Shenzhen International Holdings Limited

152 BMG8086V1467

Highways & Rail Tracks

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Mar. 28	Shenzhen International Holdings Limited Proposes Ordinary Final Dividend for the Year Ended 31 December 2023, Payable on 20 June 2024	CI
Mar. 28	Shenzhen International's Profit Surges 52% in 2023 as Revenue Rises 32%	MT

Shenzhen International : Overseas Regulatory Announcement - 2020 Annual Results Preliminary Announcement of Shenzhen Expressway Company Limited

March 24, 2021 at 08:27 am EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

(Incorporated in Bermuda with limited liability)

(Stock Code: 00152)

(Debt Securities Stock Code: 05042)

OVERSEAS REGULATORY ANNOUNCEMENT

The document attached hereto is the 2020 Annual Results Preliminary Announcement released by Shenzhen Expressway Company Limited, a subsidiary of Shenzhen International Holdings Limited (the "Company").

Hong Kong, 24 March 2021

As at the date of this announcement, the board of directors of the Company consists of Messrs. Li Haitao, Wang Peihang and Dai Jingming as executive directors, Messrs. Hu Wei and Zhou Zhiwei as non-executive directors and Professor Cheng Tai Chiu, Edwin, Messrs. Pan Chaojin and Chan King Chung as independent non-executive directors.

深圳高速公路股份有限公司

SHENZHEN EXPRESSWAY COMPANY LIMITED

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

(Stock Code: 00548)

2020 Annual Results Preliminary Announcement

I. 1.1

Important Notice

2020 Annual Results Preliminary Announcement of the Company is extracted from the full Annual Report 2020 of the Company. For detailed information, investor shall read the full Annual Report to be published on the website of SSE athttp://www.sse.com.cnand HKEx athttp://www.hkexnews.com.hk.

All the information to accompany preliminary announcement of results for the financial year required under Appendix 16 to the Listing Rules was included in the 2020 Annual Results Preliminary Announcement published on the website of HKEx.

The 2020 annual financial statements of the Company were prepared in accordance with CASBE, and also were complied with the disclosure requirements under the Hong Kong Companies Ordinance and the Listing Rules.

Unless otherwise stated, the amounts stated in this announcement are in RMB.

1.2 Basic Information of the Company

Type of shares	A Share	H Share
Abbreviation	Shenzhen Expressway	Shenzhen Expressway
Stock code	600548	00548
Listing exchanges	SSE	HKEx
Contacts and details	Secretary of the Board	Securities Officer
Name	GONG Tao Tao	GONG Xin, XIAO Wei
Telephone	(86) 755-8285 3330	(86) 755-8285 3338
Fax	(86) 755-8285 3400
E-mail	secretary@sz-expressway.com

II. Proposed Profit Distribution

The Board recommended the payment of a final dividend of RMB0.43 (proposal) (tax included) per share in cash to all shareholders (2019: RMB0.52 per share), based on the total share capital of 2,180,770,326 as at the end of 2020 and totaling RMB937,731,240.18. The aforesaid proposal shall be subject to approval by shareholders at the 2020 Annual General Meeting of the Company. The date of the annual general meeting, the record date for dividend payment, dividend payment procedures and payment date, and the book closure period for H Shares will be notified separately. It is expected that the dividend will be distributed on or before 16 July 2021.

III. Principal Financial Data and Information of the Shareholders 3.1 Principal Financial Data

During the Reporting Period, the Group recorded revenue of RMB8,026,737,000, representing a YOY increase of 25.61%, mainly due to the consolidation of Nanjing Wind Power, Baotou Nanfeng and Lande Environmental into the financial statements of the Group in April 2019, September 2019 and January 2020, respectively, leading to the increase in the Group's revenue from the environmental protection business in the current period. In 2020, the Group recorded net profit attributable to owners of the Company ("net profit") of RMB2,054,523,000 (2019 (restated): RMB2,564,318,000), taking aside the effects of the recognition of deferred income tax asset of Coastal Company by the Group in 2019, the YOY increase of the net profit is approximately 0.32%.

Currency: RMB

As at 31 Dec 2020	As at 31 Dec 2019	Change as compared to the end of last year (%)	As at 31 Dec 2018
After adjustment	Before adjustment	After adjustment	Before adjustment
Total assets	55,144,962,042.63	45,658,413,658.91	44,923,734,271.98	20.78	44,399,693,368.18	41,100,850,328.23
Owners' equity attributable to owners of the Company	23,042,941,782.92	18,525,888,505.26	18,374,542,643.63	24.38	19,098,329,778.25	17,387,090,943.28
2020	2019	Change as compared to the last year (%)	2018
After adjustment	Before adjustment	After adjustment	Before adjustment
Revenue	8,026,737,099.99	6,390,295,110.82	6,185,825,111.97	25.61	6,468,097,132.29	5,807,108,031.78
Net profit attributable to owners of the Company	2,054,523,306.30	2,564,317,594.25	2,499,484,975.75	-19.88	5,069,016,729.58	3,440,050,607.33
Net profit attributable to owners of the Company - excluding non-recurring items	1,957,015,513.64	2,243,627,358.26	2,243,627,358.26	-12.77	1,537,875,136.33	1,537,875,136.33
Net cash flows from operating activities	1,100,633,933.07	1,695,357,337.06	1,751,428,675.07	-35.08	3,243,642,096.19	3,222,228,582.62
Return on equity - weighted average (%)	10.83	13.73	14.14	Decrease 2.89 pct.pt	31.60	22.85
Earnings per share - basic (RMB/share)	0.936	1.176	1.146	-20.44	2.324	1.577
Earnings per share - diluted (RMB/share)	0.936	1.176	1.146	-20.44	2.324	1.577

1. During the Reporting Period, due to the consolidation of Financial Leasing Company, Logistics Finance Company and Longda Company into the Group as a jointly controlled entity, the Company adjusted the data of consolidated financial statements to previous years retrospectively pursuant to relevant requirements under the Accounting Standards for Business Enterprises. For details, please refer to the relevant content in Note VI of the Financial Statements.

2. During the Reporting Period, the Company issued RMB 4 billion of perpetual bonds, which were included in other equity instruments. The impact of perpetual bonds was deducted when calculating the above earnings per share and weighted average return on net assets pursuant to relevant requirements.

3.2 Information of the Total Number of Shareholders and the Top Ten Shareholders

As at the end of the Reporting Period, based on the shareholders' registers provided by the share registrars and the transfer offices of the Company in the PRC and Hong Kong, the information of the total number of shareholders and the top ten shareholders of the Company were as follows:

Unit: share

Total number of shareholders as at the end of 2020	The Company had 21,819 shareholders in total, including 21,578 holders of A Shares and 241 holders of H Shares.
Total number of shareholders as at the end of the last month prior to the Reporting Date	The Company had 20,183 shareholders in total, including 19,947 holders of A Shares and236 holders of H Shares.
Top ten shareholders as at the end of 2020
Name of shareholder	Nature of shareholders	Percentage	Number of shares held	Number of restricted circulating shares held	Number of shares pledged or frozen
HKSCC NOMINEES LIMITED (1)	Overseas legal person	33.45%	729,570,042	－	Unknown
Xin Tong Chan Development (Shenzhen) Company Limited	State-owned legal person	30.03%	654,780,000	－	None
Shenzhen Shen Guang Hui Highway Development Company	State-owned legal person	18.87%	411,459,887	－	None
China Merchants Expressway Network & Technology Holdings Company Limited	State-owned legal person	4.18%	91,092,743	－	None
Guangdong Roads and Bridges Construction Development Company Limited	State-owned legal person	2.84%	61,948,790	－	None
China Merchants Bank-SSE Dividend Trading Open Index Securities Investment Fund	Domestic non-state-owned legal person	1.04%	22,641,573	－	Unknown
AU SIU KWOK	Overseas natural person	0.50%	11,000,000	－	Unknown
Mo Jing Xian	Domestic natural person	0.49%	10,711,880	－	Unknown
Zhang Ping Ying	Domestic natural person	0.35%	7,714,565	－	Unknown
Hong Kong Central Clearing Company Limited	Domestic non-state-owned legal person	0.27%	5,843,692	－	Unknown
Connected relationship or concerted action relationship among the abovementioned shareholders	XTC Company and SGH Company are connected persons under the same control of Shenzhen International. In addition to the above associations, there is no connected relationship among the state-owned shareholders in the above table. The Company did not notice any connected relationship among the other abovementioned shareholders or any connected relationship among the abovementioned state-owned shareholders and other shareholders.
Note: (1) The H Shares held by HKSCC NOMINEES LIMITED were held on behalf of various clients.

under the same control of Shenzhen

International. In addition to the above associations, there is no connected relationship among the owned shareholders in the above table. The Company did not notice any connected relationship ntioned shareholders or any connected relationship among the abovementioned

3.3 The Ownership and the Relation of Control between the Company and the De-facto Controller

State-owned Assets Supervision and Administration Commission of Shenzhen

Municipal People's Government100%

Shenzhen Investment Holdings Company Limited 100%

Ultrarich International Limited

43.372%

Shenzhen International Holdings Limited

100%

Shenzhen Shen Guang Hui Highway

Development Company Limited

18.868% (A Shares)

Shenzhen Expressway Company Limited

IV. Report of the Directors

In order to achieve the Company's strategic goal of transformation and upgrading, in addition to upgrading and consolidating the core business of toll highway, the Group prudently seeks opportunities for cooperation with leading and branded enterprises in the general-environmental protection industry to enter the environmental protection and clean energy business sector from a high starting point, thereby establishing the current business landscape with toll highway and general-environmental protection as its dual core businesses. In recent years, the Group adheres to a market-oriented, specialised and industrialised approach to continuously adjust and integrate its internal organisational structure and functions. It has gradually established various business platforms for urban infrastructure, environmental protection, operation, construction and new energy which include the Investment Company, a company principally engages in the business of expanding infrastructure construction market as well as joint comprehensive development of land; the Operation Development Company, a company principally engages in the provision of highway operation, maintenance management services and intelligent transportation business; the Environmental Company, a company principally engages in the expansion of businesses relating to the environmental protection industry such as recovery and solid waste management; the Construction Development Company, a company principally engages in the provision of project construction management services; the Infrastructure and Environmental Protection Company, a company, located in the Shenshan Special Cooperation Zone, engages in the provision of large-scale infrastructure construction management services for the cooperation zone and the project investment within the cooperation zone, and the New Energy Company, a company principally engages in the expansion of businesses relating to wind energy and other new energy. The Group has also set up the industry financial management department in 2020, which would act as a consolidated management platform of the Group for the expansion, operation and management of industrial-financial integration and capital operations. Through the aforesaid business platform, the Group will give full play to its own competitive advantages in infrastructure investment and finance, construction, operation and integrated management. The Group will also actively extend its business scope to the upstream and downstream of the industrial chain of its dual core businesses and develop other service-oriented businesses, such as operation maintenance, intelligent transportation/environmental protection system, engineering consulting, urban comprehensive services and industrial finance, striving for greater rooms for the development of the Group's operation.

4.1 Business Review

Other regions in Guangdong Province:  Qinglian Expressway 76.37%

 Yangmao Expressway 25%



GZ W2 Expressway 25%

Entrusted Management and Other Infrastructure Development Industrial-Financial Integration

Other Businesses

- Advertising
- Engineering Consulting
- Inter-network Toll Collection

Icon：  Consolidated project

 Non consolidated project

SHENZHEN EXPRESSWAY COMPANY LIMITED

Shenzhen region:

 Meiguan Expressway 100%
 Jihe East 100%
 Jihe West 100%
 Coastal Project 100%
 Outer Ring Project 100%
 Longda Expressway 89.93%
 Shuiguan Expressway 50%
 Shuiguan Extension 40%

 Mulei Wind Power Project 100%

 Baotou Nanfeng 100%

 Lande Environmental 67.14%

 Nanjing Wind Power 51%

 Derun Environment 20%

 Water Planning Company 15%

Other Provinces in the PRC:

 Wuhuang Expressway 100%
 Yichang Project 100%
 Changsha Ring Road 51%
 Nanjing Third Bridge 25%

In 2020, the COVID-19 epidemic had a significant impact on the production and operation of the Group. In addition to properly carrying out work in relation to the prevention and control of the epidemic, the Group has also promptly taken active steps to achieve resumption of its production and operation in a full manner, and mitigated the negative impact of the epidemic by measures to broaden revenue streams and reduce expenditure, such as increasing market development efforts in quality projects, improving production efficiency and reducing operating costs, etc.

During the Reporting Period, the Group effectively managed the main business of toll highway, environmental protection and clean energy, and steadily developed relevant businesses such as entrusted management, infrastructure development and financial services. During the Reporting Period, the Group recorded revenue of approximately RMB8,027 million, representing a YOY increase of 25.61%, of which toll revenue of approximately RMB4,387 million, clean energy revenue of approximately RMB1,666 million, solid and hazardous waste treatment revenue of approximately RMB843 million, other environmental protection business revenue of approximately RMB12 million, entrusted management services revenue of approximately RMB511 million, real estate development revenue of approximately RMB351 million and other business revenue of approximately RMB258 million accounted for 54.65%, 20.75%, 10.51%, 0.14%, 6.36%, 4.37% and 3.21% of the total revenue of the Group, respectively.

(I) Analysis of Operating Environment
(1) Economic environment
In 2020, the global spread of the Epidemic has not only caused threats to human lives and health, but also a huge impact on the global economy. Despite various prevention and control measures and economic stimulus measures promptly taken by governments around the world in response to the epidemic in the past year, the global epidemic situation and the economic landscapes around the world had remained severe and complicated with numerous uncertainties as at the end of 2020. Prevention and control against the epidemic, reopening of the economy and resumption of development have been of utmost priority of various governments. Following a series of measures in relation to the prevention and control against the epidemic and economic regulation policies promptly introduced by the Chinese government, the Chinese economy demonstrated strong resilience. Since the second quarter of 2020, great progress has been made in phases in terms of national prevention and control against the epidemic as well as resumption of work and production. The national economy has resumed gradually and economic indicators have improved quarter-on-quarter with GDP saw a turnaround from negative to positive and recorded a YOY growth of 3.2% in the second quarter of 2020. The YOY GDP growth reached 4.9% in the third quarter, representing a YOY increase of 2.3% for the year. China's total economic volume exceeded RMB100 trillion, which enabled it to become the only major economy in the world with positive economic growth. The regional GDP of Guangdong Province and Shenzhen recorded a YOY growth of 2.3% and 2.6% respectively. The orderly recovery of the national economy is conducive to the general growth of the regional transportation and logistics demand via highway.Source of data: Government statistics information website
(2) Policy environment
Toll highway industry: To reinforce the reform of toll road system, the government introduced a number of policies regarding the toll highway in 2019 which have been implemented since 1 January 2020. Such policies include the removal of provincial boundary highway toll stations, which aim to achieve non-stop express toll collection, and the vigorous promotion of application of ETC on highways, which aim to realise ETC utilisation rate of vehicles passing through the highways over a certain proportion by the end of 2019, as well as strict implementation of the basic preferential policy that offer a discount of not less than 5% of the toll fees for ETC users. In addition, the MOT issued the "Classification of Toll Fees for Vehicles on Toll Highways" (《收費公路車輛通行費車型分類》), a new standard for the transportation industry. The new standard downgraded original Type-2 passenger vehicles with 8 and 9 seats as Type-1 mini passenger vehicles, and implemented toll-by-class instead of toll-by-weight policy for trucks. The traffic management department of Guangdong Province requires a cancellation of toll collection on mileage in relation to interchanges connecting ramp at transportation hubs and re-approval of the toll fees standard for section fees with the amount of toll fees for each section rounded

to the nearest cents. Moreover, in order to improve the settlement efficiency and reduce logistics costs, after the resumption of toll collection of all expressways over the country from 6 May 2020, all ETC systems have adopted the calculation method of "round-down and no round-up" for toll fees charged at all sections of expressways, i.e. for the expressway toll fee which the cent portion is less than RMB0.5, the amount will be round-down to the whole yuan; for those which the cent portion is larger than RMB0.5, the fee will be collected at the exact amount without rounding up but a 5% off discount will be offered to such fee. In general, the implementation of the above policies has had a negative impact on the Company's toll revenue. On the other hand, however, the changes in industrial policies will be more favorable for the long-term industrial development and the improvement of both efficiency and service quality. For instance, the implementation of toll-by-class instead of toll-by-weight policy has realised restriction over over-limit and overloaded vehicles without requiring them to stop for weighting or inspection at highway toll stations. The policy can also enhance the traffic efficiency and lower the maintenance cost of highways, which is positive to the reduction of labour cost and management fee of the Company in the long-term.

As required by the MOT, commencing from 00:00 on 17 February 2020 and until 00:00 on 6 May 2020, a toll-free policy was implemented for all vehicles using toll highways according to the laws, so as to ensure the transportation of materials for prevention and control of the Epidemic as well as for production and daily lives, thereby supporting the resumption of work and production of enterprises and hence providing strong support for economic and social stability as a whole. The implementation of this policy has caused a decrease in the revenue of the Group during the period of prevention and control of the Epidemic. As at the date of this announcement, the Company received related document of Department of Transportation of Guangdong Province regarding the toll free policy to toll roads vehicles during the prevention and control period of the COVID-19 epidemic. Based on the Company's understanding and assessment on related document, it recognised an income for its expressway projects in Guangdong Province.

Environmental protection industry: The construction of ecological civilisation has become a national strategy. During the implementation of the 13th Five-Year Plan, great efforts has been put into boosting ecological protection and environmental construction, thereby continuously improving the legal system construction of the ecological environment. Since 2018, 9 departments of the State including the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development have promulgated the relevant policies successively. Such policies have required to improve the charging mechanism for solid waste treatment, to establish a charging system for household waste treatment in cities and towns with administrative status across the country by the end of 2020, and to explore opportunities for the establishment of a charging system for waste treatment in rural areas, with an aim to basically establishing a household waste classification and treatment system by 2025 for cities at prefecture level and above nationwide. The Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste (《中華人民共和國固定廢物污染環境防治法》) promulgated since 1 September 2020 has required governments at county level or above to accelerate the establishment of a household waste management system for classification and management, with a view to achieving effective coverage of the household waste classification system, thereby conducting works in relation to resource recovery and harmless treatment of kitchen waste. In 2020, various provinces and cities across China issued regulations on waste classification and management successively, while cities at county level or above put efforts in enhancing the capacity of facilities for utilisation and treatment of solid waste, which have created new rooms for market development of various sub-segments along the industry chain of solid waste.

The "Notice of the National Development and Reform Commission on Improvement of Policy regarding On-grid Tariff of Wind Power" (《國家發展改革委關於完善風電上網電價政策的通知》) issued in May 2019 replaced the on-grid tariff of onshore wind power with government's guided price and the on-grid tariff of all newly approved centralised onshore wind power projects shall be determined through competitive process. For those onshore wind power projects approved in the previous years, there is a clear division of time limit for grid connection and tariff subsidies. Driven by such policy, the construction of onshore windpower projects remained in the peak period in 2020. Since May 2019, the National Energy Administration has successively issued policies in relation to the wind power and photovoltaic power industries, which highlighted two key directions, namely promoting grid parity and competitive allocation of projects that require subsidies. The transmission and consumption guarantee mechanism of wind power and photovoltaic power were also improved to enhance market competitiveness. Pursuant to the "Notice on Commencement of Relevant Review Work on the Projects List of Renewable Energy Power Generation

Subsidies" (《關於開展可再生能源發電補貼項目清單審核有關工作的通知》) issued by the General Office of the Ministry of Finance in March 2020, the application for government subsidies regarding renewable energy has been reopened, which will facilitate earlier receipt of existing power generation subsidies for new energy power generation and operation projects. The abovementioned policies will be favorable for the stable and orderly development of the wind and photovoltaic power industries. Wind energy and other new energy in China have seen rapid development. According to the information of the National Energy Administration, the annual average newly installed capacity of wind power and photovoltaic power in China during the implementation of the 13th Five-Year Plan was approximately 63 million kW in aggregate, which showed that both energy resources have become an integral part of energy transformation and the main source of incremental power in the future. President Xi Jinping further announced in December 2020 that, "by 2030, the non-fossil energy will account for about 25% of primary energy consumption, and the total installed capacity of wind power and solar power will be more than 1.2 billion kW". The new energy power generation industry will see broader room for development.

(II) Business Management and Upgrade

Striving to carry out work in relation to the prevention and control of the epidemic and foster development in joint efforts

Since the outbreak of the Epidemic, the Company, in active response to the call of the Party and the State, has made full efforts to cooperate with the government and devoted a lot of resources and staff to fight against the Epidemic. More than 63 million vehicles in the society were exempted from paying toll on the expressways under the Company. An average of over 3,000 people was arranged to be on duty every day and an aggregate of 19,000 person-times was arranged at 72 joint quarantine checkpoints to commence inspection work for epidemic prevention in cooperation with local governments. The Company has also fulfilled its social responsibility proactively by securing smooth traffic, carrying out inspection work for epidemic prevention, transporting emergency supplies, ensuring environmental hygiene of cities, helping epidemic areas with donations, etc. The earnest, pragmatic and responsible effort of the Company has received high acclaim from the government departments and the public.

In the first half of 2020, the Epidemic and the Toll-free Policy during the Epidemic caused huge impact on the Company's operations. To turn such disadvantaged situation around as soon as possible, the Company asked all its staff to overcome difficulties together. In the second half of the year, the Company has focused closely on the operating targets set in the beginning of the year, with a view to consolidating the foundation of production and operation, took initiative to explore potential and enhance efficiency, thereby seising market opportunities for development under adverse conditions.

In terms of the operation and management of highways, utilising the toll-free period, the Company has further optimised its ETC system and carried out on-road quality tests therefore. It has successfully tackled the problem of interference from the adjacent lane and other technical problems, and achieved optimisation and upgrade of the system. The optimised ETC system has been operating smoothly since the commencement of operation and the traffic efficiency of all sections have been enhanced effectively. In order to enhance operating performance, the Group actively organised various marketing and promotional activities, formulated and implemented targeted marketing and promotional campaigns for various sections according to their project features, promoted the advantages of the Company's road network and projects through multiple channels in an effort to attract traffic via its proactive measures. For instance, Yichang Company shared timely traffic information and widely promoted the route and pricing advantages of Yichang Expressway by means of traffic radio channels, WeChat service platform and promotion in collaboration with the surrounding attractions with an aim to attracting traffic volume. Besides, the Company also improved its service quality by enhancing the resource allocation of service areas. For example, the hardware facilities, including buildings and signs, of the two service areas of Qinglian Expresswaywere upgraded and modified during the year. Charging stations for new energy vehicles were also added to provide drivers and passengers with convenience for smooth driving, thereby enhancing service reputation of the Company.

In terms of project construction, major projects in progress undertaken by the Company during the Reporting Period included the Outer Ring Project, Coastal Phase II, the Duohua Bridge Project, the Bimeng Project, etc. All of those projects are tight schedules, heavy workloads and high technical requirements. Due to the Epidemic, the progress of the above projects under construction was affected to a certain extent at the beginning of the year. At the same time, the Group also faced pressure from the surging costs of raw materials, logistics and labour. After the resumption of work and production, the Group strived to meet the construction schedules and complete the projects on schedule with quality delivery under effective cost control by demanding the construction project teams to streamline all crucial points of construction comprehensively, implement targeted policies, adopt the schedule of inverted construction period, increase resource input, arrange materials in advance, arrange reasonable work procedures, enhance construction procedures and techniques, and enhance production efficiency with the help of innovative technologies. During the year, the Group also actively conducted the preliminary work of Outer Ring Phase III, the Jihe Expressway reconstruction and expansion project and the Shenshan Second Expressway Project, with a view to laying a foundation for the development of the Group's core business of toll highway.

In terms of the general-environmental protection business, the Group focused on the sub-sectors of recovery and solid waste management during the year. It completed the acquisition of the controlling interests in Lande Environmental and Qiantai Company and promptly completed the preliminary industrial layout for areas including sub-sectors in organic waste treatment, retired power battery and resource utilisation of scrap vehicle dismantling, so as to expand the Group's core environmental protection business. Meanwhile, the Group enhanced the internal management upgrade and resource integration of acquired companies by conducting joint management and control from aspects including system establishment, operation and management, technological research and development, with a view to streamlining all business procedures, optimising work procedures in a scientific way and stepping up its efforts in market expansion as well as research and development. With effective integration, the operating results of Baotou Nanfeng saw steady growth, and the internal management of Nanjing Wind Power and Lande Environmental also showed obvious improvement after acquisition. All of them have overcome the impact brought by the Epidemic and fulfilled their annual operating targets. In the beginning of 2021, the Group has secured the concession of Guangming Environmental Park Project again by way of tender, and has aquired 100% of the equity interests in the Xinjiang Mulei Wind Power Project, further enhancing the scale of its environmental protection business.

Offer momentum to business operation through application of innovative technologies

In order to improve the Group's management capability and efficiency and facilitate the operation development via technological innovation, the Group has actively conducted research of innovative technologies in recent years. Integrating its technical resources with that of the professional research institutes and technical teams by way of strategic cooperation, the Group has strenuously pushed forward the implementation and application of innovative technologies in traditional expressway construction by leveraging its advantages of infrastructure resources and operational management experience as well as the strengths of the professional technical teams in aspects such as Big Data, artificial intelligence and internet technology, thereby continuously enhancing information development of intelligent transportation and intelligent environmental protection.

During the Reporting Period, Jihe Expressway reconstruction and expansion project and other major projects were adopted by the Group as carriers to explore the construction and research of intelligent expressways. To meet the industrial construction requirements and solve the complicated management difficulties throughout the process of traffic operation and road maintenance during the period of project construction, all elements of the construction site were managed in a unified manner by adopting information technology to formulate an information-based, visualised and intelligent BIM-based engineering project management system, thereby improving the management efficiency and application value. Through the application of new technologies such as artificial intelligence and the Internet of Things, the deep integration of the full life cycle business, including construction, operation and services, of Jihe Expressway was achieved, with a view to developing a digital twin of Jihe Expressway and establishing an intelligent platform for construction, operation and management, thereby achieving the objectives on the whole process of construction, management and maintenance of the Jihe Expressway in terms of efficiency, safety andcost-efficiency. Moreover, the integrated information platform for the management and control of the road condition of Outer Ring Project successfully developed by the Group in the previous year was officially put into operation. According to the data accumulated during the process of operation, the functional modules of the platform has achieved their expected performance of improving management efficiency and work quality, and reducing management costs. Computer Software Copyright issued by the National Copyright Administration and two patents of practical innovations have been obtained by this platform. In 2020, the research on the platform was awarded with the second prize in the first Shenzhen Quality Technology and Innovation Award. During the Reporting Period, the Group also commenced research on projects such as drone application, toll collection inspection management system under the free-flow model and 5G multifunctional pole. The drone application system enabled the Group to implement works such as monitoring of traffic flows, inspection and emergency rescue coordination. In the future, the Group will also foster the application of information technology in its general-environmental protection business, with an aim to offering momentum to business operation through technologies by building intelligent environmental protection and intelligent energy infrastructure.

(III) Toll Highway Business

1. Business Performance and Analysis

In 2020, the average daily toll revenue of toll highway projects operated and invested by the Group are as follows:

Toll highway	Average daily toll revenue (RMB'000)
2020	2019	YOY
Guangdong Province - Shenzhen Region:
Meiguan Expressway	393	383	2.5%
Jihe East	2,012	2,105	-4.4%
Jihe West	1,680	1,829	-8.1%
Coastal Expressway⑴	1,498	1,459	2.7%
Shuiguan Expressway	1,658	1,786	-7.2%
Shuiguan Extension	253	331	-23.6%
Guangdong Province - Other Regions:
Qinglian Expressway	2,275	2,293	-0.8%
Yangmao Expressway	1,294	1,524	-15.1%
Guangwu Project⑶	787	796	-1.1%
Jiangzhong Project⑶	1,175	1,250	-6.0%
GZ W2 Expressway	1,544	1,597	-3.4%
Other Provinces in the PRC:
Wuhuang Expressway	1,059	1,130	-6.3%
Yichang Project	1,066	1,106	-3.6%
Changsha Ring Road	511	428	19.6%
Nanjing Third Bridge	1,517	1,393	8.9%

Notes:

⑴ According to the agreement of implementation of toll adjustment for lorries by Coastal Project signed between Shenzhen Transport Bureau and Coastal Company, all types of trucks passing through the Coastal Project will be charged 50% of the normal toll fees standard from 1 March 2018 to 31 December 2020, and Shenzhen Transport Bureau compensated to Coastal Company for RMB302 million. Upon the expiry of the toll adjustment agreement, Shenzhen Transport Bureau, the Company and Coastal Company entered into the freight compensation agreement, wherein it is agreed that during the period from 1 January 2021 to 31 December 2024, the vehicles passing the Coastal Project should be charged at 50% of the standard rate of the toll, and such toll waived by the Company and Coastal Company shall be compensated by the government in an one-off manner in March of the following year.
⑵ According to the Company's understanding and assessment on related document of Department of Transportation of Guangdong Province regarding the toll free policy to toll roads vehicles during the prevention and control period of the COVID-19 epidemic, the Company recognised an income for its expressway projects in Guangdong Province.
⑶ The Company signed a transfer agreement on 24 December 2020 in respect of 30% equity interests in Guangyun Company and 25% equity interests in Jiangzhong Company. As at the date of this announcement, the completion procedure of the equity transfer is still in progress.
⑷ Longda Expressway was consolidated into the financial statements of the Group on 26 November 2020, the average daily toll revenue of Longda Expressway of December 2020 was RMB525,000.
In 2020, the overall toll revenue from toll highways operated and invested by the Group recorded a
YOY decrease, mainly due to the impact of the Epidemic and the implementation of the Toll-free Policy during the Epidemic. With the gradual recovery of the domestic economy after the epidemic prevention and control has stabilised, toll has been resumed from 0:00 on 6 May 2020. The overall traffic volume of the toll expressways operated and invested by the Group during the period of resumption of toll collection (6 May 2020 to 31 December 2020) has returned to normal level. However, the implementation of the new toll sections and charging standards after removal of toll collection stations at provincial boundary and general promotion for the popular use of ETC toll system, the adjustment of vehicle type classification and relevant charging standards, the ETC toll discounts and adjustment to charging rules, and the adjustment to the toll sections charging policy and charging standards of Guangdong Province, and other charging policies had certain negative impact on toll revenue.

Moreover, the operational performance of toll expressways is also affected by factors such as changes in surrounding competitive or coordinated road network, construction or maintenance of the expressways, maintenance of connected or parallel expressways, implementation of urban traffic organisation plans, and positive or negative impact from other transportation means.

(1)Guangdong Province - Shenzhen region:

During the period of resumption of toll collection, benefitted from the resumption of work and production of large-scale production bases and construction projects located along the highways, the traffic volume of freight cars passing through Meiguan Expressway has maintained a promising growth, which in turn promoted its overall operational performance. As the major cargo freight traffic artery for west-to-east of Shenzhen, Jihe Expressway saw a rapid recovery in its operational performance following the regional production and economic activities returning to normal. Benefitted from the positive impacts such as the progress of various large-scale construction projects in Qianhai and western port region of Shenzhen, the turnaround of economic activities along the expressway and the synergy on expressway network arising from the opening of the connecting lane of Dongbin Tunnel Shahe West Section, the daily average traffic volume of Coastal Expressway has increased. Guangdong Province has implemented policies such as exemption of toll fees for the hub interchange ramp and the toll mileage beyond stations, and reorganise and re-approved the toll mileage of each sections, resulting in adjustments to the toll mileage of Jihe Expressway, Shuiguan Expressway and Shuiguan Extension. In addition, Banyin Avenue (Shenzhen Municipal Road) was officially opened on 1 May 2020, which significantly diverted the traffic flow of Shuiguan Extension.

On 29 December 2020, Phase I of Outer Ring Shenzhen section officially commenced operation. It has become another important road of "Ten Horizontal and Thirteen Vertical" road network constructed by Shenzhen, and also the first newly operated expressway with full 5G network coverage in domestic highway industry. With a total length of approximately 51 km, Outer Ring Phase I commences from the west, connects the Guangzhou-Shenzhen Coastal Expressway and Huiyan Expressway eastward via regions such as Bao'an, Guangming, Pingdi. Linking the regions such as Bao'an, Guangming,Longhua, Longgang and Pingshan, the project will play a key role of traffic intersection, consolidation and distribution for the six districts in Shenzhen such as Airport Economic Zone New Town along the expressway.

(2) Guangdong Province - Other regions:
The commencement of operation of all sections of Xuguang Expressway highlighted the effect of Qinglian Expressway as a north-south traffic artery from Southern China to Central China. The official opening of Qingyun Section of Shanzhan Expressway on 1 January 2020 has driven an increase in the traffic volume of Qinglian Expressway actively. Since the reopening of Qingyuan Bridge in mid-June 2020, some vehicles using the linkage chose to pass through Qinglian Expressway. With the gradual resumption of production and operation in the areas along the highways and the coming of tourist seasons, the public demand for automobile travel has increased. Due to the positive impact of the above factors, the daily traffic volume and toll revenue of Qinglian Expressway recorded a YOY growth respectively during the period of resumption of toll collection.
During the period of resumption of toll collection, the average daily toll revenue of Yangmao Expressway recorded a significant YOY decrease due to the overall negative impacts brought by adjustment of toll policy, successive opening of adjacent road network, closure for construction work at linked roads and the renovation and expansion work at certain sections of Yangmao Expressway. Following opening of the surrounding road network and the official opening Foqingcong Expressway which connected with GZ W2 Expressway in January 2020, the short-distance traffic volume of GZ W2 Expressway has increased. However, the opening of Guangfozhao Expressway at the end of December 2020 has caused certain diversion impact on the overall traffic volume of GZ W2 Expressway.
(3) Other provinces
During the Reporting Period, with the combined effect brought by factors such as the Epidemic, adjustment on toll collection policies and the diversion of road networks, the average daily toll revenue of Yichang Expressway recorded a YOY decrease. The official opening of Changyi North-Line Expressway (Changsha-Yiyang) in August 2020 has a certain positive impact on the traffic volume growth of Yichang Expressway. With the Changsha-Yiyang-Changde High-Speed Railway entering the construction stage, the traffic volume for trucks of Yichang Expressway has been pulled up to a certain extent. Wuhuang Expressway is located at the epicenter of the Epidemic and was severely affected by the Epidemic in the first half of the year. With gradual resumption of work and production after the Epidemic has been brought under control in the second half of the year, the traffic volume of Wuhuang Expressway has also recovered gradually. However, under the negative impacts including the disruption of traffic by construction works on intersecting highways and a series of severe flood disasters in Hubei and peripheral provinces since July 2020, the average daily toll revenue of Wuhuang Expressway recorded a YOY decrease during the Reporting Period. Benefitted from the positive impacts of the recovery of the peripheral economic and business zone and the opening of the peripheral highway network of Changyi North-Line Expressway and other expressways, the average daily toll revenue of Changsha Ring Road recorded a YOY increase during the period of resumption of toll collection. Moreover, benefitted from the relatively fast recovery of the peripheral and regional economy, the operational performance of Nanjing Third Bridge returned to normal during the period of resumption of toll collection.
2. Business Development

Outer Ring Project is a toll highway invested by the Group according to the PPP model, which includes Outer Ring Phase I and Outer Ring Phase II. Of which, the total length of Outer Ring Phase I is about 50.74 kilometers and the total length of Phase II is about 9.35 kilometers. Outer Ring Project is the longest expressway in the highway network planning of Shenzhen to date. Upon completion, it will be connected to 10 expressways and 8 Class 1 highways in Shenzhen region. The project involves a large scale of engineering construction with numerous bridges and tunnels as well as complicated transportation networks, and hence has a high requirement on construction management. During the Reporting Period, with a target to open Outer Ring Phase I to traffic by the end of 2020, the Group overcame the impact of the engineering construction lagging behind due tothe Epidemic in the beginning of the year by optimising the construction arrangement plan and increasing the allocation of resources, thereby successfully achieving its goal of putting Outer Ring Phase I into operation on 29 December 2020. As at the end of the Reporting Period, approximately 81.4% of Outer Ring Project has been completed, among which the land resumption and demolition and relocation work have been basically completed. The engineering construction of roadbed and bridges for Phase II in full swing is being carried out. In addition, with the approval of the Board, the Company was actively conducting the preliminary work, such as inspection and design, of the first-stage section of Outer Ring Phase III during the Reporting Period. For details of Outer Ring Project, please refer to the relevant contents of the Company's announcement dated 18 March 2016 and circular dated 25 April 2016.

The construction of Coastal Phase II commenced in December 2015, mainly including the interchange of the International Convention and Exhibition Center, the connecting lane on the Shenzhen side of Shenzhen-Zhongshan Tunnel, the interchange of Shajing and the remaining relevant construction. Of which, the interchange of the International Convention and Exhibition Center was completed and put into operation in 2019. To meet the construction requirements of the eastern artificial island of Shenzhen-Zhongshan Tunnel, the engineering design and the construction plan of Coastal Phase II were adjusted during the year. As at the end of the Reporting Period, approximately 47% of the construction progress of Coastal Phase II has been completed according to the adjusted construction plan. While the land acquisition and demolition and relocation work has been completed, the construction of roadbed, bridges and pavements have completed at a percentage of approximately 57%, 63% and 10%, respectively.

To match the overall work plan and arrangement of the government's expressway construction and improve road safety and quality and the traffic environment, the Board have approved the preliminary work of the Group's preliminary design of the Jihe Expressway reconstruction and expansion project in January 2018. During the Reporting Period, the Board further approved the work in relation to the first-stage section of the Jihe Expressway reconstruction and expansion project and the relocation of high voltage cable. Upon several rounds of communication and coordination between the Company and various administrative authorities of the government, the Jihe Expressway reconstruction and expansion project was granted the approval by the Development and Reform Commission of Guangdong Province in the end of 2020 and the feasibility plan of the project was reviewed and approved by the MOT. As at the end of the Reporting Period, the Company was actively conducting the work in relation to the review of preliminary design and the tendering for construction of the first-stage section. The model of investment and financing of the Jihe Expressway reconstruction and expansion project is still under negotiation. The Company will timely perform the approval process upon confirmation of the model.

According to the Shenzhen Municipal Government's plans and arrangements of Shenshan Second Expressway (Shenzhen - Shanwei) and with approval of the Board, the Company has commenced preliminary work such as inspection and design of Shenshan Second Expressway during the Reporting Period. According to the plan of the Shenzhen Municipal Government at current stage, Shenshan Second Expressway is planned to be constructed with four lanes in each direction and will be divided into two sections to set up projects. It includes the subsidiary road of Shenzhen section of Outer Ring Expressway (Daya Bay - Pingshan) with a construction length of approximately 15.28 kilometers, on which the Company is conducting preliminary research for planned construction recently; and the Huidong subsidiary road of Western Shenshan Expressway (Shenshan Special Cooperation Zone - Huidong County) with a construction length of approximately 25.24 kilometers to be constructed in the far future. The above subsidiary roads will be connected by the existing Huishen Coastal Expressway with a length of approximately 31.7 kilometers. Shenshan Second Expressway will have access to a number of main routes including Outer Ring Expressway upon completion. Becoming an express traffic passage between Shenzhen and Shenshan Special Cooperation Zone, the Expressway will act as a significant role in facilitating the cooperation and development among the areas such as Shenzhen, Huizhou and Shanwei.

The Company holds 25% equity interests in Yangmao Company. The reconstruction and expansion of Yangmao Expressway commenced in mid-2018 and is scheduled to be completed in 2022. As at the end of the Reporting Period, approximately 46% of the reconstruction and expansion of Yangmao Expressway has been completed. While the construction of roadbeds, soft foundation treatment, culvert works, bridge foundation and bottom structure of the bridge has been completed, the construction of upper structure of the bridge and pavements have completed at a percentage of approximately 80% and 55%, respectively.

Upon approval of the Board, the Company acquired 89.93% equity interests in Longda Company at approximately RMB405.39 million during the Reporting Period and hence holds 89.93% equity interests in Longda Expressway. The change of the relevant industrial and commercial registration was completed on 1 December 2020. For details, please refer to the Company's announcement dated 9 November 2020. Longda Expressway (Longhua, Shenzhen - Dalingshan, Dongguan) is a dual six-lane expressway. The section owned by Longda Company since 1 January 2019 is the 4.426 kilometers of Longda Expressway (north of Songgang - Guanfo Expressway). The period of toll-collection operations of such section is up to 8 October 2027. Given that Longda Expressway is located in the core region of the Guangdong-Hong Kong-Macao Greater Bay Area and is an important trunk line from Shenzhen to Dongguan and the Pearl River Delta, the acquisition of 89.93% equity interests in Longda Company will help the Company to improve its future profitability and cash flow. The acquisition will further consolidate the Company's core advantages in the investment, management and operation of toll highways, and is in line with the Company's development strategy and overall interests.

Given the planned reconstruction and expansion of Jiangzhong Project and Guangwu Project, and in consideration of the investment costs and capital returns of the reconstruction and expansion coupled with the Company's development strategy, the Company transferred 25% equity interests in Jiangzhong Company and 30% equity interests in Guangyun Company in bundle by way of public listing upon approval of the executive Board during the Reporting Period. The Company signed the relevant equity interest transfer agreement with Guangdong Xinyue Communications Investment Company Limited (廣東新粵交通投資有限公司) which won the bid in December 2020 at a transaction price of approximately RMB520 million. As at the date of this announcement, the completion procedures of the equity transfer is still in progress. The exit of the Company from highway investment projects with minority share can help to improve the existing asset structure of the highway business and reduce capital expenditure, thereby recovering a certain amount of capital to focus on the investment and development of quality projects with controlling share.

On 29 May 2020, Operation Development Company, a wholly-owned subsidiary of the Group, entered into agreement contract in respect of acquiring 60% of the equity interests in Guangdong Boyuan Construction Engineering Co., Ltd (廣東博元建設工程有限公司) at a consideration of RMB6.99 million. The change of the relevant industrial and commercial registration was completed in September 2020 and the company name has been changed to "Shenzhen Expressway Engineering Development Co., Ltd (深圳高速工程發展有限公司)". Engineering Development Company possesses a grade two qualification for general contractor in terms of road project construction as well as relatively leading professional technological advantages and extensive experience in operation management in the field of highway maintenance. Upon completion of acquisition of the controlling interests in Engineering Development Company, the Group may proactively expand its businesses relating to the upstream and downstream industrial chain such as highway and municipal road maintenance and construction, acquire more types of construction projects in Shenzhen and other areas, and thus developing its core competitiveness in the sub-segments of comprehensive highway management and maintenance.

In addition, upon approval of the executive Board, Construction Company, a wholly-owned subsidiary of the Company, has set up a joint venture called Shenzhen Expressway Architecture Technology Development Co., Ltd. (深圳高速建築科技發展有限公司) with China Power Construction South Investment Co., Ltd. and China Railway 23rd Bureau Group Co., Ltd. in November 2020. The registered capital of Construction Technology Company is RMB40,000,000. Among them, Construction Company holds 51% of the equity interests, while the other two parties each hold 24.5% of the equity interests. Prefabricated construction is in line with the future development trend of the traffic construction sector. Leveraging the equipment and technological advantages of the cooperative parties, Construction Technology Company will build a production base for prefabricated construction parts. Coupled with the construction requirements of the Jihe Expressway reconstruction and expansion project, it will generate synergies with the Group's toll highway business, which will be beneficial to enhancing the core advantages of the Group's main businesses.

(IV) Environmental Protection Business

In order to explore a broader room for the Group's long-term development, the Group will proactively explore the investment prospects and opportunities of the general-environmental protection industry including recovery and solid waste management and clean energy principally while consolidating and enhancing the core business of toll highway. The Group has established Environmental Company and New Energy Company as a market-oriented platform for expanding businesses in relation to the general-environmental protection industry.

1.Recovery and solid waste management

The organic waste treatment industry has a relatively large room for development as supported by the national environmental protection policies. Organic waste treatment is a key industry segment of focused development of the Group in the general-environmental protection area. The Group also proactively explores the investment prospects and opportunities in the area of recovery and solid waste management.

On 8 January 2020, Environmental Company, a wholly-owned subsidiary of the Company, entered into a capital increase and equity transfer agreement with the relevant parties to acquire not more than 68.1045% of the controlling interest in Lande Environmental at a consideration of not more than RMB809,600,000 by way of share subscription and capital increase. For details, please refer to the Company's announcement dated 8 January 2020. Lande Environmental has been included in the consolidated financial statements of the Group since 20 January 2020. During the Reporting Period, the Company completed the acquisition of approximately 67.14% of shares in Lande Environmental. Lande Environmental is currently an important enterprise in the field of organic waste comprehensive treatment, construction and operation in the PRC. It principally engages in provision of systematic comprehensive solutions and services for treatment of municipal organic waste treatment such as kitchen waste and waste leachate to its customers. As at the end of the Reporting Period, Lande Environmental has a total of 17 organic waste treatment projects under BOT/PPP model, covering 14 cities in 10 provinces and regions across the country. The designed treatment capacities of kitchen waste are over 4,000 tons/day. In the first half of 2020, with the impact of the Epidemic, the volume of kitchen waste collection and transportation by Lande Environmental recorded a relatively significant decrease. With gradual recovery of the catering industry since the epidemic has been brought under control, the stricter implementation of waste classification and management regulations, as well as increased effort put into waste collection, transportation and management of all projects by Lande Environmental, the volume of collection and transportation of all projects has basically returned to normal since June. As at the end of the Reporting Period, the operating income of the waste treatment business of Lande Environmental recorded a slight YOY increase. Regarding the EPC construction business, the EPC construction business of Lande Environmental recorded a significant YOY growth and its manufacturing and sales and other businesses also recorded growth in 2020 due to improvement in liquidity following the acquisition by the Group and the implementation of a series of enhanced management measures. During the Reporting Period, the Group increased its investment in Lande Environmental to actively conduct technological research and development. Lande Environmental obtained nine new patents in 2020 and the Lande Environmental Technological Research Institute was set up in December 2020 upon approval. Progress has been made in technological innovations such as harmless dehydration treatment system of dead livestock or poultry and kitchen waste sorting and pulping equipment.

In August 2020, Infrastructure and Environmental Protection Company, a wholly-owned subsidiary of the Company, entered into an agreement in respect of acquiring 50% of equity interest in Qiantai Company by way of capital increase and transfer. The total capital contribution was RMB225 million. The equity delivery and the change of the industrial and commercial registration thereof was completed in December 2020. Qiantai Company has been included in the consolidated financial statements of the Group since 16 December 2020. Qiantai Company possesses qualification for scrapping new energy vehicles and is principally engaged in comprehensive utilisation of retired electric-vehicle battery recycling business and vehicle scrapping business. Owning over 10 independent intellectual property rights related to key technologies of electric-vehicle battery recycling and scrapping new energy vehicles, Qiantai Company possess relatively strong integrated strength in the field of scrapping new energy vehicles and electric-vehicle battery technologies as well as the upstream and downstream markets. Qiantai Company has been approved as a National High-tech Enterprise in December 2020 and has become the only enterprise in Shenzhen which was listed by the Ministry of Industry and Information Technology of the PRC in the second batch of enterprises fulfilling the Requirements of the Industry Standards for the Comprehensive Utilisationof Waste Power Storage Batteries of New Energy Vehicles. Qiantai Company was also selected as the Typical Model of Recycling Traction Batteries of New Energy Vehicles (《新能源汽車廢舊動力蓄電池綜合利用行業規範條件》) of Guangdong Province and the pilot entity for the construction of "Zero-waste City" in Shenzhen in 2020. It has also obtained two technological patents. These achievements will be beneficial for Qiantai Company to further expanding the battery cascade recycling market. With the acquisition of controlling interests in Qiantai Company, the Group will be able to capture the opportunities in the development of emerging market by promptly entering the sector of scrapping new energy vehicles, solid and hazardous waste disposal of electric-vehicle battery and post-market recycling and application. The acquisition aligns with the Group's strategic development vision to explore the general-environmental protection business sector.

Moreover, the consortium formed by companies including the Environmental Company won the bid for the Guangming Environmental Park Project in October 2019 but it was terminated due to the non-performance of contracts of the consortium. The Company won the bid for the Guangming Environmental Park Project on February 2021 through an open tender. The Guangming Environmental Park Project is located in Guangming District, Shenzhen. The project will be developed into a large-scale treatment plant with a processing capacity of 1,000 tons/day for kitchen waste, 100 tons/day for large pieces waste (wasted furniture) and 100 tons/day for greening waste. The project shall be implemented under the BOT model. Social capital partner who has won in the bidding shall incorporate a project company in Guangming District, and such project company shall be responsible for the efforts in investment, financing, design, construction, transformation, operation, maintenance and handover of the project. The proposed concession period of the project is 10 years and shall be extended for 5 years upon being qualified in assessment and approval of the regional government. The static total investment of the project is estimated to be approximately RMB708 million. For details, please refer to the Company's announcements dated 30 October 2019 and 8 February 2021.

The Group will demonstrate the regional advantages and resources advantages of the Company. It will gradually establish a comprehensive service system integrating cleaning and treatment of household waste. On this basis, the Group will also expand into the upstream and downstream industrial chain. During the Reporting Period, the Group also proactively conducted site visits and negotiations in respect of research and investment projects regarding treatment of industrial hazardous waste and sewage in the field of industrial environmental protection. In conjunction with the regional expansion strategy, the Group will participate in comprehensive urban development and construction and seek opportunities in strategically expanding into the area of construction and operation of environmental protection projects such as municipal sanitation integration and treatment of industrial solid waste.

2.Clean Energy

Clean energy, being an emerging sector in the general-environmental protection industry, will be a new industrial development direction that the Group has decided to place strong emphasis on in its development strategies. In recent years, following the implementation of a series of national industrial policies and development plans related to wind power industry, wind power has become the important source of power supply for the society. The problem of wind power curtailment has been improved rapidly, which indicates a new stage of stable and sound development of wind power industry in the long run.

After the acquisition of Nanjing Wind Power in 2019, the Group has significantly improved the operation and management of Nanjing Wind Power by implementing a series of measures, thereby comprehensively improving production capacity of the complete machine manufacturing. Driven by related policy, onshore wind power project construction has been still in the peak period in 2020. Nanjing Wind Power had a full schedule for production. However, under the impact caused by the factors including the delay in resumption of work during the Epidemic, tight supply of key components and parts in the upstream, and the general delay in the engineering construction of wind farms, the progress of complete machine manufacturing delivery of Nanjing Wind Power was delayed in the first half of the year. For the second half of the year, Nanjing Wind Power secured the supply of key components and parts under extremely tight market supply by improving the coordination and management of the supply chain and establishing a project team responsible for the supply. Meanwhile, Nanjing Wind Power tried to meet its production schedule subject to safety andquality by optimising the production process constantly and promoting the development and unleashing of production capacity of production bases, thereby performing the delivery plan on schedule in the fourth quarter and hence achieved its annual performance targets. During the Reporting Period, Nanjing Wind Power also made efforts in the long-term layout to actively develop pipeline projects by establishing business connections with various provinces and regions in the country and cooperation relationships with various industry leading enterprises in the country. In addition, Nanjing Wind Power stepped up its efforts in technological research and development and completed the technological development, qualification and testing for two new models, thereby realising effective mass production of the new products. Currently, Nanjing Wind Power seeks to make preparation in advance for business development in the future by increasing market sales, enhancing productivity and management, improving product features constantly and strengthening receipt of payments of sales.

During the Reporting Period, Baotou Nanfeng continued to improve wind farm operation and management during the Epidemic and its operating and production activities are getting back on track broadly. With improved situation of epidemic prevention and control, the resumption of work and production in Mengxi Region accelerated, posing increasing demand of power supply. Benefitted from local stable policy environment related to wind power, the on-grid supply of wind power generated by Baotou Nanfeng was sound. Baotou Nanfeng recorded an aggregate on-grid power supply of 644,131 MWh in 2020, representing an YOY increase of 11.35%. According to the notice from Inner Mongolia Autonomous Region (Neicaizi [2020] File No. 1279) dated 30 September 2020, the five wind farm subsidiaries of Baotou Nanfeng have been included in the authorised list of the first batch of projects in the region entitled to renewable energy power generation subsidies and the first subsidy fund has already been received in the Reporting Period. Besides, pursuant to the agreement entered into between the Company and the relevant parties in September 2019 in respect of the acquisition of 67% of equity interests in Baotou Nanfeng, the Group, upon approval of the executive Board, entered into an agreement to acquire the remaining 33% of equity interests in Baotou Nanfeng at the price of RMB0.33 on 1 March 2021. After the acquisition, the Company will hold 100% of equity interests in Baotou Nanfeng in total. Baotou Nanfeng is a quality project with economies of scale, promising revenue and stable operation. Increasing the shareholding in the project will be beneficial to enhancing the core capabilities of investment, operation and management of the Company's wind power business and the interests as a whole.

With increasing scale of the new energy segment business, in August 2020, the Group established a wholly-owned subsidiary named Shenzhen Expressway New Energy Holdings Co., Ltd (深圳高速新能源控股有限公司) with a registered capital of RMB1.4 billion (paid-up capital of the first tranche was RMB30 million), in order to enhance the operation and management efficiency of the new energy industry and business development, with a view to integrating internal and external resources in an effective way, thereby establishing a more scientific governance structure with independent legal entity and an operation and management system, so as to align with the needs of integrated development strategies of the Group's new energy business. The subsidiary will act as a platform for investment, financing and management of the new energy industry, which the Group will develop with a focus on wind power, supplemented by the businesses of photovoltaic power and energy storage.

Upon approval of the Board, Guangdong New Energy Company, a wholly-owned subsidiary of New Energy Company, invested a total amount of approximately RMB450 million to acquire 100% equity interests in the wind power projects named Qianzhi Company and Qianhui Company in Mulei by way of equity transfer and capital increase. For details, please refer to the relevant contents in the Company's announcement dated 25 January 2021. The wind power projects in Mulei are located in Changji Hui Autonomous Prefecture, Xinjiang Uygur Autonomous Region with 133 windturbines in total. The aggregated actual installed capacity of Qianzhi Project and Qianhui Project is 249.5 MW, which had completed connection of the network and commenced power generation in the end of 2020. The approved feed-in tariff is RMB0.49/kWh. The wind power projects in Mulei possesses abundant wind resources with a relatively high value for wind power development. It is also a supporting project of ultra high voltage in Zhundong - Southern Anhui region with promising power consumption. With the acquisition of the wind power projects in Mulei, the Group can expand the scale of its clean energy business, thereby generating sound investment returns and thus further consolidating the core capabilities and position of the Group in the wind power industry.

3.Water Environmental Remediation and Others

In 2017, Environmental Company, a wholly-owned subsidiary of the Group, acquired 20% equity interests in Derun Environment. Derun Environment is a comprehensive environmental enterprise with holding subsidiaries including Chongqing Water and Sanfeng Environment, etc., and with major business segments including water supply and sewage treatment, waste incineration power generation and environmental restoration, etc. Chongqing Water is mainly engaged in urban water supply and sewage treatment. Occupying a dominant position in the Chongqing's water supply and sewage treatment market, Chongqing Water has stable earnings and abundant cash flow. Sanfeng Environment is a large-scale environmental protection group integrating investment, construction, integrated equipment and operation management in domestic waste incineration power generation field. It is mainly engaged in the investment of waste incineration power generation projects, EPC (Engineering Procurement Construction), equipment manufacturing and operation management of the whole industry chain service, with a complete set of core technologies such as waste incineration and flue gas purification, and third-generation tube-type membrane treatment and other technologies. On 5 June 2020, Sanfeng Environment (601827) was officially listed on SSE, which will help with its long-term development of becoming the leader in domestic waste incineration power generation field. During the Reporting Period, Derun Environment focused on the layout of the environmental protection industry by developing the markets in Chongqing and the peripheral areas and actively pushed forward the construction of projects, including the Project in respect of Ecological Restoration, Management and Maintenance of Landfills of Changsheng Bridge in Chongqing (EPC), the Water Environmental Remediation Project of Changsheng River in Chongqing and the Water Environmental Remediation Project of Wuhou District in Chengdu.

In October 2018, the Company established Shenzhen Expressway SUEZ Environment Company Limited with Suez Group, a shareholder of Derun Environment. Of which, the Company holds 51% of equity interests. The Company principally engages in the treatment of industrial sewage and hazardous waste. During the Reporting Period, Shenzhen Expressway SUEZ Environment Company Limited and Lande Environmental commenced cooperation in equipment and technical plans in the field of kitchen waste recycling and harmless treatment and treatment of total nitrogen in sewage. The two parties were able to complement each other in terms of market expansion, equipment manufacturing and professional technologies, thereby taking full advantages of the synergy effect. Currently, one of the subcontracting projects has completed the pilot test and is in smooth operation.

Besides, the Group held 15% of the equity interests in Water Planning Company as at the end of the Reporting Period. During the Reporting Period, Water Planning Company had abundant orders. The accumulated value of newly signed contracts completed during the year was nearly RMB1.5 billion, representing an increase of approximately 14% as compared to the same period of the previous year and a continuous growth of market share. Water Planning Company has been granted the approval for offering and listing on the ChiNext Market of the Shenzhen Stock Exchange in January 2021.

For details of the profits of Lande Environmental, Nanjing Wind Power, Baotou Nanfeng and Derun Environment during the Reporting Period, please refer to the relevant content in "Financial Analysis" below and note VI1 to the Financial Statements in this announcement.

(V) Entrusted Management and the Development of Other Infrastructure

Relying on the core business of toll highway and building on the expertise and experience accumulated in the relevant areas throughout these years, the Group has continuously launched or engaged in the entrusted construction management business and the entrusted operation management business (also known as entrusted construction business and entrusted management business). Through the provision of services relating to construction management and operation management of toll highway, the Group has realised reasonable revenues and returns from the receipt of management fee and/or bonus according to the calculation methods as agreed with the entrusting parties. In addition, the Group also attempts to use its own financial resources and financing capability to participate in the construction and development of local infrastructure so as to obtain reasonable revenues and returns.

1. Entrusted Construction Business

During the Reporting Period, the Company has had entrusted construction projects in Shenzhen region including Outer Ring Project, Cargo Organisation Adjustment Project, Longhua Municipal Section Project, Shenshan Environmental Park Project, Duohua Bridge Project and Bimeng Project of Longli County, etc. At this stage, the major work of the Group in entrusted construction business is to strengthen the safety and quality management of the projects under construction, coordinate and supervise the collection of revenue from each of the entrusted construction projects, push forward the completion and acceptance of the completed projects and proactively promote the development and cooperation in new markets and new projects.

During the Reporting Period, all the work of the entrusted construction projects has been carried out in good order. In particular, for the relevant information on the progress of Outer Ring Project, please refer to the relevant content in above description of "Business Development" in this section. The 4 toll stations in the first batch of Cargo Organisation Adjustment Project have been completed and the second batch for Paibang station commenced construction in November 2020, while the preliminary works of Xiufeng station is being carried out. Construction of Longhua Municipal Section Project commenced in September 2018, which was mainly divided into three construction sections, namely Jianshe Road, Dafu Road and Golf Boulevard, among which 96% of the overall physical work of the Jianshe Road section has been completed and the Dafu Road section has been completed; the construction of the Golf Boulevard section has been suspended due to conflict with other municipal planning and the closing work at the site has been completed.

In addition, the Company was identified as entrusted construction party of infrastructure and ancillary projects for Shenshan Eco-Environmental Science and Technology Industrial Park through an open tendering procedure in July 2019, and was assigned to be responsible for the whole process of infrastructure construction of the Environmental Park. The construction primarily includes four sub-construction projects, namely municipal roads ancillary to the Park, "seven connections and site leveling" in the Park, public management and service facilities and ancillary facilities related to waste transfer. The management fee of the entrusted construction is approximately RMB226.55 million. This infrastructure construction project is invested by the Shenzhen Municipal People's Government and is expected to be completed by 2025. During the Reporting Period, the preliminary approvals of each construction work of the project have been basically completed. The tendering work for construction has been completed and the construction of the project officially commenced in the end of 2020.

Duohua Bridge Project is about 2.2 km long in total, the major construction work of the project is the construction of Duohua Bridge. The total investment amount of the project is approximately RMB900 million and the construction period of the project is expected to be approximately 3 years. It is a municipal project invested by the government of Longli County, Guizhou through Guilong Holdings, its platform company. On 29 March 2018, Longli County Government, Guilong Holdings and Guishen Company signed an investment cooperation agreement for the project. According to the investment cooperation agreement, Guishen Company is responsible for raising construction funds, and Guilong Holdings will pay project fee to Guishen Company according to the contract. For details, please refer to the announcement of the Company dated 29 March 2018. As at the end of the Reporting Period, approximately 65% of the physical work of the project has been completed. Duohua Bridge is located in a valley with high mountains. To meet the demanding requirements of the local government in terms of engineering design and construction, the project team commenced a series of scientific tests to secure the safety of the construction, while conducting in-depth design work of the project featuring characteristics of local geographical area and culture.

The Bimeng Project is a residential resettlement construction project invested by the government of Longli County through Guilong Holdings. The total investment budget of the project is expected to be not more than RMB1,000 million. On 13 May 2020, Guilong Holdings and Guishen Company signed an investment cooperation agreement for the project. According to the investment cooperation agreement, the construction period of the project will be 2 years and the operation period will be 3 years; Guishen Company is responsible for raising construction funds, and Guilong Holdings will pay project fee and investment returns to Guishen Company according to the contract. For details, please refer to the announcement of the Company dated 13 May 2020. During the Reporting Period, the site levelling and the slope reinforcement of the project has commenced construction, while approximately 29% of the overall physical work has been completed.

2. Entrusted management business

On 30 December 2019, the Company entered into the entrusted management agreement with Baotong Company, pursuant to which Baotong Company will entrust the Company to manage its 89.93% equity interests in Longda Company. The term of the entrusted management agreement will commence on 1 January 2020 and expire on 31 December 2020. During the Reporting Period, the Company entered into an agreement to acquire 89.93% equity interests in Longda Company. Given such, the entrusted management agreement entered into between the Company and Baotong Company regarding the 89.93% equity interests in Longda Company on 30 December 2019 terminated on the day of equity delivery as agreed by both parties. The Company will not charge the entrusted management fees for the period from 1 July 2020 to the day of equity delivery and the Company will be entitled to the corresponding 89.93% equity interests in Longda Company for the period from 31 December 2019 to the day of equity delivery.

The Four Expressways have been transferred to the Shenzhen Transportation Bureau from 0:00 on 1 January 2019. In 2019, through the public tendering procedures, the consortium established by the Company and Operation Development Company has successfully won the bid for the comprehensive maintenance project for the Four Expressways and undertake the maintenance work of the Four Expressways. The Company has gained the recognition of the Shenzhen Transportation Bureau by making efforts in improving the service quality of comprehensive maintenance through the introduction of information-based and intelligent technologies. During the Reporting Period, the Company has successfully renewed the contract for the comprehensive maintenance project for the Four Expressways for a contractual term from 11 June 2020 to 10 June 2021.

For details of the profits as well as incomes and expenses of various entrusted management businesses during the Reporting Period, please refer to the content in "Financial Analysis" below and the relevant content in Note V46 to the Financial Statements in this announcement.

3. Development and Management of Land Projects

With the relevant management experience and resources, the Group prudently explores new business types such as comprehensive development of land and urban renewal, while paying close attention to and seising the opportunities for the cooperation between the advantageous areas and the existing business-related areas as business development and expansion beyond its core business as well as a beneficial supplement to revenue.

(1) Guilong Regional Development Project

The model of "construction - transfer" and ancillary land development was adopted for Guilong Project, which enabled the Group to accumulate business and management experience in respect of the exploration in the area of Guilong and development of appropriate business model. Following Guilong Project, the Group has contracted for the construction of Duohua Bridge Project and Bimeng Project in collaboration with the government of Longli County or its platform company successively.

With the improvement of Guilong Road and the infrastructure in peripheral regions and the development of the whole Guilong Economic Zone, it is expected that the peripheral land in the area of Longli County will have great potential for appreciation. In order to seise market opportunities and effectively reduce the risk of fund recovery from Guilong Project and Duohua Bridge Project, Guishen Company actively participated in the land tenders within the area of Guilong. At the end of the Reporting Period, Guishen Company has successfullywon the bid for the land of Longli Project with an area of approximately 3,037 mu (approximately 2,020,000 square meters) in aggregate, including approximately 2,770 mu of Guilong Project land with a transaction amount of approximately RMB960 million, and approximately 268 mu of Duohua Bridge Project land with a transaction amount of approximately RMB146.56 million (deed tax included). In respect of Guilong Project land, the interests in approximately 1,610 mu have been transferred, while 1,075 mu is under secondary development as at the end of the Reporting Period. The remaining land is under planning. Guishen Company has set up certain wholly-owned subsidiaries to hold and manage the land use rights of the land parcels mentioned above.

Guishen Company is adopting a rolling development strategy by phases. Focusing on the Interlaken Town Project, it has conducted secondary self-development for certain land parcels acquired, which has an area of 1,075 mu (approximately 717,000 square meters). During the construction of the Interlaken Town Project, Guishen Company fully demonstrated the artisanal spirit of Shenzhen Expressway and diligently delivered high-end and quality works. As such, the Interlaken Town Project has established a favorable brand image in the local market with its unique architectural style, beautiful landscape and good living environment. The houses launched for Interlaken Town Phase I and Phase II in Stage I have been fully delivered for use, and payments have been received. The construction of Phase II Stage II project, mainly for commercial supporting property, has been fully completed. 95 sets of commercial properties have been launched, of which 57 sets have been contracted for sale and delivered for use, and payments have been received. The Interlaken Town Phase III has been put into construction. Among which Phase III Stage I project (approximately 162 mu, equivalent to 107,000 square meters) has been completed in 2020. A total of 271 sets of houses have been launched, of which 228 sets have been contracted for sale and payments have been received. As at the end of the Reporting Period, 132 sets of houses have been delivered. Phase III Stage II project (approximately 107 mu, equivalent to 70,700 square meters) has been put into construction. It would provide 244 sets of commercial supporting property and is expected to be completed by the end of 2021. Phase III Stage III project (approximately 216 mu, equivalent to 142,700 square meters) has also been put into construction in August 2020. It would provide over 1,200 sets of houses, of which 12 sets have been contracted for sale and payments have been received. It is expected to be completed in mid-2022. During the Reporting Period, Guishen Company has adopted multi-pronged marketing strategies, including billboards, advertisements in media and themed activities, with a view to actively promoting the sale of commercial and residential properties. Besides, Guishen Company is now conducting works in relation to the planning and design for the development of the remaining land.

By operating and implementing the preliminary work of Interlaken Town Project, Guishen Company has explored and accumulated some experience in the management and operation of property development projects, thereby developing a business development model suitable for the property industry in such region. On the above basis, Guishen Company will, through means such as timely market transfer, cooperation or self-development based on the overall market conditions and development opportunities, realise the market value of the lands it holds and the Group's investment income as soon as possible, at the same time prevent the contractual and market risks in relation to the lands in an effective way.

(2)

Meilin Checkpoint Renewal Project

Pursuant to the relevant agreement and the approval of the general meeting of the Company, the Company, Shenzhen International (through XTC Company, its wholly-owned subsidiary) and Vanke jointly invested in United Land Company. The three parties held 34.3%, 35.7% and 30% equity interests of United Land Company respectively. United Land Company mainly serves as the reporting and implementing entity of Meilin Checkpoint Renewal Project. Meilin Checkpoint Renewal Project occupies a land area of approximately 96,000 square meters, which shall be used for residential and commercial purposes, and a capacity building area of not more than 486,400 square meters (including public facilities) inaggregate. For details, please refer to the Company's announcements dated 8 August 2014, 10 September 2014, 8 October 2014, 25 July 2018, 28 September 2018 and 13 November 2018 respectively and the circular dated 17 September 2014 and 22 October 2018 respectively.

The Meilin Checkpoint Renewal Project will be developed in three phases. Among which, Phase I of the project comprises residential units with an saleable area of approximately 75,000 square meters, indemnificatory housing with an area of approximately 42,000 square meters; Phase II of the project comprises residential units with an saleable area of approximately 68,000 square meters; Phase III of the project will comprise residential units with an estimated saleable area of approximately 63,000 square meters and a complex building of office and business apartment with an area of approximately 190,000 square meters. In addition, the project has reserved approximately 34,500 square meters as commercial supporting property in its overall planning. 832 sets of houses of Phase I Hefengxuan have all been sold and payments have been received. Phase II Heyaxuan has been launched to the market in the end of September 2019, and 683 sets of houses have all been sold and payments have been basically received in 2020. The relevant approval for Phase III Hesongxuan of the project has been obtained and the construction thereof has commenced in 2020. 630 sets of houses and 2,722 sets of apartments will be launched and the public sale has commenced in early December 2020. As at the end of the Reporting Period, the acquisition rate of 630 sets of houses reached 88%.

4. Development and Management of Other Infrastructure

The Investment Company and Shenzhen One Apartment Management Co., Ltd. (深圳市壹家公寓管理有限公司) has established in Shenzhen a joint venture, i.e. Shenzhen Expressway One Apartment Management Co., Ltd. (深高速壹家公寓管理有限公司) which was held as to 60% by the Investment Company, as the principal entity for the cooperation under the long-term rental apartment business in Fuyong and Songgang. Due to the impact of the epidemic, the occupancy rate of Songgang Project was 68%, while the occupancy rate of Fuyong Project was 67% as at the end of the Reporting Period.

For details of the profits as well as incomes and expenses of various property development and management businesses during the Reporting Period, please refer to the relevant content in "Financial Analysis" below.

(VI) Industrial-Financial Integration

The Group subscribed for the additional shares issued by Bank of Guizhou in 2015 and 2016 respectively. The Board has approved the Company or its authorised subsidiary to increase the shareholding in the Bank of Guizhou with a total investment amount of not more than RMB190 million. The validity period of the authorisation shall be from 11 June 2019 (i.e. the date of approval of the Board) to 20 May 2021. Bank of Guizhou has been listed on the HKEx since 30 December 2019, 76,207,000 shares of which were subscribed under IPO by the Group at a price of HK$2.48/share through Mei Wah Company, a wholly-owned subsidiary of the Group. As at the end of the Reporting Period, the Group held a total of around 502,000,000 shares in Bank of Guizhou, which accounted for approximately 3.44% of its total share capital as at the end of the Reporting Period. As Bank of Guizhou has a sound cash dividend capability and huge rooms for development, the increase in shareholding of the additional shares issued by Bank of Guizhou may be favorable for the Company to maintaining its position as a key shareholder of strategic investor, obtaining stable investment returns and strengthening regional business synergies. For details of the investment gains from Bank of Guizhou, please refer to the relevant content in "Financial Analysis" below.

During the Reporting Period, the Group has completed the acquisition of 48% interest in Financial Leasing Company held by SZ International through its wholly-owned subsidiaries at the consideration of RMB151.69 million (including debt obligations of RMB129 million). For details, please refer to the announcement of the Company dated 17 March 2020. Financial Leasing Company has been incorporated into the scope of consolidated statements of the Company since 15 April 2020. After completion of the acquisition, the Group conducted research and refined management on Financial Leasing Company in respect of its internal management as well as the mechanism for decision-making and approval, with a view to facilitating its daily business operation and development, thereby enhancing the efficiency in management and decision-making. The principal business of Financial Leasing Company is financial leasing services. The acquisition of Financial Leasing Company is conducive for the Group to give full play to its financing advantages, and helps to provide financial leasing services to satisfy the capital required in the principal businesses and the upstream and downstream of the industry chain of the Group. It is an important way for the Group to achieve "industrial-financial integration" and its business synergy strategy, which will help to enhance the overall value of the Group. During the Reporting Period, Financial Leasing Company has been proactively expanding business, while performing its function in providing financial leasing services for wind power generation equipment, thereby realising sound synergy in expanding the scale of wind power business of the Group and reducing the overall financing costs. As at the end of the Reporting Period, Financial Leasing Company has invested an amount of approximately RMB539 million in the business of industrial-financial integration.

In order to effectively consolidate its resources, expand the fund-raising channels and establish a market-oriented talent management system, Fund Company completed the capital injection by way of public listing and competitive negotiation upon approval of the Board. Two strategic investors, namely Shanghai Zezhen Investment Management Co., Ltd (上海擇珍投資管理有限公司) and Shenzhen Kangrui Dibo Investment Co., Ltd. (深圳康瑞迪博投資有限公司), were introduced in September 2020. Upon completion of capital increase of Fund Company, the registered capital has increased from RMB10 million to RMB19.6078 million. The Group has a shareholding of 51%, while the two strategic investors have a shareholding of 49% in aggregate. For details, please refer to the announcements of the Company dated 23 December 2019 and 21 September 2020.

The Board approved the promotion of establishment and participation in the investment of "Shengchuang - Shenzhen Expressway Environmental Technology Industry Investment M&A Fund" ("晟創-深高速環科產業併購投資基金", name of fund subject to the industrial and commercial registration) by the Company ("Environmental Technology Industry M&A Fund"). On 14 April 2020, six parties, including the Company and Shengchuang Investment, entered into a partnership agreement, pursuant to which, the parties agreed to jointly invest in and establish Environmental Technology Industry M&A Fund. All partners of Environmental Technology Industry M&A Fund contributed a total amount of RMB1 billion, among which, the Company contributed an amount of RMB450 million. In June 2020, the partners of Environmental Technology Industry M&A Fund completed the first tranche of capital contribution totaling RMB300 million, among which, the Company contributed an amount of RMB135 million. The record-filing and registration in respect of the fund was completed on 27 August 2020. The name of fund upon approval is Foshan Shunde Shengchuang Shenzhen Expressway Environmental Technology Industry M&A Investment Partnership (Limited Partnership) and the manager is Guangdong Shengchuang Investment Management Co., Ltd. For details, please refer to the announcements of the Company dated 23 December 2019, 14 April 2020, 3 September 2020 and 29 September 2020. The focus of Environmental Technology Industry M&A Fund is four types of operational projects, comprising treatment of industrial hazardous waste, treatment of solid waste, treatment of sewage and the new energy of wind power. During the Reporting Period, the Environmental Technology Industry M&A Fund has carried out investment research on a number of projects.

The Board approved the participation in the investment of Shenzhen State-owned Assets Collaborative Development Private Fund (Limited Partnership) (深圳國資協同發展私募基金合夥企業(有限合夥)) ("State-owned Assets Collaborative Development Fund")by the Company. On 17 August 2020, eight parties, including the Company and Shenzhen Kunpeng Zhanyi Equity Investment Management Co., Ltd. (深圳市鯤鵬展翼股權投資管理有限公司), entered into a partnership agreement, pursuant to which, the target size of proceeds raised for State-owned Assets Collaborative Development Fund shall be RMB4.01 billion, among which, the Company shall contribute an amount of RMB300 million, accounting for 7.48% of the total contribution. Themanager of the fund is Shenzhen Kunpeng Equity Investment Management Co., Ltd. (深圳市鯤鵬股權投資管理有限公司). The record-filing and registration in respect of the fund was completed on 22 September 2020. For details, please refer to the announcements of the Company dated 30 June 2020, 17 August 2020 and 24 September 2020. The focus of State-owned Assets Collaborative Development Fund comprises utilities including environmental protection, new energy and infrastructure, as well as financial and strategic emerging industries, which will generate synergies with the industrial development of Shenzhen Expressway.

On 21 August 2020, the Board approved the Company's participation in the capital increase and share subscription project of Vanho Securities, pursuant to which the Company invested an amount of approximately RMB950 million for subscription of approximately 8.68% of the enlarged equity interests in Vanho Securities. Vanho Securities is a comprehensive securities firm with full license controlled by the Shenzhen SASAC. Its principal business has developed steadily. The Company's participation in the capital increase and share subscription project of Vanho Securities can, on one hand, allow the Company to share the development results in the PRC capital market and obtain certain investment income; on other hand, allow the Company to cooperate with State-owned enterprises in Shenzhen, share high-quality project resources and enhance the Company's industrial-financial integration business.

(VII) Other Businesses

The Company has commenced to engage in billboard leasing, advertising agency, design production and related businesses alongside the toll highways and at the toll stations through Advertising Company, its wholly-owned subsidiary. In addition to operating and disseminating the self-owned media resources along the expressways, Advertising Company has also further developed outdoor media businesses of main urban roads in recent years and provided brand building and promotion plans for customers.

Consulting Company, held as to 24% by the Company, is a professional engineering consulting company with independent legal entity qualification. Its business scope covers pre-consultation, survey and design, tendering agency, cost consulting, engineering supervision, testing and inspection, as well as maintenance consulting, etc., and with the qualification and capability of providing consulting services to the whole process of investment and construction of the engineering project. During the Reporting Period, Guangdong UETC completed the private placement. The Company currently holds 9.18% of its equity interests after placement. Guangdong UETC is principally engaged in the electronic clearing business for the toll highways in Guangdong Province, including investment, management and provision of services of the electronic toll and clearing systems, and sales of related products.

During the Reporting Period, each of the above businesses proceeded smoothly and has met the Group's expectation in general. Due to the limitation on the scales or investment models, the contributions from these businesses currently only account for a very small proportion of the Group's revenue and profit. For details of other businesses during the Reporting Period, please refer to the relevant content in note V14 and note V46 to the Financial Statements in this announcement.

4.2 Financial Analysis

In 2020, the Group recorded net profit attributable to owners of the Company ("net profit") of RMB2,054,523,000 (2019 (restated): RMB2,564,318,000), taking aside the effects of the recognition of deferred income tax asset of Coastal Company by the Group in 2019, the YOY increase of the net profit is approximately 0.32%.

(I) Analysis of Main Business

Analysis of Changes in Related Items in the Income Statement and Cash Flow Statement

Unit:'000

Currency: RMB

Item	Amount for the current period	Amount for the corresponding period of last year	Change (%)
Revenue	8,026,737	6,390,295	25.61
Cost of services	5,214,517	3,585,544	45.43
Selling expenses	53,051	27,305	94.29
General and administrative expenses	363,086	350,923	3.47
Research and development expenses	58,694	18,475	217.70
Financial expenses	491,548	587,734	-16.37
Investment income	937,363	1,242,672	-24.57
Income tax expenses	473,911	-68,080	N/A
Net cash flows from operating activities	1,100,634	1,695,357	-35.08
Net cash flows from investing activities	-4,430,832	-226,734	N/A
Net cash flows from financing activities	3,588,279	-1,154,217	N/A

35.08

45.43

94.29

3.47

217.70

24.57

1. Analysis of Income and Cost

Unit:'000

Currency: RMB

Revenue item	2020	Proportion (%)	2019 (restated)	Proportion (%)	Change (%)	Description
Revenue from main business - toll highways	4,386,674	54.65	4,722,127	73.90	-7.10	①
Revenue from main business - clean energy	1,665,755	20.75	598,792	9.37	178.19	②
Revenue from main business - recovery and managementsolid waste	843,231	10.51	-	-	N/A	②
Revenue from main business - otherenvironmental businessesprotection	11,635	0.14	176	-	6,510.92
Revenue from other businesses - entrusted management services	510,745	6.36	376,403	5.89	35.69	③
Revenue from other businesses - real estate development	351,098	4.37	456,902	7.15	-23.16	④
Revenue from other businesses - other businesses	257,599	3.21	235,894	3.69	9.20	⑤
Total revenue	8,026,737	100.00	6,390,295	100.00	25.61

Description:

① During the Reporting Period, the Group recorded a YOY decrease in the revenue of ancillary toll highways, mainly due to the Toll-free Policy during the Epidemic. Detailed analysis of the operational performance of various projects during the Reporting Period is set out in the "Business Review" above. Breakdown of revenue by specific items is set out in Point (1) below.
② Nanjing Wind Power, Baotou Nanfeng and Lande Environmental were consolidated into the financial statements of the Group on 8 April 2019, 17 September 2019 and 20 January 2020, respectively. During the Reporting Period, the revenue related to sales of wind turbine equipment, wind power generation and recovery and solid waste management was RMB1,427,887,000, RMB237,869,000 and RMB843,104,000, respectively. Among them, the significant growth in the revenue of Nanjing Wind Power during the current period was attributed to the rush for installation tide of wind turbines.
③ During the Reporting Period, revenue from entrusted management services recorded a YOY increase of 35.69%, mainly due to an increase in the revenue from entrusted management services in line with the progress of the entrusted construction projects during the Reporting Period.
④ During the Reporting Period, revenue from real estate development recorded a YOY decrease of 23.16%, mainly due to the decrease in delivered units in the current period of Guilong Development Project.
⑤ During the Reporting Period, revenue from other businesses recorded a YOY increase of 9.20%, mainly due to the growth in revenue of finance leases and other businesses.

(1) Breakdown of main business by industry, product and region

Unit:'000 Currency: RMB

Breakdown of main business by industry
Industry	Revenue	Cost of services	Gross profit margin (%)	YOY change in revenue (%)	YOY change in cost of services (%)	YOY change in gross profit margin (%)
Toll highway	4,386,674	2,422,203	44.78	-7.10	3.27	Decrease by 5.55 pct. pt
Clean energy	1,665,755	1,340,213	19.54	178.19	211.66	Decrease by 8.64 pct. pt
Recovery and solid waste management	843,231	696,359	17.42	N/A	N/A	N/A
Breakdown of main business by product
Product	Revenue	Cost of services	Gross profit margin (%)	YOY change in revenue (%)	YOY change in cost of services (%)	YOY change in gross profit margin (%)
Qinglian Expressway	832,485	507,870	38.99	-0.54	4.61	Decrease by 3.00 pct. pt
Jihe East	736,384	338,656	54.01	-4.15	1.57	Decrease by 2.59 pct. pt
Jihe West	615,025	162,257	73.62	-7.88	19.09	Decrease by 5.98 pct. pt
Shuiguan Expressway	606,994	488,304	19.55	-6.91	1.70	Decrease by 6.81 pct. pt
Coastal Expressway	548,429	282,028	48.58	2.98	-1.27	Increase by 2.22 pct. pt
Yichang Expressway	305,899	212,318	30.59	-24.19	3.65	Decrease by 18.64 pct. pt
Wuhuang Expressway	304,076	187,601	38.30	-26.29	-11.06	Decrease by 10.56 pct. pt
Changsha Ring Road	146,796	65,665	55.27	-5.99	20.19	Decrease by 9.74 pct. pt
Meiguan Expressway	143,677	78,125	45.62	2.81	-1.79	Increase by 2.55 pct. pt
Longda Expressway	142,897	94,636	33.77	-6.40	26.90	Decrease by 17.38 pct. pt
Outer Ring Expressway	4,012	4,742	-18.19	N/A	N/A	N/A
Subtotal	4,386,674	2,422,203	44.78	-7.10	3.27	Decrease by 5.55 pct. pt
Sales of wind turbine equipment	1,427,887	1,242,956	12.95	179.36	214.23	Decrease by 9.66 pct. pt
Breakdown of main business by region
Region	Revenue	Cost of services	Gross profit margin (%)	YOY change in revenue (%)	YOY change in cost of services (%)	YOY change in gross profit margin (%)
Guangdong Province	3,629,904	1,956,617	46.10	-3.20	4.35	Decrease by 3.90 pct. pt
Jiangsu Province	1,427,887	1,242,956	12.95	179.36	214.23	Decrease by 9.66 pct. pt

Description on the breakdown of main business by industry, product and region:

During the Reporting Period, the overall gross profit margin of the Group's ancillary toll highways was 44.78%, representing a YOY decrease of 5.55 percentage points, mainly due to the Toll-free Policy during the Epidemic resulting in the decrease in revenue.

The overall gross profit margin of the clean energy was 19.54%, representing a YOY decrease of 8.64 percentage points, mainly due to the rise in price resulting from the tight supply of components and parts of wind turbine equipment as affected by the rush for installation tide of wind turbines and the epidemic.

(2) Analysis of Cost

During the Reporting Period, the cost of services of the Group amounted to RMB5,214,517,000 (2019 (restated): RMB3,585,544,000), representing a YOY increase of 45.43%, mainly due to the consolidation of Nanjing Wind Power, Baotou Nanfeng and Lande Environmental into the financial statements of the Group, leading to the increase in the Group's cost of services of the environmental protection business. The detailed analysis of cost of services is as follows:

Unit:'000 Currency: RMB

Breakdown by industry
Industry	Cost item	Amount for the current period	Amount for the current period as a percentage of total costs (%)	Amount for the corresponding period of last year (restated)	Amount for the corresponding period of last year as a percentage of total costs (%)	Change in amount for the current period as compared to the corresponding period of last year (%)	Description
Cost of main business - toll highways	Employee expenses	354,773	6.80	401,665	11.20	-11.67	①
Road expensesmaintenance	182,343	3.50	213,827	5.96	-14.72	②
Depreciation amortisationand	1,551,995	29.76	1,477,821	41.22	5.02	③
Other business costs	333,092	6.39	252,168	7.03	32.09	④
Subtotal	2,422,203	46.45	2,345,481	65.41	3.27	⑤
Cost of main business - clean energy	1,340,213	25.70	430,019	11.99	211.66	⑥
Cost of main business - recovery and solid waste management	696,359	13.35	-	-	N/A	⑥
Cost of main business - other environmental protection businesses	2,996	0.06	3	-	95,916.03
Other business costs - entrusted management services	406,456	7.79	356,797	9.95	13.92	○7
Other business costs - real estate development	171,359	3.29	255,162	7.12	-32.84	⑧
Other business costs - other businesses	174,932	3.35	198,083	5.52	-11.69	⑨
Total cost of services	5,214,517	100.00	3,585,544	100.00	45.43

Other Information of Cost Analysis:

① Mainly due to the decrease in the number of toll collection staff, the decrease in overtime expenses for toll collection staff attributed to the Toll-free Policy during the Epidemic, and the implementation of pension insurance Reduction and Exemption Policy in phases during the Reporting Period, resulting in a corresponding decrease in employee expenses in the current period.
② The repair of the slope landslide of Shuiguan Expressway for the corresponding period of last year, resulting in a decrease in special maintenance costs in the current period.
③ The increase in depreciation and amortization in the current period is mainly due to the completion of the relevant network of the national toll collection at the end of 2019 and the conversion to fixed assets, the upward adjustment of the amortisation amount of Yichang Expressway since 2020, and a YOY increase in traffic volume as a result of the Toll-free Policy during the Epidemic, etc.
④ Provision for the operation and management expenditure related to ancillary toll roads.
⑤ Costs presented based on specific item are set out in Point (1) above.
⑥ During the Reporting Period, the costs related to sales of wind turbine equipment, wind power generation and recovery and solid waste management was RMB1,242,956,000, RMB97,256,000 and RMB696,359,000, respectively, as a result of the consolidation of Nanjing Wind Power, Baotou Nanfeng and Lande Environmental into the financial statements of the Group. Among them, Nanjing Wind Power recorded a significant growth in the cost of service during the Reporting Period as compared to the corresponding period last year due to growth in revenue and rise in the price of components and parts.
⑦ Mainly due to an increase in the costs of entrusted construction management services in line with the progress of the entrusted construction projects.
⑧ Due to the YOY decrease in delivered units, the development cost for commercial housing carried forward by Guilong Development Project recorded a corresponding YOY decrease.
⑨ Decrease in advertising costs.

(3) Major customers and major suppliers

Given the nature of the Group's business, the target sales customers of toll highways are not specific. Apart from toll revenue, the total revenue from the top five customers of the Group amounted to RMB1,555,116,000, accounting for 19.37% of the overall revenue of the Group; of which none was sales from related parties.

The purchases from the Group's top five suppliers amounted to RMB2,788,629,000 accounting for 29.41% of total purchases of the Group for the year; of which none was purchase from related parties.

2. Expenses

The Group's selling expenses for the Reporting Period amounted to RMB53,051,000 (2019: RMB27,305,000), representing a YOY increase of 94.29%, which was mainly due to the consolidation of Lande Environmental into the financial statements and the increase in the selling expenses of Nanjing Wind Power in the current period.

The Group's general and administrative expenses for the Reporting Period amounted to RMB363,086,000 (2019 (restated): RMB350,923,000), representing a YOY increase of 3.47%, which was mainly due to the increase in the Group's general and administrative expenses resulting from the consolidation of Lande Environmental into the financial statements.

The Group's research and development expenses amounted to RMB58,694,000 (2019: RMB18,475,000) during the Reporting Period, representing a YOY increase of RMB40,219,000, which was mainly due to the consolidation of Lande Environmental into the financial statements and the increase in the research and development expenses of Nanjing Wind Power in the current period.

The Group's financial expenses for the Reporting Period amounted to RMB491,548,000 (2019 (restated): RMB587,734,000), representing a YOY decrease of 16.37%, which was mainly because foreign liabilities was affected by fluctuation in RMB exchange and resulted in exchange gain during the Reporting Period (2019: exchange loss). During the Reporting Period, the Company continued to lock the foreign exchange swap transactions on US dollar bond. Details of the foreign exchange swap transaction are set out in note V2 to the Financial Statements in this announcement. After hedging the "Gain from changes in fair value - Income from changes in fair value of foreign currency swap instruments" and "Gains from investment - Gains from completion of foreign currency swaps", the Group's comprehensive financial cost during the Reporting Period was RMB619,960,000 (2019 (restated): RMB543,288,000), representing a YOY increase of 14.11%, which was mainly due to increase in the scale of borrowing, decrease in the comprehensive borrowing costs (Reporting Period: 4.16%, 2019: 4.39%), as well as the combined effect of factors such as increase in capitalised interest. For details of the changes in borrowing scale, please refer to "Analysis of Assets and Liabilities" below. The detailed analysis of financial expenses is as follows:

Unit: '000 Currency: RMB

Financial expenses item	2020	2019 (restated)	Change (%)
Interest expenses	935,356	751,538	24.46
Less: Interest capitalised	237,873	133,609	78.04
Interest income	61,976	53,120	16.67
Add: Exchange loss	-154,936	33,399	-563.89
Finance income arising from the early repayment of finance leases	-1,166	-22,492	N/A
Others	12,142	12,019	1.03
Total financial expenses	491,548	587,734	-16.37

During the Reporting Period, the Group's income tax expenses amounted to RMB473,911,000 (2019 (restated): RMB-68,080,000), representing a YOY increase of approximately RMB541,991,000. The increase was mainly due to the recognition of deferred income tax assets in respect of partially compensable losses and impairment of road assets incurred by Coastal Company in previous periods in the corresponding period last year.

3. Investment Income

During the Reporting Period, the Group's investment income amounted to RMB937,363,000 (2019: RMB1,242,672,000), representing a YOY decrease of 24.57%, which was mainly due to the recognition of the income from the transfer of 100% equity interests and creditor's rights in four subsidiaries including Guizhou Shengbo during the corresponding period of last year, and the decrease of profit in toll highways operated by associates resulting from the Toll-free Policy during the Epidemic in the current period. Detailed analysis of investment income is as follows:

Unit: '000 Currency: RMB

Item
1. Investment income attributable to associates:
Associated toll highway enterprises in total	172,489
United Land Company	395,731
Derun Environment	206,420
Others Note	138,342
912,982
-
6,395
17,955
31
937,363

Subtotal

2. Investment income arising from transfer of subsidiaries

3. Investment income from other non-current financial assets

4. Gains from completion of foreign currency swaps

5. Others

Total

2020	2019	Change in amount
219,856	-47,367
377,224	18,507
193,468	12,953
131,491	6,852
922,038	-9,055
262,207	-262,207
30,125	-23,730
26,860	-8,905
1,442	-1,411
1,242,672	-305,309

Note: Others are attributable to the investment income of Consulting Company, Bank of Guizhou, Shengchuang Environmental Technology and Guizhou Hengtongli.

4. Investment in Research and Development

The investment in research and development mainly represents the expenses arising from the research and development of wind power generation system conducted by Nanjing Wind Power and the research and development of kitchen waste treatment system conducted by Lande Environmental.

Breakdown of investment in research and development:

Unit: '000 Currency: RMB

Expensed investment in research and development for the current period	58,694
Capitalised investment in research and development for the current period	1,857
Total investment in research and development	60,551
Percentage of total investment in research and development over revenue (%)	0.75
Number of research and development staff of the Company (person)	131
Number of research and development staff over the total number of staff of the Company (%)	1.93
Proportion of capitalised investment in research and development (%)	3.07

5. Cash Flow

Descriptions on the reasons for changes in net cash flows from operating activities: During the Reporting Period, the Group's net cash inflows from operating activities amounted to RMB1,100,634,000 (2019 (restated): RMB1,695,357,000), representing a YOY decrease of 35.08%, which was mainly due to the significant decrease in cash inflows from toll revenue during the Reporting Period as affected by the Toll-free Policy during the Epidemic, and increase in the costs for procurement of wind turbine component and advance payment of project fee. In addition, the recurring cash return on investments from associatesNote during the Reporting Period amounted to RMB288,160,000 (2019: RMB396,706,000), representing a YOY decrease of RMB108,546,000, which was mainly due to the decrease in cash flow distributed by associates operating toll highways as affected by the Toll-free Policy during the Epidemic.

Note: The recurring cash return on investments refers to the cash flow distribution (including profit distribution) from the Company's associates. According to the articles of association of certain associates of the Company, those companies will distribute cash to their shareholders if the conditions for cash distribution are fulfilled. According to the characteristics of the toll highway industry, such cash return on investments will provide continuous and stable cash flow. The reason that the Company provided the aggregated figures of net cash inflows from operating activities and recurring cash return on investments was to help the users of the financial statements understand the performance of recurring cash flow from the Group's operating and investing activities.

Descriptions on the reasons for changes in net cash flows from investing activities: During the Reporting Period, the Group's net cash from investing activities recorded a YOY decrease of approximately RMB4.2 billion, which was mainly attributable to the payment for acquisition of equity interests in companies such as Lande Environmental and Qiantai Company, the payment for investment in Vanho Securities and State-owned Coordination Fund, the consolidation of Lande Environmental into the financial statements, increase in the construction expenditure of the kitchen waste project, and increase in procurement of target assets for finance lease during the Reporting Period, as well as receipt for capital reduction of United Land Company, the payment for the transfer of equity interests in four subsidiaries including Guizhou Shengbo and the redemption of the wealth management products from banks for the corresponding period of last year.

Descriptions on the reasons for changes in net cash flows from financing activities: During the Reporting Period, the Group's net cash from financing activities recorded a YOY increase of approximately RMB4,740 million, which was mainly due to the issuance of commercial paper for fund raising during the Reporting Period.

6. Amortisation Policies of Concession Intangible Assets and the Difference of Amortisation Methods

The Group's concession intangible assets are amortised based on the units-of-usage method. The amortised amount is calculated, based on usage amount per unit, by the percentage of the actual traffic volume in the respective periods to the total projected traffic volume during the toll operating period. The Group conducts regular review on the projected traffic volume and makes corresponding adjustments to ensure reasonableness of the amortised amount. Details of this accounting policy and accounting estimates are set out in note III18(1) and 34(6) to the Financial Statements in this announcement.

During the preliminary stages of toll highways' operation, the amortised amount calculated by the units-of-usage method is generally lower than that calculated by the straight-line method. During the Reporting Period, the difference in amortisation attributable to the Company calculated by using two amortisation methods based on its share of interests was RMB279 million (2019 (restated): RMB271 million). The adoption of different amortisation methods had no impact on the cash flow generated from various toll highway projects and thus had no impact on the valuation of various projects.

(II) Analysis of Assets and Liabilities 1. Assets and Liabilities

As at 31 December 2020, the Group's total assets amounted to RMB55,144,962,000 (as at 31 December 2019 (restated): RMB45,658,414,000), representing an increase of 20.78% over the end of 2019, which was mainly due to the consolidation of Lande Environmental into the financial statements, the increase in the expenses on engineering construction of Outer Ring Project and participation in the investment of Vanho Securities and State-owned Coordination Fund.

As at 31 December 2020, the total outstanding interest-bearing liabilities of the Group amounted to RMB19,311,570,000 (as at 31 December 2019: RMB16,821,439,000), representing an increase of 14.80% over the end of 2019, mainly contributed to the increase in borrowings as a result of the increase in expenses on merger, acquisition and investment of Lande Environmental, Longda Company and Vanho Securities, and the acquisition of Lande Environmental through borrowings. In 2020, the Group's average borrowing scale was RMB20.4 billion (2019: RMB14.8 billion), representing a YOY increase of 38.08%.

Detailed analysis of assets and liabilities is as follows:

Unit:'000 Currency: RMB

Name of item	Amount as at the end of the current period	Amount as at the end of the current period as a percentage of total assets (%)	Amount as at the end of the previous period	Amount as at the end of the previous period as a percentage of total assets (%)	Change in amount as at the end of the current period as compared to the end of the previous period (%)	Descri ption
Transactional financial assets (liabilities represented by "-")	-83,678	-0.15	62,689	0.14	-233.48	(1)
Bills receivable	378,533	0.69	9,895	0.02	3,725.47	(2)
Other receivable	773,039	1.40	522,976	1.15	47.82	(3)
Contract assets	344,066	0.62	187,764	0.41	83.24	(4)
Assets held for sale	494,663	0.90	-	-	N/A	(5)
Non-current assets due within one year	74,870	0.14	176,340	0.39	-57.54	(6)
Other current assets	325,723	0.59	247,716	0.54	31.49	(7)
Long-term receivables	997,355	1.81	433,144	0.95	130.26	(8)
Other non-current financial assets	1,605,891	2.91	217,939	0.48	636.85	(9)
Construction in progress	123,596	0.22	15,939	0.03	675.43	(10)
Long-term prepaid expenses	59,662	0.11	32,405	0.07	84.11	(11)
Other non-current assets	1,770,552	3.21	605,728	1.33	192.30	(12)
Short-term borrowings	1,341,218	2.43	363,878	0.80	268.59	(13)
Bills payable	295,467	0.54	131,750	0.29	124.26	(14)
Accounts payable	1,869,889	3.39	983,440	2.15	90.14	(15)
Contract liabilities	319,854	0.58	953,226	2.09	-66.45	(16)
Taxes payable	565,790	1.03	261,897	0.57	116.04	(17)
Non-current liabilities due within one year	3,665,799	6.65	505,102	1.11	625.75	(18)
Other current liabilities	2,041,455	3.70	-	-	N/A	(19)
Provisions	165,626	0.30	10,285	0.02	1,510.43	(20)

Descriptions of assets and liabilities:

(1) Foreign exchange swap instruments were under the influence of exchange rate fluctuation.
(2) Increase in bills receivable of Nanjing Wind Power.
(3) Increase in fee advanced.
(4) The consolidation of Lande Environmental into the financial statements and increase of contract assets due to on-going and implementation of the entrusted construction projects as per scheduled.
(5) The net booking value of equity investment in Guangyun Company and Jiangzhong Company proposed for sale was classified as "Assets held for sale".
(6) Recovery of fund occupied by the original shareholders of Longda Company, and decrease of financial lease receivables (due within 1 year) by Financial Leasing Company.
(7) Increase in report item as the consolidation of Lande Environmental into the financial statements.
(8) Increase in long-term lease receivables of Financial Leasing Company and increase in long-term receivables of tariff subsidies of Baotou Nanfeng.
(9) Addition of the expenses on the investment of Vanho Securities and State-owned Coordination Fund.
(10) Items in related statements increase due to the consolidation of Lande Environmental and Qiantai Company into the financial statements.
(11) Increase in renovation costs of newly leased office.
(12) Transfer of asset contracts of over one year.
(13) Increase short-term borrowings in light of the adequacy of funds in the marketplace.
(14) Increase in payments for raw materials purchases of Nanjing Wind Power.
(15) The consolidation of Lande Environmental into the financial statements and increase in payments for components and parts purchases of Nanjing Wind Power.
(16) Advances from sales of real estate carried forward by Guilong Development Project and advances from sales of wind turbine set carried forward by Nanjing Wind Power.
(17) Increase in tax payables due to the consolidation of Lande Environmental and the recognition of gains from certain projects.
(18) Reclassification of bonds of USD300 million by maturity.

(19) Issuance of ultra-short-term commercial paper.
(20) Provision for the operation and management costs.

2. Restriction on Main Assets as at the End of the Reporting Period

(1) As at the end of the Reporting Period, details of the Company's and its subsidiaries' assets mortgaged or pledged are as follows:
Assets	Type	Bank	Scope of security	Balance of secured loan as at the end of the Reporting Period	Term
Toll collection rights of Qinglian Project	Pledge	A consortium including China Development Bank, etc.	Principal and interests of syndicated loans in an aggregate amount of RMB5.9 billion	384 million	Until repayment of all liabilities under the loan agreement
Pledge	Industrial CommercialandBank of China Limited Qingyuan Branch	Principal and interests of fixed asset loans in an aggregate amount of RMB2.5 billion	600 million	Until repayment of all liabilities under the loan agreement
100% equity interests in Meiguan Company	Pledge	China Construction Bank Shenzhen Branch	Counter-guarantee for the irrevocable guarantee with joint liability in respect of the redemption of the corporate bonds with an amount of RMB800 million upon maturity	800 million	Until repayment of corporate bonds (including principal and interests)
45% equity interests in JEL Company	Pledge	The Hong Kong and Shanghai Banking Corporation Limited	Principal and interests of bank loans in an aggregate amount of HKD350 million	HKD125 million	Until repayment of all liabilities under the loan agreement
Toll collection rights of Coastal Expressway	Pledge	A consortium including China Development Bank, etc.	Principal and interests of syndicated loans in an aggregate amount of RMB5.4 billion	3,518 million	Until repayment of all liabilities under the loan agreement
Toll collection rights of Shuiguan Expressway	Pledge	Guangdong Huaxing Bank Co., Ltd. Shenzhen Branch	Principal and interests of fixed asset loans in an aggregate amount of RMB600 million	483 million	Until repayment of all liabilities under the loan agreement

Equity interests, franchise rights, accounts receivable, land use rights and production equipment, among other assets, of various subsidiaries of Lande Environmental of RMB1,889 million

Various banks and financial leasing companies

The scope of security covers principal and interests of bank loans and finance leases for various projects in an aggregate amount of RMB852 million

(2) As at the end of the Reporting Period, details of the restrictions on the capital of the Company and its subsidiaries are as follows:

Amount subject to restrictions
RMB1,790 million
management project
Payable guarantee for acceptance of bills	RMB284 million
Consideration for acquisition of equity interests under supervision	RMB210 million
Security for letter of guarantee	RMB28 million
Security for wages of migrant workers	RMB1 million
Amount frozen due to litigations	RMB3 million
Total	RMB2,316 million
Details of restriction of assets:

Type of restricted capital

Fund in special deposit account for the entrusted construction and

Note 1:In addition, Outer Ring Company, a wholly-owned subsidiary of the Company, applied for bank loans in an aggregate amount of RMB6.5 billion from the consortium including China Development Bank, etc. by pledging the toll collection rights and the proceeds and credits receivable from the operating activities legally owned by Outer Ring Expressway. As at the end of the Reporting Period, the accumulated amount of loans withdrawn by Outer Ring Company was approximately RMB4.7 billion, which was settled at the end of the year. The loan facility available was RMB1.8 billion.

Note 2:

Details of the restrictions on the Group's major assets at the end of the Reporting Period are set out in note V62 to the Financial Statements in this announcement.

3. Capital Structure and Debt Repayment Capability

The Company is always committed to maintaining a rational capital structure and enhancing its profitability, in order to maintain its good credit ratings and solid financial position. As at the end of the Reporting Period, affected by the increase in interest-bearing liabilities scale resulting from the rise in capital expenditure, the share profit distribution for 2019 and the adjustment to the capital structure, the debt-to-asset ratio of the Group and the net borrowings-to-equity ratio decreased to a certain extent as compared with that at the beginning of the year. As affected by the epidemic, other debt repayment performance indicators of the Group for the current period recorded a decrease in the short term. Given the Group's stable and robust operating cash flows and its strong capability in financing and capital management, the Board is of the view that changes of the debt repayment indicators were periodic and the financial leverage ratios remained at a safe level at the end of the Reporting Period.

Key indicators	As at the end of 2020	As at the end of 2019 (restated)
Debt-to-asset ratio (Total liabilities/Total assets)	52.35%	53.90%
Net borrowings-to-equity ratio ((Total borrowings - cash and cash equivalents)/Total equity)	61.18%	65.77%
Net borrowing/EBITDA ((Total borrowings - cash and cash equivalents)/Earnings before interests, tax, depreciation and amortisation)	3.14	3.00
2020	2019 (restated)
Interest covered multiple ((Profit before tax + interest expenses)/Interest expenses)	3.87	4.71
EBITDA interest multiple (Earnings before interests, tax, depreciation and amortisation/Interest expenses)	5.95	7.12

4. Liquidity and Cash Management

During the Reporting Period, the increase in the short-term loans of the Group, the issuance of ultra-short-term commercial paper and reclassification of the USD bonds based on maturity date led to a decrease in the net current assets as at the end of the period as compared to the end of the previous year. Based on the financial status and capital needs, the Group will further strengthen the overall fund arrangements for subsidiaries and key projects, continue to optimise the capital structure, maintain appropriate cash on hand, and sufficient bank credit lines to prevent liquidity risks.

During the Reporting Period, the Group had no capital used in purchase of wealth management products or investment in securities.

Unit: Million Currency: RMB

31 December 2020	31 December 2019 (restated)	Change in amount
Net current assets	-3,954	1,158	-5,113
Cash and cash equivalents	3,234	2,978	256
Banking facilities available	16,409	14,366	2,043

5,113

5. Financial Strategies and Financing Arrangements

During the Reporting Period, as affected by the epidemic, the central bank continued to implement the stable monetary policy with more emphasis on flexibility, moderation and targeted and direct assess, and increased the base currency supply through the cutting of requirement reserve rate and the open market operations, thereby maintaining sufficient market liquidity in general, which has in turn led to a decrease in the price of funds. During the Reporting Period, the Group used its self-owned funds, bank loans and proceeds from bonds to meet the capital needs of debt repayment and investment expenditures, etc. Leveraging the favourable market opportunities, the Group issued financing bond instruments such as corporate bonds and ultra-short-term commercial paper for debt replacement and replenishment of working capital. It also grasped the opportunity from change in market conditions and negotiated with financial institutions to cut the interest rates of some existing debts in order to further lower financial cost. It also issued private perpetual bonds to raise capital for the Outer Ring Project and reduce debt ratios, optimise debt structure and control financial risks. The Company actively expanded its direct financing channels, and approved the issuance of ultra-short-term commercial paper with a principal amount of RMB4 billion and green cooperate bonds with a principal amount of RMB2 billion during the Reporting Period. It has also received the approval from CSRC for the issuance of not more than 300 million additional overseas-listed foreign shares in July 2020, which further expanded the financing channels for the Company.

During the Reporting Period, the Group did not have any overdue principal and interests for bank loans and bonds.

As at the end of the Reporting Period, the specific borrowing structure is shown as follows:

During the Reporting Period, the Company continued to maintain the highest credit rating and bond rating of AAA for domestic entities, and the existing investment grade ratings for international entities.

As of 31 December 2020, the Group had obtained a total of RMB34.331 billion of banking facilities, including approximately RMB15.918 billion of credit facilities specifically for construction projects, RMB14.65 billion of general credit facilities and approximately RMB3.763 billion for a single credit facility. As at the end of the Reporting Period, un-utilised banking facilities amounted to approximately RMB16.409 billion.

6. Utilisation of funds raised

During the Reporting Period, the Company completed the issuance of the first tranche of 2020 corporate bonds (epidemic prevention and control bond) (hereinafter referred to as "20SE01 Bonds") and the first tranche of 2020 green corporate bonds (hereinafter referred to as "G20SE1 Bonds") on 20 March 2020 and 22 October 2020, respectively. The fund raised was RMB1.4 billion and RMB800 million, respectively.

As at 31 December 2020, the funds raised by the issuance of the above corporate bonds have been fully used up. Among them, the funds raised by the issuance of 20SE01 Bonds was used for the repayment of interest-bearing debt of RMB1.235 billion and the replacement of capital for prevention of the epidemic of RMB163 million. The funds raised by the issuance of G20SE1 Bonds was used for the construction of green projects, the repayment of interest-bearing debt of RMB654 million for green projects and replenishment of liquidity of RMB144 million. The usage of the funds was in line with the usage, usage plans and other guarantees as stated in the fund-raising prospectus and also the operation regulations in respect of the special deposit account for fund raising.

7. Contingencies

Details of the Group's contingencies during the Reporting Period are set out in note XI2 of the Financial Statements in this announcement.

(III) Analysis of the Investment

1. General Analysis on External Equity Investments

The details of the Company's external equity investments during the Reporting Period are as follows:

(1) Material Equity Investments

During the Reporting Period, the total equity investment of the Group amounted to approximately RMB3,094 million (2019: RMB790 million), representing a YOY increase of RMB2,304 million, mainly due to the acquisition of equity interests and the increase of capital in Lande Environmental and Longda Company, subscription for the additional shares issued by Vanho Securities and the investment in State-owned Coordination Fund and Environmental Technology Industry M&A Fund during the Reporting Period. For details, please refer to the content in Business Review above. The details of material equity investments during the Reporting Period are as follows:

Unit: '000 Currency: RMB

Name of Investee Company	Major business	Shareholding	Investment amount in 2020	Description
Vanho Securities	Securities brokerage, self-owned business, investment and consultation, financing and financing bonds, asset management, underwriting and sponsoring, financial consultation and other businesses	8.68%	950,000	During the Reporting Period, the Company invested RMB950 million to subscribe for 311,475,410 shares newly issued by Vanho Securities, and hence obtained its equity interest of 8.68%.
Lande Environmental	Engaging in the research and development of organic waste treatment technology with a focus on kitchen waste, manufacturing of core equipment, investment in construction, and operation and maintenance, etc.	67.14%	798,137	During the Reporting Period, Environmental Company, a subsidiary of the Company, acquired a total of 67.14% of equity interests of Lande Environmental through acquisition of equity interests and increase of capital.
Longda Company	Operation and maintenance of Longda Expressway	89.93%	405,388	During the Reporting Period, the Company was transferred 89.93% of interest in Longda Company held by Shenzhen International through its wholly-owned subsidiary at a price of RMB405,387,900.
State-owned Coordination Fund	Focusing on infrastructure utilities including environmental protection and new energy as well as financial and strategic emerging industries	7.48%	300,000	During the Reporting Period, the Company made a contribution of RMB300 million for the investment in State-owned Coordination Fund and acquired 7.48% of its equity interest.
Qiantai Company	Engaging in battery post-market recycling application business	50%	225,000	During the Reporting Period, Infrastructure Environmental Company, a subsidiary of the Company, acquired a total of 50% of equity interests of Qiantai Company through acquisition of equity interests and increase of capital.
Financial Leasing Company	Finance lease and commercial factoring	48%	151,690	During the Reporting Period, the Company and Mei Wah Company, a wholly-owned subsidiary of the Company, acquired the 48% equity interests of the Financial Leasing Company owned by Shenzhen International through its wholly-owned subsidiary at a total consideration of RMB151.69 million (including the repayment of RMB129 million borrowed by shareholders of Logistics Finance Company).
Environmental Technology Industry M&A Fund	Investment management and equity investment	45%	135,000	During the Reporting Period, the Company agreed to contribute 45% of the capital of Environmental Technology Industry Investment M&A Fund, totalling RMB450 million. As at the end of the Reporting Period, the Company had paid initial investment of RMB135 million in accordance with the investment progress.
Yangmao Company	Investment, construction and operation management of Yangjiang-Maoming Expressway and development of its supporting service projects	25%	103,750	The approved budget for Yangmao reconstruction and expansion project is estimated to be RMB8.0 billion (35% are self-raised funds), and the Company should invest RMB700 million according to the 25% shareholding ratio. During the Reporting Period, the Company paid RMB104 million for capital increase according to shareholding ratio and project progress, and hadmade an investment million. accumulatedof RMB270
Engineering Company	Expressway maintenance engineering projects	60%	24,811	During the Reporting Period, Operation Company, a subsidiary of the Company, acquired a total of 60% of equity interests of Engineering Company through acquisition of equity interests and increase of capital.

(2) Material non-equity investments

During the Reporting Period, the Group's expenditures on material non-equity investments mainly comprised expenditures for the construction of Outer Ring Project, kitchen waste projects of Lande Environmental and the reinforcement of Changsha Ring Road pavement structure, totalling approximately RMB2,741,884,000. The investments in major projects are as follows:

Unit: '000 Currency: RMB

Project name	Project amount	Project progress	Amount invested during the Reporting Period	Actual accumulated amount invested	Gains from the project
Outer Ring Project	6,500,000	81.4%	1,490,539	5,040,760	For details of the operational performance of projects (except for Outer Ring Phase II, Coastal Phase II, Early stage of Jihe Expressway reconstruction and expansion project and certain kitchen waste projects which are still under construction) during the Reporting Period, please refer to the Analysis of Main Business as set out above.
Coastal Phase II	1,000,000	47%	10,453	45,840
Early stage of Jihe Expressway reconstruction and expansion project	/	/	119,856	200,786
Various kitchen waste projects of Lande Environmental	/	/	646,105	646,105
Reinforcement of Changsha Ring Road pavement structure	380,000	100%	204,986	227,216
ETC renovation investment	438,000	100%	100,673	264,680
Total	/	/	2,572,611	6,425,387	/

(3) Financial assets/liabilities measured at fair value

Unit: '000 Currency: RMB

Item name	Opening balance	Closing balance	Change during the period	Impact on total profit for the period
Transactional financial assets (liabilities represented by "-")	62,689	-83,678	-146,367	-146,367
Other non-current financial assets	217,939	1,605,891	1,387,952	104,024

104,024

(IV) Sale of Material Assets and Equity

During the Reporting Period, 25% of equity interest in Jiangzhong Company and 30% of equity interest in Guangyun Company held by the Group were sold by the way of public listing at Shenzhen United Property and Share Rights Exchange. For details, please refer to note V9 to the Financial Statements in this announcement.

(V) Analysis of Major Controlling Companies and Participating Companies

Unit: '000 Currency: RMB

Company name	Percent age of interests held by the Group	Registered capital	31 December 2020	2020	Principal business
Total assets	Net assets	Revenue	Operating profit	Net profit/ (net loss)
Jihe East Company	100%	440,000	2,083,278	1,568,585	740,840	398,016	296,789	Construction, operation and management of Jihe East
Coastal Company	100%	4,600,000	8,163,860	6,339,613	561,955	279,451	209,588	Investment in the construction and operation of Shenzhen section of Guangzhou-Shenzhen Coastal Expressway
Outer Ring Company	100%	6,500,000	6,490,014	5,099,443	4,012	-743	-557	Investment in the construction and operation of the Shenzhen section of Outer Ring Expressway
Qinglian Company	76.37%	3,361,000	6,644,038	2,996,282	836,742	161,476	119,968	Construction, operation and management of Qinglian Expressway and related auxiliary facilities
Qinglong Company	50%	324,000	2,573,282	1,426,712	614,664	95,800	73,999	Development, construction, toll collection and management of Shuiguan Expressway
Guishen Company	70%	500,000	1,938,314	1,312,374	681,891	218,975	115,928	Investment, construction and management of road and urban and rural infrastructure
Nanjing Wind Power	51%	357,143	2,715,474	826,326	1,450,366	75,234	67,009	The research & development, integration, manufacturing, installation, sales and maintenance of wind power generation system, as well as investment and operation of wind farms
Lande Environment al	67.14%	234,933	3,398,192	1,198,219	847,750	8,265	9,457	Research and development of organic waste treatment technology with a focus on kitchen waste, manufacturing of core equipment, investment in construction, and operation and maintenance, etc.
Company name	Percent age of interests held by the Group	Registered capital	31 December 2020	2020	Principal business
Total assets	Net assets	Revenue	Operating profit	Net profit/ (net loss)
United Land Company	34.3%	714,286	12,888,616	4,560,812	4,073,666	1,414,616	1,059,704	As the reporting entity and legal person for Meilin Checkpoint Renewal Project, it is responsible for acquiring the land, demolition and relocation and other works in respect of Meilin Checkpoint Renewal Project
Derun Environment	20%	1,000,000	49,583,987	16,342,175	11,308,509	2,694,150	1,032,102	The principal business of Derun Environment is investment holding. The major assets are 50.04% and 43.86% equity interests held in Water Group and Sanfeng Environmental, respectively

Note1: The companies listed in the above table are the major companies controlled or participated by the Company.

Note 2: Relevant data is consolidated, and has been adjusted with factors such as premium amortisation. The income and the net profit of Lande Environmental for 2020 in the table above were the amounts realised upon the completion of acquisition of relevant equity interests.

Note 3: The net profit listed in the above table is the net profit of such companies which is attributable to owners of the Company.

Note 4: For details of the operational and financial performance of the above major controlling companies and participating companies and their businesses during the Reporting Period, please refer to related contents in this section.

(VI) Proposed Profit Distribution

The Company's 2020 net profits attributable to ordinary shareholders of listed companies in its consolidated statements and the net profits of parent company statements audited based on CASBE were RMB2,054,523,306.30 and RMB952,217,667.93 respectively. Pursuant to the relevant PRC regulations and the Articles of Association, the Company withdrew its statutory common reserve fund of RMB93,790,655.68 for the year of 2020. The Board recommended to distribute a final dividend of RMB0.43 per share (tax inclusive) in cash to all shareholders for the year ended 31 December 2020, based on the total share capital of 2,180,770,326 shares at the end of 2020, with an aggregate amount of RMB937,731,240.18, which accounts for 45.96% of the net profits attributable to ordinary shareholders of the listed company in the consolidated statements for 2020 after excluding the investment income payable to the holders of the perpetual bonds. The residual balance upon distribution shall be carried forward to the next year. No capital reserve was converted into share capital during the year. The aforesaid recommendation will be proposed at the 2020 Annual General Meeting of the Company for approval.

1. Formulation, Implementation or Adjustment of Cash Dividend Policy

The Company has always been pursuing to reward its shareholders and has been distributing cash dividends for 23 consecutive years since its listing.

Pursuant to the Articles of Association, the Company shall implement a proactive cash dividend policy in line with the principle of attaching great importance to reasonable returns to shareholders while satisfying the needs of sustainable operation and development. The Articles of Association has a clear standard of dividend distribution and the minimum proportion of annual dividends, and has formulated sound decision-making procedures and mechanisms. Any modification to the profit distribution policy or failure in formulating/implementing profit distribution proposals according to such policy by the Company shall be proposed at the general meeting by way of a special resolution for consideration.

The 2020 profit distribution proposal (including the cash dividend proposal) formulated by the Company was in compliance with the relevant requirements of the Articles of Association and the Shareholders' Return Proposal. In formulating and determining the proposal, the Independent Directors have issued an independent opinion after careful study and analysis of relevant factors, and the Company is also able to listen to the opinions of the Independent Directors and theshareholders through various channels, and give regard to the demands and legitimate interests of the minority investors.

2. Proposal of Profit Distribution and Conversion of Capital Reserve into Share

Capital of the Company in the Past Three Years

Currency: RMB

Year of dividend distribution	Number of bonus issue (share) for every 10 shares	Dividend (RMB) for every 10 shares (including tax)	Total number of share (share) for conversion of capital reserve into share capital for every 10 shares	Total cash dividend (including tax)	Net profit in combined statements in the year of dividend distributionNote	Percentage (%) of dividend distributed to net profit in combined statements
2020 (Proposed)	0	4.30	0	937,731,240.18	2,040,212,195,19	45.96%
2019	0	5.20	0	1,134,000,569.52	2,499,484,975.75	45.37%
2018	0	7.10	0	1,548,346,931.46	3,440,050,607.33	45.01%

Note:

(1) The net profits attributable to ordinary shareholders the listed company in the consolidated statements for 2018 and 2019 in the above table are data before being restated.
(2) The net profits attributable to ordinary shareholders of the listed company in the consolidated statements for 2020 has excluded the investment income payable to the holders of the perpetual bonds

4.3 Outlook and Plans

(I) Development Strategies of the Company

Upholding the spirit of the Fifth Plenary Session of the 19th Central Committee, the Company has drawn up the draft of its Strategic Development Plans for the 14th Five Year Plan, which needs to be proposed for approval. The Company will take building quality infrastructure to provide beautiful living experience in cities as its mission. The Company will seise the opportunities of this era arising from the Guangdong-Hong Kong-Macau Greater Bay Area and Shenzhen in building a pioneering demonstration zone for socialism with Chinese characteristics by pursuing a market-oriented and innovation-driven strategy featuring "innovation, intelligence, environmental protection and high efficiency", with a view to consolidating and enhancing the advantages of the toll highway industry, and actively expanding the comprehensive clean energy industry of featured environmental protection, thereby building an intelligent Shenzhen Expressway and facilitating quality sustainable development of the Company, so as to provide cities with solutions of sustainable development, and become a first-class transportation and environmental protection infrastructure construction and operation service provider.

(II) Operation Plans

The working goals and focuses for the Group in 2021 are as follows:  Operating Targets: Based on the reasonable analysis and expectation on our operating environment and operating conditions, the Group has set a total revenue target for 2021 of exceeding RMB10 billion, with the total of operating costs, management expenses and selling expenses (excluding depreciation and amortisation) of approximately RMB4.5 billion. In 2021, it is expected that the average borrowing scale and the financial cost of the Group will increase on a YOY basis.

 Toll Highway Business: The Group will enhance operation management of its existing toll highway projects, continue to optimise the operation management system under the ETC model and strengthen the operational integration of the newly opened Outer Ring Phase I and the newly acquired Longda Project, in order to increase the overall profit of projects in operation. While actively promoting the research and negotiation regarding the financing plan of the Jihe Expressway reconstruction and expansion project for commencement of construction in full swing in mid-2021, the Group will also actively facilitate the construction and management of the engineering works of Outer Ring Phase II and Coastal Phase II, and also the preliminarywork of Shenshan Second Expressway, with a view to consolidating and upgrading the core business of toll highway on an ongoing basis. Besides, the Group will strengthen the service capabilities throughout the industry chain of highways and expand to the upstream and downstream industries such as design, consultation, construction and maintenance, with an aim to give full play to the professional capabilities of Engineering Development Company and Construction Technology Company, thereby developing the Group's professional competitiveness in the markets of engineering construction and management and maintenance. In addition, the Group will further enhance the level of informatisation and intelligence in its construction and operation activities through increased application of information technology, with a view to effectively enhancing the level of centralised dispatching management and the comprehensive monitoring and management ability.

 General-Environmental Protection: With a focus on recovery and solid waste management and the clean energy sector, the Company will actively promote construction of the existing projects and acquisition of new projects of Lande Environmental, effectively manage the construction management of the Guangming Environmental Park Project and enhance the internal management and expand the market for Qiantai Company, with a view to increasing the market share and influence of the Group in the sub-sectors of organic waste treatment and scrap vehicle dismantling. The Group will actively seek for appropriate investment opportunities of the industry chain by further capitalising on market opportunities arising from the national development of new energy, while effectively enhancing the management and carrying out works in relation to resource integration of Nanjing Wind Power, Baotou Nanfeng, Qianzhi Project and Qianhui Project to secure proper completion of production missions. Besides, the Group will continue to optimise the organisation structure, management system and financial structure of its subsidiaries in the general-environmental protection industry, with a view to facilitating the creation of synergy between such subsidiaries and other resources of the Group. The Group will also make full use of the financial instruments and financial resources provided by fund management platforms and Financial Leasing Company to actively explore the development of industrial-financial integration.

 Financial Management and Corporate Governance: The Group will strengthen its classification management and financial management on the invested companies, and optimise the authorisation management system based on the characteristics of different invested enterprises. Through adopting information technology, the Group will strengthen capital planning and management within the Group, implement budget and medium and long term forecast management, and coordinate financial resources. The Group will closely monitor the changes in monetary policy and the financing environment, study various types of financial instruments, actively expand financing channels to replenish the Company's capital, at the same time maintaining sound fund management and financing to reduce financing costs and ensure financial safety. Capitalising on the comprehensive reform of state-owned enterprises, the Group will actively make attempts in innovations of mechanisms. It will also adhere to the principles of good corporate governance and further improve corporate governance and various management systems, with the aim to satisfy the actual needs of the Group in business management, further improve the transparency of the Company, optimise the multi-level incentive and restraint system and promote the healthy and sustainable development of the Company.

(III) Capital Expenditure Plan

As of the date of approval of this announcement, the capital expenditures approved by the board of directors of the Group mainly include the construction expenditures for the Outer Ring Project, Coastal Phase II, Kitchen waste project of Lande Environmental, Guangming Environmental Park PPP Project, and other projects, the acquisition of the office property in Hanjing Financial Centre, as well as investment expenditure for Yangmao Renovation and Expansion and wind farm projects, and etc. It is estimated that by the end of 2023, the total capital expenditure of the Group will be approximately RMB 7.196 billion. The Group plans to use its own funds and bank loans to meet its funding needs. The Group's financial resources and financing capacity is currently able to meet the various capital expenditure needs.

The Group's capital expenditure plans approved by the Board from 2021 to 2023 are as follows:

Unit: 000 Currency: RMB

Project	2021	2022	2023	Total
I. Investment in intangible assets and fixed assets
Outer Ring Project	727,086	941,577	-	1,668,663
Coastal Phase II	21,669	321,669	321,669	665,007
Kitchen waste project of Lande Environmental	656,648	88,216	8,400	753,264
Guangming Environmental Park PPP Project	230,000	380,000	98,191	708,191
Acquisition of the office property in Hanjing Financial Centre	1,601,547	-	-	1,601,547
Reinforcement of Changsha Ring Road pavement structure	109,398	-	12,044	121,442
II. Equity investment
Reconstruction and expansion of Yangmao Expressway	192,500	35,000	-	227,500
Mergers & acquisitions and capital increase of wind farm projects	1,015,240	-	-	1,015,240
Shengchuang Environmental Technology Industry Fund	135,000	180,000	-	315,000
Other projects	120,299	-	-	120,299
Total	4,809,387	1,946,462	440,304	7,196,153

7,196,153

Note: The Board also approved capital expenditures of approximately RMB2,622 million for the Jihe Expressway reconstruction and expansion project, the early stage of Shenshan Second Expressway and Phase III of the Outer Ring project, etc. The investment and financing methods of such projects are not yet determined.

(IV) Risk Management

Through active identification, assessment and response to risk issues occurred in the operation, the Company has applied risk management to all segments, including corporate strategies, financial management, decision-making and operations. For details of the establishment and operation of the Company's risk management system, please refer to the "Internal Control" section in this annual report. Currently, the Company focuses on internal and external risk issues in respect of operation management, business expansion, financing and construction management.

1. Operational Management Risk

Risk position / analysis:

The official launch of the nation-wide ETC toll interconnection project has brought new challenges to the toll collection model and management model of the Group's operation, including new requirements on the function of toll collection systems and facilities as well as heavier workload in relation to toll collection inspection and accounting. To a large extent, electronic toll collection has replaced manual toll collection, which on one hand resulted in the problem of staff allocation and job placement, and on the other hand, imposed higher requirements on contingency response capability during the operation of highways. In addition, certain discounts have been offered for ETC toll collection, which may cause certain negative impacts on toll revenue.

Moreover, the Group has been carrying out the preliminary work of the Jihe Expressway reconstruction and expansion project. Based on the working results achieved in the current stage, it is expected that toll services will be provided according to the standard of two-direction four-lane during the reconstruction and expansion of Jihe Expressway, hence causing adverse impact on the traffic organisation, operation management and toll revenue of Jihe Expressway.

Management / response measures:

The Group has completed the transformation of toll stations and the switch of its toll collection system according to the overall national deployment. The new toll collection system and facilities have operated reliably as a whole with strong support. The Group has revised and improved the operation procedures and institutional system. It also plans to introduce the toll collection inspection management system under the free-flow model, with a view to early identifying problems such as abnormalities of data, system and vehicle driving, through big data analysis, automatic inspection and analysis of records of passing vehicles. The establishment of the road network monitoring system is also an important measure for managing the above risks. With the indicator system for monitoring the traffic of road networks, the Group can realise real-time monitoring of the operation of roads and toll stations through multi-dimensional statistics and analysis, so as to enhance the efficiency of prompt response.

The ultimate objective of nation-wide ETC toll interconnection project is to enhance the overall traffic efficiency of road networks, which will definitely attract more drivers using toll highways and enhance the utilisation rate of toll highways. In the long run, it will help to increase the traffic volume and toll revenue of road networks, thereby improving the overall operating performance of each project.

With regard to the reconstruction and expansion of Jihe Expressway, the Group has thoroughly considered the arrangement of traffic organisation during the reconstruction and expansion in its preliminary work. The Group has extensive experience in operation management and construction management of expressways, which will enable the Group to minimise the impact on traffic volume while promoting the reconstruction and expansion of Jihe Expressway as planned. The Group will also take the impact of this factor into consideration when conducting investment analysis on the reconstruction and expansion of Jihe Expressway.

2. Business Expansion Risks

Risk position / analysis:

To facilitate transformation and upgrading and realise sustainable development, the Company has stepped up its efforts in the investment and management of merger and acquisition in recent years. The major risks and challenges in business expansion include: (1) Scarce resources of quality projects lead to intense competitions, and high costs of new construction projects and reconstruction and expansion projects in general result in a decrease in the expected rate of return; (2) For the general-environmental protection industry, various uncertainties exist in the daily operation of the organic waste treatment business and the clean energy business. The Group will face challenges, including the technical research and development and equipment development for waste treatment, supply chain management of Nanjing Wind Power, safety management of wind farms, etc.; (3) M&A projects require integration and management of the operation team, as well as adaptation to differences in terms of the internal and external environment, corporate culture, business philosophy, management mindset, etc., which is to realise integration of management models with that of the Group while maintaining stability of the original management teams and core talents.

Management / response measures:

The extensive experience of the Group in feasibility studies and construction and design of projects is an important measure for controlling the costs of new construction projects and reconstruction and expansion projects. In the face of changes in industries and development of the internal and external environment, the Group will also actively develop its capabilities in project financing plans and business model design to increase the returns of projects. As for project financing, reasonable design of financing and capital bridging solutions during the construction and operation period can effectively reduce the financial risk of the project. With regard to business model design, the Group will give full play to its innovative capabilities, conduct sufficient evaluation and estimation on the project value, maintain adequate communication and cooperation with the government, specify rights and responsibilities through business contracts and control relevant risks, striving to achieve a win-win situation benefiting the government, society and enterprises.

Aiming to realise standardised management and sustainable development of each acquisition and collaboration projects, the Group will establish and improve its various rules, regulations and systems as well as incentive measures, and assign staff to be responsible for the management of the project companies so as to achieve all-round control over respective risks in terms of investments, finance, operations and human resources. The Group will establish and improve a standardised management system by benchmarking to the industry leaders, at the same time laying a sound foundation for the management of other newly acquired projects in the future. Meanwhile, the Group will also conduct in-depth classification and management of invested enterprises by giving them authorities of different aspects and levels according to their development stage, industry features, management capabilities and management foundation after comprehensive consideration, with a view to stimulate the operational momentum of invested enterprises and optimising the management models constantly, thereby establishing standardised management models to prevent and solve operational risks.

3. Financing Risk

Risk position / analysis:

In general, the Group's existing toll highway business and general-environmental protection business are both capital-intensive. The ability to provide sufficient capital support to the Group's businesses and proper financial resources for the realisation of the development strategies are important risks required to be managed by the Group.

Given increased efforts of the Group in expanding core businesses in recent years, the overall scale of investment is increasing. The Group is expecting a surge in capital expenditures in years ahead since its businesses have a relatively high funding need. Toll highway business comprises projects such as Outer Ring Phase II and Coastal Phase II; general-environmental protection business comprises projects such as Guangming Environmental Park Project, Mulei Project, and a number of waste treatment projects of Lande Environmental; other businesses comprise projects such as Duohua Bridge and Bimeng Project. In case of capital shortage or cost increase in the future market, the Group may be exposed to financing risks, which will in turn affect the Company's operating results.

Management / response measures:

The Group's excellent financing and capital management capability are its major core advantages. The Group will manage such risk in the following manners: (1) revise capital planning on a rolling basis and control the overall payment arrangement based on the capital in hand; (2) coordinate bank resources, maintain sufficient credit lines, strengthen the management of existing credit lines, maintain effective communication and information renewal with credit rating agencies and safeguard the Company's domestic and overseas credit rating; (3) make effective use of the multi-level capital market to expand financing channels, seise the opportunity of the State toencourage direct financing and physical economy of financial services, and make full use of different financing products and instruments, including securities, convertible bonds, perpetual bonds, foreign bonds, securitisation and REITS, to expand financing channels in the capital market ; (4) coordinate and optimise capital planning and financing arrangement, capitalising on market opportunities and carry out debt replacement in a timely manner, continue to optimise the Company's debt structure, reduce financial costs and enhance efficiency in resource allocation.

4. Construction and Management Risks

Risk position/analysis:

With continuous development of the dual core businesses, the engineering construction of the Company has entered the peak period. In 2021, the Group's main construction projects include Outer Ring Phase II, Coastal Phase II, Shenshan Environmental Park Project, Duohua Bridge Project, Bimeng Project and a number of kitchen waste treatment projects, etc. The current construction cost, future operating cost, project profitability and company reputation are directly or indirectly dependent on whether the project construction met the expected objectives in terms of construction period, quality, cost, safety and environmental protection. Fluctuations of building materials price, change of planning or design, new policy and technical regulations promulgated by the government, administrative measures on public affairs introduced by the government and the adjustment of development plans made by the government may affect the realisation of the above construction and management goals.

Management/response measure:

Project construction management capability has become one of the Group's important core competencies after more than 20 years of development. The Group has maintained an effective management system and is capable of managing and controlling various types of risks in the course of project construction. For preliminary works, the Group will conduct full research, strengthen communication with design parties, optimise design and construction plans, overcome technical difficulties, and save project costs. As for contract and construction management, on the one hand, the Group will take full consideration of the adjustment of material spreads in the construction contract, which can effectively reduce or transfer the risks of building material price fluctuation through the terms of the contract. On the other hand, the Group will enhance internal control and reduce changes of design by strengthening its management of changes in construction projects. Responsibilities shall be allocated on an equality basis in terms of duties, powers and interests. In terms of quality and safety management, the Group will pay more attention to safety management by continuously improving the management system of safe production, strengthening training, standardising the operation and raising the safety awareness and management ability of staff at all levels. Meanwhile, the Group will actively promote the application of new technologies, new techniques, new materials and also information technology such as Big Data and BIM, with a view to establishing an intelligent management platform for site construction, thereby realising visualised and intelligent management of engineering projects, so as to secure safe production with the application of technologies.

V. Matters Related to Financial Statements

5.1 Changes in Accounting Policies and Accounting Estimates During the Reporting

Period

1. Impact of Changes in Accounting Estimates

According to the Company's requirements under relevant accounting policies and systems, and in view of the actual situation of each main toll roads, the Group changed relevant accounting estimates of unit amortisation amount of the concession intangible assets of Yichang Expressway and Shuiguan Expressway with effect from 1 January 2020. The above changes in accountingestimates have resulted in a decrease of approximately RMB9,257,000 in equity attributable to owners of the Company as of 31 December 2020 and a decrease of approximately RMB9,257,000 in the Group's net profit attributable to owners of the Company for the Reporting Period. The above changes in accounting estimates did not have significant impact on the financial position and operating results of the Group as a whole.

The above changes in accounting estimates have been reviewed and approved at the 25th meeting of the 8th session Board of Directors of the Company. For details, please refer to note III35 to the Financial Statements in this Annual Report and the relevant announcements of the Company dated 18 March 2020.

5.2 Fulfillment of performance commitment and impact on goodwill impairment test

1.Nanjing Wind Power

On 15 March 2019, Environment Company, a wholly-owned subsidiary of the Company, entered into the "Equity Acquisition Agreement in respect of Nanjing Wind Power Technology Co., Ltd" (《關於南京風電科技有限公司的股權併購協議》) with 12 parties, including Nanjing Anbeixin Investment Management Co., Ltd, Jiangyin Jiangong Group Co., Ltd, Pan Ai Hua, Wang An Zheng, etc. all being original shareholders (collectively "Party B"), and Pan Yu ("Party C"), and Environment Company acquired a total of 30% equity interests in Nanjing Wind Power from Party B and Party C, and unilaterally increased its shareholdings to 51% via capital contribution, upon which, Party C exited from the investment and Party B made a commitment that the audited revenue of Nanjing Wind Power in 2019, 2020, 2021 and 2022 will be no less than RMB450 million, RMB600 million, RMB760 million and RMB950 million, respectively, while the audited net profit will be no less than RMB56 million, RMB70 million, RMB88 million and RMB106 million, respectively.

Nanjing Wing Power fulfilled its performance commitment for 2019. As at the date of this announcement, Nanjing Wing Power has not yet issued its audit report for year 2020. Based on its preliminary financial results, it is expected it is able to fulfil its performance commitment target for year 2020. The Group's goodwill arising from the acquisition of equity interests in Nanjing Wind Power was RMB156 million. Pursuant to the evaluation report issued by Shenzhen Pengxin Asset, Land and Real Estate Appraisal Co., Ltd. on the asset position of Nanjing Wind Power as of 31 December 2020 (i.e. the evaluation benchmark date), the recoverable amount of the asset group (including goodwill) was higher than the carrying amount, hence, no impairment loss on goodwill was recorded.

2.Lande Environmental

As at the date of this announcement, Lande Environmental has not yet issued its audit report for year 2020. Based on its preliminary financial results, it is expected it is able to fulfil its performance commitment target for year 2020.

3.Qiantai Company

On 6 August 2020, Infrastructure and Environmental Protection Company, a wholly-owned subsidiary of the Company, entered into an agreement with related parties including Shenzhen Qiantai Energy Renewable Technology Co., Ltd. ("Shenzhen Qiantai") in respect of acquiring 50% of equity interest in Qiantai Company by way of capital increase and transfer. The total capital contribution was RMB225 million. Meanwhile, Qiantai Company guaranteed that: the audited net profit of Qiantai Company in 2021, 2022, 2023 and 2024 ("Valuation Adjustment Mechanism Period") will be no less than RMB12.29 million, RMB18.56 million, RMB23.00 million and RMB28.34 million, respectively.

5.3 Accounting Errors Occurred during the Reporting Period

There is no correction of accounting errors by the Company occurred during the Reporting Period.

5.4 Changes in the Scope of Consolidated Financial Statements during the Reporting

Period

In 2020, the main changes in the scope of the consolidated financial statements of the Group are as follows:

1) During the Reporting Period, the Company completed the acquisition of the equity interests of Lande Environmental Technology Group Co., Ltd. and held 67.14% of its equity at the end of the Reporting Period. Lande Environmental and its subsidiaries has been included into the Group's consolidated financial statements since 20 January 2020.
2) During the Reporting Period, the Company completed the acquisition of 48% equity interests in Shenzhen International Financial Leasing Co., Ltd., and Financial Leasing Company has been included into the Group's consolidated financial statements since 15 April 2020.
3) During the Reporting Period, the Company completed the acquisition of 60% equity interests in Shenzhen Expressway Engineering Development Co., Ltd., and the Engineering Development Company has been included into the Group's consolidated financial statements since 14 August 2020.
4) During the Reporting Period, the Company completed the acquisition of 89.93% equity interests in Shenzhen Longda Expressway Co., Ltd., and Longda Company has been included into the Group's consolidated financial statements since 26 November 2020.
5) During the Reporting Period, the Company completed the acquisition of 50% equity interest in Shenzhen Shenshan Special Cooperation Zone Qiantai Technology Co., Ltd. and Qiantai Company has been included into the Group's consolidated financial statements since 16 December 2020.
6) For further details of the changes in the scope of consolidation please refer to the note VI to the Financial Statements in this announcement.
5.5 The Consolidated Financial Statements and Notes for the Year 2020 of the Company are set out in the Appendix to this Results Preliminary Announcement.
5.6 Results Review

The audit committee of the Company has reviewed and confirmed the financial statements and the annual report of the Company for the year 2020.

5.7 Auditors' Procedures Performed on This Results Preliminary Announcement

The figures in the 2020 Annual Results Preliminary Announcement have been agreed by the Company's auditors, Ernst & Young Hua Ming LLP ("Ernst & Young Hua Ming"), to the amounts set out in the Company's audited consolidated financial statements for the year 2020. The workperformed by Ernst & Young Hua Ming in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Ernst & Young Hua Ming on this results preliminary announcement.

VI. Other Matters

6.1 Purchase, Sale or Redemption of Securities

During the Reporting Period, no listed securities of the Company were purchased, sold or redeemed by the Company, any of its subsidiaries or any of its joint ventures.

6.2 Compliance with the Corporate Governance Code

During the Reporting Period, the Company has fully adopted all the code provisions of the "Corporate Governance Code" as set out in Appendix 14 of the Listing Rules and there is no material deviation or breach of the code provisions occurred.

6.3 Compliance with the Model Code

The "Securities Transaction Code" of the Company has been adopted by the Board in accordance with Appendix 10 to the Listing Rules, as written guidelines to regulate dealings in the Company's securities by the Directors, Supervisors and relevant staff. The "Securities Transaction Code" of the Company has incorporated the standards as set out in Appendix 10 to the Listing Rules, and gone beyond such standards to certain extents. After making specific enquiry to all the Directors, Supervisors and senior management, the Company confirms that all the Directors, Supervisors and senior management had complied with the standards for securities transactions as stipulated under the aforesaid code during the Reporting Period.

VII. Definitions

Company	Shenzhen Expressway Company Limited
Group	The Company and its consolidated subsidiaries
Year, Reporting Period,	The year ended 31 December 2020
Period, 2020(year)
Reporting Date	The date on which Annual Report 2020 of the Company is approved by the
Board, i.e. 24 March 2021
YOY	Year-on-year change rate as compared to the same period of 2019
SSE	The Shanghai Stock Exchange
HKEx	The Stock Exchange of Hong Kong Limited
Listing Rules	The Rules Governing the Listing of Securities on HKEx
CASBE	The Accounting Standards for Business Enterprises (2006) of the PRC and
the specific accounting standards as well as relevant provisions issued later
NDRC	中華人民共和國國家發展和改革委員會 (National Development and
Reform Commission)
MOT	中華人民共和國交通運輸部 (Ministry of Transport of the People's
Republic of China)

National Energy	中華人民共和國國家能源局 (National Energy Administration of the
Administration	People's Republic of China).
Ministry of Finance	中華人民共和國財政部 (Ministry of Finance of the People's Republic of
China).
Ministry of Industry	中華人民共和國工業和信息化部 (Ministry of Industry and Information
and Information	Technology of the People's Republic of China).
Technology
Shenzhen SASAC	深圳市人民政府國有資產監督管理委員會 (State-owned Assets
Supervision and Administration Commission of Shenzhen Municipal
People's Government)
Shenzhen Transport	深圳市交通運輸局 (Transport Bureau of Shenzhen Municipality), formerly
Bureau	known as 深圳市交通運輸委員會 (Transport Commission of Shenzhen
Municipality).
Three Projects	Nanguang Expressway, Yanpai Expressway and Yanba Expressway. On
November 30, 2015, the Company entered into the Three Expressways
Agreement with the Transport Bureau. The Three Projects have been
transferred to Shenzhen Transport Bureau from 0:00 on 1 January 2019.
Four Expressways	Nanguang Expressway, Yanpai Expressway, Yanba Expressway and the
Shenzhen section of Longda Expressway (the Four Expressways), all of
which have been transferred to Shenzhen Transport Bureau from 0:00 on 1
January 2019

Yichang Company
Yichang Project	The expressway from Yiyang to Changde in Hunan (Yichang Expressway)
and Changde connection line
SIHCL	深圳市投資控股有限公司（Shenzhen Investment Holdings Company
Limited）
Shenzhen International	Shenzhen International Holdings Limited
XTC Company	新通產實業開發 ( 深圳 ) 有限公司 (Xin Tong Chan Development
(Shenzhen) Company Limited)
SGH Company	深圳市深廣惠公路開發有限公司(Shenzhen Shen Guang Hui Highway
Development Company Limited), formerly known as 深圳市高速公路開發
公司(Shenzhen Freeway Development Company Limited)
Cargo Organisation	The entrusted construction project of the highway toll stations and ancillary
Adjustment Project	facilities undertook by the Company due to the implementation of the freight
traffic organisation adjustment of Shenzhen
Shenshan	The entrusted construction and management project for the whole process in
Environmental Park	relation to the infrastructure and ancillary projects for Shenshan
Project	Eco-Environmental Science and Technology Industrial Park undertaken by
the Group
Bimeng Project	The Bimeng Garden community resettlement project in Longli, Guizhou
undertaken by the Group with BT model.
JEL Company	Jade Emperor Limited
Meiguan Company	Shenzhen Meiguan Expressway Company Limited
Longda Company	Shenzhen Longda Expressway Company Limited
Jihe East Company	Shenzhen Jihe Expressway (Eastern Section) Company Limited
Qinglian Company	Guangdong Qinglian Highway Development Company Limited
Magerk Company	Hubei Magerk Expressway Management Private Limited
Outer Ring Company	Shenzhen Outer Ring Expressway Investment Company Limited
Mei Wah Company	Mei Wah Industrial (Hong Kong) Limited

湖南益常高速公路開發有限公司 (Hunan Yichang Expressway Development Company Limited).

Coastal Company Vanke

Infrastructure and

Environmental Protection Company

Qinglong Company Investment Company Guilong Holdings Guishen Company Guizhou Property Guizhou Yuelong Guizhou Shengbo

Shenzhen Guangshen Coastal Expressway Investment Company Limited China Vanke Co., Ltd

Shenzhen Shenzhen Expressway Infrastructure and Environmental Protection Development Company Limited

Shenzhen Qinglong Expressway Company Limited Shenzhen Expressway Investment Company Limited Guizhou Guilong Industry (Group) Company Limited Guizhou Guishen Investment Development Company Limited Guizhou Shenzhen Expressway Property Company Limited Guizhou Yuelong Investment Company Limited.

Guizhou Shengbo Land Company Limited

Guizhou Hengfengxin Guizhou Hengfengxin Property Company Limited. Guizhou Henghongda Guizhou Henghongda Property Company Limited.

Guizhou Yehengda Advertising Company

Guizhou Yehengda Property Company Limited Shenzhen Expressway Advertising Company LimitedUnited Land Company Shenzhen International United Land Co., Ltd

Environmental

Company

Consulting Company Guangdong UETC

Operation Development

Company

Shenzhen Expressway Environmental Company Limited

Shenzhen Expressway Engineering Consulting Company Limited Guangdong United Electronic Toll Collection Inc

Shenzhen Expressway Operation Development Company LimitedConstruction Company Shenzhen Expressway Construction Development Company Limited ArchitectureTechnolog Shenzhen Expressway Architecture Technology Development Company

y Company Bank of Guizhou Fund Company

Limited

Bank of Guizhou Co., Ltd

Shenzhen Expressway Private Equity Industrial Investment Fund Management Co., Ltd.

New Energy Company Shenzhen Expressway New Energy Holdings Company Limited

Guangdong New

Energy

Mulei Wind Power

Project

Shenzhen Expressway (Guangdong) New Energy Investment Company Limited

The wind power project of Changji Mulei Laojunmiao Wind Farm in Xinjiang Zhundong New Energy Base, including Qianzhi and Qianhui projects.

Qianzhi	Mulei County Qianzhi New Energy Development Company Limited
Qianhui	Mulei County Qianhui New Energy Development Company Limited
Land of Longli Project	The peripheral land of Guilong Project and the Duohua Bridge Project were
successfully bid by the Group. As at the end of the Reporting Period, the
Group has cumulatively won the bids for the land of Longli Project with an
area of approximately 3,037 mu, including 2,770 mu for Guilong Project and
268 mu for the Duohua Bridge Project.
Guilong Development	The proprietary secondary development project with an area of over 1,000
Project	mu, conducted by the Group on Guilong Project, which has been approved
by the Board.
Duohua Bridge Project	A road construction project from Jichang Village to Duohua Village in
Longli County undertaken by Guishen Company by BT model. The major
work of the project is Duohua Bridge.
CCCC Second	CCCC Second Highway Engineering Co.,Ltd.
Highway
Water Planning	深圳市水務規劃設計院有限公司(Shenzhen Water Planning & Design
Company	Institute Company Limited)
Derun Environment	Chongqing Derun Environment Company Limited
Water Asset	重慶市水務資產經營有限公司 (Chongqing Water Asset Management
Company Limited)
Chongqing Water	重慶水務集團股份有限公司(Chongqing Water Group Company Limited),
a company listed on the Shanghai Stock Exchange, stock code: 601158
Sanfeng Enviroment	重慶三峰環境集團股份有限公司(Chongqing San Feng Environmental
Industrial Group Co., Ltd.), a company listed on the Shanghai Stock
Exchange, stock code: 601827
Suez Group	Suez Group, France
Mengxi Region	The western economic zone of Inner Mongolia, mainly comprises the three
core and engine cities of Hohhot, Baotou, and Ordos, and radiates with the
four league cities of Alxa, Ulanqab, Bayannaoer and Wuhai.
Nanjing Wind Power	南京風電科技有限公司 (Nanjing Wind Power Technology(NJWP) Co.,
Ltd.)
One Apartment	深圳市深高速壹家公寓管理有限公司 (Shenzhen Expressway One
Apartment Management Co., Ltd.)
Engineering	深圳高速工程發展有限公司 (Shenzhen Expressway Engineering
Development	Development Co., Ltd), formerly known as 廣東博元建設工程有限公司
Company	(Guangdong Boyuan Construction Engineering Co., Ltd).
Qiantai Company	深圳深汕特別合作區乾泰技術有限公司 (Shenzhen Shenshan Special
Cooperation Zone Qiantai Technology Co., Ltd).
Vanho Securities	萬和證券股份有限公司 (Vanho Securities Co., Ltd).
Logistics Financial	中國物流金融服務有限公司 (China Logistics Financial Services Limited).
Company
Financial Leasing	深圳市深國際融資租賃有限公司 (Shenzhen International Financial
Company	Leasing Co., Ltd).
Lande Environmental	藍德環保科技集團股份有限公司 (Lande Environmental Technology
Group Holdings Co., Ltd)
Baotou Nanfeng	包頭市南風風電科技有限公司 (Baotou Nanfeng Wind Power Technology
Co., Ltd.)

Damao Ningyuan Damao Ningxiang Damao Ningfeng Damao Nanchuan Lingxiang Company Guangming

達茂旗寧源風力發電有限公司 (Damao Ningyuan Wind Power Company Limited), a wholly-owned subsidiary of Baotou Nanfeng 達茂旗寧翔風力發電有限公司 (Damao Ningxiang Wind Power Company Limited), a wholly-owned subsidiary of Baotou Nanfeng 達茂旗寧風風力發電有限公司 (Damao Ningfeng Wind Power Company Limited), a wholly-owned subsidiary of Baotou Nanfeng 達茂旗南傳風力發電有限公司 (Damao Nanchuan Wind Power Company Limited), a wholly-owned subsidiary of Baotou Nanfeng 包頭市陵翔新能源有限公司 (Baotou Lingxiang New Energy Company Limited), a wholly-owned subsidiary of Baotou Nanfeng

The Shenzhen Guangming Environmental Park PPPEnvironmental Park (Public-Private-Partnership) Project invested and constructed by the

Project

consortium composed of the Environment Company and the other companies under the BOT (Build-Operate-Transfer) model

Meilin Checkpoint

Renewal Project

Shenzhen Longhua New Area Mingzhi Office Meilin Checkpoint Urban Renewal Project, the entity which carried out the project is United Land Company and area of the land is approximately 96,000 square meters.

PRC

The People's Republic of China excluding, for the purpose of this announcement, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan

PPP (model)

Public-Private-Partnership model, refer to a partnership on the basis of concession agreement for the construction of urban infrastructure projects or the provision of public goods and services between the government and private organisations. PPP model ultimately makes both parties of the cooperation get more favorable results than those who act alone expected, by signing the contract to define the rights and obligations of both parties, to ensure the smooth completion of cooperation

BOT (model)

Build-Operate-Transfer model, refer to the infrastructure model of investment, construction and operation. On premised on an agreement between the government and the private sector, the government issues a franchise to the private sector to allow it to raise funds for a certain period of time to build an infrastructure ,manage and operate the facility and its corresponding products and services

EPC (model)

BIM

Engineering Procurement Construction model means the Company is entrusted by the owner to carry out the whole process or several stages of contracting for the design, procurement, construction, and trial operation of a construction project in accordance with the contract. Usually, the Company is responsible for the quality, safety, cost and schedule of the contracted project under the conditions of the total price contract 建築信息模型(Building Information Modelling), which is a model equipped with a complete and realistic construction database by building a virtual three-dimensional construction model and using digitisation technology. It is a digitised tool applied to engineering design, construction and management. Meanwhile, the model plays a key role in enhancing productivity, saving costs and shortening construction periods

ETC

Electronic Toll Collection, a system used to electronically collect tolls on highways.

Coastal Freight

Compensation Scheme

The scheme that all types of freight cars passing through the Coastal Project will be charged 50% of the normal toll fees standard from 1 March 2018 to 31 December 2020, and Shenzhen Transport Bureau compensates to Coastal Company for RMB302 million. Upon the expiry of the toll adjustment agreement, Shenzhen Transport Bureau, the Company and Coastal Company entered into the freight compensation agreement, wherein it is agreed that during the period from 1 January 2021 to 31 December 2024, the vehicles passing the Coastal Project should be charged at 50% of the standard rate of the toll, and such toll waived by the Company and Coastal Company shall be compensated by the government in an one-off manner in March of the following year.

Epidemic

A global outbreak of COVID-19 in early 2020.

Toll-free Policy during the Epidemic

According to the unified requirements of the Ministry of Transport, from 0:00 on 17 February 2020 to 0:00 on 6 May 2020, all vehicles using toll roads in accordance with the law will be exempted from toll across the country.

Airport Economic Zone

Shenzhen Bao'an Airport and its surrounding areas. The area mainly includes the western coastal area of Shajing and Fuyong. It covers Shenzhen Airport, Bao'an West River area and Qianhai area, with a total area of approximately 95 square kilometres. It is located at the intersection of three urban circles, including Guangdong-Foshan-Zhaoqing, Shenzhen-Dongguan-Huizhou and Zhuhai-Zhongshan-Jiangmen, and the core of the Pearl River Estuary Bay area, with outstanding strategic location advantages

Note: For definitions of the relevant highways/projects of the Company, please refer to Company's website athttp://www.sz-expressway.com under the section of "Company Business".

By Order of the Board

Hu Wei

Chairman

Shenzhen, PRC, 24 March 2021

As at the date of this announcement, the directors of SZ Expressway are Mr. HU Wei (Executive Director and Chairman of the Board), Mr. LIAO Xiang Wen (Executive Director and President), Mr. WANG Zeng Jin (Executive Director), Mr. WEN Liang (Executive Director), Mr. DAI Jing Ming (Non-executive Director), Ms. LI Xiao Yan (Non-executive Director), Ms. CHEN Hai Shan (Non-executive Director), Ms. CHEN Xiao Lu (Independent non-executive Director), Mr. BAI Hua (Independent non-executive Director) and Mr. LI Fei Long (Independent non-executive Director).

This announcement is prepared in Chinese and English. In case of any inconsistency between the Chinese version and the English version, the Chinese version shall prevail.

This results preliminary announcement, which has been published on the website of HKEx athttp://www.hkexnews.com.hk, only gives a summary of the information and particulars contained in the full "Annual Report 2020" of the Company. The "Annual Report 2020" of the Company containing all the information to accompany annual report required under Appendix 16 to the Listing Rules will be subsequently published on the website of HKEx in due course.

Appendix:

SHENZHEN EXPRESSWAY COMPANY LIMITED Consolidated Financial Statements (including notes) For the Year ended 31 December 2020

Shenzhen Expressway Company Limited
CONTENTS	Page
Reviewed Financial Statements
Consolidated and company statements of financial position	1 -3
Consolidated and company statements of profit or loss and other
comprehensive income	4 -5
Consolidated and company statements of cash flows	6 -7
Consolidated and company statements of changes in equity	8 - 10
Notes to financial statements	11 - 175
Supplementary information
1. Detailed list of non-recurring profit or loss items	176
2. Return on net assets and earnings per share	176

Note: The part marked with * in the notes to the financial statements is the new or more detailed disclosure in compliance with the Hong Kong Companies Ordinance and the Listing Rules of the Hong Kong Stock Exchange.

Consolidated Statement of Financial Position 2020

Assets	Note	2020	2019 (Restated)
Current assets：
Cash at banks and on hand	V.1	5,549,304,352.44	4,779,129,953.96
Transactional financial assets	V.2	-	62,689,444.00
Bills receivable	V.3	378,532,713.65	9,895,060.34
Accounts receivable	V.4	798,070,361.76	789,334,048.57
Prepayments	V.5	403,190,304.27	335,836,766.05
Other receivables	V.6	773,039,332.04	522,976,116.30
Inventories	V.7	939,799,846.74	724,293,477.40
Contract assets	V.8	344,065,793.25	187,763,917.15
Assets held for sale	V.9	494,662,913.71	-
Non-current assets due within one year	V.10	74,870,082.79	176,339,894.25
Other current assets	V.11	325,722,991.02	247,715,780.63
Total current assets	10,081,258,691.67	7,835,974,458.65
Non-current assets:
Long-term prepayments	V.12	318,301,869.39	360,050,431.14
Long-term receivables	V.13	997,354,914.31	433,144,452.90
Other non-current financial assets	V.14	1,605,891,286.54	217,939,080.00
Long-term equity investments	V.15	8,939,325,449.78	8,706,289,341.73
Investment properties	V.16	11,222,998.80	11,798,941.20
Fixed assets	V.17	3,493,301,179.79	2,871,815,153.51
Construction in progress	V.18	123,595,758.16	15,938,914.56
Right-of-use assets	V.19	139,306,754.99	152,870,380.46
Intangible assets	V.20	26,853,518,315.85	23,603,411,519.77
Development expenditure	1,856,946.00	-
Goodwill	V.21	156,039,775.24	156,039,775.24
Long-term prepaid expenses	59,662,232.25	32,405,392.30
Deferred income tax assets	V.22	593,773,910.48	655,007,680.73
Other non-current assets	V.23	1,770,551,959.38	605,728,136.72
Total non-current assets	45,063,703,350.96	37,822,439,200.26
Total assets	55,144,962,042.63	45,658,413,658.91

Consolidated Statement of Financial Position(Continued) 2020

Liabilities and shareholders' equity	Note	2020	2019
Current liabilities:
Short-term borrowings	V.24	1,341,218,126.43	363,877,741.65
Transactional financial liabilities	V.2	83,677,813.21	-
Notes payable	V.25	295,467,331.39	131,749,731.69
Accounts payable	V.26	1,869,889,416.15	983,440,109.43
Contract liabilities	V.27	319,853,971.11	953,225,966.42
Employee benefits payable	V.28	281,972,189.76	288,511,044.14
Payable taxes	V.29	565,789,757.10	261,897,258.24
Other Payables	V.30	3,570,365,680.07	3,189,731,830.23
Non-current liabilities due within one year	V.31	3,665,798,518.83	505,101,989.80
Other current liabilities	V.32	2,041,455,397.33	-
Total current liabilities	14,035,488,201.38	6,677,535,671.60
Non-current liabilities:
Long-term borrowings	V.33	6,511,333,267.55	9,031,815,479.53
Bonds payable	V.34	3,792,324,357.82	4,676,256,207.56
Long-term payables	V.35	2,234,299,535.22	2,217,015,191.85
Long-term employee benefits payable	V.36	114,813,411.45	105,824,300.00
Lease liabilities	V.37	104,653,671.67	118,269,744.66
Estimated debts	V.38	165,626,186.20	10,284,566.66
Deferred revenue	V.39	608,186,171.37	616,021,048.73
Deferred income tax liabilities	V.22	1,299,127,356.20	1,157,482,536.08
Total non-current liabilities	14,830,363,957.48	17,932,969,075.07
Total liabilities	28,865,852,158.86	24,610,504,746.67
Shareholders' equity
Equity	V.40	2,180,770,326.00	2,180,770,326.00
Other equity instruments	V.41	4,000,000,000.00	-
Including: perpetual debt	4,000,000,000.00	-
Capital reserves	V.42	6,003,524,259.38	6,280,676,402.09
Other comprehensive income	V.43	868,945,190.79	916,005,374.46
Surplus reserves	V.44	2,711,599,472.69	2,617,808,817.01
Undistributed profit	V.45	7,278,102,534.06	6,530,627,585.70
Total shareholders' equity attributable to the parent company	23,042,941,782.92	18,525,888,505.26
Minority interests	3,236,168,100.85	2,522,020,406.98
Total shareholders' equity	26,279,109,883.77	21,047,908,912.24
Total liabilities and shareholders' equity	55,144,962,042.63	45,658,413,658.91

These financial statements are signed by:

Legal representative: Hu WeiChief financial officer: Zhao GuipingHead of accounting department (Account officer): Li Xiaojun

The accompanying notes are an integral part of these financial statements

Company Statement of Financial Position 2020

Item	31 December 2020	31 December 2019
Current assets
Cash at banks and on hand	1,365,622,853.05	1,309,001,086.11
Transactional financial assets	-	62,689,444.00
Accounts receivable	XIV.1	20,151,041.12	16,170,543.00
Prepayments	21,750,910.62	15,546,278.08
Other receivables	XIV.2	1,319,653,642.94	1,005,795,909.83
Inventories	1,263,019.74	776,373.15
Contract assets	134,830,169.45	115,303,836.38
Assets held for sale	494,662,913.71	-
Other current assets	-	13,771,786.56
Total current assets	3,357,934,550.63	2,539,055,257.11
Non-current assets
Long-term prepayments	206,552,739.53	80,469,002.23
Long-term receivables	6,014,995,341.30	4,503,665,771.45
Long-term equity investments	XIV.3	25,003,745,962.67	19,741,522,254.89
Other non-current financial assets	1,571,963,316.54	217,939,080.00
Investment properties	11,222,998.80	11,798,941.20
Fixed assets	154,670,681.46	159,982,306.36
Construction in progress	-	2,398,709.49
Right-of-use assets	23,040,119.83	32,330,237.50
Intangible assets	187,570,677.62	219,274,003.05
Development expenditures	1,856,946.00	-
Long-term prepaid expenses	16,421,680.05	1,144,174.07
Deferred tax assets	84,546,531.11	62,996,204.64
Other current assets	152,054,832.31	-
Total non-current assets	33,428,641,827.22	25,033,520,684.88
Total assets	36,786,576,377.85	27,572,575,941.99
Current liabilities
Short-term borrowings	601,857,503.53	-
Transactional financial liabilities	83,677,813.21	-
Accounts payable	62,687,911.59	19,760,352.78
Contract liabilities	-	2,411,761.00
Employee benefits payable	96,584,656.04	101,746,485.90
Taxes payable	38,268,742.63	14,883,928.57
Other payables	1,710,725,016.45	2,046,947,507.14
Current portion of non-current liabilities	3,315,629,370.65	155,386,860.13
Other current liabilities	2,018,087,592.62	-
Total current liabilities	7,927,518,606.72	2,341,136,895.52
Non-current liabilities
Long-term borrowings	4,658,608,867.55	4,015,858,867.55
Bonds payable	3,792,324,357.82	4,676,256,207.56
Long-term payables	1,948,950,517.48	1,618,960,000.00
Long-term employee benefits payable	69,517,451.40	59,000,200.00
Lease liabilities	19,098,409.12	28,620,243.26
Provision	29,708,258.21	-
Deferred income	272,250,747.47	291,504,931.35
Deferred Tax Liability	40,123,832.92	-
Total non-current liabilities	10,830,582,441.97	10,690,200,449.72
Total liabilities	18,750,025,605.48	13,031,337,345.24
Owners' equity
Share capital	V.40	2,180,770,326.00	2,180,770,326.00
Other equity instruments	V.41	4,000,000,000.00	-
Including: permanent debt	4,000,000,000.00	-
Capital surplus	2,978,192,273.96	3,279,942,664.85
Other comprehensive income	-14,148,065.97	770,798.03
Surplus reserve	V.44	2,711,599,472.69	2,617,808,817.01
Undistributed profits	6,172,061,322.48	6,461,945,990.86
Total owners' equity	18,028,475,329.16	14,541,238,596.75
Total liabilities and owners' equity	36,786,576,377.85	27,572,575,941.99

The accompanying notes are an integral part of these financial statements.

Consolidated Statement of Profit or Loss and Other Comprehensive Income 2020

Item	Notes	2020	2019 (Restated)

1.Total revenue	V.46	8,026,737,099.99	6,390,295,110.82
2.Total costs	6,247,745,214.15	4,625,148,989.65
Including: Cost of services	V.46	5,214,517,013.16	3,585,544,228.47
Taxes and surcharges	V.47	66,849,496.88	55,168,145.30
Selling expenses	53,050,692.24	27,304,777.79
General and administrative expenses	V.48	363,086,346.32	350,922,800.60
Research and development expenses	V.49	58,693,733.78	18,474,814.08
Financial expenses	V.50	491,547,931.77	587,734,223.41
Including: Interest expense	696,585,411.91	616,906,852.64
Interest income	-61,078,272.26	-52,098,081.71
Add: Other income	V.51	46,895,088.75	8,563,991.88
Investment income	V.52	937,363,288.55	1,242,672,036.85
Including: Share of profits of associates and joint ventures	V.15	880,729,972.60	899,684,300.39
Gain or loss from changes in fair value (loss shown with "-")	V.53	-2,343,020.67	81,086,510.00
Credit impairment losses (loss shown with "-")	V.54	-48,205,059.78	-5,435,762.42
Asset impairment loss (loss shown with "-")	V.55	-116,143.51	-552,000,000.00
Gains or loss on disposal of assets (loss shown with "-")	74,529.31	386,045.39
3.Operating profits	2,712,660,568.49	2,540,418,942.87
Add: Non-operating income	V.56	11,048,942.94	12,446,180.50
Less: Non-operating expenses	V.57	14,243,130.20	12,266,950.23
4.Total profit	2,709,466,381.23	2,540,598,173.14
Less: Income tax expenses	V.59	473,910,634.04	-68,080,046.28
5.Net profit	2,235,555,747.19	2,608,678,219.42
Including: net profit before the merger of the merged party in a business combination under common control	43,219,171.98	72,194,997.65
(1) Classified by business continuity
Net profit from continuing operations (loss shown with "-")	2,235,555,747.19	2,608,678,219.42
(2) Classified by ownership
Net profit attributable to owners of the Company	2,054,523,306.30	2,564,317,594.25
Minority interests	181,032,440.89	44,360,625.17
6.Other comprehensive income after tax (loss shown with "-")	-47,060,183.67	34,629,387.26
Other comprehensive income after tax attributable to owners of the company	-47,060,183.67	34,629,387.26
Items that may be reclassified subsequently to profit or loss	-47,060,183.67	34,629,387.26
Including: Foreign exchange gain/loss	V.43	-5,459,626.18	1,407,655.27
Share of other comprehensive income from investees accounted for the equity method to be reclassified to profit or loss in the subsequent period	V.43	-41,600,557.49	33,221,731.99
7.Total comprehensive income	2,188,495,563.52	2,643,307,606.68
Total comprehensive income attributable to owners of the Company	2,007,463,122.63	2,598,946,981.51
Total comprehensive income attributable to minority interests	181,032,440.89	44,360,625.17
8.Earnings per share
Basic earnings per share (RMB/share)	V.64(1)	0.94	1.18
Diluted earnings per share (RMB/share)	V.64(1)	0.94	1.18

The accompanying notes are an integral part of these financial statements.

Company Statement of Profit or Loss and Other Comprehensive Income 2020

Item	Notes	2020	2019

1. Total revenue	XIV.4	748,753,621.85	847,458,688.26
Less: Cost of services	XIV.4	278,167,368.83	304,766,868.20
Tax and surcharges	4,531,940.97	5,870,527.93
General and administrative expenses	214,880,143.28	253,094,815.03
Financial expenses	126,603,248.48	212,540,305.49
Including: Interest expense	521,950,889.21	335,770,080.64
Interest income	-263,575,094.42	-169,176,987.11
Add: Other income	33,448,014.58	1,411,793.31
Investment income	XIV.5	888,967,922.38	1,274,784,245.06
Including: Share of profits of associates and joint ventures	655,401,158.35	705,905,909.94
Gain or loss from changes in fair value (loss shown with "-")	-42,343,020.67	55,086,510.00
Gains or loss on disposal of assets	12,978.64	401,073.56
2.Operating profit	1,004,656,815.22	1,402,869,793.54
Add: Non-operating income	1,349,035.86	334,300.41
Less: Non-operating expenses	1,826,249.17	883,418.11
3.Total profit	1,004,179,601.91	1,402,320,675.84
Less: Income tax expenses	51,961,933.98	40,883,108.64
4. Net profit	952,217,667.93	1,361,437,567.20
Net profit from continuing operations	952,217,667.93	1,361,437,567.20
5. Other comprehensive income (loss shown with "-")	-14,918,864.00	-1,175,383.96
Items that may be reclassified subsequently to profit or loss	-5,330,956.40	-1,175,383.96
Including: Share of other comprehensive income from investees accounted for the equity method to be reclassified to profit or loss in the subsequent period	-5,330,956.40	-1,175,383.96
6. Total comprehensive income	937,298,803.93	1,360,262,183.24

The accompanying notes are an integral part of these financial statements.

Consolidated Statement of Cash Flows 2020

Item	Notes	2020	2019
(Restated)
1.Cash flows from operating activities:
Cash received from rendering services and selling goods	5,224,541,330.86	5,617,980,236.44
Refund of taxes	9,055,921.31	10,311,510.97
Cash received relating to other operating activities	V.60(1)	392,344,240.69	80,459,082.50
Sub-total of cash inflows	5,625,941,492.86	5,708,750,829.91
Cash paid for goods and services	2,431,058,268.63	1,503,309,464.74
Cash paid to and on behalf of employees	813,081,462.48	717,728,043.38
Payments of taxes and surcharges	563,904,568.19	1,058,003,538.90
Cash paid relating to other operating activities	V.60(2)	717,263,260.49	734,352,445.83
Sub-total of cash outflows	4,525,307,559.79	4,013,393,492.85
Net cash flows used in operating activities	V.61(1)	1,100,633,933.07	1,695,357,337.06
2.Cash flows from investing activities
Cash received from recovery of investments	113,918,059.94	710,881,506.16
Cash received from returns on investments	306,114,819.30	425,251,397.49
Net cash received from disposal of fixed assets intangible assets and other long-term assets	1,262,708.09	1,699,012,279.00
Net cash flows from disposal of subsidiaries and other business units	V.60(3)	156,010,000.00	567,000,000.00
Cash received relating to other investing activities	V.60(4)	107,350,604.72	382,928,403.86
Sub-total of cash inflows	684,656,192.05	3,785,073,586.51
Cash paid to acquire fixed assets, intangible assets and other long-term assets	2,483,911,608.02	1,621,704,789.93
Payments for investing activities	2,028,234,088.71	363,126,864.49
Cash paid to acquire subsidiaries and other business units	V.60(5)	453,525,734.29	-
Cash paid relating to other investing activities	V.60(6)	149,816,594.72	2,026,976,098.65
Sub-total of cash outflows	5,115,488,025.74	4,011,807,753.07
Net cash flows used in investing activities	-4,430,831,833.69	-226,734,166.56
3.Cash flows from financing activities
Cash received from absorbing investment	4,030,790,067.00	2,205,000.00
Cash received from borrowings	12,012,675,519.46	4,857,576,249.18
Cash received relating to other financing activities	V.60(7)	445,900,000.00	2,569,790,000.00
Sub-total of cash inflows	16,489,365,586.46	7,429,571,249.18
Cash repayments of borrowings	9,447,323,816.64	4,567,023,779.19
Cash payments for interest expenses and distribution of dividends or profits	1,920,539,452.58	2,336,361,865.92
Including: Dividends and profits paid by subsidiaries to minority shareholders	127,272,394.51	153,885,579.25
Cash payments relating to other financing activities	V.60(8)	1,533,223,757.72	1,680,402,187.93
Sub-total of cash outflows	12,901,087,026.94	8,583,787,833.04
Net cash flows used in financing activities	3,588,278,559.52	-1,154,216,583.86
4.Effect of foreign exchange rate changes on cash and cash equivalents	-2,334,372.36	113,118.38
5.Net increase in cash and cash equivalents	V.61(1).2	255,746,286.54	314,519,705.02
Add: Cash and cash equivalents at beginning of year	2,977,834,893.73	2,663,315,188.71
6.Cash and cash equivalents at end of year	V.62(1).2	3,233,581,180.27	2,977,834,893.73

The accompanying notes are an integral part of these financial statements.

Company Statement of Cash Flows 2020

Item	Notes	2020	2019
1.Cash flows from operating activities
Cash received from selling goods and rendering services	411,736,643.63	798,453,954.44
Cash received relating to other operating activities	1,621,908,100.32	2,398,164,503.30
Sub-total of cash inflows	2,033,644,743.95	3,196,618,457.74
Cash paid for goods and services	91,944,300.64	88,113,186.77
Cash paid to and on behalf of employees	218,471,575.93	219,375,894.78
Payments of taxes and surcharges	43,596,759.47	129,354,240.36
Cash paid relating to other operating activities	1,389,384,766.00	2,783,675,175.29
Sub-total of cash outflows	1,743,397,402.04	3,220,518,497.20
Net cash flows from operating activities	290,247,341.91	-23,900,039.46
2.Cash flows from investing activities
Cash received from recovery of investments	156,010,000.00	622,570,553.84
Cash received from returns on investments	300,288,849.79	427,627,287.90
Net cash received from disposal of fixed assets, intangible assets and other long-term assets	3,500.00	932,730,318.97
Cash received relating to other investing activities	2,242,504,940.76	1,315,343,863.53
Sub-total of cash inflows	2,698,807,290.55	3,298,272,024.24
Cash paid to acquire fixed assets, intangible assets and other long-term assets	138,562,417.10	102,597,953.29
Payments for investing activities	6,986,405,267.59	4,758,950,000.67
Cash paid relating to other investing activities	3,759,314,703.05	2,286,832,118.97
Sub-total of cash outflows	10,884,282,387.74	7,148,380,072.93
Net cash flows from investing activities	-8,185,475,097.19	-3,850,108,048.69
3.Cash flows from financing activities
Cash received from absorbing investment	4,000,000,000.00	-
Cash received from borrowings	8,298,070,797.56	4,438,000,000.00
Cash received relating to other financing activities	635,900,000.00	4,274,290,000.00
Sub-total of cash inflows	12,933,970,797.56	8,712,290,000.00
Cash repayments of borrowings	2,688,000,000.00	689,954,545.45
Cash payments for interest expenses and distribution of dividends or profits	1,545,367,456.34	1,882,670,260.13
Cash payments relating to other financing activities	745,891,639.05	2,190,993,833.63
Sub-total of cash outflows	4,979,259,095.39	4,763,618,639.21
Net cash flows from financing activities	7,954,711,702.17	3,948,671,360.79
4.Effect of foreign exchange rate changes on cash and cash equivalents	-5,090.24	-80.34
5.Net increase in cash and cash equivalents	59,478,856.65	74,663,192.30
Add: Cash and cash equivalents at beginning of year	1,267,105,113.94	1,192,441,921.64
6.Cash and cash equivalents at end of year	1,326,583,970.59	1,267,105,113.94

The accompanying notes are an integral part of these financial statements.

Shenzhen Expressway Company Limited

Consolidated Statement of Changes in Equity 2020

Item	2020
Attributable to owners of the Company	Minority interests	Total owners' equity
Share capital	Other equity instruments	Capital surplus	Other comprehensive income	Surplus reserve	Undistributed profit	Subtotal
1. Ending balance on 31 December 2020	2,180,770,326.00	-	6,220,711,401.21	916,005,374.46	2,617,808,817.01	6,439,246,724.95	18,374,542,643.63	2,348,729,616.21	20,723,272,259.84
Add: Business combination under common control	-	-	59,965,000.88	-	-	91,380,860.75	151,345,861.63	173,290,790.77	324,636,652.40
2. Beginning balance on 1 January 2020	2,180,770,326.00	-	6,280,676,402.09	916,005,374.46	2,617,808,817.01	6,530,627,585.70	18,525,888,505.26	2,522,020,406.98	21,047,908,912.24
3.Increases/decreases in the current year ("-" for decreases)	-	4,000,000,000.00	-277,152,142.71	-47,060,183.67	93,790,655.68	747,474,948.36	4,517,053,277.66	714,147,693.87	5,231,200,971.53
(1) Total comprehensive income	-	-	-	-47,060,183.67	-	2,054,523,306.30	2,007,463,122.63	181,032,440.89	2,188,495,563.52
1.Net profit	-	-	-	-	-	2,054,523,306.30	2,054,523,306.30	181,032,440.89	2,235,555,747.19
2.Other comprehensive income	-	-	-	-47,060,183.67	-	-	-47,060,183.67	-	-47,060,183.67
(2) Profit distribution (Note V.45)	-	-	-	-	93,790,655.68	-1,307,048,357.94	-1,213,257,702.26	-127,272,394.51	-1,340,530,096.77
1.Withdrawal of surplus reserve	-	-	-	-	93,790,655.68	-93,790,655.68	-	-	-
2.Profit distribution to equity owners	-	-	-	-	-	-1,198,946,591.15	-1,198,946,591.15	-127,272,394.51	-1,326,218,985.66
3.Profit distribution to perpetual bond	-	-	-	-	-	-14,311,111.11	-14,311,111.11	-	-14,311,111.11
(3) Capital invested and reduced by shareholders	-	4,000,000,000.00	-429,089,399.70	-	-	-	3,570,910,600.30	660,387,647.49	4,231,298,247.79
1.Capital invested by shareholders	-	-	-1,011,521.33	-	-	-	-1,011,521.33	31,801,588.33	30,790,067.00
2.Capital reduced by shareholders	-	-	-	-	-	-	-	-29,749,845.09	-29,749,845.09
3.Capital invested by holders of other equity instruments-perpetual bonds	-	4,000,000,000.00	-	-	-	-	4,000,000,000.00	-	4,000,000,000.00
4.Business combination under common control	-	-	-428,077,878.37	-	-	-	-428,077,878.37	-	-428,077,878.37
5.Business combination not under common control (Note VI.1)	-	-	-	-	-	-	-	658,335,904.25	658,335,904.25
(4) Others	-	-	151,937,256.99	-	-	-	151,937,256.99	-	151,937,256.99
1.Other changes in equity of associates (Note V.15(b))	-	-	151,937,256.99	-	-	-	151,937,256.99	-	151,937,256.99
4. Ending balance on 31 December 2020	2,180,770,326.00	4,000,000,000.00	6,003,524,259.38	868,945,190.79	2,711,599,472.69	7,278,102,534.06	23,042,941,782.92	3,236,168,100.85	26,279,109,883.77

The accompanying notes are an integral part of these financial statements.

Shenzhen Expressway Company Limited

Consolidated Statement of Changes in Equity (continued) 2020

Item	2019
Attributable to owners of the Company	Minority interests	Total owners' equity
Share capital	Capital surplus	Other comprehensive income	Surplus reserve	Undistributed profit	Subtotal
1. Ending balance on 31 December 2018	2,180,770,326.00	6,219,027,132.41	881,375,987.20	2,481,665,060.29	5,624,252,437.38	17,387,090,943.28	2,152,661,784.07	19,539,752,727.35
Add: Business combination under common control	-	59,965,000.88	-	-	26,548,242.25	86,513,243.13	169,813,990.87	256,327,234.00
2.Beginning balance on 1 January 2019	2,180,770,326.00	6,278,992,133.29	881,375,987.20	2,481,665,060.29	5,650,800,679.63	17,473,604,186.41	2,322,475,774.94	19,796,079,961.35
3.Increases/decreases in the current year ("-" for decreases)	-	1,684,268.80	34,629,387.26	136,143,756.72	879,826,906.07	1,052,284,318.85	199,544,632.04	1,251,828,950.89
(1) Total comprehensive income	-	-	34,629,387.26	-	2,564,317,594.25	2,598,946,981.51	44,360,625.17	2,643,307,606.68
1.Net profit	-	-	-	-	2,564,317,594.25	2,564,317,594.25	44,360,625.17	2,608,678,219.42
2.Other comprehensive income	-	-	34,629,387.26	-	-	34,629,387.26	-	34,629,387.26
(2) Profit distribution (Note V.45)	-	-	-	136,143,756.72	- 1,684,490,688.18	-1,548,346,931.46	-153,885,579.25	-1,702,232,510.71
1.Withdrawal of surplus reserve	-	-	-	136,143,756.72	-136,143,756.72	-	-	-
2.Profit distribution to equity owners	-	-	-	-	- 1,548,346,931.46	-1,548,346,931.46	-153,885,579.25	-1,702,232,510.71
(3) Capital invested and reduced by shareholders	-	-	-	-	-	-	309,069,586.12	309,069,586.12
1.Capital invested by shareholders	-	-	-	-	-	-	-	-
2.Capital reduced by shareholders	-	-	-	-	-	-	-31,009,845.84	-31,009,845.84
3.Business combination not under common control	-	-	-	-	-	-	340,079,431.96	340,079,431.96
(4) Others	-	1,684,268.80	-	-	-	1,684,268.80	-	1,684,268.80
1.Other changes in equity of associates	-	1,684,268.80	-	-	-	1,684,268.80	-	1,684,268.80
4. Ending balance on 31 December 2019	2,180,770,326.00	6,280,676,402.09	916,005,374.46	2,617,808,817.01	6,530,627,585.70	18,525,888,505.26	2,522,020,406.98	21,047,908,912.24

The accompanying notes are an integral part of these financial statements.

Shenzhen Expressway Company Limited

Company Statement of Changes in Equity 2020

Item	2020
Share capital	Other equity instruments	Capital surplus	Other comprehensive income	Surplus reserve	Undistributed profit	Total owners' equity
1.Beginning balance on 1 January 2020	2,180,770,326.00	-	3,279,942,664.85	770,798.03	2,617,808,817.01	6,461,945,990.86	14,541,238,596.75
2.Increases/decreases during the year ("-" for decreases)	-	4,000,000,000.00	-301,750,390.89	-14,918,864.00	93,790,655.68	-289,884,668.38	3,487,236,732.41
(1) Total comprehensive income	-	-	-	-14,918,864.00	-	952,217,667.93	937,298,803.93
1.Net profit	-	-	-	-	-	952,217,667.93	952,217,667.93
2.Other comprehensive income	-	-	-	-14,918,864.00	-	-	-14,918,864.00
(2) Profit distribution (Note V,45)	-	-	-	-	93,790,655.68	-1,242,102,336.31	-1,148,311,680.63
1.Withdrawal of surplus reserve	-	-	-	-	93,790,655.68	-93,790,655.68	-
2.Profit distribution to equity owners	-	-	-	-	-	-1,134,000,569.52	-1,134,000,569.52
3.Profit distribution to perpetual payment interest	-	-	-	-	-	-14,311,111.11	-14,311,111.11
(3) Shareholders invested and reducing capital	-	4,000,000,000.00	-301,750,390.89	-	-	-	3,698,249,609.11
1.Other equity tool holders put into capital - perpetual debts	-	4,000,000,000.00	-	-	-	-	4,000,000,000.00
2.Business combination under common control	-	-	-301,750,390.89	-	-	-	-301,750,390.89
3. Ending balance on 31 December 2020	2,180,770,326.00	4,000,000,000.00	2,978,192,273.96	-14,148,065.97	2,711,599,472.69	6,172,061,322.48	18,028,475,329.16

2019

Item	2019
Share capital	Capital surplus	Other comprehensive income	Surplus reserve	Undistributed profit	Total owners' equity
1.Ending balance on 31 December 2018	2,180,770,326.00	3,279,942,664.85	1,946,181.99	2,481,665,060.29	6,784,999,111.84	14,729,323,344.97
2.Increases/decreases during the year ("-" for decreases)	-	-	-1,175,383.96	136,143,756.72	-323,053,120.98	-188,084,748.22
(1) Total comprehensive income	-	-	-1,175,383.96	-	1,361,437,567.20	1,360,262,183.24
1.Net profit	-	-	-	-	1,361,437,567.20	1,361,437,567.20
2.Other comprehensive income	-1,175,383.96	-	-	-1,175,383.96
(2) Profit distribution (Note V,45)	-	-	-	136,143,756.72	-1,684,490,688.18	-1,548,346,931.46
1.Withdrawal of surplus reserve	-	-	-	136,143,756.72	-136,143,756.72	-
2.Profit distribution to equity owners	-	-	-	-	-1,548,346,931.46	-1,548,346,931.46
3. Ending balance on 31 December 2019	2,180,770,326.00	3,279,942,664.85	770,798.03	2,617,808,817.01	6,461,945,990.86	14,541,238,596.75

The accompanying notes are an integral part of these financial statements.

- 10 -

I. General information

Shenzhen Expressway Company Limited (the "Company") was established as a joint stock limited company in Guangdong Province, the People's Republic of China (the "PRC") on 30 December 1996. The Company has its H shares and A shares listed on the Stock Exchange of Hong Kong Limited and the Shanghai Stock Exchange of the PRC, respectively. The address of its registered office is Fumin Toll Station, Fucheng Subdistrict, Longhua District, Shenzhen, the PRC. The head office of the Company is located at 2-4/F, Jiangsu Building, Yitian Road, Futian District, Shenzhen, the PRC.

The principal activities of the Company and its subsidiaries (collectively the "Group") are the construction, operation, management, investment of toll highways and environmental protection in China. The environmental business mainly includes solid waste treatment and clean energy.

Shenzhen International Holdings Limited ("Shenzhen International") is the parent company of the Company. The State-owned Assets Supervision and Administration Commission of the People's Government of Shenzhen Municipality ("Shenzhen SASAC") is the ultimate controlling company of the Company.

These financial statements have been approved for issue by the Company's Board of Directors on 24 March 2021.

The consolidation scope of the financial statements is determined on the basis of control. The detailed information of changes in the scope of consolidation is included in Note VI.

II. Basis of preparation of the financial statements

These financial statements have been prepared in accordance with the "Accounting Standards for Business Enterprises -- Basic Standards" issued by the Ministry of Finance and the subsequent issuance and revision of specific accounting standards, application guidelines, interpretations and other relevant provisions (collectively, "Accounting Standards for Business Enterprises"). In addition, the financial statements have been prepared in accordance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and regulations of the Hong Kong Companies Ordinance.

On 31 December 2020, The Group's current liabilities exceeded its current assets by RMB 3,954,229,509.71. The directors of the company have assessed that as the group can generate positive cash flow from operating activities, and the group still has unused bank credit lines of about RMB 16.41 billion as at 31 December 2020, and the relevant banks have not made any reservation on the use of these credit lines, which can meet the financial needs of the group's debt and capital commitments, the directors of the company consider that the group has not made any reservation on the use of these credit lines There is no going concern in the group. Therefore, the company adopted the going concern basis in preparing the consolidated financial statements.

Except for certain financial instruments, the financial statements have been prepared using historical cost as the principle of measurement. A disposal group classified as held for sale is reported at the lower of the book value and the net amount of the fair value less the cost of the sale. Where assets are impaired, provisions for asset impairment are made in accordance with the relevant requirements.

III. Summary of significant accounting policies and accounting estimates

The Group adopts specific accounting policies and makes accounting estimates according to the characteristics of its business operations. The focus of the accounting policies and accounting is the criteria for assessing impairment of non-current assets (Note III. 19), depreciation policy for fixed assets and amortization policy for intangible assets (Note III. 14 and 18), measurement of provisions (Note III. 23), revenue recognition (Note III. 25) and recognition of deferred income tax assets (Note III. 29), etc.

Key judgments and estimates applied for significant accounting policies by the Group are disclosed in Note III.34.

1. Statement of compliance with Accounting Standards for Business Enterprises

The financial statements present truly and completely the financial position of the Group and the Company as at 31 December 2020, and the financial performance and the cash flows for the year ended 31 December 2020 in accordance with Accounting Standards for Business Enterprises.

2. Accounting period

The fiscal year of the Group begins on 1 January and ends on 31 December of the Gregorian calendar. This accounting period begins on 1 January 2020 and ends on 31 December 2020.

3. Normal operating cycle

Except for the real estate business, kitchen waste disposal construction projects and agent construction business, the Group's business has a relatively short operating cycle and takes 12 months as the standard for the liquidity division of assets and liabilities. The business cycle of real estate business is generally more than 12 months from real estate development to sales realization. The specific cycle is determined according to the development project, and the business cycle is taken as the criterion for the liquidity division of assets and liabilities. The business cycle of kitchen waste disposal construction projects and agent construction businesses is generally more than 12 months from project development to project completion. The specific cycle is determined according to the development of the project, and its business cycle is taken as the liquidity division standard of assets and liabilities.

4. Functional currency

The Company adopts Renminbi ("RMB") as its functional currency for preparing its financial statements except that Fameluxe Investment Company Limited ("Fameluxe Investment") adopts the Hong Kong dollar ("HKD") as its functional currency. The financial statements are denominated in RMB unless there is any special circumstance.

5. Business combinations

Business combinations are classified into business combinations involving entities under common control and business combinations not involving entities under common control.

The accounting treatment of business combinations involving enterprises under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination involving entities under common control, the party that, on the combination date, obtains control of another entity participating in the combination is the merging party, the other combining enterprise(s) is(are) the merged party(parties). The combination date is the date on which the merging party actually obtains control of the merged party(parties). Assets and liabilities (including goodwill arising from the acquisition of the merged party by the ultimate controlling party) obtained by the merging party in a business combination shall be measured at their carrying amounts at the date of combination as recorded by the ultimate controlling party. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) shall be adjusted to share premium under capital surplus. If the capital surplus is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

III. Summary of significant accounting policies and accounting estimates (continued) 5. Business combinations (continued)

The accounting treatment of business combinations involving enterprises not under common control

If the enterprises participating in the merger are not ultimately controlled by the same party or the same parties before and after the merger, it is an enterprise merger under different control. In case of a combination of enterprises not under common control, the party that acquires the control right of the other enterprises participating in the merger on the purchase date is the purchaser, and the other enterprises participating in the merger are the purchaser. The term "purchase date" refers to the date on which the purchaser actually acquires the control right of the purchaser.

The acquirer shall measure the acquiree's identifiable assets, liabilities and contingent liabilities acquired in the business combination at their fair values on the acquisition date.

Where the fair value of combination consideration and the fair value of the equity interest held in the acquiree prior to the acquisition date exceed the acquirer's interest in the fair value of the acquiree's identifiable net assets, the difference is recognized as goodwill, which is subsequently measured at cost less accumulated impairment losses. Where the fair value of combination consideration and the fair value of the equity interest held in the acquiree prior to the acquisition date are less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirer first reassesses the measurement of the fair values of the acquiree's identifiable assets, liabilities and contingent liabilities and measurement of the fair value of combination consideration and the fair value of the equity interest held in the acquiree prior to the acquisition date. If the fair value of combination consideration and the fair value of the equity interest held in the acquiree prior to the acquisition date are still less than the acquirer's interest in the fair value of the acquiree's identifiable net assets after the reassessment, the acquirer recognizes the difference immediately in profit or loss for the current period.

6. Consolidated financial statements

The scope of consolidation in the consolidated financial statements is determined on the basis of control. The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries. A subsidiary is an entity (including an entity, a separable part of an investee, and the structured entities controlled by the Company) which is under the control of the Company.

The accounting policies and accounting periods of the Company and subsidiaries are consistent in the preparation of the consolidated financial statements. All assets, liabilities, equity, income, expenses and cash flows arising from intra-group transactions are eliminated on consolidation.

When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is still charged against non-controlling interests.

For a subsidiary that is acquired in a business combination involving enterprises not under common control, the operating results and cash flows of the acquiree shall be consolidated into the consolidated financial statements from the date on which the Group takes control of acquiree to the date on which such control ceases. In the preparation of the consolidated financial statements, the financial statements of the subsidiary are adjusted based on the fair value of the subsidiary's identifiable assets, liabilities or contingent liabilities determined as at the acquisition date.

III. Summary of significant accounting policies and accounting estimates (continued) 6. Consolidated financial statements (continued)

For a subsidiary that is acquired in a business combination involving enterprises under common control, the operating results and cash flows of the merged party shall be incorporated into the consolidated financial statements at the beginning of the current period. In the preparation of the consolidated financial statements, the relative items of the financial statements of the previous period are treated as if the merged party had been formed under the control of the Group at the very beginning.

If a change in any facts and circumstances gives rise to one or more changes in controlling factors, the Group will reassess whether it controls the investee or not.

Change in non-controlling interests that does not result in the loss of control over the subsidiary is accounted for as an equity transaction.

7. Cash and cash equivalents

Cash comprises the Group's cash on hand and deposits that can be withdrawn on demand at any time; cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

8. Foreign currency translation

The Group's foreign currency transactions are translated and recorded in the respective functional currencies.

A foreign currency transaction is recorded in the functional currency on initial recognition, by applying the exchange rate on the date of transaction or applying the average exchange rate through the transaction period. At the end of the reporting period, foreign currency monetary items are translated into the functional currency using the spot exchange rates at the end of the reporting period. Exchange differences arising from the differences between the spot exchange rates prevailing at the end of the reporting period and those on initial recognition or at the end of the previous reporting period are recognized in profit or loss for the period, except that exchange differences that qualify for capitalization related to a specific-purpose borrowing denominated in foreign currency are capitalized as part of the cost of the qualifying asset during the capitalization period. Foreign currency non-monetary items measured at historical cost are re-translated at the spot exchange rate on the date of transaction but the amount of the functional currency is not changed. Foreign currency non-monetary items measured at fair value are re-translated at the spot exchange rate on the date the fair value is determined. Differences between the re-translated functional and the original functional currency amount are recognized in profit or loss or as other comprehensive income depending on the nature of the non-monetary items.

For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the statement of financial position are translated at the spot exchange rate at the end of the reporting period; shareholders' equity items except for retained earnings are translated at the spot exchange rates at the dates on which such items arose; income and expenses in profit or loss are translated at the average exchange rates during the transaction period. The exchange differences arising on translation of financial statements denominated in foreign currencies are recognized as other comprehensive income. For disposals of equity interests in foreign operations, the proportionate share of the accumulated exchange differences arising on translation of financial statements in other comprehensive income of foreign operations is transferred to profit or loss. For partial disposals, the reclassification is determined in proportion to the disposal.

Foreign currency cash flows and cash flows of overseas subsidiaries shall be converted at the average exchange rate of the period when the cash flow occurs. The impact of exchange rate changes on cash is shown separately in the statement of cash flows as an adjustment item.

III. Summary of significant accounting policies and accounting estimates (continued)

9. Financial instruments

Financial instruments refer to contracts that form the financial assets of one company and form the financial liabilities or equity instruments of other companies.

Recognition and derecognition of financial instruments

The Group recognizes a financial asset or financial liability when it becomes a party to a financial instrument contract.

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated balance sheet) when:

(1) The right to receive cash flows from financial assets expires;
(2) Transferring the right to receive cash flows from financial assets, or under the "hands-on agreement", the obligation to pay the full amount of cash flows to the third party in full; and (a) substantially transferring the ownership of the financial assets all risks and rewards, or (b) abandoning the control of the financial asset, although it does not substantially transfer or retain almost all of the risks and rewards of ownership of the financial asset.

If the responsibility for a financial liability has been fulfilled or revoked or has expired, the financial liability should be derecognized. If an existing financial liability is replaced by another financial liability of the same creditor on substantially virtually different terms, or if the terms of the existing liability are substantially modified, such replacement or modification is deemed to terminate the recognition of the original liability and to confirm the new disposal of liabilities, the difference is included in the current profit or loss.

The purchases and sales of financial assets in regular ways are recognized and derecognized on a trade date basis. The purchases and sales of financial assets in regular ways refer to the collection or delivery of financial assets within the time limit stipulated by regulations or common practices in accordance with the terms of the contract. The trading day is the date on which the Group commits to buy or sell the financial assets.

Classification and measurement of financial assets

The financial assets of the Group are classified upon the initial recognition based on the business model of the Group's financial asset management and the characteristics of the financial assets' contractual cash flows: financial assets measured at fair value and whose changes are included in the current profit or loss, financial assets measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income. Financial assets are measured at fair value on initial recognition, but accounts receivable or notes receivable arising from the sale of goods or rendering of services that do not contain significant financing components or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component due within one year, are initially measured at the transaction price.

For financial assets measured at fair value through profit or loss, the related transaction expense is directly recognized in profit or loss for the current period. The related transaction costs of other types of financial assets are included in their initial recognition amount.

Subsequent measurement of financial assets depends on their classification:

Debt instrument investments measured at amortized cost

Financial assets are classified as financial assets measured at amortized cost if the financial assets meet the following conditions: The Group's business model for managing the financial assets is to collect contractual cash flows; the contractual terms of the financial assets stipulate that cash generated on a specific date. The flow is only the payment of the principal and the interest based on the outstanding principal amount. The effective interest method is used to recognize interest revenue for such financial assets. The gains or losses arising from derecognition, modification or impairment are recognized in profit or loss.

III. Summary of significant accounting policies and accounting estimates (continued)

9. Financial instruments (continued)

Classification and measurement of financial assets (continued)

Financial assets measured at fair value through profit or loss

For financial assets classified as measured at fair value through profit or loss, fair value is used for subsequent measurement, and all changes in fair value are recognized in profit or loss for the current period.

Only when it is possible to eliminate or significantly reduce accounting mismatches, financial assets can only be designated as financial assets at fair value through profit or loss.

Once the Company initially designates a financial asset as a financial asset measured at fair value through profit or loss, it cannot be reclassified to other financial assets; other financial assets cannot be reclassified to financial assets measured at fair value through profit or loss after initial recognition.

Financial assets at fair value through other comprehensive income (equity instrument investments)

The Group irrevocably chooses to designate some instrument investments of non-trading nature as financial assets at fair value through other comprehensive income. Only relevant dividend income (excluding dividend income explicitly recovered as part of investment cost) is recognised in profit or loss, and subsequent changes in fair value are included in other comprehensive income without provision for impairment.

Under the above conditions, such financial assets designated by the Group consist mainly of transactional financial assets (Note V.2) and other non-current financial assets (Note V.14).

Classification and measurement of financial liabilities

The financial liabilities of the Group are classified as financial liabilities at fair value through profit or loss and other financial liabilities. For financial liabilities measured at fair value through profit or loss, the related transaction expense is directly recognized in profit or loss, while the related transaction expense of other financial liabilities is included in the initial recognition amount.

Subsequent measurement of financial liabilities depends on their classification:

Financial liabilities measured at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading (including derivative instruments attributable to financial liabilities) and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading (including derivative instruments attributable to financial liabilities) are subsequently measured at fair value. All changes in fair value of such financial liabilities are recognized in profit or loss except for the derivatives designated as hedging instruments in an effective hedge. Financial liabilities designated at fair value through profit or loss are subsequently measured at fair value and gains or losses are recognized in profit or loss, except for the gains or losses arising from the Group's own credit risk which are presented in other comprehensive income. If gains or losses arising from the Group's own credit risk which are presented in other comprehensive income will lead to or expand an accounting mismatch in profit or loss, the Group will include all the changes in fair value (including the amount affected by changes in the Group's own credit risk) of such financial liabilities in profit or loss.

III. Summary of significant accounting policies and accounting estimates (continued) 9. Financial instruments (continued)

Classification and measurement of financial liabilities (continued)

Financial liabilities measured at fair value through profit or loss (continued)

If only one of the following conditions is satisfied, financial liabilities can be designated as financial liabilities at fair value through profit or loss at their initial measurement.

(1) Accounting mismatches can be eliminated or significantly reduced.
(2) A formal written document on risk management or investment strategy states that the portfolio of financial instruments is managed, evaluated and reported to key management personnel on a fair value basis.
(3) A hybrid instrument that includes one or more embedded derivatives, unless the embedded derivative does not significantly change the cash flow of the hybrid instrument, or the embedded derivative is clearly not to be split from the relevant hybrid tool.
(4) A hybrid instrument that includes embedded derivatives that need to be split but cannot be separately measured at the time of acquisition or on the subsequent statement day.

Once the Company initially designates a financial liability as a financial liability measured at fair value through profit or loss, it cannot be reclassified to other financial liabilities; other financial liabilities cannot be reclassified to financial liabilities measured at fair value through profit or loss after initial recognition.

Other financial liabilities

For such financial liabilities, the actual interest rate method is adopted and the subsequent measurement is carried out according to the amortized cost.

Impairment of financial instruments

On the basis of expected credit losses, the Group performs the impairment treatment on financial assets and contract assets measured at amortized cost and confirms the loss provision.

For trade receivables and contract assets that do not contain a significant financing component, the Group applies the simplified approach to recognise a loss allowance based on lifetime ECLs.

For trade receivables and contract assets that contain a significant financing component and lease receivables, the Group chooses to adopt the simplified approach to recognise a loss allowance based on lifetime ECLs.

Except for financial assets which apply the simplified approach as mentioned above, other financial assets, the Group assesses whether the credit risk has increased significantly since initial recognition at each balance sheet date. If the credit risk has not increased significantly since initial recognition (stage 1), the loss allowance is measured at an amount equal to 12-month ECLs by the Group and the interest income is calculated according to the carrying amount and the effective interest rate; if the credit risk has increased significantly since initial recognition but are not credit-impaired (stage 2), the loss allowance is measured at an amount equal to lifetime ECLs by the Group and the interest income is calculated according to the carrying amount and the effective interest rate; if such financial assets are credit-impaired after initial recognition (stage 3), the loss allowance is measured at an amount equal to lifetime ECLs by the Group and the interest income is calculated according to the amortised cost and the effective interest rate. If the credit risk of financial instruments is low at the balance sheet date, the Group assumes that the credit risk has not increased significantly since initial recognition.

III. Summary of significant accounting policies and accounting estimates (continued)

9. Financial instruments (continued)

Impairment of financial instruments (continued)

The Group assesses the expected credit losses for financial instruments individually and collectively. The Group considers the credit risk characteristics of different customers and evaluates the expected credit losses for accounts receivable on the basis of the age combination. See the following table for details:

Bad debt provision for receivables that are subject to provision by group with similar credit risk characteristics
Group 1 Government receivable and related parties receivable	Other appropriate methods
Group 2 Fans receivable sales industry customers	Aging analysis
Group 3 Receivable customers in kitchen waste disposal industry	Aging analysis
Group 4 Receivable from all third parties other than Portfolio 1, Portfolio 2 and Portfolio 3	Aging analysis

When the Group no longer reasonably expects to be able to fully or partially recover the contractual cash flows of financial assets, the Group directly writes down the carrying amount of the financial assets.

Offsetting of financial instruments

If the following conditions are met at the same time, the financial assets and financial liabilities are presented in the statement of financial position offset with each other: a statutory right to offset the confirmed amount, and the legal right is currently enforceable; net settlement, or simultaneous realization of the financial assets and settlement of the financial liabilities.

Derivative financial instruments

The Group uses derivative financial instruments, which are foreign exchange forward contracts and foreign exchange swap contracts, to hedge its foreign currency risk. Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The gain or loss arising from changes in the fair value of derivatives is recognized directly in profit or loss, except for those that are related to hedge accounting.

Transfer of financial assets

If the Group has transferred substantially all the risks and rewards associated with the ownership of a financial asset to the transferee, the asset should be derecognized. If the Group retains substantially all the risks and rewards of ownership of a financial asset, the asset should not be derecognized.

When the Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset, it may either derecognize the financial asset and recognize any associated assets and liabilities if control of the financial asset has not been retained; or recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability if control has been retained.

Assets formed by the continuing involvement by way of the provision of financial guarantee in respect of the transferred financial assets shall be recognized as the lower of the carrying value of the financial asset and the amount of financial guarantee. The amount of financial guarantee means the maximum amount among the considerations received to be required for repayment.

III. Summary of significant accounting policies and accounting estimates (continued)

9. Financial instruments (continued)

Financial guarantee contract

A financial guarantee contract is a contract by which the guarantor and the lender agree that the guarantor would settle the debts or bear obligations in accordance with terms of the contract in case the borrower fails to settle the debts. Financial guarantee contracts are measured at fair value on initial recognition. Subsequent to initial recognition, financial guarantee contracts that are not designated as financial liabilities at fair value through profit and loss are measured at the higher of: the expected credit loss amount recognised on the date of statement of financial position and the balance of the initial recognition amount after deducting the accumulated amortisation amount recognised according to the revenue recognition principle.

10. Inventories

(1) Classification

Inventories include real estate development properties, raw materials, in-process products, goods in stock, tickets, low-value consumables, maintenance and repair parts, contract performance costs and inventory materials, etc., which are listed at the lower of cost and net realizable value.

Real estate properties comprise properties held for sale, properties under development and properties held for development. Properties held for sale are those properties completed and for sale, while properties under development are those properties still under construction and for sale purposes, and properties held for development are those lands purchased and planned to have properties developed on. The costs of raw materials, work in progress, and finished goods include procurement costs, processing costs, and other costs.

Manufacturing business inventories include procurement costs, processing costs and other costs. The actual cost of delivered inventory is determined by the monthly weighted average method. Low value consumables are amortized by the one-time resale method.

(2) Costing of inventories

The cost of completed properties held for sale is determined using the specific identification method, which comprises the land cost, construction cost and other cost. The actual cost of raw materials, work in progress, and finished goods is determined using the FIFO method. The costs of toll tickets, low value consumables, maintenance and repair parts and materials in stock are determined using the weighted average method or amortization method.

(3) Basis for determination of net realisable value and provisions for declines in value of inventories

At the end of the reporting period, the inventories are measured at the lower of the cost and the net realizable value. If the cost is higher than the net realizable value, the provision for the inventories should be recognized in profit or loss for the current period. If the influencing factors of the provision for inventories have been eliminated and the net realizable value of inventories is higher than its book value, the previously deducted amount will be recovered from the amount of provision for inventories accrued previously and the amount should be recognized in profit or loss for the current period.

Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs and related taxes necessary to achieve completion and to make the sale. When recognizing the provision for value decline of inventories, the raw materials are recognized based on the categories, and the finished goods are recognized based on the items. The provisions for declines in value of inventories are consolidated for the inventories that are related to a product line produced and sold in the same region having the same or similar end use or purpose and difficult to measure separately from other items.

The Perpetual Inventory System is adopted for the inventories

III. Summary of significant accounting policies and accounting estimates (continued) 11. Non-current assets or disposal groups held for sale

Those whose book value is recovered mainly through the sale of a non-current asset or the disposal group rather than the continuous use of the asset are classified as holding for sale. If the following conditions are also met, the assets are classified as held for sale: immediately available for sale under current conditions in accordance with the usual practice of selling such assets or the disposal group in similar transactions; The sale is most likely to occur, that is, the enterprise has made a decision on a sale plan and obtained a firm purchase commitment, the sale is expected to be completed within one year (the relevant regulations require the enterprise relevant authority or regulatory authority approval before the sale, has been approved). Pair from the sale of the company's investment causes such as loss of control of the subsidiary, whether sale to keep part of the equity investment, meet division holds for sale conditions, in individual investment as a whole is divided into holding subsidiary to the financial statements will be for sale category, in the heart of the consolidated financial statements, a subsidiary of all assets and liabilities are divided into category holds for sale.

Hold illiquid assets for sale or disposal groups (except financial assets and deferred income tax assets), its book value is higher than the fair value minus the net amount after sale cost, book value will be down to the fair value minus the net amount after selling fees, the amount of write-down shall be recognized as asset impairment loss, included in the current profits and losses, provision for assets impairment provision holds for sale at the same time. Non-current assets held for sale or non-current assets in the disposal group are not depreciated or amortized.

12. Long-term equity investments

Long-term equity investments comprise the Company's long-term equity investments in its subsidiaries as well as the Group's long-term equity investments in its joint ventures and associates.

Subsidiaries are the investees over which the Company is able to exercise control. A joint venture arrangement reached by the Group through a separate entity that can exercise joint control with other parties and has rights to its net assets based on legal form, contract terms, and other facts and circumstances. Associates are the investees that the Group has significant influence on their financial and operating policies.

Investments in subsidiaries are presented in the Company's financial statements using the cost method and are adjusted for preparing the consolidated financial statements using the equity method. Investments in joint ventures and associates are accounted for using the equity method.

(1) Determination of investment costs

For long-term equity investments acquired through a business combination: for a long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination costs. Where the initial investment cost of a long-term equity investment is acquired through a business combination involving enterprises under common control, the initial investment cost is the absorbing party's share of the carrying amount of the owners' equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial investment cost and the carrying amount of the consideration of the combination is adjusted to capital reserve (and the excess goes to retained earnings, if any). For other comprehensive income before the combination date, it is accounted for on the same basis as would have been required if the investee has directly disposed of the related assets or liabilities. The investee's shareholders' equity recognized resulting from changes in shareholders' equity other than net profit or loss, other comprehensive income and profit distribution is charged to profit or loss when the related investment is disposed of. Investments which remain long-term after disposal are recognized in proportion, whereas investments converted to financial instruments after disposal are recognized in full.

For long-term equity investments acquired not through a business combination: for a long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued.

III.	Summary of significant accounting policies and accounting estimates (continued)
12.	Long-term Equity Investment (continued)
(2)	Subsequent measurement and the methods of investment income recognition

For long-term equity investments accounted for cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognized as investment income in profit or loss.

For long-term equity investments accounted for cost method, where the initial investment cost of a long-term equity investment exceeds the Group's share of the fair value of the investee's identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than the Group's share of the fair value of the investee's identifiable net assets at the acquisition date, the difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.

For long-term equity investments accounted for using the equity method, the Group recognizes the investment income according to its share of net profit or loss of the investee. The Group discontinues to recognize its share of net losses of an investee after the book value of the long-term equity investment and any long-term interests that, in substance, form part of the investor's net investment in the investee is reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues to recognize the investment losses and the provisions. For changes in owners' equity of the investee other than those arising from its net profit or loss, comprehensive income and profit distribution, the Group records its proportionate share directly in capital surplus. The book value of the investment is reduced by the Group's share of the profit distribution or cash dividends declared by an investee. The unrealized profits or losses arising from the intra-group transactions amongst the Group and its investees are eliminated in proportion to the Group's equity interests in the investees, and then based on which the investment gains or losses are recognized. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealized loss is not eliminated.

On disposal of a long-term equity investment, the difference between the proceeds actually received and the book value is recognized in profit or loss for the current period. For a long-term equity investment accounted for using the equity method, when the Group discontinues to use the equity method, any other comprehensive income previously recognized is accounted for on the same basis as would have been required for if the investee had directly disposed of the related assets or liabilities. Shareholders' equity recognized resulting from changes in shareholders' equity other than net profit or loss, other comprehensive income and profit distribution is charged to profit or loss in its entirety. When the Group continues to use the equity method, any other comprehensive income previously recognized is accounted for on the same basis as would have been required for if the investee had directly disposed of the related assets or liabilities and charged to the current period profit or loss on a pro-rata basis. Shareholders' equity, recognized resulting from changes in shareholders' equity other than net profit or loss, other comprehensive income and profit distribution, is charged to profit or loss on a pro-rata basis.

III. Summary of significant accounting policies and accounting estimates (continued)

12. Long-term equity investments (continued)

(3) Basis for determination of the existence of control, joint control or significant influence over the investees

Control refers to having the power over the investee, enjoying variable returns by participating in related activities of the investee, and being able to use its power over the investee to influence the investment return.

Joint control refers to the common control of an arrangement in accordance with relevant agreements, and related activities of the arrangement can only be made after the unanimous consent of the participants sharing control.

Significant influence is the power to participate in the decision making of financial and operating policies of the investee but is not control or joint control over those policies.

(4) Impairment of long-term equity investments

When the recoverable amount of the long-term equity investment in the subsidiaries and associated enterprises is less than the book value, the book value shall be written down to the recoverable amount (Note III.19).

13. Investment properties

Investment properties, the buildings held for the purpose of leasing, are measured initially at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and its cost can be reliably measured; otherwise, the expenditures are recognized in profit or loss in the period in which they are incurred.

The Group adopts the cost model for the subsequent measurement of investment properties. Investment properties are depreciated or amortized to their estimated net residual values over their estimated useful lives. The estimated useful life, the estimated residual value rate and the annual amortization rate of the investment properties are as follows:

Estimated useful life	Estimated residual value rate	Annual amortization rate
Car parking spaces	30 years	-	3.33%

When an investment property is transferred to an owner-occupied property, it is reclassified as fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment property at its carrying amount at the date of the transfer.

The estimated useful life, the net residual value of the investment property and the amortization method applied are reviewed and adjusted at each year-end.

An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sales, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.

The carrying amount of investment properties should be reduced to the recoverable amount when its recoverable amount is below the carrying amount (Note III.19).

III. Summary of significant accounting policies and accounting estimates (continued) 14. Fixed assets

(1) Recognition and initial measurement of fixed assets

Fixed assets comprise buildings, traffic equipment, mechanical equipment, motor vehicles and office and other equipment.

Fixed assets are initially measured at cost. The cost of purchasing a fixed asset includes the purchase price, related taxes and fees, and other expenses directly attributable to the asset incurred before the fixed asset is ready for its intended use. The cost and accumulated depreciation of fixed assets invested by state shareholders to the Company on 1 January 1997 were recognized according to the valuation results performed by the valuer which were certified by the State-owned Assets Supervision and Administration Bureau in accordance with Guo Zi Ping (1996) No.911.

Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognized. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.

(2) Depreciation methods of fixed assets

Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been impaired, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.

Type	Depreciation method	Estimated useful life	Estimated residual value rate	Annual depreciation rate
Buildings	Straight-line	20-30 years	5%	3.17%-4.75%
Traffic equipment	Straight-line	5-11 years	0%-10%	8.18%-20.00%
Mechanical equipment	Straight-line	5-20 years	4%-5%	4.75%-19.20%
Motor vehicles	Straight-line	5-6 years	5%	15.83%-19.00%
Office and other equipment	Straight-line	3-5 years	0%-5%	19.00%-33.33%

The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed and adjusted at least at each year-end.

(3) Impairment of fixed assets

The book value of fixed assets is reduced to the recoverable amount if the recoverable amount is below the book value (Note III.19).

(4) Disposal of fixed assets

A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of a fixed asset net of its book value and related taxes and expenses is recognized in profit or loss for the period.

III. Summary of significant accounting policies and accounting estimates (continued) 15. Construction in progress

Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs and borrowing costs that are eligible for capitalization and other costs necessary to bring the construction in progress ready for their intended use. Construction in progress should be transferred to fixed assets when the assets are ready for their intended use and should start to depreciate in the following month. The book value of construction in progress should be reduced to the recoverable amount if the recoverable amount is below the book value (Note III.19).

16. Borrowing costs

The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially long period of time for acquisition and construction for its intended use, which are to be capitalized and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalization of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use, the borrowing costs incurred thereafter are recognized in profit or loss for the current period. Capitalization of borrowing costs is suspended during the periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.

For the specific borrowings obtained for the acquisition or construction of a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalization period.

For the general borrowings occupied by the acquisition or construction of a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by multiplying the weighted average effective interest rate of general borrowings by the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which estimated future cash flows during the expected or shorter period applied to be discounted to the initial amount of the borrowings.

17. Right-of-use assets

Right-of-use assets comprise buildings, equipment and billboards.

At the commencement date of the lease, the Group recognises a right-of-use asset. The cost of the right-of-use asset comprises: (i) the amount of the initial measurement of the lease liability; (ii) any lease payments made at or before the commencement date of the lease less any lease incentives received; (iii) any initial direct cost incurred; and (iv) an estimate of costs incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. The right-of-use assets are depreciated on a straight-line basis subsequently by the Group. If the Group is reasonably certain that the ownership of the underlying asset will be transferred to the Group at the end of the lease term, the Group depreciates the asset from the commencement date to the end of the useful life of the asset. Otherwise, the Group depreciates the assets from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term.

The Group remeasures the lease liability at the present value of the changed lease payments and adjusts the carrying amount of the right-of-use assets accordingly. When the carrying amount of the right-of-use asset is reduced to zero, and there is a further reduction in the measurement of the lease liability, the Group recognises the remaining amount of the remeasurement in profit or loss.

III. Summary of significant accounting policies and accounting estimates (continued) 18. Intangible assets

Intangible assets include concession intangible assets (toll road and kitchen waste disposal projects), billboard use right, patent, land use right and software. Intangible assets are measured at cost.

(1) Concession intangible assets

(a) Toll roads

Toll road concession intangible assets refer to the rights granted by the respective concession grantors, which entitle the Group to receive the toll fees from users and the land use right obtained in conjunction with the concession arrangement. Concession intangible assets are measured at actual cost because the Group subcontracts the construction to third parties instead of providing actual construction service. Actual cost comprises construction infrastructure prices, construction related costs and borrowing costs that are eligible for capitalization and incurred before the toll roads are ready for their intended use. The concession intangible assets of the toll road that the Group has delivered but not yet completed the final settlement account are temporarily estimated based on the book value of the toll road project or the estimated value of the project. When the final account is completed, the book value will be adjusted to the actual value.

The concession intangible assets of the toll roads invested by the state-owned shareholders on 1 January 1997 were stated at valuation performed by the asset valuation firms and the values were certified by the State-owned Assets Supervision and Administration Bureau ("SASAB") in accordance with Guo Zi Ping (1996) No.911. The land use right relating to Shenzhen Airport-Heao Expressway (Western Section) invested to the Company by the promoter of the Company during the restructuring period of the Group was stated at the then revaluation amount admitted by the SASAB on 30 June 1996. The land use right relating to Meiguan Expressway and Shenzhen Airport-Heao Expressway (Eastern Section) owned by Shenzhen Meiguan Expressway Company Limited ("Meiguan Company") and Airport-Heao Eastern Company("Airport-Heao Eastern Company"),the subsidiary, were invested by Xin Tong Chan Development (Shenzhen) Company Limited ("Xin Tong Chan Company"), one of the promoters of the Company, at the value specified in the respective investment agreement.

When toll roads are ready for their intended use, amortization of concession intangible assets is calculated to write off their costs on the traffic volume amortization method. Amortization is provided on projected units-of-usage ("unit usage"), which is calculated based on the total projected traffic volume during the operating period of the concessions and the original or book value of the concession intangible assets with the concession combined with the actual traffic volume during each accounting period.

The Company has set policies to execute internal review on the total projected traffic volume during the operating period of the concessions annually. The Group also appoints an independent professional traffic consultant to perform independent professional traffic studies when material differences between actual traffic volume and projected traffic volume exist, or every 3 to 5 years and then adjust the amortization unit usage according to the revised total projected traffic volume, to ensure that the respective concession intangible assets would be fully amortized in the operating period.

III. Summary of significant accounting policies and accounting estimates (continued) 18. Intangible assets (continued)

(1) Concession intangible assets (continued) (a) Toll road (continued)

The respective operating periods and amortization units of the toll roads are set out as follows:

Item	Operating period	The unit usage (RMB)
Meiguan Expressway	May 1995 to March 2027	0.53
Shenzhen Airport-Heao Expressway (Western Section)	May 1999 to March 2027	0.59
Shenzhen Airport-Heao Expressway (Eastern Section)	October 1997 to March 2027	2.95
Wuhuang Expressway	September 1997 to September 2022	5.82
Qinglian Expressway	July 2009 to July 2034	30.01
Shuiguan Expressway	March 2002 to February 2027	5.66(Note 1)
Yichang Expressway	January 2004 to December 2033	10.88(Note 1)
Changsha Ring Road (North-western Section) ("Changsha Ring Road")	November 1999 to October 2029	5.09
Coastal Expressway	December 2013 to December 2038	6.21
Outer ring highway	December 2020 to December 2045	7.02
Same high-speed	October 2005 to October 2027	0.25

Note 1:As stated in Note III.35(a), the unit usage of concession intangible assets of Shuiguan Expressway and Yichang Expressway have been adjusted from RMB 5.86 and RMB 9.55 to RMB 5.66 and RMB 10.88 separately from 1 January 2020.

Subsequent expenditures incurred for the toll roads are included in the cost of the concession intangible assets when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.

(b) Kitchen waste disposal projects

Concession intangible assets related to kitchen waste allows the Company to charge the government department a kitchen waste disposal fee according to negotiated price, to generate electricity by biogas, and to sell the oil and grease extracted from the kitchen waste in the franchise period.

The income from the kitchen waste disposal project contract is evaluated by the fair value. The income is recognized, and the project is regarded as financial assets and intangible assets when: (1) the Company can charge the contract awarding party a certain amount of cash or cash equivalents or other financial assets in a given period as the infrastructural construction has been finished. When the Company provides the operating service below a regulated price, the contract awarding party will compensate for the loss according to the contract. The financial assets will be recognized at the time the income is recognized according to Chinese Accounting Standard No.22 The recognition and measurement of financial instruments (Note III.9); and (2) the contract gives the Company the right to charge served clients in a given period. The Company cannot charge cash unconditionally if the charge amount is uncertain. The Company will recognize intangible assets at the time when the income is recognized.

The Group recognizes the franchised kitchen waste disposal projects as an intangible asset. The Group uses the straight-line amortization methods in the franchise period.

III	Summary of significant accounting policies and accounting estimates (continued)
18.	Intangible assets (continued)
(2)	Other intangible assets

The useful lives of other intangible assets are as follows:

Useful life (year)
Billboard use right	5
Patent	5-10
Land use rights	50
Software and others	2-10
Franchises	10

Intangible assets with finite useful lives are amortized over their estimated useful lives using the straight-line method.

(3) Periodical review of useful life and amortization method

For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method and makes adjustment if necessary at each year-end.

(4) Impairment of intangible assets

The book value of intangible assets should be reduced to the recoverable amount if the recoverable amount is below the book value (Note III.19).

(5) Development expenditure

The Group classifies the expenditures on an internal research and development project into expenditure on the research phase and expenditure on the development phase. Expenditure on the research phase is recognised in profit or loss as incurred.

Expenditures during the development phase may be capitalized only if the following conditions are simultaneously satisfied, i.e., it is technically feasible to complete the intangible asset so that it can be used or sold; It has the intention to complete the intangible asset and use or sell it. The ways in which the intangible asset generates economic benefits include the ability to prove the existence of the market for the products produced by using the intangible asset or the existence of the market for the intangible asset itself. If the intangible asset will be used internally, the ability to prove its usefulness; Having sufficient technical, financial and other resources to support the completion of the development of the intangible asset and having the ability to use or sell the intangible asset; The expenditure attributable to the development stage of the intangible asset can be measured reliably. The development expenditures that do not meet the above conditions shall be recorded into the current profit or loss when incurred.

III. Summary of significant accounting policies and accounting estimates (continued)

19. Impairment of long-term assets

Impairment of assets other than inventories, deferred tax assets, financial assets and held for sale assets is recognised based on the following methods:

The Group assesses at each date of statement of financial position whether there is any indication that the assets may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets and impairment tests are performed. Goodwill arising in a business combination and an intangible asset with an indefinite useful life shall be assessed for impairment at least at each year end, irrespective of whether there is any indication occurring. Impairment tests of intangible assets should be performed annually, even if they are not ready for use.

The recoverable amount of an asset is the higher of fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The recoverable amount is estimated on an individual basis. If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. Identification of an asset group shall be based on whether there are major cash inflows which are independent from other assets or asset groups.

If the recoverable amount of an asset or asset group is less than its carrying amount, the carrying amount shall be reduced to its recoverable amount. The reduction is recognised as an impairment loss and charged to profit or loss for the current period. A provision for impairment losses of the asset is recognised accordingly.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated on a reasonable basis to each of the Group's cash-generating units or to relevant groups of cash-generating units if it is difficult to do so. Each unit or group of units to which the goodwill is so allocated represents those which are expected to benefit from the synergies of the combination and is not larger than a reported segment of the Group.

In testing an asset group or a set of asset groups to which goodwill has been allocated for impairment, if there is evidence of impairment in relation to goodwill, the Group shall first test the asset group or the set of asset groups excluding the amount of goodwill allocated for impairment. It shall determine and compare the recoverable amount with the related carrying amount and recognise any impairment loss. After that, the Group shall test the asset group or set of asset groups including the goodwill for impairment. The carrying amount is compared to its recoverable amount. If the recoverable amount of the asset group or set of asset groups is lower than its carrying amount, an impairment loss on goodwill shall be recognised. Firstly, the impairment loss shall be allocated to reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups. Then, the impairment loss shall be allocated to the other assets of the asset group or set of asset groups (excluding goodwill) on the basis of the proportion of the carrying amount of each asset in the asset group or set of asset groups.

Once an impairment loss of the abovementioned asset is recognised, it shall not be reversed in any subsequent period.

III. Summary of significant accounting policies and accounting estimates (continued) 20. Long-term prepaid expenses

Long-term prepaid expenses comprise the prepaid expenditures but should be recognized as expenses for the current and subsequent periods, which in total are more than one year. Long-term prepaid expenses are averagely amortized over the expected benefit period and are presented at actual expenditure net of accumulated amortization.

21. Employee benefits

Employee benefits represent all kinds of allowances and compensations paid by the Group for services rendered by employees or for termination of employment relationship, which mainly include short-term wages, retirement benefits, termination of employment benefits and other long-term staff welfare.

(1) Accounting treatment of short-term wages

Short-term wages include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical insurance, employment injury insurance, maternity insurance, housing funds, labor union funds, employee education funds, short term paid leave and etc. Actual short-term wages are recognized as liabilities in the periods when the employees render services and are charged to profit or loss or capitalized in costs of related assets. The non-monetary welfare is measured at fair value.

(2) Accounting treatment of retirement benefits

The Group classifies the retirement benefit plans as defined contribution plans and defined benefit plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into an independent fund. As a result, the Group has no legal or constructive obligations to pay further contributions. A defined benefit plan is a pension plan other than a defined contribution plan. During the reporting period, the Group's retirement benefits were mainly basic pension insurance and unemployment insurance which were both defined contribution plans.

(a) Basic pension insurance

The Group's employees are involved in the basic social pension insurance organized and implemented by the local labor and social security bureau. The Group pays the basic pension issuance expenses monthly to designated insurance companies for its employees. The basic amounts and rates are determined by the local regulations. Upon employees' retirement, the local labor and social security bureau is responsible for paying the pension benefit to the retired employees. The amounts of pension insurance payable calculated according to the above regulations are recognized as liabilities in profit or loss or capitalized in costs of related assets during the periods when the employees provide services.

(b) Enterprise annuity plan

Beside the above basic social pension insurance, the Company establishes an enterprise annuities plan in accordance with the relevant national enterprise annuity system policies ("enterprise annuity plan"), in which the Group's employees can voluntarily participate. The Company shall provide the annuities at a certain proportion of employees' total wages, and the corresponding expenditures shall be recorded in the current profit or loss. Except for the above-mentioned, the Company did not have any other significant social insurance commitments to its employees.

(3) Accounting treatment of termination benefits

The Group provides compensation for the termination of employment relationship before the expiry of employment contracts or for employees' voluntary layoffs. The compensation is recognized as a liability and in profit or loss at the earlier of the date the Group is unable to unilaterally withdraw the plan on the termination of employment relationship or the layoff proposal and the date on which the costs and expenses in relation to the payment of compensation to the termination of employment relationship are recognized.

III. Summary of significant accounting policies and accounting estimates (continued) 21. Employee benefits (continued)

(4) Other long-term employee benefits

For other long-term employee benefits provided to employees, the net liabilities or net assets of other long-term employee benefits shall be recognized and measured in accordance with the relevant provisions of pension benefits, but changes are included in the current profit or loss or the cost of related assets.

22. Lease liabilities

At the commencement date of the lease, the Group recognizes the present value of the lease payments that have not been paid as lease liabilities, except for short-term leases and low-value asset leases. In calculating the present value of the lease payments, the Group uses the leased interest rate as the discount rate; if the interest rate of the lease cannot be determined, the lessee's incremental borrowing rate is used as the discount rate. The Group calculates the interest expense of the lease liability for each period of the lease term based on the fixed periodic interest rate and recognizes it in profit or loss for the current period. The variable lease payments that are not included in the measurement of the lease liabilities are recognized in profit or loss when incurred.

After the commencement date of the lease period, when the actual fixed payment amount changes, the expected amount of the guarantee residual value changes, or the index or ratio used to determine the lease payment amount changes, the purchase option, the renewal option or the termination option is evaluated and when the results or actual exercise rights change, the Group remeasures the lease liability based on the present value of the changed lease payments.

23. Provisions

An obligation related to a contingency shall be recognised by the Group as a provision when all of the following conditions are satisfied, except for contingent considerations and contingent liabilities assumed in a business combination not involving entities under common control:

(1) the obligation is a present obligation of the Group;

(2) It is probable that an outflow of economic benefits will be required to settle the obligation; and

(3) a reliable estimate can be made of the amount of the obligation.

A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation, taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money as a whole. Provisions are reviewed at each balance sheet date. Where there is clear evidence that the carrying amount of a provision does not reflect the current best estimate, the carrying amount is adjusted to the current best estimate.

24. Other equity instruments

The perpetual bonds issued by the Group have no maturity date, and the Group has the right to defer payment of the coupon interest on the perpetual bonds. The Group has no contractual obligation to pay cash or other financial assets, which are classified as equity instruments.

25. Revenue from contracts with customers

Revenue from contracts with customers is recognized when the Group has fulfilled its performance obligations in the contracts, that is, when the customer obtains control of relevant goods or services. Control of the relevant goods or services refers to the ability to direct the use of the goods, or the provision of the services, and obtain substantially all of the remaining benefits from the goods or services.

(1) The Group's toll revenue from the operations of toll roads is recognized when the related services have been provided, revenue and total costs can be measured reliably and economic benefits with transactions can flow to the Group.

III. Summary of significant accounting policies and accounting estimates (continued) 25. Revenue from contracts with customers (continued)

(2) The contracts for the sale of goods between the Group and the customer usually contain the performance obligations for the transfer of the complete machine, components, and accessories of wind turbine generators, transfer kitchen waste disposal equipment and accessories, and the sales of electricity. The Group generally recognizes revenue at the point of transfer of control of the goods on the basis of a combination of the following factors: the current right to collect the goods, the transfer of major risks and benefits in the ownership of the goods, and the transfer of the legal ownership of the goods, the transfer of physical assets of the goods and that the customers have accepted the goods.
(3) For sales with a right of return, the Group recognizes the revenue in the amount of consideration to which the Group expects to be entitled in exchange for transferring control of the goods to the customer, and recognizes the amount expected to be refunded as a result of the sales return as a refund liability. At the same time, an asset recognized for an entity's right to recover goods from a customer on settling a refund liability is measured by reference to the carrying amount of the goods less any expected costs to recover the goods (including potential decreases in the value of the returned goods), that is, right-of-return assets, and recognized cost of sales based on the carrying amount of the transferred goods at the time of transfer of the goods less the net amount of the asset cost above. At the end of the reporting period, the group reassesses the return of future sales and remeasures the assets and liabilities mentioned above.
(4) According to the contractual agreement, legal provisions etc., the Group provides quality assurance for the goods sold. For the quality assurances of guarantees, which ensure the established standard of the product, and the quality assurances of services, which provide separate services from the product, the Group treats both of them as a single performance obligation. For this performance obligation, the Group allocates part of the transaction price to the quality assurance of the service category with the relative ratio of the individual selling prices of the product to that of the provided quality assurance, and the revenue of this performance obligation is recognized when the customers obtain the control of the service. In assessing whether the quality assurance provides a separate service in ensuring that the goods sold meet the established standards, the Group considers the statutory requirement of the assurances, the term of the assurance, the nature of the Group's commitment of performance, etc.
(5) Service contracts between the Group and its customers usually include the obligation to perform construction management services. For construction management service projects, the Group is responsible for the construction and implementation of the entire project as the general contractor. For the construction unit, survey and design, consulting, etc., the Group is responsible for bidding and signing contracts with the third-party units and the government shall pay the total price of the project investment to the Group in accordance with the payment method agreed in the agency construction. The Group takes control over the projects under construction before transferring the goods to the owners, leads the third party to provide services to the owners, and bears the primary responsibility for transferring the construction to the owners. Therefore, the Group is the main responsible person and recognizes the revenue according to the total consideration received or receivable. Otherwise, the Group is an agent and recognizes the revenue according to the amount of the commission or handling fee expected to receive. The amount shall be netted according to the total amount received or receivable, after deducting the price payable to other related parties, or the established commission amount or proportion is determined. As the services provided by the Group in the course of performance are irreplaceable and the Group has the right to calculate the revenue accumulated to date for the performance of the contract during the whole contract period, when the results of the construction management services can be estimated reliably, construction management service revenue is recognized using the percentage of completion method and the stage of completion is measured with reference to the actual construction costs and related management expenses incurred till the end of the reporting period as a percentage of the total estimated construction costs and management expenses. When the results of the construction management services cannot be estimated reliably, construction management service revenue is recognized at the same amount of actual management expenses incurred only to the extent that such expenses are probable to be recovered.

III. Summary of significant accounting policies and accounting estimates (continued) 25. Revenue from contracts with customers (continued)

(6) The realization of the sales income of the Group's property shall be confirmed upon the completion and acceptance of the property, the signing of the sales contract, the acquisition of the buyer's payment certificate and the delivery of use. If the buyer refuses to receive the written notice of house delivery without justifiable reasons, the income shall be confirmed after the end of the time limit of the written notice of house delivery. The Group's property sales contracts with its customers generally contain a performance obligation and, based on the terms contained in the existing sales contracts, the Group considers that the proceeds from the sale of the property should be recognized when control of the asset is transferred to the customer (normally delivery).
Under the revenue criteria, the transaction price and the amount of proceeds from the sale need to be adjusted for the impact (if material) of the financing component if, as agreed in the contract, the period during which the customer pays is different from the period during which the promised goods or services are transferred. The Group considers that, given the time difference between customer payment and delivery of the property to customer and current market interest rates, the financing component is significant and needs to be discounted at the sale price to calculate the material financing component. The Group recognizes contractual liabilities in respect of interest received from customers on advances containing a material financing component. The Group does not take into account the material financing component of the contract where the customer is expected to acquire control of the commodity and the customer is expected to pay the price within one year.
(7) Revenue from highway entrusted services is recognized on a straight-line basis over the contract period.
(8) Revenue from entrusted operation and management service of kitchen waste disposal of the Group shall be recognized according to the actual disposal volume and unit price agreed in the agreement.
(9) For the service concession contracts entered into with the government departments, pursuant to which the Group participates in the development, financing, operations and maintenance of the toll road construction, the Group recognizes no construction service revenue because the Group subcontracts the work to other parties and does not undertake the construction work on its own.
(10) The Group and the government department have signed franchise agreements via the build-operate-transfer method to engage in the kitchen waste disposal project, core equipment construction, and complete equipment system integration and maintenance. During the construction period, the construction service provided by the Group shall be regarded as the performance obligations performed within a certain period and the construction income shall be recognized by the completion percentage methods in accordance with the proportion of the incurred costs to estimated total costs. During the commercial operation period, the kitchen waste revenue of the restaurant shall be recognized according to the actual amount of waste disposal and the unit price agreed in the franchise agreement or the waste disposal agreement. Income from biogas power generation shall be recognized according to the unit price agreed in the electricity generation and electricity purchase and sale contracts. Grease sales revenue shall be confirmed according to the actual grease supply and the unit price agreed in the agreement.
(11) Advertising revenue is recognized on a straight-line basis over the contract period.
(12) Interest income is determined by using the effective interest method, based on the length of time for which the Group's cash is used by others.
(13) Income from an operating lease is recognized on a straight-line basis over the period of the lease. Income from a finance lease is recognized by the effective interest rate method during each period of the lease term.
(14) Some of the contracts between the Group and its customers have arrangements for sales rebates, compensation for non-compliance, contract discounts, liquidated damages, assessment fines and incentives, and results in a variable consideration. The Group determines the best estimate amount of the variable consideration based on the expected value or the most likely amount, but the transaction price including the variable consideration does not exceed the amount that the accumulated revenue is likely not to be significantly reversed when the relevant uncertainty is eliminated.

III. Summary of significant accounting policies and accounting estimates (continued)

25. Revenue from contracts with customers (continued)

(15) When the contract for construction entered into between the Group and the customer changes:a) If the contract change adds a clearly distinguishable construction service and contract price and the new contract price reflects the separate selling price of the new construction service, the Group treats the contract change as a separate contract for the accounting treatment;

b) If the contract change does not fall within the above-mentioned situation (a), and the construction date, the Group will regard it as the original contract termination, and at the same time, the non-compliance part of the contract and the contract change part are merged into a new contract for the accounting treatment;
service transferred and the one not transferred can be clearly distinguished on the contract change
c) If the contract change does not fall within the above-mentioned situation (a), and there is no clear change date, the Group will treat the changed part of the contract as part of the original contract. The resulting impact on the recognized revenue is adjusted for current income on the contract change date.

distinction between the construction service transferred and the one not transferred on the contract

26. Contract asset and liability

Contracts with customers will be presented in the Group's statement of financial position as a contract liability or a contract asset, depending on the relationship between the Group's performance and the customer's payment. The Group offsets the contract assets and contract liabilities under the same contract and presents them on the statement of financial position as a net amount.

Contract asset

A contract asset is recognized when the Group's right to consideration is conditional on something other than the passage of time, for example future performance of the Group. A receivable is recognized when the Group's right to consideration is unconditional except for the passage of time. The Group's method for determining and accounting for expected credit losses, which are related to contract assets are detailed in Note III.9.

Contract liability

A contract liability is presented in the statement of financial position where a customer has paid an amount of consideration prior to the Group performing by transferring the related good or service to the customer.

27. Assets relating to contract cost

The Group's assets relating to contract cost include the contract acquisition costs and contract performance costs, presented respectively under inventories, other current assets and other noncurrent assets.

Where the Group expects the incremental costs for acquiring a contract to be recoverable, such contract acquisition costs are recognized as an asset (unless the amortization period of the asset is not more than 1 year).

Costs incurred by the Group for the performance of a contract are recognized as an asset as contract performance costs if they do not fall under the scope of the relevant standards for inventories, fixed assets or intangible assets but meet all the following conditions:

(1) They are directly related to a current or anticipated contract, including direct labor, direct materials, manufacturing expenses (or similar expenses), to be borne by customers as specifically stipulated, and otherwise incurred solely in connection with the contract;
(2) They will increase the resources to be utilized in the Company's future performance of its contractual obligations;
(3) They are expected to be recoverable.

The Group amortizes assets relating contract costs on the same basis as that for the recognition of revenue relating to such assets and recognizes the amortized assets in current profit or loss.

III. Summary of significant accounting policies and accounting estimates (continued) 27. Assets relating to contract cost (continued)

For assets relating to contract costs whose carrying value is higher than the difference between the following two items, the Group makes provision for impairment for the excess to be recognized as asset impairment losses:

(1) The remaining consideration expected to be obtained as a result of the transfer of goods relating to such assets;

(2) Estimated costs to be incurred in connection with the transfer of relevant goods.

In the event that the difference between (1) and (2) becomes higher than the carrying value of such assets as a result of changes in the factors of impairment for previous periods, previous provisions for asset impairment losses should be written back and included in current profit or loss, provided that the carrying asset value following the write-back shall not exceed the carrying value such assets would have on the date of write-back were there no provision for impairment.

28. Government grants

A government grant is recognized when the condition attached to it is fulfilled and the grant can be received. The monetary grant from the government is measured at the amount received or receivable. The non-monetary grant from the government is measured at its fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount.

Government documents stipulate that if the long-term assets are obtained by acquisitions, constructions or other forms, the grants should be recognized as the government grants related to assets. If the government documents are unclear, they should be judged on the basis of the basic conditions necessary for obtaining such grants. if the long-term assets are obtained by acquisitions, constructions or other forms, the grants should be recognized as the government grants related to assets, and others should be recognized as income-related government grants.

For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred in the subsequent periods, the grant is recognized as deferred income, and included in profit or loss over the periods in which the related costs are recognized or adjusted against the relevant cost; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognized immediately in profit or loss for the current period or is adjusted against the relevant cost.

Government grants related to assets are adjusted against the book value of the assets or recognized as deferred income and evenly distributed in profit or loss over the useful life of related assets in a reasonable and systematic way. Government grants measured at their nominal amounts shall be recognized immediately in profit or loss for the current period. If the relevant assets are sold, transferred, disposed of or ruined before their useful life ends, the undistributed relevant deferred income shall be transferred to the gain from asset disposal for the current period.

The total amount method is applied for the Group's government grants.

III. Summary of significant accounting policies and accounting estimates (continued) 29. Income tax

The income tax expenses include current income tax and deferred tax. Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise from transactions or events that are directly recognized in owners' equity, in which case they are recognized in owners' equity; and when they arise from business combinations, in which case they adjust the carrying amount of goodwill.

Current income tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.

At the end of the reporting period, for temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the carrying amounts of items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balance sheet liability method.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

(1) When the taxable temporary difference arises from: the initial recognition of goodwill or the initial recognition of an asset or liability in transactions that are not business combinations and, at the time of the transaction, affects neither the accounting profit, taxable profit or loss nor deductible losses;
(2) For taxable temporary differences related to the investments of subsidiaries and associates, the timing of reversal of such temporary differences can be controlled and it is likely that such temporary differences will not be reversed in the foreseeable future.

For deductible temporary differences, deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, deductible losses and tax credits can be utilized, except:

(1) When the deductible temporary differences do not arise from business combinations and, at the time of the transaction, affects neither the accounting profit, taxable profit or loss nor deductible losses;
(2) For the deductible temporary differences related to the investments of subsidiaries and affiliates, the corresponding deferred tax assets shall be recognized if the following conditions are met: the temporary differences are likely to be reversed in the foreseeable future, and the taxable income amount used to offset the deductible temporary differences is likely to be obtained in the future.

At the end of the reporting period, deferred tax assets and liabilities are measured at applicable tax rates according to the requirements of tax laws during the period that the assets are expected to be recovered or the liability expected to be repaid. The recognition of deferred tax assets and liabilities also takes the recovery or the repayment terms into account.

At the end of the reporting period, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. At the end of the reporting period, the carrying amount of deferred tax assets is reviewed and recognized to the extent that it is probable that available taxable profits in the future will allow the benefit of deferred tax assets to be utilized.

When all of the following conditions are satisfied simultaneously, the deferred income tax assets and deferred income tax liabilities are listed as the net amount after offsetting: the Group has a legal right to settle current tax assets and liabilities on a net basis; the deferred taxes are related to the same tax payer within the Group and the same taxation authority, or related to different tax payers but during the period when each of the significant deferred income tax assets and deferred income tax liabilities is reversed and the tax payer involved intends to settle the current income tax asset and current income tax liability on a net basis, or simultaneously obtain assets and pay off the debts.

III. Summary of significant accounting policies and accounting estimates (continued) 30. Leases

Identification of leases

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, the customer has both of the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

Identification of separate lease components

For a contract that contains multiple separate lease components, the Group separates the components of the contract and accounts for each separate lease component. The right to use an underlying asset is a separate lease component if both:

(1) the lessee can benefit from use of the underlying asset either on its own or together with other resources that are readily available to the lessee;
(2) the underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the contract.

Assessment of lease term

The lease term is the period during which the Group has the right to use the leased asset and is irrevocable. The Group has the option to renew the lease, that is, it has the right to choose to renew the lease, and it is reasonable to determine that the option will be exercised. The lease term also includes the period covered by the option to renew the lease. The Group has the option to terminate the lease, that is, it has the right to choose to terminate the lease of the asset, but it is reasonable to determine that the option will not be exercised. The lease term includes the period covered by the termination of the lease option. In the event of a major event or change within the Group's controllable range, and affecting whether the Group reasonably determines that the option will be exercised, the Group determines whether it will reasonably exercise the option to renew the lease, purchase option or terminate the lease option.

As a lessee

For the general accounting treatment of the Group as a lessee, refer to Note III.17 and Note III.22.

Lease changes

Lease modification is a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease, for example, adding or terminating the right to use one or more underlying assets, or extending or shortening the contractual lease term.

The Group accounts for a lease modification as a separate lease if both:

(1) the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
(2) the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification the Group remeasures the lease liability by discounting the revised lease payments using a revised discount rate. The revised discount rate is determined as the interest rate implicit in the lease for the remainder of the lease term, or the lessee's incremental borrowing rate at the effective date of the modification, if the interest rate implicit in the lease cannot be readily determined.

III. Summary of significant accounting policies and accounting estimates (continued) 30. Leases (continued)

For a lease modification that is not accounted for as a separate lease, the Group accounts for the remeasurement of the lease liability by:

(1) decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, and recognizing the gain or loss relating to the partial or full termination of the lease in profit or loss; or
(2) making a corresponding adjustment to the right-of-use asset for all other lease modifications.

Short-term leases and lease of low-value assets

The Group considers a lease that, at the commencement date of the lease, has a lease term of 12 months or less, and does not contains any purchase option as a short-term lease; and a lease for which the value of the individual underlying asset is not more than RMB 50,000.00 when it is new as a lease of low-value assets. If the Group subleases an asset, or expects to sublease an asset, the head lease does not qualify as a lease of a low-value asset. The Group does not recognise the right-of-use assets and lease liabilities for short-term leases and low-value assets. The Group recognises lease payments on short-term leases and leases of low-value assets in the costs of the related asset or profit or loss on a straight-line basis over the lease term.

Rent reduction during COVID-19

The Company and the lessor apply a reduction in rentals, delay in payment and other forms of rent reduction to lessees who are directly affected by COVID-19. The following methods will apply to those who meet the condition:

(1) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(2) any reduction in lease payments affects only payments originally due on or before 30 June 2021;
(3) there is no substantive change to other terms and conditions of the lease.

The Group does not assess whether there is a lease change, thus, the Group will apply the same amortization rate as before COVID-19 to the interest expenses of lease liability and included it in this period's expenditure. For rent concessions, the Group will regard concessions as a variable lease payment. When the rent concession condition is met, the Group will write off the cost or expense of related assets and make adjustments to lease liability based on the amount that has not been discounted; for payment delay, the Group will offset the lease liabilities recognized in the previous period when paying.

As a lessor

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, except that a lease is classified as an operating lease at the inception date.

As lessor of a finance lease

At the commencement date of the lease, the Group recognises finance lease receivable and derecognises finance lease assets. The Group presents lease receivable at an amount equal to the net investment in the lease for the initial measurement. The net investment in the lease is the sum of any unguaranteed residual value accruing to the lessor and at the commencement date of the lease the lease payments receivable by a lessor under a finance lease discounted at the interest rate implicit in the lease.

The Group recognises finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the its net investment in the lease. Variable lease payments received by the Group that are not included in the measurement of the net investment in the lease are recognised in profit or loss as incurred.

III. Summary of significant accounting policies and accounting estimates (continued) 30. Leases (continued)

As a lessor (continued)

As lessor of an operating lease

The rental income of the operating lease shall be recognized as the profit or loss of the current period according to the straight-line method in each period of the lease term, and the variable lease payment that is not included in the lease income shall be included in the profit or loss of the current period when actually incurred.

Sale and leaseback transactions

The Group applies the requirements in Note III.25 to assess and determine whether the transfer of an asset is accounted for as a sale of that asset.

As a lessee

If the asset transfer in the sale and leaseback transaction does not belong to the sale, the Group, as the lessee, continues to recognize the transferred asset, and meanwhile recognizes a financial liability equal to the transfer income. The financial liability shall be accounted for in accordance with Note III 9.

31. Dividend distribution

Cash dividends of the Company are recognized as liabilities after being approved at the shareholders' meeting.

32. Fair value measurement

The Group measures its derivative financial instruments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement of the related assets and liabilities at fair value is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market is accessible by the Group as at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset at its highest and best use or by selling it to another market participant that would use the asset at its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly; Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

III. Summary of significant accounting policies and accounting estimates (continued) 32. Fair value measurement (continued)

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization at the end of each reporting period.

33. Other significant accounting policies and accounting estimates

Segment information

The Group identifies operating segments based on the internal organization structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.

An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) the component's operating results are regularly reviewed by the Group's management to make decisions about resources to be allocated to the segment and to assess its performance; (3) the information on the financial position, operating results and cash flows of the segment is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.

34. Significant accounting judgments and estimates

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the presentation and disclosure of income, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the statement of financial position. However, the results of these assumptions and estimated uncertainties may cause significant adjustments to the carrying amounts of future assets or liabilities that are affected.

Judgments

During the application of the Group's accounting policies, management made the following judgments that had a significant impact on the confirmed amounts in the financial statements:

(1) Business model

The classification of financial assets at initial recognition depends on the business model of the Group's management of financial assets. When determining whether the business model is still likely to be based on the collection of contractual cash flows, the Group needs to analyze the sale of financial assets before the maturity date. It also requires judgment whether the sale is accidental or whether the value of the sale is low.

(2) Contractual cash flow characteristics

The classification of financial assets at initial recognition depends on the contractual cash flow characteristics of the financial assets. When it is necessary to judge whether the contractual cash flow is only the payment of the principal and the interest based on the outstanding principal, the correction of the time value of the currency is included. In the assessment, it is necessary to judge whether there is a significant difference compared with the benchmark cash flow, and for the financial assets including the prepayment characteristics, it is necessary to judge whether the fair value of the early repayment characteristics is very small.

III. Summary of significant accounting policies and accounting estimates (continued) 34. Significant accounting judgments and estimates (continued)

(3) Principal responsible person/agent

As for the Group's ability to lead a third party to provide services on behalf of the Group to its customers, the Group has the right to decide the price of the commodities traded independently, that is, the Group can control the project before transferring the agent project to the customer. Therefore, the Group is the main responsible person, recognizing the revenue according to the total consideration received or receivable. Otherwise, the Group as an agent shall recognize income in accordance with the amount of commission or commission expected to be entitled to collect. The amount shall be determined by deducting the net amount payable to other interested parties from the total amount of consideration received or receivable, or by the established amount or proportion of commission.

(4) Lease period - Lease contract with a renewal option

The lease term is the period during which the Group has the right to use the leased asset and is irrevocable. If there is an option to renew the lease and it is reasonably determined that the option will be exercised, the lease term also includes the period covered by the option to renew the lease. Some of the Group's lease contracts have the option to renew the lease for 1 to 3 years. In assessing whether it is reasonable to determine whether the option to renew the lease will be exercised, it will consider all relevant facts and circumstances that bring economic benefits to the exercise of the option of renewal of the Group, including the facts from the commencement date of the lease term to the date of exercise of the option and expected changes in the situation. The Group believes that due to the conditions relating to the exercise of the option and the possibility of meeting the relevant conditions, the Group can reasonably determine that the option to renew the lease will be exercised. Therefore, the lease period includes the period covered by the option of renewal.

Estimation uncertainty

The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the future financial year are addressed below:

(5) Estimation of construction management services income and costs

As stated in Note III.25(5), the Group recognizes revenue from construction management services using the percentage of completion method when the outcome of the construction management services can be estimated reliably.

During the current period, the directors of the Company recognized construction management service income and costs according to the optimum estimation on the total investment top limit, project costs as well as other construction management service costs.

If the total budget for the project and project costs as well as the actual construction management service costs is different from management's current estimates, the construction management service income and costs will be changed prospectively.

(6) Amortization of concession intangible assets

As stated in Note III.18(1)(a), amortization of concession intangible assets is provided under the traffic volume amortization method. Appropriate adjustments to the amortization of concession intangible assets will be made when there is a material difference between total projected traffic volume and the actual results.

The directors perform periodic assessment of the total projected traffic volume. The Group will appoint an independent professional traffic consultant to perform independent professional traffic studies in order to make an appropriate adjustment if there is a material and continuous difference between projected and actual traffic volume. The Group appointed independent professional traffic consultants to perform independent professional traffic studies on its main toll roads in years 2016, 2017, 2018 and 2019 and perform independent traffic volume studies respectively on major expressways.

III. Summary of significant accounting policies and accounting estimates (continued) 34. Significant accounting judgments and estimates (continued)

Estimation uncertainty (continued)

(7) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the present value of the future cash flows expected to be derived from the asset groups (sets of asset groups) to which the goodwill is allocated. Estimating the present value requires the Group to make an estimate of the expected future cash flows from the asset groups (sets of asset groups) and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

(8) Income tax and deferred tax

The Group is subject to income taxes in several jurisdictions. During the ordinary course of business, the ultimate tax determinations of some transactions and events are uncertain. Significant judgment is required from the Group in determining the provision for income taxes in each of these jurisdictions. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The Group recognizes deferred tax assets based on estimates that it is probable to generate enough taxable income in the foreseeable future that the deductible losses will be utilized. The recognition of deferred tax assets mainly involves management's judgments and estimations about the timing and the amount of taxable income of the Company which has tax losses. Where the final outcome of timing and the amount is different from the original estimate, such differences will impact the current income taxes and deferred tax assets in the period in which such determination is made.

(9) Impairment of long-term equity investments

The Group assesses at the end of the reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. An impairment test should be executed when there is any indication that the carrying amount is not recoverable. An impairment exists if the carrying amount of the financial asset or the group of financial assets exceeds its recoverable amount, which is the higher of the fair value net of disposal costs and the present value of the estimated future cash flow. The net amount of fair value minus disposal costs is determined by reference to the agreement price or observable market price of similar assets in the fair trade. When estimating the present value of future cash flows, management must estimate the expected future cash flows of the asset or asset group and select the appropriate discount rate to determine the present value of future cash flows.

(10) Estimate of fair value of the identifiable net assets acquired

(a) As of 31 December 2020, Shenzhen Expressway Environment Co., Ltd. (the "Environment Company"), a subsidiary of the Company, has completed the acquisition of 67.1402% of the shares of Bioland Environmental Technology Group Co., Ltd. (" Bioland Company "), thereby realizing control of the Company. According to the share acquisition agreement, the following terms are set for the performance of Bioland Company in 2020, 2021, 2022 and 2023:

i） During the period of performance betting, if the accumulated net profit of the parent after deducting non recurring profit and loss at the end of a certain year is not less than 70% of the total accumulated net profit of the corresponding period, the performance commitment party shall pay the performance compensation to the investor in cash. If the accumulated net profit of parent company after deducting non recurring profit and loss as of the end of a certain year is not less than 90% of the total accumulated net profit committed in the same period, the performance compensation will not be carried out temporarily in the current year but will be postponed to the year with corresponding indicators lower than 90% or accumulated compensation will be carried out after the end of the performance commitment period, if the accumulated net profit of the parent company after deducting the non recurring profit and loss at the end of a certain year is lower than 90% but higher than 70% of the total accumulated committed net profit for the same period, the performance commitment party shall pay cash compensation to the investor in that year to achieve the net profit enjoyed by the environmental company according to the shareholding ratio and the accumulated committed net profit for the same period.

III. Summary of significant accounting policies and accounting estimates (continued) 34. Significant accounting judgments and estimates (continued)

Estimation uncertainty (continued)

(10) Estimate of fair value of the identifiable net assets acquired (continued)

ii） If the cumulative actual net profit at the end of any year during the Valuation Adjustment

Mechanism period is less than 70% of the committed cumulative net profit during the same period, the equity compensation mechanism will be triggered. The performance promises shall transfer shares to Environmental Company according to the following term: That is, the number of shares that should be compensated for the current period = [(The cumulative committed net profit as of the end of the current period-the cumulative realized net profit as of the end of the current period) × the proportion of shares held by the investor after the completion of this transaction - the compensation paid in the previous period (including cash compensation and equity compensation)] ÷the acquisition price per share of this transaction.

On the purchase date, the Company judged that the performance could be reached based on the profit forecast, and the contingent consideration was zero. As at the date of this report, Bioland Company's 2020 audit report has not yet been issued, and the Group expects Bioland Company to reach the 2020 benchmark performance indicator.

The Company also continued to pay attention to the realization of Bioland Company's future performance and based on the existing profit forecast, it judged that future performance could still be achieved, and the contingent consideration was zero.

(b) During the year 2019, the Company's wholly-owned subsidiary, Environment Company, completed the acquisition of 51% of the shares of Nanjing Wind Power Technology Co., Ltd. (" Nanjing Wind Power "), thus obtaining its control. According to the terms and conditions of the equity purchase agreement:

i） During the Valuation Adjustment Mechanism period, if Nanjing Wind Power fails to reach the gambling performance in 2019 and 2020, it will trigger a profit compensation mechanism: the original shareholders who still hold the shares will transfer some of the shareholders' profits for the year to the environmental company without compensation for compensation. That is, the original shareholders transferred part of the shareholders' profits corresponding to their shareholdings to the environmental company as compensation to ensure that the actual shareholder profit of the environmental company for the year reached the shareholder profit that the environmental company should obtain according to the shareholding ratio under the current year's performance. The profit compensation to the environmental company shall be subject to the profit for the year corresponding to all the equity held by the original shareholders;

ii） During the Valuation Adjustment Mechanism period, if Nanjing Wind Power does not reach the performance in 2021 and 2022, the equity adjustment mechanism will be triggered: the original shareholders were required to transfer the corresponding proportion of equity at no charge to the stock ratio based on the net profit amount that the performance should achieve in the current period to the environmental company. That is, the original shareholders transferred the corresponding proportion of equity to the environmental company free of charge in order to compensate the environmental company to ensure that the actual shareholder profit of the environmental company in the year after obtaining this part of the equity reached the shareholder profit that the environmental company should obtain according to the shareholding ratio.

On the purchase date, the Company judged that the performance could be reached based on the profit forecast, and the contingent consideration was zero. At the end of the year 2019, Nanjing Wind Power successfully achieved the 2019 performance indicators. As at the date of this report, Nanjing Wind Power's 2020 annual audit report has not yet been issued. The Group expects Nanjing Wind Power to reach the 2020 benchmark performance indicator.

The Company also continued to pay attention to the realization of Nanjing Wind Power's future performance, and based on the existing profit forecast, it judged that future performance could still be achieved, and the contingent consideration was zero.

III. Summary of significant accounting policies and accounting estimates (continued) 34. Significant accounting judgments and estimates (continued)

Estimation uncertainty (continued)

(10) Estimate of fair value of the identifiable net assets acquired (continued)

(c) On 31 December 2020, the Company's subsidiary, Infrastructure Environmental Development Company, has completed the acquisition of 50% of the shares of Qiantai Company, thus realizing its control. According to the Share Acquisition Agreement, for the performance of Qiantai Company in 2021, 2022, 2023 and 2024, the following terms of bet are set:

i）

During the gambling period, if Qiantai company fails to achieve the performance of the gambling for the first time, the profit compensation mechanism will be triggered. The performance commitment party shall transfer part of the shareholders' profits of the year to Infrastructure Environmental Development Company for free to compensate the infrastructure environmental protection development company for the difference in the performance of the gambling obtained during the assessment period, that is, the performance commitment party shall not enjoy the profit distribution rights of Qiantai company since the year when the performance of the gambling is not achieved in the assessment, and the originally entitled profit distribution rights shall be enjoyed by Infrastructure Environmental Development Company. Until the above performance difference of the gambling is compensated, if the performance commitment party fails to fully compensate the performance difference of the gambling that should be obtained by Infrastructure Environmental Development Company after transferring all the shareholders' profits that should be obtained by the performance commitment party within the assessment period, the performance commitment party shall continue to compensate the performance difference of the gambling until the next assessment period.

ii）

In the gambling period, if Qiantai company fails to achieve the gambling performance for the second time, the cash compensation mechanism / equity adjustment mechanism shall be triggered. Within three months from the date of triggering, the performance commitment party shall first compensate Infrastructure Environmental Development Company with the following amount in cash: ➀ the difference of gambling performance that Infrastructure Environmental Development Company shall obtain in the evaluation period, and ➁ the performance commitment party shall make up for the infrastructure in the previous evaluation period Infrastructure Environmental Development Company but not make up the part. If the performance commitment party fails to make full compensation in cash within three months, or makes it clear that it will not make compensation, the equity adjustment mechanism will be triggered, and the performance commitment party will compensate the infrastructure environmental protection development company with its equity of Qiantai company, the performance commitment party will make up the difference between the performance of Infrastructure Environmental Development Company (➀ and ➁) according to the valuation determined by this transaction And) the corresponding proportion of Qiantai company's equity is transferred to Infrastructure Environmental Development Company free of charge, and the relevant taxes involved in the above equity transfer are borne by the performance commitment party.

iii） During the gambling period, if Qiantai company fails to achieve the gambling performance for the third time, it will trigger the equity adjustment mechanism/equity repurchase mechanism: in such cases, the Infrastructure Environmental Development Company has the right to unilaterally choose the equity adjustment mechanism or the equity repurchase mechanism according to the following agreement. If the Infrastructure Environmental Development Company chooses the equity adjustment mechanism, the equity adjustment mechanism in II) above shall be implemented. If the Infrastructure Environmental Development Company chooses the share repurchase mechanism, the performance commitment Party (or the third party designated by the performance commitment party) shall, according to the time point of Infrastructure Environmental Development Company choosing the share repurchase mechanism, calculate the investment amount of Infrastructure Environmental Development Company in this transaction and the investment amount by 8% IRR per year After deducting the dividend amount obtained by Infrastructure Environmental Development Company the equity repurchase of Infrastructure Environmental Development Company shall be completed within one year (12 months) after Infrastructure Environmental Development Company proposes to exercise the equity repurchase mechanism. If the performance commitment Party (or the third party designated by the performance commitment party) fails to complete the equity buyback on schedule, the performance commitment party shall transfer its equity of the same value of Qiantai Company to Infrastructure Environmental Development Company free of charge (the proportion of equity transferred free of charge = the above equity buyback price / the valuation determined in this transaction; where "equity buyback price" = the investment in this transaction of Infrastructure Environmental Development Company) If the equity held by the performance commitment party in Qiantai Company is insufficient to make up for the equity repurchase price, the insufficient part shall be made up by the performance commitment party in cash.
On the purchase date, the company judges that the gambling performance can be achieved or the contingent consideration is zero according to the profit forecast. The company also continues to pay attention to the future performance of Qiantai Company. Based on the current profit forecast, it is judged that the future performance of gambling can be achieved or the consideration is zero.

III. Summary of significant accounting policies and accounting estimates (continued) 34. Significant accounting judgments and estimates (continued)

Estimation uncertainty (continued)

(11) Impairment of concession intangible assets

The estimates on the net realizable value should be made when considering the impairment of the concession intangible assets.

When considering the impairment of the concession intangible assets, the management of the Company calculates the future cash flows of the toll roads and determines the recoverable amount. The key assumptions of this calculation include the estimated growth rate of the traffic volume, the standards of toll road charge, operating period, maintenance cost and the required return rate. The assumptions of calculating the kitchen waste disposal project franchise right include the per unit waste disposal fee, production/processing capacity, operation duration, operating cost, and necessary return rate.

Under the previous assumptions, the Group's management considered that a concession intangible asset had a recoverable amount higher than the book value, and therefore provision for the impairment of a concession intangible asset was not necessary during the current period. The Group is going to examine the relevant items closely and continually. Adjustments will be made during the corresponding period once there is any indication for adjustment of the accounting estimates.

(12) Depreciation and amortization

After the residual value of fixed assets and intangible assets is taken into account, depreciation and amortization of fixed assets and intangible assets are calculated and withdrawn on a straight-line basis within their service life. The group periodically reviews the service life to determine the amount of depreciation and amortization that will be included in each reporting period. The service life of the group is based on previous experience with similar assets and in combination with expected technical updates. In the event of a material change in previous estimates, depreciation and amortization expenses are adjusted for future periods.

(13) Method for determining the performance progress of a construction contract

The Group shall determine the performance progress of the construction contract provided by the Group in accordance with the input method. Specifically, the Group shall determine the performance progress in accordance with the proportion of the accumulated actual construction cost to the estimated total cost. The accumulated actual incurred cost shall include the direct and indirect costs incurred in the process of the Group's commodity transfer to the customer. In the Group's opinion, the construction contract price with the customer is determined on the basis of the construction cost, and the proportion of the actual construction cost to the estimated total cost can accurately reflect the performance progress of the construction services. The Group determines the performance progress according to the proportion of the actual accumulated construction cost to the estimated total cost and recognizes the revenue accordingly. In view of the long duration of the construction contract, which may span several accounting periods, the Group will review and revise the budget as the construction contract progresses and adjust the revenue recognition amount accordingly.

(14) Impairment of financial instruments

The Group uses the expected credit loss model to assess the impairment of financial instruments. The application of the expected credit loss model requires significant judgments and estimations, and all reasonable and evidenced information, including forward-looking information, should be considered. In making such judgments and estimations, the Group infers the expected changes in the debtor's credit risk based on the historical repayment data in combination with economic policies, macroeconomic indicators, and industry risks. Different estimates may affect the provision for impairment and the provision for impairment that has been made may not be equal to the actual amount of impairment losses in the future.

III. Summary of significant accounting policies and accounting estimates (continued) 34. Significant accounting judgments and estimates (continued)

Estimation uncertainty (continued)

(15) Fair value of unlisted equity investments

Fair value of non-listed equity investment at fair value through profit or loss is estimated using the market-based method. The assumptions on which it is based are unobservable input. The estimation requires management to determine comparable public companies (peers) based on industry, scale, gearing and strategy and compute appropriate price multiples in respect of each identified comparable company, such as enterprise value to EBITDA ("EV/EBITDA"), price to book ("P/B") or price to earnings ("P/E"), etc. Such multiples are measured and arrived at based on the relevant data of the comparable companies and discounted by a percentage for the lack of liquidity. The discounted multiple shall be used for the measurement of the profit or asset of the non-listed equity investment to arrive at its fair value. Management believes that the estimated fair value (as recorded in the financial statements) and changes in fair value (as recorded in profit or loss and other comprehensive income) arrived at using the aforesaid valuation method were reasonable and represented the most appropriate value at the end of the reporting period.

(16) Quality assurance

The Group will make a reasonable estimate of the warranty rate for the contract Product improvements combination with similar characteristics based on the historical warranty data, current warranty conditions, market changes, and other relevant information. The Group re-evaluates the warranty rate at least on every balance sheet date and determines the estimated liability based on the re-evaluated warranty rate.

(17) Estimated compensation

The Group is involved in a number of litigations. The estimated compensation is based on management's understanding of the litigations and the opinions of legal counsels or legal representatives. These estimations are likely to be updated according to the progress of the litigations. This may affect the Group's operation and operating results.

35. Changes in accounting policies and accounting estimates

Changes in accounting estimates

Details and reasons for changes in accounting estimates	Procedures for approval	Effective date	Notes (Financial statement items and amounts affected)
Changes in accounting estimates of unit usage of Shuiguan Expressway and Yichang Expressway	Approved by the Board of Directors of the Company on 18 March 2020	1 January 2020	(a)

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Shenzhen International Holdings Ltd. published this content on 24 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 March 2021 12:26:02 UTC.

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Shenzhen International Holdings Ltd is an investment holding company principally engaged in the toll road businesses. The Company operates business through two segments. The Toll Roads and General-environmental Protection Business segment is engaged in the development, operation and management of toll highway businesses. The Segment is also engaged in the wind turbine equipment sale business, kitchen waste disposal projects construction business and wind power stations operation businesses. The Logistics Business segment is engaged in the construction, operation and management of logistics parks mainly including logistics centres and integrated logistics hubs. The Segment also provides third party logistics services, logistics information services, financial services, port and other related services. In addition, the Segment is engaged in the logistics park transformation and upgrading businesses

Sector

Highways & Rail Tracks

Calendar

2024-05-16 - Ex-dividend day for Cash amount paid with the scrip issue offered as an alternative to the dividend

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Income Statement Evolution

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Ratings for Shenzhen International Holdings Limited

Trading Rating

Investor Rating

ESG Refinitiv

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Analysts' Consensus

Sell

Buy

Mean consensus

BUY

Number of Analysts

Last Close Price

5.9 HKD

Average target price

9.95 HKD

Spread / Average Target

+68.64%

Consensus

EPS Revisions

Estimates Revisions

Annual profits - Rate of surprise

Company calendar

Sector Highway Operators

	1st Jan change	Capi.
SHENZHEN INTERNATIONAL HOLDINGS LIMITED	-10.94%	1.8B
TRANSURBAN GROUP	-7.00%	25.51B
MUNDYS S.P.A.	+0.22%	20.21B
CHINA MERCHANTS EXPRESSWAY NETWORK & TECHNOLOGY HOLDINGS CO.,LTD.	+21.39%	11.18B
JIANGSU EXPRESSWAY COMPANY LIMITED	+12.68%	7.53B
SALIK COMPANY	+15.76%	7.39B
IMPULSORA DEL DESARROLLO Y EL EMPLEO EN AMÉRICA LATINA, S.A.B. DE C.V.	+5.41%	6.51B
SHANDONG HI-SPEED COMPANY LIMITED	+29.97%	6.03B
ATLAS ARTERIA LIMITED	-7.27%	5.06B
GRUPO CCR S.A.	-10.08%	4.89B

Highway Operators

Shenzhen International Holdings Limited

Equities

152

BMG8086V1467

Highways & Rail Tracks

Shenzhen International : Overseas Regulatory Announcement - 2020 Annual Results Preliminary Announcement of Shenzhen Expressway Company Limited

Latest news about Shenzhen International Holdings Limited

Chart Shenzhen International Holdings Limited

Company Profile

Income Statement Evolution

Ratings for Shenzhen International Holdings Limited

Analysts' Consensus

EPS Revisions

Annual profits - Rate of surprise

Sector Highway Operators