Guangdong Yueyun Transportation : INSIDE INFORMATION - CHANGES IN ACCOUNTING ESTIMATES

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廣東粵運交通股份有限公司

Guangdong Yueyun Transportation Company Limited*

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

(Stock Code: 03399)

INSIDE INFORMATION

CHANGES IN ACCOUNTING ESTIMATES

This announcement is made by the board (the "Board") of directors (the "Directors") of Guangdong Yueyun Transportation Company Limited (the "Company", together with its subsidiaries, the "Group") pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The Board hereby announces that, in order to ensure that the accounting depreciable lives of its New Energy Pure Electric Buses (the "New Energy Buses") are in better alignment with the Company's actual usage conditions, the Board resolved to change the accounting depreciable lives of the New Energy Buses from 6-8 years to 8 years in accordance with actual conditions (the "Changes in Accounting Estimates"). The Changes in Accounting Estimates shall take effect from 1 January 2021.

Changes in Accounting Estimates

Pursuant to the requirements of "Accounting Standards for Business Enterprises No. 4 - Fixed Assets" 《( 企業會計準則第4 號－固定資產》) (the "Accounting Standards for Business Enterprises No. 4"), an enterprise shall review the estimated useful lives, estimated net residual

values and depreciation methods of its fixed assets and where there are discrepancies between the estimated useful life and the original accounting estimates of the relevant fixed assets, corresponding adjustments to the estimated useful lives shall be made to reflect the discrepancies.

Pursuant to the requirements of "Accounting Standards for Business Enterprises No. 28 -

Accounting Policies, Changes in Accounting Estimates and Accounting Corrections" 《( 企業會 計準則第28號－會計政策、會計估計變更和會計差錯更正》) (the "Accounting Standards for Business Enterprises No. 28"), an enterprise may need to revise its accounting estimates due to

a change in the basis for estimates, or due to the obtainment of new information, accumulation of more experiences as well as the subsequent development and changes.

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Since the end of 2015, the Group has successively acquired the New Energy Buses. Given that the New Energy Buses were a new type of vehicle, based on the principle of prudence, the Group mainly adopted 6 years as the depreciable lives of the New Energy Buses, which is in line with the depreciable lives of operating vehicles of the Group. After nearly 5 years of operation, the Group has accumulated a certain level of experience and data with respect to the use, wear, maintenance and repair of the New Energy Buses, and also according to the quality assurance conditions of the vehicle suppliers for the core equipment, it is believes that adopting 8 years as the depreciable lives of New Energy Buses will be better in line with the actual operation of the Company.

After conducting a review on the useful lives of the New Energy Buses, in order to more accurately reflect the actual useful lives of the New Energy Buses and to ensure that the New Energy Buses and their related depreciation expenses better align with the Company's actual usage conditions, the Board resolved to change the accounting depreciable lives of the New Energy Buses from 6-8 years to 8 years. After the changes, the depreciable lives of New Energy Buses will be adjusted from 6-8 years to 8 years, and the specific depreciations are provided as follows:

	Before the	After the
Transportation equipment-New Energy Pure Electric Buses	changes	changes
Depreciable lives（year(s)）	6-8	8
Estimated net residual value rate (%)	1-5	1-5
Annual depreciation rate (%)	11.88-16.50	11.88-12.38

Expected financial impact of Changes in Accounting Estimates

The Changes in Accounting Estimates shall be implemented by the Group with effect from 1 January 2021. It is expected that there will be a reduction in annual depreciation expense of the Group of approximately RMB99,761 thousand. As there will be a corresponding adjustment in amortization period for the deferred income from subsidies for the New Energy Buses from 6 years to 8 years, it is expected that there will be a reduction in other income of the Group of approximately RMB38,684 thousand for the year ending 31 December 2021. Accordingly, it is expected that the Changes in Accounting Estimates will result in an increase in the total profit of the Group approximately RMB61,077 thousand for the year ending 31 December 2021.

The Changes in Accounting Estimates are to be accounted for prospectively without retrospective adjustment. Therefore, Changes in Accounting Estimates will not have any impact on the financial statements of the Group for previous years.

Opinion of the Board

The Board (including Audit & Corporate Governance Committee) is of the view that the Changes in Accounting Estimates will enable the Company to more accurately reflect the actual useful lives and actual usage conditions of the New Energy Buses, and are in compliance with the relevant requirements under the Accounting Standards for Business Enterprises No. 4 and the Accounting Standards for Business Enterprises No. 28, and the relevant decision-making procedures are in line with the requirements of relevant laws, regulations and the Articles of Association. Thus, the Changes in Accounting Estimates are approved.

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The expected financial impact of the Changes in Accounting Estimates contained in this announcement is only a preliminary assessment based on information currently available, which has not been reviewed or audited by the auditors of the Company. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

By order of the Board

Guangdong Yueyun Transportation Company Limited

Zhang Li

Company Secretary

Guangzhou, the PRC

8 April 2021

As at the date of this announcement, the Board comprises Mr. Tang Yinghai, Mr. Yao Hanxiong, Mr. Zhang Xian and Mr. Huang Wenban as executive Directors, Mr. Chen Min and Mr. Chen Chuxuan as non-executive Directors, and Mr. Jin Wenzhou, Ms. Lu Zhenghua, Ms. Wen Huiying and Mr. Zhan Xiaotong as independent non-executive Directors.

• For identification purpose only

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