue price of the Issuance and rounded down to the nearest integer.
II-1 -

APPENDIX II

PRINCIPAL TERMS OF THE A SHARES SUBSCRIPTION AGREEMENT

The final number of A Shares to be issued is subject to adjustment in the manner as set forth in the paragraph “ (5) Number of A Shares to be issued” under Appendix I: “Proposal of the Issuance” above.

Upon completion of the Issuance, Shenzhen International will hold no less than 45% (inclusive) of the total issued shares of the Company through its wholly-owned subsidiaries,

(6) Conditions precedent:

The A Share Subscription Agreement will become effective after having been executed and sealed by the legal representative or authorised representative of the parties and satisfaction of all the following conditions:

the A Share Subscription Agreement, the Issuance, the XTC Company A Share Subscription and all related matters have been approved by/at the board of directors of the Company, the extraordinary general meeting and class meetings (if required) and the board of directors and general meeting (if required) of the controlling shareholder of the Company (i.e. Shenzhen International);
the Issuance, the XTC Company A Share Subscription and the related matters have been approved by the entity(ies) supervising and managing State-owned assets in accordance with the requirements of the laws and regulations; and
the CSRC has provided its consent for registration in respect of the Issuance.
II-2 -

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors, the supervisors or the chief executive of the Company 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 were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which have been taken or deemed to have been taken under such provisions of the SFO); or (ii) entered into the register maintained by the Company under Section 352 of the SFO; or (iii) notified to the Company and the Stock Exchange pursuant to the “Model Code for Securities Transactions by Directors of Listed Issuers” (collectively, “ interests or short positions ”) were as follows:

Long positions in ordinary shares of Shenzhen International:

		Approximate
		percentage of
		ordinary shares
		held in the issued
	Number of ordinary	share capital of
	shares held as at the	Shenzhen	Nature of
Name	Latest Practicable Date	International	interests	Capacity
Liao Xiang Wen (4)	21,520	0.001%	Family	Beneficial
			interests	owner

Interests in share option of Shenzhen International:

		As at the Latest
		Practicable Date
		Number of share
		options unexercised	Nature of
Name	Options	(1)(2)(3)	interests	Capacity
Liao Xiang Wen (4)	Share option scheme 1 (1)	332,000	Family	Beneficial
	Share option scheme 2 (2)	249,000	interests	owner
	Share option scheme 3 (3)	249,000

III-1 -

GENERAL INFORMATION

APPENDIX III

Note:

(1) Share option scheme 1 was granted on 1 November 2023 and could be exercised during the period from 1 November 2025 to 31 October 2028 pursuant to the grant provision;
(2) Share option scheme 2 was granted on 1 November 2023 and could be exercised during the period from 1 November 2026 to 31 October 2028 pursuant to the grant provision;
(3) Share option scheme 3 was granted on 1 November 2023 and could be exercised during the period from 1 November 2027 to 31 October 2028 pursuant to the grant provision;
(4) The interests are owned by the spouse of Liao Xiang Wen, a Director of the Company.

Saved as disclosed above, as of the Latest Practicable Date, none of the Directors, the supervisors or the chief executive of the Company had interests or short positions defined above.

As at the Latest Practicable Date, save for Mr. Dai Jing Ming, a non-executive Director, also acts as an executive director of Shenzhen International, none of the Directors was a director or an employee of a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and their respective close associates were interested in any business, apart from the Group’s business, which competes or is likely to compete, either directly or indirectly, with the Group’s business.

4. INTERESTS IN ASSETS, CONTRACT OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors or supervisors of the Company is materially interested in any contracts or arrangement entered into by any members of the Group which is subsisting at the date of this circular and which is significant in relation to the business of the Group.

None of the Directors or supervisors of the Company has any direct or indirect interest in any assets which have been, since 31 December 2023, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to any members of the Group, or are proposed to be acquired or disposed of by, or leased to any members of the Group.

5. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2023, the date to which the latest published audited consolidated accounts of the Group have been made up.

III-2 -

GENERAL INFORMATION

APPENDIX III

6. LITIGATION

As at the Latest Practicable Date, no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

7. SERVICE CONTRACTS

No service contracts that cannot be terminated by the Group within one year without compensation (other than general statutory compensation) have been or proposed to be entered into between the Group and the Directors as at the Latest Practicable Date.

8. EXPERT

(a) The following is the qualification of the expert who has given opinion or advice contained in this circular:

Name Qualification Lego Corporate Finance Limited a corporation licensed by the SFC to carry out Type 6 (advising on corporate finance) regulated activities under the SFO

(b) As at the Latest Practicable Date, Lego had no shareholding interest in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) As at the Latest Practicable Date, Lego was not interested, directly or indirectly, in any assets which had since 31 December 2023 (being the date to which the latest published audited accounts of the Group were made up) been acquired or disposed of by or leased to any member of the Group or which are proposed to be acquired or disposed of by or leased to any member of the Group.
(d) Lego has given and has not withdrawn its written consent to the issue of this circular, with inclusion of its letter or report and references to its name in the form and context in which it is included.

9. DOCUMENTS ON DISPLAY

Copies of the following documents will be available on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (www.sz-expressway.com) for 14 days from the date of this circular:

(a) the letter from the Independent Board Committee, the text of which is set out on pages 20 to 21 of this circular;
III-3 -

GENERAL INFORMATION

APPENDIX III

(b) the letter from the Independent Financial Adviser, the text of which is set out on pages 22 to 49 of this circular;
(c) the written consent referred to in paragraph headed “Expert” of this appendix; and
(d) the A Shares Subscription Agreement.

10. LANGUAGE

In the event of inconsistency between the Chinese and the English version of this circular, the Chinese version shall prevail.

III-4 -

NOTICE OF THE EGM

==> picture [314 x 96] intentionally omitted <==

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00548)

NOTICE OF THE THIRD EXTRAORDINARY GENERAL MEETING 2024

Notice is hereby given that the Third Extraordinary General Meeting 2024 (the “ EGM ”) of Shenzhen Expressway Corporation Limited (the “ Company ”) will be held at the conference room of the Company on 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC at 10:00 a.m. on Friday, 20 September 2024 to consider and, if thought fit, pass the following resolutions:

SPECIAL RESOLUTION

To consider and approve the resolution in relation to the extension of the validity period of the resolutions and mandate in relation to the Issuance of A Shares to Specific Target.

ORDINARY RESOLUTIONS

To consider and approve the resolution in relation to the Plan on Shareholders’ return for 2024-2026 of the Company.
To consider and approve the resolutions in relation to the Construction Contracts Sections 1, 5 and 6 for main works of Jihe Expressway reconstruction and expansion project individually:
3.01 Construction Contract Section 1;
3.02 Construction Contract Section 5;
3.03 Construction Contract Section 6.

By Order of the Board

Liao Xiang Wen

Executive Director and President

Shenzhen, the PRC, 23 August 2024

Notes:

1. Capitalised terms used in this notice shall have the same meanings as those defined in the two circulars of the Company dated 23 August 2024.

EGM-1 -

NOTICE OF THE EGM

2. Eligibility for attending the EGM

Shareholders of the Company whose names appear on the registers of shareholders of the Company at the close of business on 12 September 2024 shall have the right to attend the EGM after complying with the necessary registration procedures.

3. Registration procedures for attending the EGM

Holders of H shares of the Company please note that the register of holders of H shares of the Company will be closed from 13 September 2024 to 20 September 2024 (both days inclusive), during which period no transfer of H shares of the Company will be registered. Holders of H shares of the Company who intend to attend the EGM must deliver their instruments of transfer together with the relevant share certificates to Hong Kong Registrars Limited, the registrar of H shares of the Company, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, at or before 4:30 p.m. on 12 September 2024.

4. Proxy

i. Shareholders entitled to attend and vote at the EGM are entitled to appoint, in written form, one or more proxies (whether a shareholder or not) to attend and vote on his behalf.
ii. A proxy should be appointed by written instrument signed by the appointor or his attorney. If the written instrument is signed by the attorney of the appointor, the written authorisation or other authorisation documents of such attorney should be notarised. In order to be valid, for holders of A shares of the Company, the written authorisation or authorisation documents which have been notarised together with the completed proxy form must be delivered to the Company not less than 24 hours before the time of the holding of the EGM. In order to be valid, for holders of H shares of the Company, the above documents must be delivered to Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, within the same period.
iii. Shareholder or his proxy should produce identity proof when attending the EGM.

5. Poll

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Articles of Association of the Company, voting at the EGM on the resolutions set out in the notice of the EGM will be taken by poll.

6. Other matters

i. The duration of the EGM is expected not to exceed one day. Shareholders or proxies who attend the EGM shall arrange for transport, food, accommodation and other relevant expenses at their own cost.
ii. Address of Hong Kong Registrars Limited (for share transfer):

Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

iii. Address of the Company: 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC Postal code: 518057

Tel: (86)755 – 8669 8056

Fax: (86)755 – 8669 8002

EGM-2 -

NOTICE OF THE HCM

==> picture [314 x 96] intentionally omitted <==

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

(Stock Code: 00548)

NOTICE OF THE FIRST CLASS MEETING 2024 OF HOLDERS OF H SHARES

Notice is hereby given that the First Class Meeting 2024 of the Holders of H Shares (the “ HCM ”) of Shenzhen Expressway Corporation Limited (the “ Company ”) will be held at the conference room of the Company 46th Floor, Hanking Center Tower, No. 9968 Shennan Avenue, Nanshan District, Shenzhen, the PRC after 10:00 a.m. on Friday, 20 September 2024 (immediately after the conclusion of the First Class Meeting 2024 of the Holders of A Shares of the Company to be held on the same date or adjournment) to consider and, if thought fit, pass the following resolution:

SPECIAL RESOLUTION

To consider and approve the resolution in relation to the extension of the validity period of the resolutions and mandate in relation to the Issuance of A Shares to Specific Target.

By Order of the Board Liao Xiang Wen

Executive Director and President

Shenzhen, the PRC, 23 August 2024

Notes:

1. Capitalised terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 23 August 2024.

2. Eligibility for attending the HCM

Shareholders of the Company whose names appear on the registers of holders of H shares of the Company at the close of business on 12 September 2024 shall have the right to attend the HCM after complying with the necessary registration procedures.

3. Registration procedures for attending the HCM

HCM-1 -

NOTICE OF THE HCM

instruments of transfer together with the relevant share certificates to Hong Kong Registrars Limited, the registrar of H shares of the Company, at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, at or before 4:30 p.m. on 12 September 2024.

4. Proxy

i. Holders of H shares entitled to attend and vote at the HCM are entitled to appoint, in written form, one or more proxies (whether a shareholder or not) to attend and vote on his behalf.
ii. A proxy should be appointed by written instrument signed by the appointor or his attorney. If the written instrument is signed by the attorney of the appointor, the written authorisation or other authorisation documents of such attorney should be notarised. In order to be valid, for holders of H shares of the Company, the written authorisation or authorisation documents which have been notarised together with the completed proxy form must be delivered to Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time of the holding of the HCM.
iii. Shareholder or his proxy should produce identity proof when attending the HCM.

5. Poll

Pursuant to Rule 13.39(4) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Articles of Association of the Company, voting at the HCM on the resolutions set out in the notice of the HCM will be taken by poll.

6. Other matters

i. The duration of the HCM is expected not to exceed one day. Shareholders or proxies who attend the HCM shall arrange for transport, food, accommodation and other relevant expenses at their own cost.
ii. Address of Hong Kong Registrars Limited (for share transfer): Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong
HCM-2 -

AI assistant

Water Oasis Group Limited — Proxy Solicitation & Information Statement 2024

49733_rns_2024-08-22_090626e5-7a3a-44db-bd39-951bdde9f816.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

(I) INTRODUCTION

(II) PROPOSED EXTENSION OF THE VALIDITY PERIOD OF THE RESOLUTIONS AND THE SPECIFIC MANDATE IN RELATION TO THE ISSUANCE

LETTER FROM THE BOARD

EFFECT OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

LETTER FROM THE BOARD

PRICING OF ISSUANCE OF A SHARES TO SPECIFIC TARGETS

LETTER FROM THE BOARD

PROGRESS IN THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS

LISTING RULES IMPLICATIONS

REASONS FOR AND BENEFITS OF THE EXTENSION OF THE VALIDITY PERIOD OF THE RESOLUTIONS AND THE SPECIFIC MANDATE IN RELATION TO THE ISSUANCE OF A SHARES TO SPECIFIC TARGETS (INCLUDING THE XTC COMPANY A SHARE SUBSCRIPTION)

LETTER FROM THE BOARD

LETTER FROM THE BOARD

MEASURES IN PROTECTING SHAREHOLDERS’ INTERESTS

LETTER FROM THE BOARD

FUND-RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

GENERAL INFORMATION OF THE PARTIES

The Company

Shenzhen International

XTC Company

(III) PLAN ON SHAREHOLDERS’ RETURN FOR 2024-2026

(A) Major consideration factors in formulating the Plan

(B) Basic principles in formulating the Plan

(C) The Company’s Plan on Shareholders’ return for 2024-2026

1. Method of profit distribution

2. Conditions and ratio of cash dividend distribution by the Company

3. Conditions for distribution of stock dividend by the Company

(D) Decision-making mechanism of the Plan and the proposal of annual profit distribution

LETTER FROM THE BOARD

(E) Adjustment to the Plan on Shareholders’ return

(F) Effective mechanism of the Plan

(IV) THE EGM AND THE HCM

(V) CLOSURE OF REGISTER OF HOLDERS OF H SHARES

(VI) VOTING BY POLL

LETTER FROM THE BOARD

(VII) RECOMMENDATION

(VIII) FURTHER INFORMATION

CONNECTED TRANSACTION – A SHARES SUBSCRIPTION AGREEMENT

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

CONNECTED TRANSACTION IN RESPECT OF THE XTC COMPANY A SHARE SUBSCRIPTION

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information on the Company, Shenzhen International and XTC Company

1.1. The Company

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.2. Shenzhen International

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.3. XTC Company

2. Reasons for and benefits of the Issuance (including the XTC Company A Share Subscription) and use of proceeds

2.1. Reinforcing the advantages of toll highways as a principal business

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.2. Improving capital structure and enhancing long-term shareholders’ returns

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.3. Use of Proceeds

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Other financing alternatives available to the Group

4. A Share Subscription Agreement

4.1 Principal terms of the A Share Subscription Agreement

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4.2 Analysis of the principal terms of the A Share Subscription Agreement

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Water Oasis Group Limited Proxy Solicitation & Information Statement 2024