Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Guangdong Provincial Expressway Development Co., Ltd. 2018 Annual Report March 2019 1 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report I. Important Notice, Table of Contents and Definitions The Board of Directors and the directors, Supervisory Committee and supervisors and Senior Executives of the Company hereby warrant that at the year , there are no misstatement, misleading representation or important omissions in this report and shall assume joint and several liability for the authenticity, accuracy and completeness of the contents hereof. Mr.Zheng Renfa, The Company leader, Mr. Wang Chunhua, General Manager, Mr. Fang Zhi, Chief financial officer and the Ms.Zhou Fang, the person in charge of the accounting department (the person in charge of the accounting )hereby confirm the authenticity and completeness of the financial report enclosed in this annual report. All the directors attended the board meeting for reviewing the Annual Report. The toll revenues of Expressway is main source of the major business income of the company , The charge standard of vehicle toll must be submitted to the same level people's government for review and approval after the transport regulatory department of province, autonomous region or municipality directly under the central government in conjunction with the price regulatory department at the same level consented upon examination. Therefore, the adjustment trend of the charge price and the charge price if has the corresponding adjustment in the future price level when the cost of the company rises still depend on the approval of relevant national policies and government departments, and the company isn't able to make timely adjustment to the charge standard in accordance with the its own operation cost or the change of market supply demand. So, the change of charge policy and the adjustment of charge standard also have influence on the expressways operated by the company to some extent. So, the charging policy changes and charges adjustment will affect the highways operation of the company. The profit distribution proposal reviewed and approved by the boarding meeting was summarized as follows: 2,090,806,126 for the base, the Company would distribute cash dividend to all the shareholders at the rate of CNY5.62 for every 10 shares (with tax inclusive) , 0 bonus shares ( including tax ) and no reserve would be converted into share capital. 2 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Table of Contents I. Important Notice, Table of contents and Definitions II. Basic Information of the Company and Financial index III. Outline of Company Business IV. Management’s Discussion and Analysis V. Important Events VI. Change of share capital and shareholding of Principal Shareholders VII. Situation of the Preferred Shares VIII. Information about Directors, Supervisors and Senior Executives IX. Administrative structure X. Corporate Bond XI. Financial Report XII. Documents available for inspection 3 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Definition Terms to be defined Refers to Definition Reporting period, This year Refers to January 1, 2018 to December 31, 2018 The annual report of the company was approved by the board of directors on 2018, Reporting date Refers to that is, March 27, 2019 YOY Refers to Compared with 2017 The Company /This Company Refers to Guangdong Provincial Expressway Development Co.,Ltd. Communication Group Refers to Guangdong Communication Group Co., Ltd. Guangdong Expressway Refers to Guangdong Expressway Co.,Ltd. Construction Company Refers to Guangdong Highway Construction Co., Ltd. Technology Company/Guangdong Refers to Guangdong Expressway Technology Investment Co., Ltd Expressway Technology Fokai Company,Subsidiary Refers to Guangdong Fokai Expressway Co., Ltd. Fokai Branch Refers to Guangdong Fokai Expressway Co., Ltd. Fokai Branch The reconstruction and expansion The reconstruction and expansion of the Sanbao-Shuikou section (south section) of of th south section of Fokai Refers to Fokai Expressway. Expressway Guangfo Company Refers to Guangdong Guangfo Expressway Co., Ltd. Guangdong Expressway Capital Refers to Yuegao Capital Investment (Hengqin) Co., Ltd. Guangzhu East Company Refers to Jingzhu Expressway Guangzhu Section Co., Ltd. Guangdong Provincial Expressway Development Co.,Ltd. issues shares and uses Major assets restructuring Refers to cash to purchase assets and raise counterpart funds and Related transaction 4 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report II. Basic Information of the Company and Financial index 1.Company Information Stock abbreviation: Guangdong Expressway A,B Stock code: 000429、200429 Stock exchange for listing Shenzhen Stock Exchange Name in Chinese 广东省高速公路发展股份有限公司 Chinese Abbreviation 粤高速 English name (If any) Guangdong Provincial Expressway Development Co.Ltd. English Abbreviation (If any) GPED Legal Representative Zheng Renfa Registered address 85 Baiyun Road, Guangzhou, Guangdong Province Postal code of the Registered 510100 Address Office Address 45-46/F, Litong Plaza, No.32, Zhujiang East Road, Zhujiang New City, Tianhe Disrtict , Guangzhou Postal code of the office 510623 address Internet Web Site www.gpedcl.com E-mail ygs@gdcg.cn 2. Contact person and contact manner Board secretary Securities affairs Representative Name Yang Hanming Liang Jirong 46/F, Litong Plaza, No.32, Zhujiang East 45/F, Litong Plaza, No.32, Zhujiang East Contact address Road, Zhujiang New City, Tianhe Disrtict , Road, Zhujiang New City, Tianhe Disrtict , Guangzhou Guangzhou Tel 020-29004619 020-29004523 Fax 020-38787002 020-38787002 E-mail Hmy69@126.com 139221590@qq.com 3. Information disclosure and placed Newspapers selected by the Company for information Securities Times, China Securities, Shanghai Securities Daily and disclosure Hongkong Commercial Daily. Internet website designated by CSRC for publishing www.cninfo.com.cn the Annual report of the Company The place where the Annual report is prepared and Securities affair Dept of the Company placed 5 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 4.Changes in Registration Organization Code 91440000190352102M Changes in principal business activities No change since listing (if any) On November 2000, In accordance with Cai Guan Zi (2008) No. 109 Document of Ministry of Finance and Yue Ban Han (2000) No. 574 Document of General Office of Guangdong People's Government, the state-owned shares of Guangdong Expressway originally entrusted to Guangdong Expressway Company (now renamed as Changes is the controlling shareholder in "Guangdong Provincial Expressway Co., Ltd.") for management were transferred to the past (is any) Guangdong Communication Group Co., Ltd. for holding and management. After the transfer of state-owned shares, Guangdong Communication Group Co., Ltd. became the largest shareholder of the Company. The nature of equity was defined as state-owned shares. 5. Other Relevant Information CPAs engaged Name of the CPAs Guangdong Zhengzhong Zhujiang Certified Public Accountants Co., Ltd. Office address: 10/F,Yuehai Group Building, No.555 Dongfeng East Road, Guangzhou Names of the Certified Public Feng Kuncong, Xu Jihong Accountants as the signatories The sponsor performing persistent supervision duties engaged by the Company in the reporting period. □ Applicable√ Not applicable The Financial advisor performing persistent supervision duties engaged by the Company in the reporting period □ Applicable√ Not applicable 6 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 6.Summary of Accounting data and Financial index Whether it has retroactive adjustment or re-statement on previous accounting data √Yes □ No Retroactive adjustment or restatement of reasons Accounting policy change Changed over last 2017 2016 2018 year(%) Before adjustment After adjustment After adjustment Before adjustment After adjustment Revenue(Yuan) 3,218,694,083.94 3,089,055,399.21 3,089,055,399.21 4.20% 2,825,049,808.36 2,825,049,808.36 Net profit attributable to the shareholders of the listed company 1,677,028,179.18 1,509,922,398.70 1,509,922,398.70 11.07% 1,001,205,945.39 1,001,205,945.39 (Yuan) Net profit after deducting of non-recurring gain/loss attributable to 1,395,441,391.82 1,271,993,450.05 1,271,993,450.05 9.71% 846,981,077.52 846,981,077.52 the shareholders of listed company (Yuan) Cash flow generated by business 1,915,985,578.04 2,194,989,925.35 2,194,989,925.35 -12.71% 1,924,259,958.28 1,924,259,958.28 operation, net(Yuan) Basic earning per share(Yuan/Share) 0.80 0.72 0.72 11.11% 0.52 0.52 Diluted gains per share(Yuan/Share) 0.80 0.72 0.72 11.11% 0.52 0.52 Weighted average ROE(%) 18.37% 17.69% 17.69% 0.68% 14.18% 14.18% Changed over last End of 2017 End of 2016 End of 2018 year(%) Before adjustment After adjustment After adjustment Before adjustment After adjustment Gross assets(Yuan) 16,295,910,774.45 16,523,315,093.72 16,523,315,093.72 -1.38% 16,072,445,216.59 16,072,445,216.59 Net assets attributable to shareholders of the listed company 9,586,701,904.06 9,023,071,118.45 9,023,071,118.45 6.25% 8,289,020,301.39 8,289,020,301.39 (Yuan) Reasons of accounting policy change and correction of accounting error On June 26,2018,The Ministry of Finance issued the Notice on Revising and Issuing the Format of General Enterprise Financial Statements for 2018 (Caikuai 7 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report [2018] No. 15), which adjusted the format of enterprise financial statements accordingly and merged the original "notes receivable" and "accounts receivable" line items into "notes receivable and accounts receivable"; The items in the original "interest receivable", "dividend receivable" and "other receivables" lines are merged into "other receivables"; The items in the original "fixed assets" and "fixed assets liquidation" lines are merged into "fixed assets"; The items in the original "engineering materials" and "construction in progress" lines are merged into "construction in progress"; The items in the original "notes payable" and "accounts payable" lines are merged into "notes payable and accounts payable"; The items in the original "interest payable", "dividend payable" and "other payables" lines are merged into "other payables"; The items in the original "long-term payables" and "special payables" lines are merged into "long-term payables"; In the income statement, the detailed items of "management expenses" and "research and development expenses" are broken down under the item of "management expenses"; The detailed items of "interest expense" and "interest income" are broken down under "financial expense" in the income statement. The Company adopts retrospective adjustment method for this accounting policy change, and retroactively adjusts the items reported in 2017 financial statements. 8 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 7.The differences between domestic and international accounting standards 1.Simultaneously pursuant to both Chinese accounting standards and international accounting standards disclosed in the financial reports of differences in net income and net assets. □ Applicable□√ Not applicable Nil 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. □ Applicable √Not applicable Nil 8.Main Financial Index by Quarters In RMB First quarter Second quarter Third quarter Fourth quarter Revenue 743,043,761.26 792,820,383.88 850,769,743.92 832,060,194.88 Net profit attributable to the 341,598,430.84 437,403,816.14 441,303,002.76 456,722,929.44 shareholders of the listed company Net profit after deducting of non-recurring gain/loss attributable 341,067,803.01 411,849,908.52 427,205,756.24 215,317,924.05 to the shareholders of listed company Net Cash flow generated by 332,977,529.61 484,302,058.49 616,987,110.21 481,718,879.73 business operation Whether significant variances exist between the above financial index or the index with its sum and the financial index of the quarterly report as well as semi-annual report index disclosed by the Company. □ Yes √No 9.Items and amount of non-current gains and losses √Applicable □Not applicable In RMB Items Amount (2018) Amount (2017) Amount (2016) Notes Non-current asset disposal gain/loss(including the write-off part for 63,173,138.25 -2,745,683.68 8,644,766.55 which assets impairment provision is made) Govemment subsidies recognized in current gain and loss(excluding those closely related to the Company’s 1,113,228.32 385,932.17 704,645.87 business and granted under the state’s policies) Current net gains and losses occurred from period-begin to combination day 102,025,476.76 by subsidiaries resulting from business combination under common control 9 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Amount (2018) Amount (2017) Amount (2016) Notes Other non-business income and -1,545,368.05 61,458,075.96 62,762,574.05 expenditures other than the above The amount in 2018 is due to the deferred income tax assets of Less: Amount of influence of income -230,679,518.30 -178,668,186.37 17,954,525.92 246,010,541.19 yuan after the tax cancellation of Guangdong Fokai Expressway Co., Ltd. Amount of influence of minority 11,833,729.46 -162,437.83 1,958,069.44 interests(after tax) Total 281,586,787.36 237,928,948.65 154,224,867.87 -- For the Company ’ s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Companies Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason. □ Applicable√ Not applicable None of Non-recurring gain /loss items recorgnized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non –recurring gain/loss in the report period. 10 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report III. Business Profile Ⅰ.Main Business the Company is Engaged in During the Report Period Whether the company needs to comply with the disclosure requirements of the particular industry No The Company is an infrastructure industry, with main business in developing and operating expressway and big bridges. It is one of the main institutions of developing expressway and big bridge in Guangdong Expressway System. The expressway industry is the industry helped by government. The Company is mainly engaged in tolling and maintenance of Guangfo Expressway, Fokai Expressway and Jingzhu Expressway Guangzhu Section investment in technological industries and provision of relevant consultation while investing in Shenzhen Huiyan Expressway Co., Ltd., Guangzhou Guanghui Expressway Co., Ltd.,Guangdong Jiangzhong Expressway Co., Ltd., Zhaoqing Yuezhao Expressway Co., Ltd.,Ganzhou Kangda Ex pressway , Ganzhou Gankang Expressway Co., Ltd.,Guangdong Yueke Technology Petty Loan Co., Ltd., Guangdong Guangle Expressway Co.,Ltd.and Guoyuan Securities Co., Ltd. As of the end of the reporting period, the company’s share-controlled expressway is 153.71 km, and Share-controlled expressways and share-participation expressways are converted to 264.41 kilometers in proportion to equity. Ⅱ.Major Changes in Main Assets 1. Major Changes in Main Assets Main assets Major changes An increased by 98.36 million yuan and 3.23% over the beginning of the year, Mainly Equity assets due to the combined effect of the shareholder's distribution of dividends and the increase in investment income. A decreased by 905.38 million yuan and 10.64% over the beginning of the year,Mainly Fixed assets due to the depreciation of the current period of Guangzhu East and Fokai Company. Intangible assets No significant change. An increased by 731.86 million yuan and 204.65% over the beginning of the year, Construction in process Mainly due to the affection by the reconstruction and expansion of the Sanbao-Shuikou section (south section) of Fokai Expressway. An increased by 112.19 million yuan and 33.46% over the beginning of the year, The Deferred income tax assets main reason is that the Department recognizes the deferred income tax assets corresponding to the losses. 2. Main Conditions of Overseas Assets □ Applicable √Not applicable III. Analysis On core Competitiveness Whether or not the Company complies with disclosure requirement of the special industry No The toll revenue of expressway industry mainly depends on the regional economic development. The 11 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report regional economy is the critical factor that influences the traffic volume. The Guangfo expressway and the Fokai expressway, controlled by the company, are part of the National Expressway Network Planning-“Five vertical and seven horizontal ”,The share-controlled Beijing-Zhuhai Guangzhu Section Expressway is a fast and convenient expressway.and many of the company’s equity-participation expressways that are part of the main skeleton of the Guangdong Provincial Expressway Planning- “ Ten vertical and five horizontal ” , which provides a strong guarantee for stable traffic volume. Meanwhile, the regional economy is the critical factor that influences the traffic volume, as Guangdong province is the economically developed region, with years ’ continuous high growth of GDP, so that provides the stable rising demand for the company. 12 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report IV. Management’s Discussion and Analysis I. General In 2018, The board of directors of the Company actively implements the resolutions of the general meeting of shareholders, earnestly performs its duties, leads the company's management team, closely focuses on the overall goal of "being stronger and better" in accordance with the relevant requirements of Guangdong province for comprehensively deepening the reform of state-owned enterprises, takes the party construction as the guide, stabilizes the main business, promotes the transformation through investment, and promotes the high-quality development of the Company. In 2018, according to the overall work plan, steady progress are made and implementation are vigorously promoted. All tasks and objectives have been successfully completed. 1. Basically complete the set target in 2018. 2018 to achieve operating income of 3.219 billion yuan to complete the target value of 3.227 billion yuan by 99.75%; to achieve operating costs of 1.279 billion yuan to complete the target value of 1.326 billion yuan by100%. 2. Complete the absorption and merger of Fokai subsidiaries. In 2018, the company organized and completed key work such as bank loan contract subject change, real estate transfer, preparation and handover of asset list, cancellation of tax registration by 15 tax authorities, and cancellation of Fokai subsidiaries, and successfully completed the absorption and merger of Fokai subsidiaries. 3. Achieve smooth progress for reconstruction and expansion project. In 2018, the construction projects under construction of the holding company include the reconstruction and expansion projects of Foshan-Shuikou Expressway Sanbao-Shuikou Section and Huiyan Expressway of Foshan-Shuikou Expressway, among which the Foshan-Shuikou Expressway south section is subject to reconstruction and expansion of soft foundation, subgrade and culvert works, the bridge and pavement works are completed by 60% and 50% respectively, and the construction is progressing smoothly. Huiyan Expressway reconstruction and expansion project is also progressing steadily as planned. 4. The screening of high-quality project sources is strengthened. According to the overall arrangement of the company's "13th Five-Year" Development Plan and the goal of transformation and development, we have firmly established the concept that focus on the projects and investment is the focus on development. Based on Guangdong's high capital investment platform, centered by directions such as service industry and intelligent transportation, we have followed and analyzed more than a dozen projects,and will continuou search for high-quality investment projects suitable for company development. 5. Orderly promote the development of resources along the expressway. Through the practice of comprehensive development of resources along expressways, it is not only the needs of the company's own development, but also the practical needs of "driving competitive business with quasi-public business, driving quasi-public business with competitive business, and creating a comprehensive return model". This year, efforts will be focused on revitalizing land plots along the route through lease, promoting eligible land plots and deepening research on the comprehensive development model of land resources, so as to lay a foundation for the subsequent development of land resources along the route. 6. Promote the integration of self-developed "Blue Channel" technology and provincial highway toll collection 13 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report system upgrading. "Blue Channel" project is a useful exploration for the company to expand its intelligent transportation business. In order to integrate this technology into the overall arrangement of the upgrading and renovation of expressway toll collection system in Guangdong Province, Guangdong High Speed Technology Investment Co., Ltd., a wholly-owned subsidiary of the company, takes the "Blue Channel" related intellectual property rights as the transfer price by means of agreement transfer and according to the evaluation value. The asset group is transferred to Guangdong Union Electronic Services Co., Ltd. 7. Lead the establishment of the Intelligent Transportation Industry Investment Alliance. The company actively responded to national policies and the needs of industry development. In order to strengthen the research on intelligent transportation industry policies, industry analysis and information exchange and sharing, the company took the opportunity of the "China (Xiaoguwei)' Internet + Transportation' Innovation and Entrepreneurship Competition". In November, the company jointly established the "China Intelligent Transportation Industry Investment Alliance" with a number of transportation industry companies to help expand intelligent transportation business. II. Main business analysis 1. General The Company is an infrastructure industry, with main business in developing and operating expressway and big bridges. It is one of the main institutions of developing expressway and big bridge in Guangdong Expressway System. In the report period, the vehicle traffic and toll income of the controlled subsidiaries and joint ventures of the Company are as follows: Volume of vehicle traffic in Increase Toll income in 2018 Increase 2018(Ten thousands vehicles) /Decrease(%) (Ten thousands) /Decrease(%) Guangfo Expressway 6,571.56 4.92% 47,459.17 9.13% Fokai Expressway 7,538.89 19.82% 132,756.72 5.91% Jingzhu Expressway 8,129.98 2.94% 131,428.29 1.81% Guangzhu East Section Huiyan Expressway 4,134.96 8.41% 24,528.82 5.52% Guangzhao Expressway 3,258.06 8.67% 55,079.41 8.45% Guanghui Expressway 6,258.26 8.72% 183,152.15 0.60% Jiangzhong Expressway 5,751.28 4.08% 47,945.55 4.91% Kangda Expressway 302.44 2.28% 23,986.88 -0.45% Gangkang Expressway 399.92 16.79% 16,615.27 18.93% Guangle Expressway 2,684.97 14.24% 310,013.64 4.04% Overall situation: During the reporting period, the traffic volume of participating and controlling expressways maintained a growth trend. Toll revenue increased by different rates compared with the same period last year except for the negative growth of Nankang-Dayu Expressway. 1. Guangfo Expressway: affected by the implementation of restricted trucks in Foshan First Ring Road, the number of truck traffic increased year-on-year, so the increase percentage in toll revenue was higher than the increase in traffic volume. 2. Fokai Expressway: The income growth level of the first three quarters remained stable. In the fourth quarter, due to the opening of the entire line of Yunzhan Expressway, the income growth level declined. 14 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 3. Guangzhu Section of Beijing-Zhuhai Expressway: During the period of closure of Hongqili Bridge on National Highway from January to August 2017, vehicles bypassed Guangzhudong Expressway, which resulted in a sharp increase in traffic flow and toll revenue of Guangzhudong Expressway. In 2018, this factor disappeared, and the traffic flow and toll revenue of Guangzhou-Zhuhai-East Expressway returned to normal, with a small increase over the same period last year. 4. Huiyan Expressway: Vehicle flow and toll revenue maintained normal natural growth. The ongoing reconstruction and expansion of Huiyan Expressway has not had a substantial impact on road traffic this year. 5. Gankang Expressway: The increase in traffic volume and toll revenue was mainly due to the comprehensive effects of positive factors including surrounding local road repair, local road key vehicle regulating and Xingan highway traffic volume bringing-in. 2. Revenue and cost (1)Component of Business Income In RMB 2018 2017 Increase /decrease Amount Proportion Amount Proportion Total operating 3,218,694,083.94 100% 3,089,055,399.21 100% 4.20% revenue Industry Highway 3,116,441,804.18 96.82% 2,979,291,622.84 96.45% 4.60% transportations Other 102,252,279.76 3.18% 109,763,776.37 3.55% -6.84% Product Highway 3,116,441,804.18 96.82% 2,979,291,622.84 96.45% 4.60% transportations Other 102,252,279.76 3.18% 109,763,776.37 3.55% -6.84% Area Guangfo 474,591,734.35 14.74% 434,905,187.39 14.08% 9.13% Expressway Fokai Expressway 1,327,567,186.19 41.25% 1,253,453,513.48 40.58% 5.91% Jingzhu Expressway 1,314,282,883.64 40.83% 1,290,932,921.97 41.79% 1.81% Guangzhu Section Other 102,252,279.76 3.18% 109,763,776.37 3.55% -6.84% (2)Situation of Industry, Product and District Occupying the Company’s Business Income and Operating Profit with Profit over 10% √ Applicable □Not applicable Whether or not the Company complies with disclosure requirement of the special industry No In RMB Increase/decrease Increase/decrease Increase/decrease Gross profit of revenue in the of business cost of gross profit Turnover Operation cost rate(%) same period of over the same rate over the same the previous period of period of the 15 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report year(%) previous year (%) previous year (%) Industry Highway 3,116,441,804.18 1,202,346,408.66 61.42% 4.60% 2.17% 0.92% transportations Product Highway 3,116,441,804.18 1,202,346,408.66 61.42% 4.60% 2.17% 0.92% transportations Area Guangfo 474,591,734.35 102,214,783.92 78.46% 9.13% -17.36% 6.90% Expressway Fokai 1,327,567,186.19 703,995,761.95 46.97% 5.91% 3.93% 1.01% Expressway Jingzhu Expressway 1,314,282,883.64 396,135,862.79 69.86% 1.81% 5.41% -1.03% Guangzhu Section Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest on year’s scope of period-end. □ Applicable √Not applicable (3)Whether the Company’s Physical Sales Income Exceeded Service Income □ Yes √ No (4)Degree of Performance of the Significant Sales Contract Signed up to this Report Period □ Applicable √Not applicable (5)Component of business cost Industry category In RMB 2018 2017 Increase/ Industry category Items Proportion in the Proportion in the Decrease Amount Amount (%) operating costs (%) operating costs (%) Highway Depreciation and 795,052,567.72 62.16% 809,040,484.70 64.87% -1.73% transportations Amortized Highway Out of pocket expenses 407,293,840.94 31.84% 367,806,625.74 29.49% 10.74% transportations Other Other 76,748,662.66 6.00% 70,275,242.91 5.63% 9.21% Note (6)Whether Changes Occurred in Consolidation Scope in the Report Period √Yes □No The Company had 5 subsidiaries included in the scope of consolidation in 2018. The scope of the consolidated financial statements decreased by 1 compared with the previous period-for having the write off subsidiary. In August 2018, Guangdong Fokai Expressway Co., Ltd. completed the industrial and commercial cancellation, and obtained the “Notice of Approval for Cancellation Registration” and the “Notice of Permit for Cancellation Registration”. From August 2018, Guangdong Fokai Expressway Co., Ltd. was no longer included in the scope of consolidated statements. 16 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (7)Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in the Company’ s Report Period □ Applicable √Not applicable (8)Situation of Main Customers and Main Supplier □ Applicable √Not applicable 3.Expenses In RMB Increase/Decr 2018 2017 Notes ease(%) Selling expenses 0.00 0.00 Administrative expenses 183,392,148.68 179,811,709.59 1.99% Financial expenses 212,592,783.74 247,306,751.08 -14.04% Reduced loan principal After April 2018, the research and Research & development 1,318,344.01 9,773,866.38 -86.51% development cost of "Blue Channel" project no expenses longer occur. 4. Research and Development √ Applicable □Not applicable In April 2018, Guangdong Expressway Technology stopped the research and development of the “Blue Channel” project, with investment going into other smart transportation projects, and the related projects are in their infancy stage, thus the R&D investment is lower than that of the previous year. R & D investment Increase 2018 2017 /decrease Number of Research and Development persons (persons) 17 28 -39.29% Proportion of Research and Development persons 0.77% 1.28% -0.51% Amount of Research and Development Investment (In RMB) 1,318,344.01 9,773,866.38 -86.51% Proportion of Research and Development Investment of Operation Revenue 0.04% 0.32% -0.28% Amount of Research and Development Investment Capitalization (In RMB) 0.00 0.00 0.00% Proportion of Capitalization Research and Development Investment of Research and 0.00% 0.00% 0.00% Development Investment The Reason of the Prominent Change in Total Amount of Research and Development Input Occupying the Business Income Year on Year □ Applicable √Not applicable Explanation of the Reason for Substantial Changes in the Research and Development Input’s Capitalization Rate and Its Reasonableness □ Applicable √ Not applicable 5.Cash Flow In RMB 17 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Increase/Decrease Items 2018 2017 (%) Subtotal of cash inflow received from operation activities 3,384,347,808.21 3,236,665,403.26 4.56% Subtotal of cash outflow received from operation activities 1,468,362,230.17 1,041,675,477.91 40.96% Net cash flow arising from operating activities 1,915,985,578.04 2,194,989,925.35 -12.71% Subtotal of cash inflow received from investing activities 642,611,742.49 484,922,170.62 32.52% Subtotal of cash outflow for investment activities 845,371,278.92 1,229,007,515.09 -31.22% Net cash flow arising from investment activities -202,759,536.43 -744,085,344.47 -72.75% Subtotal cash inflow received from financing activities 1,385,000,000.00 1,838,277,777.78 -24.66% Subtotal cash outflow for financing activities 3,335,697,061.08 3,530,866,387.00 -5.53% Net cash flow arising from financing activities -1,950,697,061.08 -1,692,588,609.22 15.25% Net increase in cash and cash equivalents -239,738,904.10 -240,236,943.83 -0.21% Notes to the year-on-year change of the relevant data √Applicable □ Not applicable 1. The cash outflow from operating activities was 1.468 billion yuan, of which 283 million yuan was paid in cash for goods and services purchased and received for road maintenance, repair, etc; paid various labor costs of 332 million yuan; and paid 779 million yuan taxes,An increased by 427 million yuan year-on year, mainly because Fokai subsidiaries’ absorption and merge-leading to that in 2018 it paid 321 million yuan of corporate income tax provisioned in the end of 2017. 2. The cash outflow of investment activities was 845 million yuan, mainly paid for the progress of the reconstruction and expansion project of Fokai South Section; A decreased by 384 million yuan year-on year, which was mainly due to the combined impact that the Company invested RMB 800 million purchased Guoyuan Securities in the previous period, and this year’s payment for the Fokai Expressway’s reconstruction and expansion of the southern section increased by 416 million yuan. 3. The cash inflows from financing activities amounted to 1.385 billion yuan, which was the obtained borrowings, a decrease of 453 million yuan year-on -year due to the decrease in borrowings. 4. The cash outflow from financing activities was 3.336 billion yuan, of which 1.785 billion yuan was repaid for debt, and 1.55 billion yuan was for dividends and interests distribution. A decreased by 195 million yuan year-on year, which was mainly due to the decrease in debt repayments during the period. Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company √ Applicable □ Not applicable In RMB Supplement Information Amount of current period I. Adjusting net profit to cash flow from -- operating activities Net profit 1,903,340,402.71 Add: Impairment loss provision of assets -1,006,155.42 Depreciation of fixed assets, oil and gas 807,609,480.04 assets and consumable biological assets Amortization of intangible assets 2,526,983.05 Amortization of Long-term deferred 101,686.95 expenses 18 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Loss on disposal of fixed assets, intangible -66,431,966.75 assets and other long-term deferred assets Fixed assets scrap loss 3,258,828.50 Financial cost 249,543,624.55 Loss on investment -507,659,683.96 Decrease of deferred income tax assets -112,186,009.51 Increased of deferred income tax liabilities -34,374,901.56 Decrease of inventories -81,017.91 Decease of operating receivables 245,477,300.99 Increased of operating Payable -574,132,993.64 Net cash flows arising from operating 1,915,985,578.04 activities II. Significant investment and financing -- activities that without cash flows: 3.Movement of cash and cash equivalents: -- Ending balance of cash 2,123,303,796.32 Less: Beginning balance of cash equivalents 2,363,042,700.42 Net increase of cash and cash equivalents -239,738,904.10 III. Analysis of Non-core Business √ Applicable □Not applicable In RMB Proportion in total Amount Explanation of cause Sustainable (yes or no) profit Investment income from Investment Income 507,659,683.96 24.20% Sustainable share-participating units Asset impairment -1,006,155.42 -0.05% This section is reversed Not sustainable Non-operating Mainly is the compensation 4,175,801.94 0.20% Not sustainable income income. Non-operating Mainly due to the damage 8,979,998.49 0.43% Sustainable expenses repair of civil facilities The Zhuhai High-tech Zone Management Committee recovered 4.213 kilometers of Guangzhou-Zhuhai Proceeds from asset Section Beijing-Zhuhai 66,431,966.75 3.17% Not sustainable disposal Expressway Co., Ltd. The Expressway has confirmed the proceeds of asset disposal. 19 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report IV. Condition of Asset and Liabilities 1.Condition of Asset Causing Significant Change In RMB End of 2018 End of 2017 Proportion Notes to the significant change Proportion in the Proportion in the increase/dec Amount Amount total assets(%) total assets(%) rease Monetary fund 2,124,524,996.32 13.04% 2,363,042,700.42 14.30% -1.26% Accounts 91,076,995.07 0.56% 92,642,625.45 0.56% 0.00% receivable Inventories 81,017.91 0.00% 0.00% 0.00% Investment real 3,579,007.54 0.02% 2,755,757.68 0.02% 0.00% estate Long-term equity 3,145,644,970.07 19.30% 3,047,275,000.00 18.44% 0.86% investment Fixed assets 7,600,046,319.91 46.64% 8,505,434,890.71 51.48% -4.84% Construction in 1,089,473,425.63 6.69% 357,612,211.95 2.16% 4.53% process Long-term loans 2,983,040,000.00 18.31% 4,744,170,000.00 28.71% -10.40% 2.Asset and Liabilities Measured by Fair Value √Applicable □ Not applicable In RMB Gain/Loss on fair value Impairment Purchased Sold amount in Cumulative fair value change Items Opening amount change in the reporting provisions in the amount in the the reporting Closing amount recorded into equity period reporting period reporting period period Financial assets 20 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Gain/Loss on fair value Impairment Purchased Sold amount in Cumulative fair value change Items Opening amount change in the reporting provisions in the amount in the the reporting Closing amount recorded into equity period reporting period reporting period period Available-for-sale 952,782,523.20 -82,339,230.40 352,882,416.00 870,443,292.80 financial assets Subtotal of financial assets 952,782,523.20 -82,339,230.40 352,882,416.00 870,443,292.80 Total of the above 952,782,523.20 -82,339,230.40 352,882,416.00 870,443,292.80 Financial liabilities 0.00 0.00 Did any significant change occur to the attribute of the Company’s main asset measurement during the reporting period? □ Yes √No 21 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 3. Assets right restriction till end of reporting period The balance of restricted bank deposits at the end of the period was RMB 1,221,200.00, which was the land reclamation fund deposited into the fund custody account for the reconstruction and expansion project of sanbao to shuikou section of Fokai Expressway. V. Investment situation 1. General √ Applicable □ Not applicable Investment Amount in 2018(Yuan) Investment Amount in 2017(Yuan) Change rate 824,811,091.23 1,128,590,181.23 -26.92% 22 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2.Condition of Acquiring Significant Share Right Investment during the Report Period √Applicable □Not applicable In RMB Gain or Name of the Share Progress up Whether to Main Investme Investment Capital Investment Product Less or the Date of Company Proportion Partner to Balance Anticipated Involve in Disclosure Index Business nt Way Amount Source Horizon Type Current Disclosure Invested % Sheet Date Income Lawsuit Investment Announcement of Resolutions of Huiyan the 13th On the basis of Shenzhen Co., Ltd. (Provisional) the term of Huiyan Increase Unallocated Yantian Port Limited October Meeting of the Expressway 53,000,000.00 33.33% operation Completed 0.00 0.00 No Expressway capital profit Co., ltd. Company 31,2017 Eighth Board of approved by Co., Ltd. conversion Directors, the government Capital Announcement of External Investment Total -- -- 53,000,000.00 -- -- -- -- -- -- 0.00 0.00 -- -- -- 3.Situation of the Significant Non-equity Investment Undergoing in the Report Period √ Applicable □Not applicable In RMB Reasons Accumulate for failure Industry in d realized Fixed Accumulated actual in meeting Form of which the Investment return as of assets amount invested as Source of Estimated scheduled Date of Disclosure(If Disclosure index(If Name investme investment amount during the Progress the end of investme of the end of und return progress any) any) nt project reporting period the end of nt or not reporting period and operates the reporting estimated period return 23 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Announcement of Fokai the 19th Expressway (Provisional) Sanbao to Self and Not Meeting of the Shuikou Self Yes Expressway 771,811,091.23 1,498,464,844.16 43.74% 0.00 0.00 June 17,2016 Borrowing applicable Seventh Board of section Directors, Extension Announcement of projecy External Investment Total -- -- -- 771,811,091.23 1,498,464,844.16 -- -- 0.00 0.00 -- -- -- 4.Investment of Financial Asset (1)Securities investment √ Applicable □ Not applicable In RMB Purchase Sale Book value Book value Stock Mode of Changes in fair Cumulative fair amount amount Gain/loss of Account Security Security Initial investment balance at the balance at the Sauce of Abbreviati accounting value of the this value changes in in the in the the reporting ing category code cost beginning of the end of the the shares on: measurement period equity this this period items reporting period reporting period period period Domesti Financia c and Everbright l assets 601818 517,560,876.80 FVM 952,782,523.20 -82,339,230.40 352,882,416.00 0.00 0.00 42,581,144.86 870,443,292.80 Self foreign Bank available stocks for sale Total 517,560,876.80 -- 952,782,523.20 -82,339,230.40 352,882,416.00 0.00 0.00 42,581,144.86 870,443,292.80 -- -- Disclosure Date of Announcement on Securities July 22,2009 Investment Approved by the Board of Directors Disclosure Date of Announcement on Securities August 7,2009 Investment Approved by the Shareholders Meeting(If any) 24 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2)Investment in Derivatives □ Applicable √ Not applicable The Company had no investment in derivatives in the reporting period. 5.Application of the raised capital □ Applicable √ Not applicable The Company had no application of the raised capital in the reporting period. VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company had no sales of major assets in the reporting period. 2.Sales of major equity □ Applicable √ Not applicable 25 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report VII.Analysis of the Main Share Holding Companies and Share Participating Companies √ Applicable □ Not applicable Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company In RMB Company Company Name Leading products and services Registered capital Total assets Net assets Operating Income Operating profit Net Profit type Operating Guangfo Expressway Co., Guangfo Ltd.(starts from Hengsha, Guangzhou, ends Subsidiary 200 million yuan 618,339,194.93 560,017,228.16 478,698,151.01 350,870,752.07 264,958,397.35 Expressway in Xiebian, Foshan. Total length 15.7 kilometers Guangzhu Traffic Highway investment management and Investment Subsidiary 3 million yuan 2,739,116,415.57 708,069,127.55 1,340,650,149.26 867,657,015.17 352,076,637.69 consultation; highway maintenance Management Co., Ltd. Investment in and construction of Guanghui Expressway Co., Ltd. and supporting facilities, the toll collection and Guangdong maintenance management of Guanghui Guanghui Sharing Expressway, The Guanghui 2.352 million yuan 4,700,244,777.56 3,308,404,078.58 1,855,658,219.29 1,278,442,208.08 969,032,056.06 Expressway Co., company Expressway's supporting gas station, Ltd. salvation, vehicle maintenance, vehicle transport, catering, warehousing investment and development Jingzhu The operation and management of Subsidiary 580 million yuan 2,734,157,149.77 1,278,381,667.35 1,340,650,149.26 867,740,150.68 640,290,496.74 Expressway Guangzhou-Zhuhai Expressway and 26 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Guangzhu provision of supporting services including Section Co., fueling, salvage and supply of parts and Ltd. components Subsidiaries obtained or disposed in the reporting period √ Applicable □Not applicable Name Mode Influence Has been transferred to a branch, canceled the loss of equity, confirmed deferred income tax assets, increased net profit of Guangdong Fokai Expressway Co., Ltd. Logout 246,010,541.19 yuan. Particulars about the Mutual holding companies 1.Guangfo Expressway Co., Ltd., a subsidiary of the company, the company owns 75% of Guangfo Expressway's equity. It builds and operates Guangzhou-Foshan Expressway. Its management includes road maintenance, toll collection, signs, marking and other transportation facilities maintenance, vehicle rescue and other business. The net profit of this period increased by 46.4731 million yuan, or 21.27% over the same period last year. The main reasons for the increase were: the increase of traffic volume led to the increase of toll income; the depreciation of Guangzhou-Foshan Expressway was completely withdrawn in February last year, and the depreciation of road property decreased by 22.07 million yuan. 2.Beijing-Zhuhai Expressway Guangzhu Section Co., Ltd., a subsidiary of the company, the company owns 75% of Guangzhu Section's equity directly and indirectly. It operates Guangzhou-Zhuhai Expressway and provides the service of refueling, rescuing and spare parts supplying with the expressway. The net profit of the current period increased by 57.5706 million yuan, or 9.88%, compared with the same period last year. The main reason for the increase was that the proceeds of asset disposal confirmed by repurchase of Zhuhai Section amounted to 62.2315 million yuan. 3.Guangdong Guanghui Expressway Co., Ltd. is a joint-stock company of the company. The company holds 30% of Guanghui Expressway's equity, invests in and builds Guanghui Expressway and its supporting facilities; charges and maintenance management of Guanghui Expressway; invests and develops gas stations, rescues, automobile maintenance, automobile transportation, catering and warehousing for Guanghui Expressway. Net profit in the current period increased by 29.0104 million yuan, or 3.09%, compared with the same period last year. The main reason for the increase was the combined effect of the increase of traffic volume on the increase of toll revenue and the decrease of financial expenses. 27 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report VIII. Special purpose vehicle controlled by the Company □ Applicable √ Not applicable IX. Prospect for future development of the Company The overall goal of 2019 is: to achieve the operating income of 3.222 billion yuan and to control the operating cost within 1.422 billion yuan. In 2019, the company will focus on the "people-oriented, road-based business, and diversified development" strategic goal, accelerating the implementation of two-wheel drive of "Highway + Investment", adhering to the general tone of steady progress, centering on the highway industry and related industry development, thus to promote the Company's transformation and upgrading and sustainable development. 1. Consolidate the development foundation of the main business of expressways and enhance the company's core competitiveness. Step up supervision and coordination of projects such as the reconstruction and expansion project of the south section of Foshan-Shuikou Expressway and Huiyan Expressway, as well as the Guangzhudong Special Overhaul Project, seize the work objectives of key links, promote the construction progress, and minimize the adverse impact on highway traffic caused by the Company by project construction. Push forward the review and approval of the reconstruction and expansion of th south section of Fokai Expressway and the toll operation period according to the working idea of "overall planning and coordinated promotion", and complete the toll standard adjustment and approval after the completion of the reconstruction and expansion project of Fokai Expressway South section. Actively Tracking Investment Opportunities of High Quality Expressway Projects , promote the normalization of the capital operation of expressway main business, and strengthen the main business foundation. 2. Focus on the intelligent transportation industry and foster new momentum for the company's development. Fully utilize the role of platforms such as the China Intelligent Transportation Industry Investment Alliance, actively track the development trend of the intelligent transportation industry, and focus on investment opportunities in areas such as expressway traffic infrastructure management, intelligent monitoring, electronic charging, travel information services, big data development and application, vehicle-road collaboration and assisted driving, traffic safety, traffic management, so as to steadily promote equity investment. Guangdong Expressway Technology and Yuegao Capital have developed their respective professional investment capabilities and post-investment management capabilities in intelligent transportation research and development investment, production investment, service investment, etc., with division of labor to realize linkage between capital and industry. 3. Accelerate the development of land resources along the route and enhance the company's land value. Efforts will be made to promote the upgrading and renovation project of the Zhishan Service Area of Foshan-Shuikou Expressway. Research and demonstration of land development programs along the line, and strive to improve the return on comprehensive land investment. 4. Continuously improve the quality of operation and management. In strict accordance with the requirements of standardization, refinement and intensification of operation management, strengthen the statistics and analysis of operation data, and strive to improve the quality of operation management. 5. Actively expand financing channels. The Company will pay close attention to the changes in the national monetary policy, make a plan to connect the demand for funds, the time of demand and the supply of funds, actively expand financing channels, issue medium-term notes at the right time, and raise funds through various 28 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report means such as insurance creditor's rights funds and bank loans to ensure that all kinds of fund needs are met. 6. Enterprise risk prevention is more accurate. Strengthen risk prevention awareness, risk management and internal control. Full utilize the supervisory functions of internal audit, discover business risks in a timely manner, increase the use of inspection results, and promptly urge subordinate enterprises to implement rectification and mitigate risks. X. List of the received researches, visits and interviews 1.Particulars about researches, visits and interviews received in this reporting period √ Applicable □Not applicable Reception Types of Way of reception Basic index time visitors 1. The main content of research:1. the daily operation; 2. the company's April 2,2018 By Phone Organization financial data analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's April 10,2018 Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's May 2,2018 Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's May 8,2018 Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's May 9,2018 Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's July 23,2018 Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's August Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 28,2018 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's October Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 31,2018 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's December Onsite investigation Organization financial data analysis;3. development strategy; 4. analysis on the industry. 19,2018 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's December By Phone Organization financial data analysis;3. development strategy; 4. analysis on the industry. 24,2018 2.Primary data investigation: Public information company regularly reports Reception times 10 Reception agency amount 45 Reception personal number 0 Others 0 Whether to disclose, reveal or disclose non-public No material information 29 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report V. Important Events I. Specification of profit distribution of common shares and capitalizing of common reserves Formulation, implementation and adjustment of profit distribution policy of common shares especially cash dividend policy during the reporting period □Applicable√ Not applicable The profit distribution preplan or proposal and the Plan(preplan) or proposal of conversion of the capital reserve into share capital in the past three years(with the reporting period inclusive): (1) The Company's profit distribution plan for 2016 is as follows: 1.10% of the net profit of the company, i.e. 71,314,278.93 yuan, is to be allocated for statutory common reserve fund. 2.The profit for 2016 is to be distributed as follows: 702,510,858.34 yuan. is to be allocated as the fund for dividend distribution for 2016. with the total shares at the end of 2016, i.e., 2,090,806,126 shares, as the base, cash dividend of 3.36 yuan(including tax) is to be distributed for every 10 shares .The remaining undistributed profits are to be carried forward to the next year. The foreign exchange translation of the cash dividends for shareholders holding B share and overseas corporate shares will be determined according to HKD:RMB bank’s Middle rate quoted by People’s Bank of China on the first working day after 2016 annual shareholders’ general meeting makes resolution on dividend distribution. (2) The Company's profit distribution plan for 2017 is as follows: 1.10% of the net profit of the company, i.e. 177,864,580.14 yuan, is to be allocated for statutory common reserve fund. 2.The profit for 2017 is to be distributed as follows:1,057,947,899.76 yuan. is to be allocated as the fund for dividend distribution for 2017. with the total shares at the end of 2017, i.e., 2,090,806,126 shares, as the base, cash dividend of 5.06 yuan (including tax) is to be distributed for every 10 shares .The remaining undistributed profits are to be carried forward to the next year. The foreign exchange translation of the cash dividends for shareholders holding B share and overseas corporate shares will be determined according to HKD:RMB bank’s Middle rate quoted by People’s Bank of China on the first working day after 2017 annual shareholders’ general meeting makes resolution on dividend distribution. (3) The Company's profit distribution preplan for 2018 is as follows: 1.10% of the net profit of the company, i.e. 230,581,431.32 yuan, is to be allocated for statutory common reserve fund. 2.The profit for 2018 is to be distributed as follows:1,175,033,042.81 yuan. is to be allocated as the fund for dividend distribution for 2018. with the total shares at the end of 2018, i.e., 2,090,806,126 shares, as the base, cash dividend of 5.62 yuan (including tax) is to be distributed for every 10 shares .The remaining undistributed profits are to be carried forward to the next year. The foreign exchange translation of the cash dividends for shareholders holding B share and overseas corporate shares will be determined according to HKD:RMB bank’s Middle rate quoted by People’s Bank of China on the first working day after 2018 annual shareholders’ general meeting makes 30 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report resolution on dividend distribution. Dividend distribution of the latest three years In RMB Ratio of the Ratio of the total cash cash bonus bonus (other Ratio of the by other ways Net profit cash bonus in ways in net Proportion included) in attributable to net profit profit for cash net profit common stock attributable to attributable Total cash bonus by attributable Year for Amount for cash shareholders of listed common stock to common bonus(other other to common bonus shares bonus(tax included) company in shareholders of stock ways ways(i.e. stock consolidation listed company shareholders included) share shareholders statement for bonus contained in of listed buy-backs) of listed year consolidation company company statement contained in contained in consolidation consolidation statement statement 2018 1,175,033,042.81 1,677,028,179.18 70.07% 0.00 0.00% 1,175,033,042.81 70.07% 2017 1,057,947,899.76 1,509,922,398.70 70.07% 0.00 0.00% 1,057,947,899.76 70.07% 2016 702,510,858.34 1,001,205,945.39 70.17% 0.00 0.00% 702,510,858.34 70.17% In the reporting period, both the Company’s profit and the parent company’s retained earnings were positive however not cash dividend distribution proposal has been put forward. □Applicable√ Not applicable II.Profit distribution plan and capitalizing of common reserves plan for the Period √ Applicable □ Not applicable Bonus shares for every ten shares(Shares) 0 Cash dividend for every ten shares 5.62 (Yuan)(Tax-included) Distribute additional (shares)for 10 shares 0 A total number of shares as the distribution 2,090,806,126 basis(shares) Cash dividend amount (yuan, including tax 1,175,033,042.81 Other means (such as repurchase of shares) cash 0.00 dividend amount (yuan) Total cash dividend (yuan, including tax) 1,175,033,042.81 Distributable profit (yuan) 3,680,165,040.86 Proportion of cash dividend in the distributable profit 100% Cash dividend distribution policy The Company is in a fast growth stage, there fore, the cash dividend will reach 80% of the profit distribution at least. Cash dividend distribution policy. Details of profit distribution or reserve capitalization plan 1.10% of the net profit of the company, i.e. RMB 230,581,431.32, is to be allocated for statutory common reserve fund. 2.The profit for 2018 is to be distributed as follows: 1,175,033,042.81 yuan. is to be allocated as the fund for dividend distribution for 2018. with the total shares at the end of 2018, i.e., 2,090,806,126 shares, as the base, cash dividend of 5.62 yuan (including tax) is to be distributed for every 10 shares .The remaining undistributed profits are to be carried forward to the next year. The foreign exchange translation of the cash dividends for shareholders holding B share and overseas corporate shares will be determined 31 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report according to HKD:RMB bank’s Middle rate quoted by People’s Bank of China on the first working day after 2018 annual shareholders’ general meeting makes resolution on dividend distribution. 32 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report III. Commitments to fulfill the situation 1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of the reporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, senior management personnel and other related parities. √Applicable □Not applicable Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment Commitment on share reform Commitment in the acquisition report or the report on equity changes Guangfa Securities Guangdong Expressway A shares acquired by the Company through subscription in this major Co., Ltd., Tibet The date of asset reorganization cannot be transferred or listed for transaction within thirty-six months Fulfill the Yingyue Investment the expiration Share limited from the date of the completion of the shares issuance in this major asset reorganization. commitment Management Co., June 18,2015 of the share commitment Upon the expiry of the lock-up period, the transfer and transaction of these shares will be normally Ltd., Yadong Fuxing lock. made in accordance with the effective laws and regulations, and relevant provisions of CSRS Yalian Investment Co., Commitment and Shenzhen Stock Exchange (SSE). Ltd. made upon the assets Guangdong Expressway A shares acquired by the Company through subscription in this major Guangdong replacement asset reorganization cannot be transferred or listed for transaction within thirty-six months Expressway Co., Ltd., The date of from the date of the completion of the shares issuance in this major asset reorganization. Fulfill the Guangdong Highway the expiration Share limited Upon the expiry of the lock-up period, the transfer and transaction of these shares will be commitment Construction Co., June 26,2015 of the share commitment made in accordance with the effective laws and regulations, and relevant provisions of CSRS normally Ltd., Guangdong lock. and Shenzhen Stock Exchange (SSE). Upon the completion of this major asset reorganization, Communication if the closing price of the A-share of Guangdong Expressway is below the issue price for 20 Group Co., Ltd. consecutive trading days within six months, or at the end of six months after the completion 33 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment of the transaction the closing price is below the issue price, the lock-up period of the A-share of Guangdong Expressway acquired by the Company through this major asset reorganization will be automatically extended for six months. Upon the mutual agreement by the Company and the Guangdong Expressway Co., Ltd., the predicted annual net profit of the Guangzhou Fokai Expressway Co., Ltd. is 250.6973 million yuan in 2016, 2690.0802 million yuan in 2017, and 403.1197 million yuan in 2018,The non-recurring profit and loss in total is 105.5743 million yuan through accumulated prediction. Within the compensation period, if Guangdong Fokai Expressway Co., Ltd. achieves the accumulated net profit at the end of one year lower than the accumulated predicted net profit of such year, the company will, based on shares needing compensation through calculated and determined subject to the Agreement, buy back them by 1 yuan from Performance Guangdong Fokai Expressway Co., Ltd. and cancel them and Guangdong Expressway Co., The period of commitment Ltd. shall compensate in cash for the share part in short. Upon the compensation period Fulfill the compensation Guangdong s and expiration, if the actual accumulated non-recurring profit and loss (means the compensation commitment August 26,2015 and the date of Expressway Co., Ltd. compensatio granted within the compensation period by the governmental sector to Guangdong Fokai normally completion of n Expressway Co., Ltd. for Jiujiang Bridge charging cancel, hereinafter referred to as the agreement. arrangements “compensation amount for Jiujiang bridge”) of Guangdong Fokai Expressway Co., Ltd. is lower than accumulated predicted non-recurring profit and loss, Guangdong Expressway Co., Ltd. will, subject to its shareholding ratio in Guangdong Fokai Expressway Co., Ltd. before the major assets restructuring implementation, compensate the company in cash per the agreement; after the compensation period expiration, upon Guangdong Fokai Expressway Co., Ltd. acceptance of Jiujiang bridge compensation each time, the company shall refund the corresponding part among the compensation paid subject to the agreement by Guangdong Expressway Co., Ltd. within 30 workdays after Guangdong Fokai Expressway Co., Ltd. receives such compensation. Guangdong Highway Performance Upon the mutual agreement by the Company and the Guangdong Provincial Highway The period of Fulfill the August 26,2015 Construction Co., Ltd. commitment Construction Co., Ltd., the predicted annual net profit of the Guangzhou Guangzhu Traffic compensation commitment 34 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment s and Investment Management Co., Ltd. is 230.3606 million yuan in 2016, 263.2329 million yuan and the date of normally compensatio in 2017, and 286.5018 million yuan in 2018. Within the term of compensation, if the completion of n cumulated net profit of Guangzhou Guangzhu Transportation Investment Management Co., the agreement. arrangements Ltd. by the end of a year is lower than the accumulated predicted net profit of that year, the Company will buy back the compensated shares at the price of 1 yuan from the Guangzhou Guangzhu Transportation Investment Management Co., Ltd. that should be calculated in accordance with the agreement, and deregister such shares. The commitment to avoid horizontal competition: 1. the Company and the companies that are under direct or indirect control of the Company, except Guangdong Expressway and its This subsidiaries, will not use the controlling shareholders to damage the legitimate interests of the commitment business activities of Guangdong Expressway and its medium and small shareholders and its is valid from subsidiaries. 2. The Company and the companies that are under direct or indirect control of the date of the Company, except Guangdong Expressway and its subsidiaries, will not use the signing this information acquired from Guangdong Expressway and its subsidiaries to engage in core Commitment letter of Guangdong business which competes with Guangdong Expressway and its subsidiaries and will not s on commitment Expressway Co., Ltd., conduct any activity that damages or may damage the legitimate interests of Guangdong horizontal to the date on Fulfill the Guangdong Highway Expressway and its medium and small shareholders and its subsidiaries. 3. As for the transfer competition, which the commitment Construction Co., of toll roads, bridges, tunnels and related ancillary facilities or equity invested, constructed or June 26,2015 related shares of normally Ltd., Guangdong managed by the Company or companies, that are under direct or indirect control of the transaction Company is Communication Company, except Guangdong Expressway and its subsidiaries to the Company or any and capital no longer Group Co., Ltd. company that is under direct or indirect control of the company, unless it is a transferee occupation controlled by expressly designated by the relevant government departments, to the extent permitted by the controlling relevant laws and regulations, Guangdong Expressway has the right of preemption under the shareholder of same conditions. 4. In the future, if the Company and the companies that are under direct or the indirect control of the Company, except Guangdong Expressway and its subsidiaries, invest Guangdong and construct a parallel highway or a highway in the same direction on either side of the Expressway. Highway within 20 km, to the extent permitted by relevant laws and regulations, except in the project whose investors have been expressly specified by the relevant government 35 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment departments, Guangdong Expressway has the priority right to invest ahead of the Company and the companies that are under direct or indirect control of the Company, except Guangdong Expressway and its subsidiaries,. This commitment, when signed, constitutes the irrevocable legal obligations of the Company. If the circumstances arise that cause damage to Guangdong Expressway because of the Company’s breach of the commitment, the Company will bear the corresponding liability according to laws. The commitment to reduce and regulate the connected transactions: 1. After the completion of this major asset reorganization, the Company and the companies that are under direct or indirect control of the Company, except Guangdong Expressway and its subsidiaries, and other related parties will try to avoid the connected transaction with Guangdong Expressway and its subsidiaries; the necessary and unavoidable connected transactions shall be conducted in accordance with the principles of fairness and compensation of equal value, the transaction prices shall be determined according to the reasonable market price, the transaction approval procedures and the disclosure obligations should be conducted in accordance with relevant laws, regulations and regulatory documents, to effectively protect the interests of medium and small shareholders of Guangdong Expressway . 2. The Company guarantees to be in strict accordance with relevant laws and regulations, the regulations and regulatory documents promulgated by CSRC, the business rules promulgated by Shenzhen Stock Exchange (SSE) and the rules of the system such as the Articles of Association of Guangdong Provincial Expressway Development Co., Ltd., exercise the shareholder rights and fulfill the obligations of shareholders according to laws, without using controlling shareholders’ holding position to seek improper interests, without damage to the legitimate rights and interests of Guangdong Expressway and its medium and small shareholders. Once in violation of the above-stated commitment, the company conducts a transaction with Guangdong Expressway and its subsidiaries, causing damages to them, it shall bear the liability for compensation according to laws. The date of this commitment is valid from the date of signing the letter of commitment to the date of the Company's ceasing to be controlled by the controlling shareholder of the Company. 36 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment (1) The commitment to the authenticity, accuracy and completeness of the information (1) a promise provided: 1. The Company guarantees to provide the information related to the major asset without a reorganization for Guangdong Expressway and ensures its authenticity, accuracy and commitment completeness; if there is false, misleading statement or major omission in the information period. provided, which causes losses to Guangdong Expressway or the investors, the Company will (2) the date of assume the compensation liabilities in accordance with laws. If it is suspected that there is the validity of false, misleading statement or major omission in the information disclosed or provided for the the term major asset reorganization, and it is investigated by the judiciary authorities or by CSRC, commitment before the clear conclusion of the case is reached, the Company will suspend the transfer of from the date shares of Guangdong Expressway held by the Company, and within two business days upon of this letter of receipt of the notice of filing a case and inspection, the written application for suspending the commitment transfer and the stock account should be submitted to the Board of Directors of Guangdong to the date of Expressway , and the Board of Directors of Guangdong Expressway , shall, on behalf of the the company Fulfill the Guangdong Other Company apply for the lockout towards Shenzhen Securities Exchange (SSE) and no longer is commitment Communication June 18,2015 commitment Registration and Clearing Company; if the application for the lockout is not submitted in two the date of the normally Group Co., Ltd. business days, after verification the Board of Directors authorized by the Company will controlling directly submits the Company’s identity and account information to the Registration and shareholder of Clearing Company and apply for the lockout; if the Board of Directors fails to do so, the Guangdong. Securities Exchange and the Registration and Clearing Company will be authorized to directly (3) the date of lock the related shares. If it is found that the Company has illegal circumstances, the company the validity of promises that the lockout shares should be automatically used for the compensation for the the term relevant investors. (2) The commitment to maintain the independence of the listed company. commitment The Company and the companies, that are under direct or indirect control of the Company, to the except Guangdong Expressway and its holding subsidiaries, have increased their shares of completion of Guangdong Expressway after the completion of the major asset reorganization; however they the will not damage the independence of Guangdong Expressway . They will continue to be completion of separated from Guangdong Expressway in assets, personnel, finance, organization and the business and strictly abide by the relevant provisions on the independence of listed companies completion of 37 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment of CSRC. They don’t illegally use Guangdong Expressway to provide guarantee, or occupy the major its capital so as to keep and maintain its independence and safeguard the legitimate rights and asset interests of other shareholders of Guangdong Expressway . All losses will be borne by the restructuring. Company if it breaks the above commitments and causes losses to Guangdong Expressway . (1) The commitment to the authenticity, accuracy and completeness of the information (1) a promise provided: The Company guarantees that there is no false, misleading statement or major without a omission in the information disclosure and application documents for the major asset commitment reorganization. If it is suspected that there is false, misleading statement or major omission in period. the information disclosed or provided for the major asset reorganization, and it is investigated (2) the date of by the judiciary authorities or by CSRC, before the clear conclusion of the case is reached, the the validity of Company will suspend the transfer of shares of Guangdong Expressway held by the the term Company, and within two business days upon receipt of the notice of filing a case and commitment inspection, the written application for suspending the transfer and the stock account should be from the date submitted to the Board of Directors of Guangdong Expressway, and the Board of Directors of of this letter of Guangdong Highway Guangdong Expressway, shall, on behalf of the Company, apply for the lockout towards Fulfill the commitment Construction Co., Other Shenzhen Securities Exchange (SSE) and Registration and Clearing Company; if the commitment June 26,2015 to the date of Ltd.,Guangdong commitment application for the lockout is not submitted within two business days, after verification the normally the company Expressway Co., Ltd. Board of Directors authorized by the Company will directly submits the Company’s identity no longer is and account information to the Registration and Clearing Company and apply for the lockout; the date of the if the Board of Directors fails to do so, the Securities Exchange and the Registration and controlling Clearing Company will be authorized to directly lock the related shares. If it is found that the shareholder of Company has illegal circumstances, the Company promises that the lockout shares should be Guangdong. automatically used for the compensation for the relevant investors. (2) The commitment to (3) the date of maintain the independence of the listed company. The Company and the companies, that are the validity of under direct or indirect control of the Company, except Guangdong Expressway and its the term subsidiaries, have increased their shares of Guangdong Expressway after the completion of commitment the major asset reorganization; however they will not damage the independence of to the Guangdong Expressway. They will continue to be separated from Guangdong Expressway in 38 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment assets, personnel, finance, organization and business and strictly abide by the relevant completion of provisions on the independence of listed companies of CSRC. They will not illegally use the Guangdong Expressway to provide guarantee, or occupy its capital, and they will keep and completion of maintain the its independence and safeguard the legitimate rights and interests of other the shareholders of it. (3)The company confirmed and guaranteed: 1, the company set up and completion of effectively exist in accordance with the law of the enterprise, the company has an independent the major legal personality, independent of the ability to assume legal responsibility. 2, as the asset commitment letter issued by the Japanese, the company does not exist in the listed company restructuring. acquisition management approach "the provisions of Article 6 of the acquisition of a listed company may not be under any of the following circumstances: (1) bears a relatively large amount of debt, due and outstanding, and in persistent state; (2) in recent 3 years, have major violations or suspected of major violations; (3) in recent 3 years, have severe stock market acts of dishonesty; (4) the laws, administrative regulations and recognized by the CSRC shall not purchase of Listed Companies in other circumstances. This commitment is issued to the completion of the reorganization before, if the company does not conform to the fact that these commitments, the company that will be occurring in the facts, from within 3 days notice of Guangdong expressway, otherwise it will bear incurred in the full legal responsibility. Related land, Guangdong Communication Group Co., Ltd. commits: for the lands, real estates and allocated real estate lands for which the Guangdong Fokai Expressway Co., Ltd. and Guangzhu Section of Jingzhu management Expressway Co., Ltd. have not gone through the procedures of ownership registration (1) the authority Fulfill the Guangdong Other property rights of the above-mentioned lands are clear, and can be legally used by the target certificate or commitment Communication January 19,2016 commitment company; (2) assist or ask the Guangdong Highway Co., Ltd. and Guangdong Highway related land to normally Group Co., Ltd. Construction Co., Ltd to assist in conducting the ownership registration of the real estates; (3) complete the the land can continue to be used unscathed before the ownership registration; (4) once losses transfer arise, bear the losses of Guangdong Expressway according to its shareholding ratio. procedures of the day. 39 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment In favor of safeguarding the interests of listed companies under the situation, will urge the Fokai company and Guangzhou Zhuhai east company in accordance with the following plan registration: 1, hire a professional organization, the relevant land and real estate information for further screening and combing, and further to find out the management problems and within 3 years difficulties relating to land and property management authority to prove the existence of the 2; from the date the establishment of land and real estate registration work group, and hire a professional of completion Guangdong Fulfill the Other agency, organize and improve the relevant land and real estate registration documents; 3, to July 19,2017 of the Communication commitment commitment accelerate the processing speed, the completion of 3 years for the relevant land and real estate reorganized Group Co., Ltd. normally registration formalities completed in this major asset restructuring, which, for Guangzhou underlying Zhuhai east company in Guangzhou City, the administrative area of Zhuhai cityhave not for asset transfer the relevant certificate of ownership of land and real estate (the part of the land, real estate If not covered by the letter of confirmation of the relevant government, the registration procedures shall be completed within 3 years from the date of the completion of this major asset reorganization. Commitments made upon first issuance or refinance Equity incentive commitment Other commitments made to minority shareholders Completed on No time(Y/N) 40 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Time of making Period of Commitment Commitment maker Type Contents Fulfillment commitment commitment Where the Through the deliberation and approval of the 11th temporary meeting of the 8th Board of Directors and the 1st temporary general meeting of shareholders in 2017, it agrees on commitment is the change of Guangdong Traffic Group Co., Ltd. commitments about relevant land and housing handling the ownership registration procedures of the asset reorganization subject overdue and has Guangdong Fokai Expressway Co., Ltd. and Jingzhu Expressway Guangzhu Section Co., Ltd. among major assets reorganization for which, the company issues shares, pay for not been assets purchase in cash and collect the supporting capital in 2016. The same above is changed into that to speed up the certificate handling and to complete handling of relevant fulfilled, then the ownership registration procedures related to the land and housing within 3 years after such major assets reorganization, among which, the ownership registration procedures of the specific reasons relevant land and housing (excluded by relevant governmental confirmation letters) of Guangzhudong company in Guangzhou and Zhuhai administrative regions, which are not for the failure to equipped with the ownership certificates, shall also be completed within the same time above. Refer to the Announcement on the Completion Progress Condition of the Major complete and the Assets Reorganization Commitments and the Completion Period of the Dominant Shareholder ’ s Application for Changing Partial Commitments and Announcement of the next work plan Resolution of the 11th Session (Temporary) of the 8th Board of Directors on July 4, 2017 and the Announcement of the Resolution of the 1st Temporary General Meeting of shall be Shareholders on July 20, 2017 of the company on Securities Times, China Securities Journal and Shanghai Securities News for details about the partial commitments change. specified 41 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is still in the forecast period, the company has assets or projects meet the original profit forecast made and the reasons explained √Applicable □Not applicable Asset or Project Start date of End date of the Name of Forecast Actual Reason for less Disclosure date of Reference for the the forecasting forecasting Earnings earnings earnings than forecast the Forecast Forecast period period Forecast The part of the reconstruction and expansion project of Sanbao-Shuiko u section of www.cninfi.com.cn . Fokai Announcement on Fokai Expressway December matters related to Expressway Co., January 1,2016 40,311.97 37,376.11 was opened to July 7,2016 31,2018 major asset Ltd. traffic ahead of restructuring schedule and commitments converted to fixed assets, and depreciation increased. Guangzhou www.cninfi.com.cn . Guangzhu Announcement on Traffic December matters related to January 1,2016 28,650.18 32,475.62 Not applicable July 7,2016 Investment 31,2018 major asset Management restructuring Co., Ltd. commitments Note:During the period of profit compensation, that is, from 2016 to 2018, the cumulative net profit exceeding the cumulative forecast net profit amount is 60.7385 million yuan, and the cumulative net profit commitment completion rate is 106.65%. For detailed information on performance commitments and compensation commitments, please refer to the company's Notice on Commitments Related to Major Asset Restructuring. The commitments of the operating earnings made by the company’s shareholder and relevant transaction parties □ Applicable √ Not applicable Achievement of performance commitments and its impact on goodwill impairment tests. IV. Particulars about the non-operating occupation of funds by the controlling shareholder □ Applicable √ Not applicable Nil V. Explanation of the Supervisory Committee and Independent Directors (If applicable)on the Qualified Auditor’s Report Issued by the CPAs. □ Applicable √ Not applicable 42 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report VI. Explain change of the accounting policy, accounting estimate and measurement methods as compared with the financial reporting of last year. √Applicable □ Not applicable On June 26,2018,The Ministry of Finance issued the Notice on Revising and Issuing the Format of General Enterprise Financial Statements for 2018 (Caikuai [2018] No. 15), which adjusted the format of enterprise financial statements accordingly and merged the original "notes receivable" and "accounts receivable" line items into "notes receivable and accounts receivable"; The items in the original "interest receivable", "dividend receivable" and "other receivables" lines are merged into "other receivables"; The items in the original "fixed assets" and "fixed assets liquidation" lines are merged into "fixed assets"; The items in the original "engineering materials" and "construction in progress" lines are merged into "construction in progress"; The items in the original "notes payable" and "accounts payable" lines are merged into "notes payable and accounts payable"; The items in the original "interest payable", "dividend payable" and "other payables" lines are merged into "other payables"; The items in the original "long-term payables" and "special payables" lines are merged into "long-term payables"; In the income statement, the detailed items of "management expenses" and "research and development expenses" are broken down under the item of "management expenses"; The detailed items of "interest expense" and "interest income" are broken down under "financial expense" in the income statement. The Company adopts retrospective adjustment method for this accounting policy change, and retroactively adjusts the items reported in 2017 financial statements. VII.Explain retrospective restatement due to correction of significant accounting errors in the reporting period □Applicable √ Not applicable Nil VIII.Explain change of the consolidation scope as compared with the financial reporting of last year. √Applicable □Not applicable The Company had 5 subsidiaries included in the scope of consolidation in 2018. The scope of the consolidated financial statements decreased by 1 compared with the previous period-for having the write off subsidiary. In August 2018, Guangdong Fokai Expressway Co., Ltd. completed the industrial and commercial cancellation, and obtained the “Notice of Approval for Cancellation Registration” and the “Notice of Permit for Cancellation Registration”. From August 2018, Guangdong Fokai Expressway Co., Ltd. was no longer included in the scope of consolidated statements. IX. Engagement/Disengagement of CPAs CPAs currently engaged Name of the domestic CPAs Zhengzhong Zhujiang Certified Public Accountants Co., Ltd. Remuneration for domestic accounting firm (Ten thousands 120 yuan) Successive years of the domestic CPAs offering auditing services 8 43 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name of domestic CPA Feng Kuncong,Xu Jihong Continuous fixed number of year for the auditing service Feng Kuncong( 3 years),Xu Jihong(4 years) provided by CPA in domestic CPA Firms Has the CPAs been changed in the current period □ Yes √No Description of the CPAs, financial adviser or sponsor engaged for internal control auditing √Applicable □Not applicable 2017 shareholders' general meeting of the Company examined and adopted the Proposal for Engaging Auditing Body for Internal Control. The Company was approved to engage Guangdong Zhengzhong Zhujiang Certified Public Accountants Co., Ltd. as the auditing body for internal control of the Company for 2018. The audit fee shall be less than 300,000 yuan. X. Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report □Applicable √ Not applicable XI. Relevant Matters of Bankruptcy Reorganization □Applicable √ Not applicable Nil XII. Matters of Important Lawsuit and Arbitration □Applicable √ Not applicable Nil XIII. Situation of Punishment and Rectification □Applicable √ Not applicable Nil XIV. Credit Condition of the Company and its Controlling Shareholders and Actual Controllers □Applicable √ Not applicable XV. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan or Other Employee Incentive Measures □Applicable √ Not applicable Nil XVI. Material related transactions 1. Related transactions in connection with daily operation □Applicable √ Not applicable 44 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Nil 2. Related-party transactions arising from asset acquisition or sale □Applicable √ Not applicable Nil 3. Related-party transitions with joint investments □Applicable √ Not applicable Nil 4. Credits and liabilities with related parties √Applicable □ Not applicable There are non-operational contact of related credit and debts in the Company □Yes √No Nil 5. Other significant related-party transactions √Applicable □ Not applicable 1.The 16th (provisional) meeting of the Eighth board of directors of the Company examined and adopted the Proposal about Singing the Contract of Entrustment of Operation and Management of 2018-2020 of Guangzhu North Section of Guangdong Jingzhu Expressway between the Guangzhu Section Company and the Guangzhu North Section Company.Agreed that Jingzhu Expressway Guangzhu Section Co., Ltd signs the Contract of Entrustment of Operation and Management of 2018-2020 of Guangzhu North Section of Guangdong Jingzhu Expressway with the Guangdong Jingzhu Expressway Guangzhu North Section Co., Ltd, with the total contract amount not exceeding 60 million yuan. 2. The 16th (provisional) meeting of the Eighth board of directors of the Company examined and adopted the Proposal about the Entrustment of Lease and Operation of Communication Pipe along the Expressways of Guangdong Provincial Expressway Development Co.,Ltd’s Holding Subsidiaries and Branch Company.Agreed that Our subsidiaries-Guangfo Expressway Co., Ltd and Jingzhu Expressway Guangzhu Section Co., Ltd and our branch company-Guangdong Provincial Expressway Development Co., Ltd Fokai Branch sign the Communication Pipeline Lease Contract with the Guangdong Litong Technology Investment Co., Ltd, which is to entrust the communication pipeline ( including main line , ramp , structure and auxiliary facilities ) along the expressway under the jurisdiction to Guangdong Litong Technology Investment Co.,Ltd for external lease and maintenance, with the total lease income of about 79.27 million yuan. 3. The 16th (provisional) meeting of the Eighth board of directors of the Company examined and adopted the Proposal of Signing the Contract of Operation Entrustment of Un-Pillar Advertisement between the Jingzhu Expressway Guangzhu Section Co., Ltd and the Guangdong High Speed Media Co., Ltd.Agreed that Jingzhu Expressway Guangzhu Section Co., Ltd signs the Contract of Operation Entrustment of Un-Pillar Advertisement of Guangzhu Section of Beijing-Zhuhai Expressway with Guangdong High Speed Media Co., Ltd. It is estimated that the total contract amount is not more than 10 million yuan. 4. The 17th (provisional) meeting of the Eighth board of directors of the Company Examined and Adopted of the Proposal on Borrowing Entrusted Loans to Guangdong Guanghui Expressway Co., Ltd.Agreed that the company borrowed entrusted loans from Guangdong Guanghui Expressway Co., Ltd. The total amount of loans was 180 45 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report million yuan. According to the actual needs of the company, withdrawals were made for a period of 1 year, and the interest rate was lowered by 10% according to the benchmark interest rate of the People's Bank of China for the same period. Used to supplement working capital. After the entrusted loan expires, it can be renewed according to the original conditions. 5. The 17th (provisional) meeting of the Eighth board of directors of the Company examined and adopted the Proposal Concerning the Company Daily Associated Transactions Predicted of 2018. Agree on the predicted daily associated transactions for the company headquarters, wholly-owned and holding subsidiaries of 2018, whose amount in total is 63.1779 million yuan. 6. The 20th (provisional) meeting of the Eighth board of directors of the Company examined and adopted the Proposal on Borrowing Entrusted Loans to Guangdong Jiangzhong Expressway Co., Ltd.,Agree that our company will borrow unsecured entrusted loans from Guangdong Jiangzhong Expressway Co., Ltd., with a loan amount of 36 million yuan, and withdraw funds according to the actual needs of the company. The borrowings are used for daily business turnover, with a term of 5 years, using “1+1”. +1+1+1" mode, that is, one loan period per year. If we do not propose repayment, the loan will be automatically transferred to the next one-year period. The interest rate is reduced by 10% according to the one-year lending benchmark interest rate announced by the People's Bank of China. The website to disclose the interim announcements on significant related-party transactions Date of disclosing provisional Description of the website for Description of provisional announcement announcement disclosing provisional announcements Announcement on related party transactions January 31,2018 www.cninfo.com.cn entrusted by subsidiaries Announcement on Related Transactions of Non-column Advertising Entrusted Operation of January 31,2018 www.cninfo.com.cn Holding Subsidiary Jingzhu Expressway Guangzhu Section Co., Ltd. Announcement on Related Transactions of Entrusted Leasing Operation of Communication January 31,2018 www.cninfo.com.cn Pipeline along the Expressway of Guangdong Expressway Holding Subsidiary and Branch Related transaction announcement March 29,2018 www.cninfo.com.cn Announcement of Daily Associated Transactions March 29,2018 www.cninfo.com.cn Predicted of 2018 Related transaction announcement August 28,2018 www.cninfo.com.cn XVII. Particulars about significant contracts and their fulfillment 1. Particulars about trusteeship, contract and lease (1) Trusteeship □Applicable √ Not applicable Nil (2) Contract □ Applicable √ Not applicable Nil (3) Lease 46 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report □Applicable √ Not applicable Nil 2.Guarantees √Applicable□Not applicable (1)Guarantees 47 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Ten Thousands yuan Guarantee of the Company for the controlling subsidiaries (Exclude controlled subsidiaries) Relevant disclosure Date of happening Complete Amount of Actual mount of Guarantee for associated Name of the Company date/No. of the (Date of signing Guarantee type Guarantee term implementation Guarantee guarantee parties (Yes or no) guaranteed amount agreement) or not Guangdong Communication Group May 11,2012 172,500 May 31,2013 172,500 Pledge 2012.9.25-2021.7.25 No Yes Co.,Ltd Total of external guarantee Total balance of actual external guarantee 172,500 172,500 approved at Period-end(A3) at Period-end(A4) Guarantee of the Company for the controlling subsidiaries Guarantee Name of the Relevant disclosure Date of happening Actual Complete Amount of Guarantee for Company date/No. of the (Date of signing mount of Guarantee term implementation guarantee type associated parties guaranteed guaranteed amount agreement) guarantee or not (Yes or no) Guarantee of the subsidiaries for the controlling subsidiaries Relevant Date of Guarantee disclosure Complete Name of the Amount happening Actual for date/No. of Guarantee implementation Company of (Date o mount of Guarantee term associated the type or guaranteed guarantee signing guarantee parties guaranteed not agreement) (Yes or no) amount Total of Company’s guarantee(namely total of the large three aforementioned) Total of actual guarantee at Period-end Total of guarantee at Period-end(A3+B3+C3) 172,500 172,500 (A4+B4+C4) The proportion of the total amount of actually guarantee in the net assets of the 17.99% Company(that is A4+B4+C4) Including Amount of guarantee for shareholders, actual controller and its associated parties(D) 172,500 Total guarantee Amount of the abovementioned guarantees(D+E+F) 172,500 48 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2)Illegal external guarantee □ Applicable √ Not applicable Nil 3.Situation of Entrusting Others for Managing Spot Asset (1)Situation of Entrusted Finance □ Applicable √ Not applicable Nil (2)Situation of Entrusted Loans □ Applicable √ Not applicable Nil 4. Other significant contract □ Applicable √ Not applicable Nil XVIII.Social responsibility 1. Execution of social responsibility of targeted poverty alleviation In 2018, the expressway toll-free policy for small-sized passenger cars with less than 7 seats for main holidays, intermittent free-charge release and green-channel preferential policy were still executed, Guangfo company, Fokai company and Guangzhudong company have completed each safety and smooth traffic task successfully based on the thorough understanding, complete personnel dispatching, duties performance and measures implementation. 1. Several measures are implemented synchronously to provide drivers and the public with the smooth, convenient, comfortable and safe driving environment and build the harmonious relationship between vehicles and roads jointly. The company is located in Guangfo and Fokai sections among Pearl River Delta developed zone, in which, the traffic flow is large and the charging squares and lanes resources are limited due to the limitation of the previous infrastructure construction scale. Then, with the influence of the north-ring expressway as well as Gonghe-Siqian bottleneck-type section, the congestion and slow traffic become normal. The traffic flow peak in holidays lasts long with strong directionality and plenty of emergencies and therefore the vehicle free toll in holidays catches high social attention. Each toll-station lanes are reconstructed with the whole-weighing-platform weighing equipment, which results in the larger pressure of the smooth traffic guarantee by stations. In light of such condition, the company motivated through organization the section companies to perfect and detail the smooth traffic guarantee working schemes continuously, summarize previous experience, conduct emergency exercises and make the production line exercise various smooth-traffic measures skillfully on one hand; on the 49 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report other hand strengthen the service consciousness and conduct the business and civilized service trainings. Through efforts of all parties, the section for the company is free from artificial vehicle congestion and mass incidents for the whole year with the complaints limited to zero, through which, the safety and reliability of the expressway traffic environment were guaranteed. 2. Respond positively to the governmental policies, provide preferential, deduction and exemption policies per laws and reduce the cost of enterprise transportation and the masses travel. 2.Overview of the targeted poverty alleviation The company has no precise social responsibility for poverty alleviation in the period and bas no follow-up plan either. 3.Major environmental protection The Listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department No XIX. Explanation on other significant events □ Applicable √Not applicable Nil XX. Significant event of subsidiary of the Company √ Applicable □Not applicable The 15th (provisional) meeting of the Eighth board of directors of the Company examined and adopted the Proposal of matters relevant to the Zhuhai Municipal People's Government's Taking-back of Guangzhou-Macao Expressway Zhuhai Section's 4.213 km Expressway asset compensation and asset transfer" was examined and approved.1. Agreed that Zhuhai High-tech Zone Management Committee uses 206 million yuan of compensation (excluding the relevant taxes and fees, and the taxes and fees compensation subjecting to the actual amount of payment) to take back the Guangdong-Macao Expressway Zhuhai Section's 4.213 km (Pile Number K0 +945-K5 +158)Expressway Asset. 2. Agreed that Jingzhu Expressway Guangzhu section Co., Ltd-the company's holding subsidiary-shall, after performed the relevant decision-making procedures, enter into the Compensation and Asset transfer Agreement with Zhuhai High-Tech Zone Management Committee. On January 31, 2018, Jingzhu Expressway Guangzhu Section Co., Ltd. received the first compensation of 100 million yuan from Zhuhai High-tech Zone Management Committee. On July 3, 2018, Jingzhui Expressway Guangzhu Section Co., Ltd. received the equity value compensation amount of 106 million yuan for the asset transfer from Zhuhai High-tech Zone Management Committee. As of that date, Guangzhu East Company has received all the compensation of 260 million yuan for the equity value compensation of the asset transfer and has completed the transfer of the asset with the Zhuhai High-tech Zone Management Committee in accordance with the “Compensation and Asset Transfer Agreement”. Description of provisional announcement Date of disclosing Description of the website for 50 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report provisional announcement disclosing provisional announcements Announcement of Resolutions of the 15th (Provisional) Meeting of December 30,2017 www.cninfo.com.cn the Eighth Board of Directors Announcement of matters relevant to the Zhuhai Municipal December 30,2017 www.cninfo.com.cn People's Government's Taking-back of Guangzhou-Macao Expressway Zhuhai Section's 4.213 km Expressway asset compensation and asset transfer" Progress Announcement of matters relevant to the Zhuhai February 2,2018 www.cninfo.com.cn Municipal People's Government's Taking-back of Guangzhou-Macao Expressway Zhuhai Section's 4.213 km Expressway asset compensation and asset transfer" Progress Announcement of matters relevant to the Zhuhai July 5,2018 www.cninfo.com.cn Municipal People's Government's Taking-back of Guangzhou-Macao Expressway Zhuhai Section's 4.213 km Expressway asset compensation and asset transfer" 51 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report VI. Change of share capital and shareholding of Principal Shareholders I. Changes in share capital 1. Changes in share capital In shares Before the change Increase/decrease(+,-) After the Change Amount Proportion Capitalization Share Bonus of common Other Subtotal Quantity Proportion allotment shares reserve fund 1.Shares with conditional 1,273,170,302 60.89% 101,325 101,325 1,273,271,627 60.90% subscription 1.State-owned shares 410,002,853 19.61% 0 0 410,002,853 19.61% 2.State-owned legal person 521,393,021 24.94% 131,578,946 131,578,946 652,971,967 31.23% shares 3.Other domestic shares 341,774,428 16.34% -131,480,434 -131,480,434 210,293,994 10.06% Including :Domestic Legal 341,225,786 16.32% -131,727,511 -131,727,511 209,498,275 10.02% person shares Domestic natural person 548,642 0.02% 247,077 247,077 795,719 0.04% shares 4.Foreign shares 0 0.00% 2,813 2,813 2,813 0.00% Foreign natural person shares 0 0.00% 2,813 2,813 2,813 0.00% II.Shares with unconditional 817,635,824 39.11% -101,325 -101,325 817,534,499 39.10% subscription 1.Common shares in RMB 468,885,824 22.43% 468,885,824 22.43% 2.Foreign shares in domestic 348,750,000 16.68% -101,325 -101,325 348,648,675 16.67% market III. Total of capital shares 2,090,806,126 100.00% 0 0 2,090,806,126 100.00% Reasons for share changed √ Applicable □Not applicable Note 1: During the reporting period, 131,578,946 shares held by two shareholders changed from “domestic legal person shareholding” to “state-owned legal person shareholding” due to changes in the holder's category. 52 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Note 2: During the reporting period, 148,565 shares of "domestic legal person holding" were converted to "domestic natural person holding" and "overseas natural person holding" shares. Note 3: During the reporting period, 101,325 shares of "unlimited conditional sale shares" were converted into "limited conditional sale shares" held by natural persons in China. Approval of Change of Shares □ Applicable √ Not applicable Ownership transfer of share changes □ Applicable √ Not applicable Implementation progress of the share repurchases □ Applicable √ Not applicable Implementation progress of the reduction of repurchases shares by centralized bidding □ Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable Other information necessary to disclose for the company or need to disclosed under requirement from security regulators □ Applicable √ Not applicable 53 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2. Change of shares with limited sales condition √ Applicable □Not applicable In RMB Number of Number of Increased Restricted Reason for Date of Shareholder Initial Restricted Unrestricted Shares Restricted Shares Shares in the Restricted Restriction Name Shares This Term This Term End of the Term Shares Removal Wang Executive 0 0 101,325 101,325 Unknown Chunhua locking stock Total 0 0 101,325 101,325 -- -- II. Securities issue and listing 1.Explanation of the Situation of the Security Issue(No Preferred Shares) in the Report Period □ Applicable √ Not applicable 2.Change of asset and liability structure caused by change of total capital shares and structure □ Applicable √ Not applicable 3.About the existing employees’ shares □Applicable√Not applicable 54 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report III. Shareholders and actual controlling shareholder 1. Number of shareholders and shareholding In Shares Total preference shareholders Total with Total number of The total number o shareholders at voting rights common f preferred shareho the end of the recovered at shareholders at the end 55,254 58,069 lders voting rights 0 end 0 of the month from the restored at period-e of last month date of disclosing reporting period nd (if any) before annual the annual report report disclosed(if any) Particulars about shares held above 5% by shareholders or top ten shareholders Changes Number of share Proportion Amount of pledged/frozen Nature of Number of shares in Amount of restricted Shareholders of shares un-restricted shares shareholder held at period -end reporting shares held State of held(%) held Amount period share Guangdong State-owned Communication 24.55% 513,382,595 410,002,853 103,379,742 legal person Group Co.,Ltd Guangdong Highway State-owned 22.30% 466,325,020 466,325,020 Construction Co., legal person Ltd, Domestic Yadong Fuxing non Yalian Investment State-owned 9.68% 202,429,149 202,429,149 Pledge 156,652,500 Co., Ltd. Legal person Tibet Yingyue Investment State-owned 4.84% 101,214,574 101,214,574 Management Co., legal person Ltd. Guangdong State-owned Expressway Co., 2.53% 52,937,491 52,937,491 legal person Ltd. Guangfa State-owned Securities Co., 1.45% 30,364,372 30,364,372 legal person Ltd. Agricultural Bank of China- Jingshun Great Wall Energy Other 1.39% 29,062,189 Infrastructure Mixed Securities Investment Fund 55 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Domestic natural Feng Wuchu 1.08% 22,572,543 person shares UBS AG Foreign LONDON 0.70% 14,691,031 legal person BRANCH Foreign Xinyue Co., Ltd. 0.63% 13,201,086 legal person Guangdong Communication Group Co., Ltd. is the parent company of Guangdong Highway Construction Co., Ltd, Explanation on associated Guangdong Expressway Co., Ltd. and Xinyue Co., Ltd.. It is unknown whether there is relationship between other relationship or concerted action shareholders and whether they are persons taking concerted action specified in the Regulations on Disclosure of of the above shareholders Information about Change in Shareholding of Shareholders of Listed Companies. Shareholding of top 10 shareholders of unrestricted shares Quantity of unrestricted shares held at the end of the reporting Share type Name of the shareholder period Share type Quantity Guangdong Communication Group Co.,Ltd 103,379,742 RMB Common shares 103,379,742 Agricultural Bank of China-Jingshun Great Wall Energy Infrastructure Mixed 29,062,189 RMB Common shares 29,062,189 Securities Investment Fund RMB Common shares 20,665,204 Feng Wuchu 22,572,543 Foreign shares placed in 1,907,339 domestic exchange Foreign shares placed in UBS AG LONDON BRANCH 14,691,031 14,691,031 domestic exchange Foreign shares placed in Xinyue Co., Ltd. 13,201,086 13,201,086 domestic exchange Foreign shares placed in PRUSIK UMBRELLA UCITS FUND PLC 12,999,871 12,999,871 domestic exchange VALUE PARTNERS HIGH-DIVIDEND Foreign shares placed in 10,634,903 10,634,903 STOCKS FUNDS domestic exchange Khazanah Nasional Berhad-self fund 10,522,779 RMB Common shares 10,522,779 Foreign shares placed in MATTHEWS CHINA DIVIDEND FUND 8,336,021 8,336,021 domestic exchange ICBC-Jingshun Great Wall Shanghai, Hong Kong and Shenzhen Select Stock 8,321,695 RMB Common shares 8,321,695 Investment Fund Explanation on associated relationship or Guangdong Communication Group Co., Ltd. is the parent company of Guangdong Highway Construction consistent action among the top 10 Co., Ltd, Guangdong Expressway Co., Ltd. and Xinyue Co., Ltd.. It is unknown whether there is shareholders of non-restricted negotiable relationship between other shareholders and whether they are persons taking concerted action specified in shares and that between the top 10 the Regulations on Disclosure of Information about Change in Shareholding of Shareholders of Listed shareholders of non-restricted negotiable Companies. shares and top 10 shareholders Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period. □ Yes √ No The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy –back agreement dealing in reporting period. 56 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2.Controlling shareholder Nature of Controlling Shareholders: Local state holding Type of Controlling Shareholders: Legal person Name of the Controlling Legal Date of incorporation Organization code Principal business activities shareholder representative/Leader Equity management, organization of asset reorganization and optimized allocation, raising funds by means including mortgage, transfer of property rights and joint stock system transformation, project investment, operation and management, traffic infrastructure Guangdong Communication Deng Xiaohua June 23,2000 91440000723838552J construction, highway and railway Group Co., Ltd. project operation and relevant industries, technological development, application, consultation and services, highway and railway passenger and cargo transport, ship industry, relevant overseas businesses; Value added telecommunication services. Equity in other domestic and foreign listed companies held Guangdong Communication Group Co., Ltd. holds 74.12% equity of Guangdong Nanyue Logistics Co., Ltd., a by the controlling shareholder company listing H shares. by means of control and mutual shareholding in the reporting period Changes of controlling shareholder in reporting period □ Applicable √ Not applicable No changes of controlling shareholder for the Company in reporting period. 3.Information about the controlling shareholder of the Company Actual controller nature:Local state owned assets management Actual controller type:Legal person Legal Organization Name of the actual controller representative Date of incorporation Principal business activities code /Leader As an ad hoc body directly under the Guangdong Provincial People's State-owned Assets supervision Government, commissioned by the and administration Commission provincial government to fulfill the of Guangdong Provincial Li Cheng June 26,2004 Not learn State-owned asset investor, regulatory People’s Government enterprises to implement the rights, obligations and responsibilities, pipe asset control and people management. Equity of other As an ad hoc body directly under the Guangdong Provincial People's Government, commissioned 57 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report domestic/foreign listed by the provincial government to fulfill the State-owned asset investor, regulatory enterprises to company with share implement the rights, obligations and responsibilities, pipe asset control and people management. controlling and share participation by controlling shareholder in reporting period Changes of controlling shareholder in reporting period □ Applicable √ Not applicable No changes of controlling shareholder for the Company in reporting period Block Diagram of the ownership and control relations between the company and the actual controller The actual controller controls the company by means of trust or managing the assets in other way □Applicable √Not applicable 4.Particulars about other legal person shareholders with over 10% shareheld √ Applicable □Not applicable Legal person/person Date of Legal person shareholder Register capital Main operation business or management activities in charge of the unit foundation Highway, bridge, tunnel bridge, traffic infrastructure construction, investment and management, technical Guangdong Highway 8827.36846696 consulting, leasing of road construction machinery; Tong Degong April 16,1987 Construction Co., Ltd. million yuan sales of construction materials, construction machinery equipment; vehicle rescue services (operated by the branch). 58 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Party and Other Commitment Subjects □Applicable √Not applicable 59 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report VII. Situation of the Preferred Shares □Applicable √Not applicable The Company had no preferred shares in the reporting period. 60 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report VIII. Information about Directors, Supervisors and Senior Executives I. Change in shares held by directors, supervisors and senior executives Shares Amount of Amount of shares Other Starting Expiry Office held at the shares increased decreased at the changes Shares held at the Name Positions Sex Age date of date of status year-begin at the reporting reporting increase/ year-begin(share) tenure tenure (share) period(share) period(share) decrease Zheng Board In January July Male 49 Renfa Chairman office 4,2017 21,2019 Director, Wang In October July General Male 54 135,100 135,100 Chunhua office 19,2015 21,2019 Manager Director, In April July Wang Ping Chief Female 54 3,500 3,500 office 21,2014 21,2019 Engineer Director,CF In December July Fang Zhi Male 55 O office 31,2015 21,2019 In July July Chen Min Director Male 55 office 19,2017 21,2019 Zeng In July July Director Male 48 Zhijun office 21,2016 21,2019 In December July Du Jun Director Male 53 office 4,2016 21,2019 Zhuo In December July Director Male 47 Weiheng office 4,2017 21,2019 In July July Cao Yu Director Male 33 150,000 150,000 office 21,2016 21,2019 In July July Huang Hai Director Male 43 office 21,2016 21,2019 Independen In April April Xiao Duan Female 60 t director office 16,2013 16,2019 Gu Independen In July July Male 53 Naikang t director office 21,2016 21,2019 Bao Independen In July July Male 40 Fangzhou t director office 21,2016 21,2019 Zhang Independen In December July Male 53 Hua t director office 4,2017 21,2019 Liu Independen In Male 53 December July 61 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Shares Amount of Amount of shares Other Starting Expiry Office held at the shares increased decreased at the changes Shares held at the Name Positions Sex Age date of date of status year-begin at the reporting reporting increase/ year-begin(share) tenure tenure (share) period(share) period(share) decrease Zhonghua t director office 4,2017 21,2019 Chairman of the In March July Ling Ping Female 55 Supervisory office 23,2015 21,2019 Committee Li In July July Supervisor Female 47 Haihong office 21,2016 21,2019 In Septembe July Ke Lin Supervisor Female 49 office r 15,2017 21,2019 Cao In July July Supervisor Female 50 Xiaoying office 21,2016 21,2019 Dimiss March March Li Mei Supervisor Female 49 123,205 7,700 115,505 ion 22,2000 30,2018 Yang In March July Supervisor Male 36 Tianshu office 30,2018 21,2019 Deputy In October July Zuo Jiang General Female 46 office 19,2015 21,2019 Manager Deputy In August July Cheng Rui General Male 44 office 28,2017 21,2019 Manager legal In July July He Bing Female 51 counsel office 23,2012 21,2019 Yang Secretary to In August July Male 49 Hanming the Board office 28,2017 21,2019 Total -- -- -- -- -- -- 411,805 0 7,700 0 404,105 Note: 1. If the position is an independent director, it must be separately indicated. 2. The relevant circumstances of the directors, supervisors and senior management personnel who no longer serves at the end of the reporting period but served in the position from the beginning of this reporting period must still be included in this form. 3. The commencement date of term of who was re-elected during the previous term shall be the date of the first term commencement date. II. Change in shares held by directors, supervisors and senior executives √ Applicable □Not applicable 62 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name Positions Types Date Reason Li Mei Supervisor Dimission January 5,2018 Resigned III.Posts holding Work Experience in the past five years of Directors, supervisors and senior Executives in Current office Mr. Zheng Renfa,He served as Chairman, Master Degree,Senior economic engineer.Since December 2005,He served as Deputy Minister of Investment Management Department of Guangdong Communication Group,Since April 21, 2014,He served as director ,Since August 15, 2016, the implementation of the duties of the Board of Directors and the legal representative of the duties. Since January 4, 2017, he was the chairman of the board of directors of the Company and hold a concurrent post of vice chairman of Guangdong Guanghui Expressway Co., Ltd. Mr. Wang Chunhua, He served as Director and General Manager of the Company, Master Degree, senior engineer and senior economic engineer, Since September 2006, he served as Deputy General Manager of the Company.From March 2013 to October 2015, He served as director and Deputy General Manager of the Company, Since October 2015, He served as Director and General director of the Company, and hold a concurrent post of vice chairman of Gankang Expressway Co., Ltd , Ganzhou Kangda Expressway Co., Ltd.and Shenzhen Huiyan Expressway Co., Ltd. Ms. Wang Ping, She served as Director and Chief Engineer of the Company, bachelor's degree, professor of Engineering, National registered cost engineer, Senior Economist. From February 2001 to April 2012, she served as Minister of Infrastructure Management Department. From April 2012 , she served as chief engineer of the Company, Since April 21, 2014, She served as Director of the Company, and hold a concurrent post of Chairman of Zhaoqing Highway Co., Ltd.and Vice Chairman of Guangdong Jiangzhong Expressway Co., Ltd. Mr. Fangzhi , He serves as Director , Master Degree and Senior Accountant, He served as associate director and Deputy General Manager of Finance Center of Guangdong Communication Group, Since May 2015, He served as Chief accountant of the Company, Since December 2015, He served as director and chief accountant of the Company, and hold a concurrent post of Chairman of the board of supervisors of Guanghui Expressway Co., Ltd, and Direcotr of Yueke Technology Petty Loan Co., Ltd Mr. Chin Min , He serves as Director , undergraduate degree, senior economist, corporate legal adviser, cost engineer. From September 2001 to August 2009, He served as Senior economist , Director and General Manager of Guangdong Jingtong Highway Engineering Construction Group Co., Ltd.,From August 2009 to April 2011, He served as Deputy General Manager of Guangdong Nanyue Logistics Co., Ltd.,Form April 2011 to December 2014, He served as Duputy Minister of Legal Affairs of Guangdong Communications Group Co., Ltd., Since December 2014, He served as Minister of Legal Affairs of Guangdong Communications Group Co., Ltd.,Since July ,19, 2017, He served as Director of the Company. Mr. Zeng Zhijun, economist, is a director of the Company, with master degree. Since June 2010, he has served as the deputy chief economist of Guangdong Provincial Expressway Co., Ltd. From January 2015 to September 2015, he served as Minister of Investment Planning Department of Guangdong Provincial Expressway Co., Ltd; since September 2015, he has served as Minister of Legal Affairs Department of Guangdong Provincial Expressway Co., Ltd. Since December 4, 2017, he serves as Director of the Company. 63 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Mr. Du Jun, He serves as Director, Master's degree and bachelor's degree, senior engineer, He serves as Deputy General Manager ,director and member of party committee of Guangdong Luqiao Construction Development Co., Ltd.Since April 2016, He served as Deputy General Manager of Guangdong Highway Construction Co., Ltd., Since July 21,2016, He served as Director of the Company. Mr. Zhuo Weiheng, is a senior accountant, with bachelor degree. From January 2008 to May 2009, he served as the minister of the financial audit department of Guangdong Provincial Highway Construction Co., Ltd. Since May 2009, he has served as the Minister of Finance Management Department of Guangdong Provincial Highway Construction Co., Ltd.,Since December 4, 2017, he served as Director of the Company. Mr. Cao Yu, Master of Business Administration, since 2011 has served as Shanghai Fuxin high-tech (Group) Co., Ltd. investment manager, deputy director of investment, investment director. From July 21, 2016, he served as director of the Company. Mr. Huang Hai, Master of Business Administration. Used to be the business manager of Shenzhen Wofa Technology Development Co., Ltd., the marketing manager of Shantou Branch of Guangzhou Xingda Communications Co., Ltd., Zhongshan Public Technology Co., Ltd. securities manager and securities affairs representative. He is currently the Secretary of the Board of Directors of Poly Developments and Holdings, Group CO., LTD, the Director of the Office of the Board of Directors and the Executive Director of Tibet YinyueInvestment Management Co., Ltd. From July 21, 2016, he serves as director of the Company. Ms.Xiao Duan an independent director of the Company, Doctor of Economics, the Jinan University Associate Professor of Finance and research supervisor. She used to be a researcher at the Beijing Institute of Market Economy, executive member of the council of Guangdong shares Economic Research Association, a member of the Taiwan Economic Research Institution. She is also the independent director of Guangdong Tianhe Agricultural materials Co., Ltd.Sice April 2013, She served as Dorector of the Company. Mr. Bao Fangzhou, Independent director of the Company, Master of Law. Shanghai Jin Tiancheng Law Firm, Senior Partner, 2008 - 2014 Former Independent Director of New Nanyang Co., Ltd. Since 2013, he has been an independent director of Hubei Wushi Pharmaceutical Co., Ltd. since June 2016, Power Co., Ltd. Independent Director. From July 21, 2016,He is an independent director of the Company. Mr.Gu Naikang, Independent directors and doctorate degree of the Company. Since June 2004, he has been a professor and doctoral tutor of Finance and Investment Department of Zhongshan University School of Management. He is currently an independent director of Guangxi Guitang (Group) Co., Ltd., an independent director of Dongguan Yuqiu Electronics Co., Ltd. and an independent director of Guangzhou Zhujiang Industrial Development Co., Ltd. From July 21, 2016, he is an independent director of the Company. Mr. Liu Zhonghua, professor of accounting, is an independent director of the Company, with master degree. In September 2005, he was transferred to the School of Management of Guangdong University of Foreign Studies to teach. He is currently a professor at the School of Accounting of Guangdong University of Foreign Studies, he is a master tutor, concurrently serves as member of Accounting Society of China, executive member of China Association of Foreign Trade and Economic Accounting, vice chairman of Guangdong Province Management Accounting Association, executive member of Guangdong Provincial Accounting Association and member of Guangdong Audit Society. Since December 4, 2017, he is an independent director of the Company. Mr. Zhang Hua, economist, is an independent director of the Company, with Master Degree. From May 2006 to May 2012, he served as deputy general manager and chief investment director of Guangzhou Yingzhi Caihua Investment Co., Ltd. From June 2012 to September 2016, he served as the deputy general manager of Guangzhou De’rui Investment Co., Ltd and concurrently served as Deputy General Manager of Shenzhen Dongying Ruitong 64 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Investment Management Partnership (Limited Partnership); since October 2016, he has served as general manager of Shanghai Er Luo Investment Management Service Center (General Partnership). From November 2010 to January 2017, he served as an independent director of Guangzhou Yu Yin Technology Co., Ltd. From December 2011 to September 2017, he served as an independent director of Guangdong Electric Power Development Co., Ltd. In September 2017, he was an independent director of Zhuhai Taichuan Cloud Community Technology Co., Ltd., Since December 4, 2017, he is an independent director of the Company. Ms.Ling Ping, he has served as chairman of the supervisory committee of the Company,bachelor degree, Senior Accountant, Senior Economist, Form February 1996 to January 2015, worked in Guangdong Provincial Highway Construction Company, served as account, audit, deputy manager of audit Department, minister of the Audit Department, Since January 2015, Worked at Guangdong Communication Group Co., Ltd., Currently serve as Chairman of the exterior supervisory committee.Since March 2015, She served as Chairman of Board of supervisor of the Company. Ms. Li Haihong, Supervisors of the Company, bachelor degree, senior economist and road and bridge engineer. Since October 2008, she has been working as a supervisory and auditing department of the Guangdong Provincial Communications Group. From October 2008 to September 2012, she was appointed full-time supervisor of Guangdong Expressway Co., Ltd., FromOctober 2012 to March 2016, she was appointed full-time supervisor of Guangdong Yueyun Traffic Co., Ltd. and Guangdong Communications Industrial Investment Co., Ltd.,Form March 2016 to December 2017, she was appointed full-time supervisor of Guangdong Litong Real Estate Investment Co., Ltd.,Since December 2017, she was appointed full-time supervisor of Guangdong Nanyue Traffic Investment Construction Co., Ltd., Since March 2016, she was appointed full-time supervisor of Guangdong Traffic Industry Investment Co., Ltd., from December 2018 to present, is the first secretary of the party organization of Guangdong Kaiyang Expressway Co., Ltd. From July 21, 2016, she has served as supervisor of the Supervisory Committee of the Company. Ms.Ke Lin, bachelor degree, Bachelor of Science, assistant researcher. She began to take a job in July 1991. She had successively served as cadre of personnel department, deputy head, head of the personnel department, section chief rank cadre of discipline inspection and supervision department, director of the commission for discipline Inspection (deputy-director level). In November 2008, she was transferred to work in Provincial Transportation Group, successively served as member of party committee, union chairman and discipline inspection commission secretary. From January 2013 to August 2017, she has served as party committee member, discipline inspection commission secretary and chairman of the union in Yueyun Transportation. .Since September 15, 2017, She served as supervisor of Board of supervisor of the Company. Ms. Cao Xiaoying, Supervisors of the Company, bachelor's degree, bachelor's degree, senior economist, deputy interpreter, senior human resource management division, senior corporate culture division. Since 2011 to work in the Company, She has served as vice minister of human resources, minister, minister of human resources and minister of the Party and the Communist Party,Since June 2018,She has seved as Minister of Department of General Affairs, Since June 21, 2016,she has served as employee supervisor of the 8th Supervisory Committee. Mr. Yang Tianshu, supervisor of the Company, with a bachelor degree and a master degree and a national legal professional qualification, as well as is a senior economist. From July 2004 to April 2005, he worked as a salesman in Guangdong Expressway Technology Investment Co., Ltd.; from June 2005 to July 2018, he worked in the General Affairs Department of the Company, and served as a salesman, business supervisor, deputy minister, and minister; Since July 2018,, he has been the Minister of Investment and Development of the Company. Since March 30, 2018, he has served as the Supervisor of the 8th Supervisory Committee of the Company. Ms. Zuo Jiang, Deputy General Manager of the Company, Master of Economics, Senior Economist, Qualified as 65 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Legal Adviser of the Enterprise, Secretary of the Board of Directors. He has been working in the Company since 1994. He has been the Minister of Securities Affairs of the Company since 1999. He has been the Secretary of the Board of Directors and Director of Securities Affairs Department since March 2006. From October 2015 to July 2016, he was the Deputy General Manager and Secretary of the Board of Directors And Minister of Securities Affairs. Since October 2015, he has been the Deputy General Manager of the Company, and hold a concurrent post of Director of Yueke Technology Petty Loan Co., Ltd., and director of Guoyuan Securities Co., Ltd. Mr. Cheng Rui,On-job postgraduate, master of business administration, with a lawyer qualification. He began to take a job in July 1997. He had successively served as development department staff, deputy manager of investment management department and manager of investment management department in HongKong Xinyue Co.,Ltd, served as Deputy General Manager of HongKong Xinyue Company in August 2015, and served as deputy minister of strategic development department from April 2016 to August 2017. Since August 2017, he served as Deputy General Manager of the Company. Ms. He Bing , general counsel, master's degree in law, enterprise legal adviser, from August 2005 to July 2012, she served as Deputy chief economic engineer of the Company, Since July 2012, she served as Chief legal adviser of the Company. and hold a concurrent post of Director of Huiyan Expressway Co., Ltd., and supervisor of Jiangzhong Expressway Co., Ltd. Mr. Yang Hanming, he has been the Secretary of the Board, bachelor's degree, senior economist, corporate legal adviser, with the board secretary qualifications. Since March 2000, he has been successively served as deputy minister of investment planning and minister of legal affairs in Guangdong Provincial Expressway Development Co., Ltd. Since August 2014, he has been concurrently served as minister of investment and development. Since August 2017, he has been the Secretary of the Board of the Company, and hold a concurrent post of Supervisor of Yueke Technology Petty Loan Co., Ltd., and supervisor of Ganzhou Kangda Expressway Co., Ltd. Office taking in shareholder companies √Applicable □Not applicable Does he /she Names of the receive Titles engaged in the Sharting date of Expiry date of persons in Names of the shareholders remuneration or shareholders office term office term office allowance from the shareholder Guangdong Communication Minister of Investment Chen Min December 1,2014 Yes Group Management Dept. Guangdong Highway Du Jun Deputy General Manager April 1,2016 Yes Construction Co., Ltd. Guangdong Highway Zhuo Weiheng Deputy Chief Accountant March 1,2018 Yes Construction Co., Ltd. Guangdong Expressway Co., Minister of legal affairs Zeng Zhijun September 1,2015 Yes Ltd Dept Tibet Yinyue Investment Huang Hai Executive director June 1,2015 No Management Co., Ltd. Dispatched chairman Guangdong Communication Ling Ping of the supervisory January 1,2015 Yes Group Co., Ltd. committee Guangdong Communication Li Haihong Full-time field supervisors July 21,2016 Yes Group Co., Ltd. Offices taken in other organizations 66 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report √Applicable □Not applicable Does he/she receive Name of the Titles engaged in the other Starting date of Expiry date of Name of other organizations remuneration or persons in office organizations office term office term allowance from other organization The financial department of the Associate professor, Xiao Duan school of economics of Jinan Yes Master’s supervisor University Elion Clean Energy Company Xiao Duan Independent director June 1,2017 Yes Limited Guangzhou Jiesai Technology Xiao Duan Independent director July 1,2018 Yes Co.,Ltd. Bao Fangzhou Shanghai Allbright law firm Lawyer, Senior partner January 1,2000 Yes Hubei Wushi Pharmaceutical Co., Bao Fangzhou Independent director January 1,2013 Yes Ltd. Bao Fangzhou Laurel Power Co., Ltd. Independent director January 1,2016 Yes Finance and Investment ,School of Professor, doctoral Gu Naikang January 1,2004 Yes Business Sun YAT-SEN University supervisor Gu Naikang Zhubo Design Co., Ltd. Independent director June 1,2012 March 1,2018 Yes Gu Naikang Guangxi Guitang(Group)Co., Ltd. Independent director December 1,2013 November 1,2018 Yes Guangzhou Zhujiang Industry Gu Naikang Independent director May 1,2014 Yes Development Co., Ltd. Mingyang Intelligent Energy Gu Naikang Supervisor July 1,2017 Yes Group Co., Ltd. Shanghai Erro Investment Zhang Hua Management Service General Manager October 1,2016 Yes Centre(General partnership) Guangdong Electric Power Zhang Hua Independent director November 1,2011 Yes Development Co., Ltd. Zhuhai Taichuan Community Zhang Hua Independent director September 1,2017 Yes Technology Co., Ltd . Guangzhou Yuyin Technology Co., Zhang Hua Independent director November 1,2018 Yes Ltd. College of Accounting, Guangdong Professor, Master’s September 1, Liu Zhonghua Yes University of Foreign Studies supervisor 2005 Shanghai Fuxing Cao Yu ECD May 1,2008 Yes Technology(Group) Co., Ltd. Poly Developments and Huang Hai Secretary to the Board April 26,2012 Yes Holdings Group Co., Ltd. Punishments to the current and leaving board directors, supervisors and senior managers during the report period by securities regulators in the recent three years □ Applicable √Not applicable IV. Remuneration to directors, supervisors and senior executives Decision-making procedures, basis for determination and actual payment of the remuneration to directors , 67 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report supervisors and senior executives The remuneration of members of the Eighth board of directors and supervisory committee was examined and determined at the second provisional shareholders ’ general meeting in 2016.The remuneration of the senior executives is determined by the assets operation responsibility system in that year. 1. The directors of the Company and the controlling shareholder of the Company and its related parties, as well as the directors of the Company, shall not receive the remuneration of the directors. 2. Directors who have not held other positions in the Company and the controlling shareholder of the Company and its related parties are remunerated by the directors of the Company, and the standard is 5,000 yuan(tax included) per person per month. In addition, the expenses incurred by the independent directors at the board of directors and the shareholders' general meeting and the expenses incurred in exercising their functions and powers in accordance with the articles of association may be reimbursed in the company. Remuneration to directors, supervisors and senior executives in the reporting period Ten Thousands yuan Total Whether to get remuneration paid in the Name Positions Sex Age Office status received from the company related Company party Zheng Renfa Board Chairman Male 49 In Office 74.8 No Director,General Wang Chunhua Male 54 In Office 72.51 No Manager Director, Chief Wang Ping Female 54 In Office 61.84 No Engineer Director, Chief Fang Zhi Male 55 In Office 62.01 No Accountant Chen Min Director Male 55 In Office 0 Yes Zeng Zhijun Director Male 48 In Office 0 Yes Du Jun Director Male 53 In Office 0 Yes Zhuo Weiheng Director Male 47 In Office 0 Yes Cao Yu Director Male 33 In Office 6 No Huang Hai Director Male 43 In Office 6 No Independent Xiao Duan Female 60 In Office 6 No director Independent Gu Naikang Male 53 In Office 6 No director Independent Bao Fangzhou Male 40 In Office 6 No director Independent Zhang Hua Male 53 In Office 6 No director 68 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Total Whether to get remuneration paid in the Name Positions Sex Age Office status received from the company related Company party Independent Liu Zhonghua Male 53 In Office 6 No director Chairman of the Ling Ping Supervisory Female 55 In Office 0 Yes Committee Li Haihong Supervisor Female 47 In Office 0 Yes Ke Lin Supervisor Female 49 In Office 46.41 No Cao Xiaoying Supervisor Female 50 In Office 47.4 No Li Mei Supervisor Female 49 Dimission 0 No Yang Tianshu Supervisor Male e 36 In Office 47.3 No Deputy General 61.84 Zuo Jiang Female 46 In Office No Manager Deputy General 46.58 Cheng Rui Male 44 In Office No Manager Chief legal 50.86 He Bing Female 51 In Office No adviser Secretary to the 50.31 Yang Hanming Male 49 In Office No Board Total -- -- -- 663.86 -- Incentive equity to directors, supervisors or/and senior executives in the reporting period □ Applicable √Not applicable V. Particulars about employees. 1.Number of staff, professional structure and educational background Number of in-service staff of the parent company(person) 844 Number of in-service staff of the main subsidiaries(person) 1353 The total number of the in-service staff(person) 2,197 The total number of staff receiving remuneration in the current 2,197 period(person) Retired staff with charges paid by the parent company and main 101 subsidiaries (person) 69 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Professional Category Number of persons(person) Management personnel 429 Toll collectors 1,372 Road service personnedl 121 Logistical personnedl 275 Total 2,197 Education Category Number of persons(person) Holders of master’s degree or obove 37 Graduates of regular university 407 Graduates of junior colleges 1,469 Other 284 Total 2,197 2. Remuneration policies According to the company's overall development plan, to further establish and improve a variety of human resource management system, strengthen the macro salary management, to maintain the level of salary market competitiveness. Advocate salary and performance related, and constantly improve the performance appraisal mechanism, personal performance appraisal approach, staff promotion system, to develop both incentive and restrictive salary performance policy. Think highly of the establishment and perfection of welfare system, in accordance with the relevant provisions of the state on time and in full for the full pay pension insurance, medical insurance, work-related injury insurance, unemployment insurance, maternity insurance, housing provident fund and other statutory benefits, comply with the provisions on working hours, rest and vacations, the establishment of supplementary medical insurance, enterprise annuity and welfare system. 3.Training plan Nil 4.Outsourcing situation □ Applicable √ No Applicable 70 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report IX. Administrative structure I. General situation The Company strictly followed the requirement of laws and regulations in,< the Securities Law>,< Code of Corporate Governance for Listed Companies in China>, etc. and kept on improving corporate governance structures, improving normative operation level. Company had stipulated rules such as , rules of procedures in three meetings, working guide of special committee in board of directors, working guide of general manager etc. and internal control system basically covering all operating management such as company financial management, investment management, information disclosure, related transaction, external guarantee, fund raising etc. All rules are well implemented. In the report period, strictly following the relevant provisions of “Company Law”and “Regulations”, the shareholder’s meeting of our bank effectively performed the functions. The board of directors is to be responsible for the shareholder’ meeting, to take the ultimate responsibility for the bank’ operation and management and to convene a meeting as well as performing the function and power according to legal procedure. In line with the attitude which is responsible for all shareholders and keeping in close contact and communication with the board of directors and the management, the board of supervisors carries out the assessment work on duty exercising for the board of directors and the board of supervisors, effectively performing functions and obligations of supervision. Does there exist any difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC, □ Yes √No There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC. II. Independence and Completeness in business, personnel , assets, organization and finance 1. Independent business The company mainly engaged in business is Guangfo Expressway, Fokai Expressway and Beijing-Zhuhai Expressway Guangzhu section of the charges and maintenance work, investment in science and technology industry and provide relevant advice. it has invested in or holds Shenzhen Huiyan Expressway Co., Ltd., Guanghui Expressway Co., Ltd., Jiangzhong Expressway Co., Ltd. , Zhaoqing Yuezhao Highway Co., Ltd., Ganzhou Kangda Expressway Co., Ltd ,Ganzhou Gankang Expressway Co., Ltd., Guangdong Yueke Technology Micro Loan Co., Ltd. and Guangdong Guangle Expressway Co., Ltd. The Company has outstanding main operation, independent and complete business and the ability of independent operation. All business decisions of the Company were made independently, being completely separated from the shareholder with actual control. Related transactions were carried out in light of the principle of fair transaction, 71 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report which did not harm the interests of the Company and other shareholders of the Company. The content of related transactions was fully, timely and accurately disclosed, which did not have negative influence on the Company. 2. Complete assets The relationship of the Company's property right is clear. The assets injected by shareholders in the Company are independent and complete and have clear property right. All capital was paid up and relevant formalities of property right change were settled. 3. Independent personnel As for personnel relationship, the general manager, deputy general managers, the secretary to the board of directors and financial controller of the Company were full-time employees and received salary from the Company, who did not concurrently hold positions at the parent company. All directors and supervisors of the Company were elected through legal procedure. The general manager, deputy general managers, chief accountant, chief economic engineer and chief engineer were directly appointed by the board of directors. Other managerial personnel of all levels were directly appointed by the general manager. The Company owns independent power of personnel appointment and removal. 4. Independent finance The company has established an independent accounting department, including subsidiaries, and has established an independent accounting system and financial management system. The company opens bank accounts independently; the company pays taxes independently; the company's financial decisions are made independently, and there is no case of major shareholders interfering in the use of funds of listed companies. 5. Independent organization The board of directors, the supervisory committee and other internal organs of the Company operated independently. Its organs are complete and independent. III. Horiontal Competitions □ Applicable √ Not applicable IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period 1.Annual General Meeting Description of Sessions Meeting Date Resolution Disclosure date Disclosure index proposals Annual Announcement of Resolutions of 2017 Shareholders’ Shareholders’ 66.27% April 26,2018 April 27,2018 the shareholders' general meeting general meeting General Meeting in 2017.www.cninfo.com.cn The First provisional Announcement of Resolutions of Provisional shareholders’ the First provisional shareholders' shareholders’ 61.46% August 23,2018 August 24,2018 General meeting of general meeting of 2018. General meeting 2018 www.cninfo.com.cn 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √Not applicable 72 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report V. Responsibility performance of independent directors in report period 1. The attending of independent directors to board meetings and shareholders’ general meeting The attending of independent directors Number of Failure to Board Number of Attendance of personally meetings Number of meetings Number of the Independent Number of attend board necessary to be spot attended by attendances by shareholders' Directors absence meetings attended in the attendances Communicatio representative general successively reporting n meeting twice (Yes/No) period Xiao Duan 7 2 5 0 0 No 2 Gu Naikang 7 2 5 0 0 No 2 Bao Fangzhou 7 2 5 0 0 No 2 Liu Zhonghua 7 2 5 0 0 No 2 Zhang Hua 7 2 5 0 0 No 2 Notes to failure to personally attend Board Meetings Successively Twice Nil 2. Objection for relevant events from independent directors Independent directors come up with objection about Company’s relevant matters □Yes √No No objections arising from the independent directors on relevant events of the Company during the Period 3. Other notes to duty performance of independent directors Has an independent director’s advice to the Company been accepted √Yes □No Explanation on acceptance of or failure to accept an independent director’s advice to the Company. Independent directors seriously exercise the rights conferred by law, keep abreast of the company's production and management information, concerned about the company's comprehensive development, actively attend relevant meetings held by the company in 2018, published an independent and objective advice on relevant matters for consideration by the Board of Directors of the Company. Faithfully perform their duties, give full play to the independent role of the independent directors, to safeguard the interests of the company as a whole, and to safeguard the legitimate rights and interests of all shareholders, especially minority shareholders. The advices on business development and corporate governance given by independent directors can be adopted. VI. Duty Performance of Special Committees under the Board of Directors in the Reporting Period 1. The board of directors has an audit committee composed of three directors. i.e., Mr. Liu Zhonghua , Mr.Zhang Hua and Mr.Fang Zhi. The particulars of the work of the audit committee in the report period are as follows: According to the Rules of Procedure of Audit Committee of the Board of Directors and Working Regulations of Audit Committee of the Board of Directors on Annual Report and the work requirements of CSRC and 73 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Shenzhen Stock Exchange on annual report for 2017 the audit committee carried out a series of work for the annual audit of the Company for 2017, including deciding the working schedule for the audit of financial report for the report year after consultation with the certified public accountants in charge, reviewing the financial report prepared by the Company and forming written opinions, issuing the Urging Letter for Audit to certified public accountants and requiring certified public accountants to carry out overall work plan for audit and submit relevant progress report to the audit committee, reviewing the financial report for 2017 submitted by the Finance Dept. of the Company (on which the certified public accountants in charge of annual audit issued standard unqualified opinions) and giving written auditing opinions. 2. The board of directors has a remuneration committee composed of three directors, i.e., Mr. Bao Fangzhou, Ms. Xiao Duan and Mr Huang Hai. The particulars of the work of the remuneration committee in the report period are as follows: According to the Company's Regulations on Performance Appraisal and Remuneration Management of Senior Executives, the remuneration and appraisal committee audited the remuneration disclosed by the Company's directors for 2017. 3.In the report period, The board of directors has an strategy committee composed of five directors. i.e., Mr. Zheng Renfa, Mr.Wang Chunhua, Mr.Gu Naikang, Mr.Bao Fangzhou .and Mr.Zhang Hua. Strategy Committee will strengthen the company's strategic direction, strategic planning, research, and supervise the implementation of corporate strategies, provide timely advice to the Board decisions on strategic development. VII. Work of the supervisory Committee Did the supervisory Committee find any risk existing in performing the supervision activities in the reporting period □Yes √No The supervisory Committee has no objection aginst any matters under supervision in the reporting period VIII. Assessment and incentive Mechanism for Senior executives The Company implemented position responsibility to every senior management, and made clear regulations on job standards, appraisal standards. The senior management staff shall report to worker representatives and accept comments. IX. Internal Control I. Specific situations on major defects of internal control discovered during report period □ Yes √ No II. Self-evaluation report on internal control Disclosure date of appraisal report on March 29,2019 internal control Disclosure index of appraisal report on www.cninfo.com.cn internal control 74 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the 100.00% company's consolidated financial statements The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the 100.00% company's consolidated financial statements Standards of Defects Evaluation Type Financial Report Non-financial Report The qualitative criteria for the evaluation of The qualitative criteria for the evaluation internal control deficiencies in financial of internal control deficiencies in reports confirmed by the Company is as non-financial reports confirmed by the follows: The following situations (including Company is as follows: Material but not limited to) shall be deemed as deficiencies: serious violations and being “material deficiencies” in the internal sentenced to heavy fines or need taking control of the financial report. criminal (1) There are major frauds made by the responsibility; utterly disregard the rules directors, or supervisors, or senior of law, illegal behaviors in the operation management personnel in the company’s and management management activities; are particularly severe and the (2)There are material misstatements in the circumstance is very bad, which leads to current financial report but the the suspension or cessation internal control failed to find the to the company's daily operation and misstatements during its operation; management activities, and leads to the Qualitative standard (3) The supervisions made by the company's audit report with a audit committee and the internal disclaimer of opinion or a negative audit organization on the internal control are opinion issued by the CPA; the negative invalid; news spread all over the (4) The control environment is invalid; country, which caused severe damage to (5)The material deficiencies found and the company’s reputation; resulted in reported to the management but are decease of a number not corrected within a reasonable time; of workers or citizens, or resulted in (6)There is an administrative punishment damages that are unable to recover to from the securities regulatory workers or citizens; institution due to accounting errors. reached the circumstance(grade II) of The following situations (including but not major environmental event. Significant limited to) shall be deemed as deficiencies: illegal “significant deficiencies” in the internal and being punished; disregard the control of the financial report and requirements of the company’s there are intense signs for the situations management system and the 75 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Disclosure date of appraisal report on March 29,2019 internal control Disclosure index of appraisal report on www.cninfo.com.cn internal control The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the 100.00% company's consolidated financial statements The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the 100.00% company's consolidated financial statements Standards of Defects Evaluation Type Financial Report Non-financial Report becoming “material deficiencies”: (1) relevant rules of law, there are illegal Frauds made by staff in key positions; acts of using the authority to seek illegal (2)The supervisory function on compliance interests in the work, is invalid, and the violations of which significantly affect the efficiency regulations may have a significant impact on and the result of daily operation and the reliability of the financial management activities report; and lead to the audit report with qualified (3)The significant deficiencies reported to opinion issued by the CPA; the negative the management but are not news spread in a corrected within a reasonable period. region, which caused the large-extent The following situations (including but not damage to the company’s reputation; limited to) shall be deemed as resulted in decease of a “general deficiencies” in the internal worker or a citizen, or resulted in control of the financial report. damages that need long time to recover (1) Frauds made by staff in non key to workers or citizens; positions, or business operators execute reached the circumstance(grade Ⅲ) of the implementation procedures not strictly big environmental event. conforming to the company’s General deficiencies: minor violations; policy but resulted in no significant impact the awareness of management under in on the reliability of the financial compliance with report. laws and regulations is weak, lacking of (2)The supervisory function on compliance business and management knowledge, is invalid, and the violations of and there are phenomena such as being regulations may not have a significant slack in performing management duties, impact on the reliability of the financial being passive and poorly execute report; the institution in the work, which shall 76 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Disclosure date of appraisal report on March 29,2019 internal control Disclosure index of appraisal report on www.cninfo.com.cn internal control The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the 100.00% company's consolidated financial statements The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the 100.00% company's consolidated financial statements Standards of Defects Evaluation Type Financial Report Non-financial Report (3)The general deficiencies reported to the affect the efficiency and the result of management but are not corrected daily operation and within a reasonable period. management activities and lead to small effects to the company’s management goal; the negative news spread within the company, which caused the little-extent damage to the company’s reputation; shortly affected the health of the workers or citizens and the workers or citizens can be recovered in a short time; reached the circumstance(grade Ⅳ) of general environmental event. 77 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Disclosure date of appraisal report on March 29,2019 internal control Disclosure index of appraisal report on www.cninfo.com.cn internal control The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the 100.00% company's consolidated financial statements The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the 100.00% company's consolidated financial statements Standards of Defects Evaluation Type Financial Report Non-financial Report The qualitative criteria for the evaluation The qualitative criteria for the evaluation of of internal control deficiencies in internal control deficiencies in financial nonfinancial reports confirmed by the reports confirmed by the Company is as Company is as follows: Material follows: Material deficiencies: potential deficiencies: potential misstatement≧ misstatement≧1% of the total amount of the 1% of the total amount of the owner’s owner’s equity or 200 million yuan; equity or significant deficiencies: 0.5% of the 200 million yuan; significant Standards of Quantization totalamount of the owner’s equity or 100 deficiencies: 0.5% of the total amount of million yuan≤potential misstatement<1% the owner’s equity or100 million yuan of the total amount of the owner’s equity or ≤potential misstatement<1% of the 200 million yuan; general deficiencies: total amount of the owner’s equity or potential misstatement<0.5% of the total 200 amount of the owner’s equity or 100 million Million yuan ; general deficiencies: yuan Standards of Quantization potential misstatement<0.5% of the total amount of the owner’s equity or 100 million yuan. Number of major defects in financial 0 reporting(a) Number of major defects in non financial 0 reporting (a) Number of important defects in financial 0 reporting(a) Number of important defects in non 0 financial reporting(a) 78 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report X. Internal Control audit report √ Applicable □Not applicable Review opinions in the internal control audit report In our opinion, Guangdong Expressway has maintained effective financial report internal control in all material aspects according to the basic standards for Enterprise internal control and relevant regulations ended December 31, 2018. Disclosure of internal audit report Disclosure Disclosure date of audit report March 29,2019 of internal control (full-text) Disclosure index of audit report www.cninfo.com.cn of internal control (full-text) Internal audit report’s opinion Unqualified audit opinion Non-financial reporting the No existence of significant deficiencies Has the CPAs issued a qualified auditor’s report of internal control . □ Yes √No Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors √Yes □No X. Corporation bonds Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at maturity on the approval date for annual report disclosed No 79 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report XI. Financial Report I. Audit report Type of audit opinion Standard Unqualified audit opinion Type of audit opinion March 28,2019 Guangdong Zhengzhong Zhujiang Certified Public Accountants Name of audit firm Co., Ltd.(Special General Partnership) Name of Certified public Accountant Feng Kuncong, Xu Jihong Auditors’ Report To all shareholders of Guangdong Provincial Expressway Development Co., Ltd. I. Opinion We have audited the financial statements of Guangdong Provincial Expressway Development Co., Ltd. (hereinafter referred to as "the Company"), which comprise the balance sheet as at December 31, 2018, and the income statement, the statement of cash flows and the statement of changes in owners' equity for the year then ended and notes to the financial statements. In our opinion, the attached financial statements are prepared, in all material respects, in accordance with Accounting Standards for Business Enterprises and present fairly the financial position of the Company as at December 31, 2018 and its operating results and cash flows for the year then ended. II. Basis for Our Opinion We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants in China. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. According to the Code of Ethics for Chinese CPA, we are independent of the Company in accordance with the Code of Ethics for Chinese CPA and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. III. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. (1) Long-term Eqiuty Investment 1 Factual description As stated in “Section XI Financial Report V, Important Accounting Policies and Accounting Estimates 14, Long-term Equity Investment”, “Section XI Financial Report VII, Consolidated Statements Project Chairman 9, Long-term Equity Investment”, as of December 31, 2018, the amount of long-term equity investment of the Company was 3145.645 million yuan. 80 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Guangdong Expressway bought shares from Shenzhen Huiyan Expressway Co., Ltd., Guangdong Guanghui Expressway Co., Ltd., Guangdong Jiangzhong Expressway Co., Ltd., Zhaoqing Yuezhao Highway Co., Ltd., Ganzhou Kangda Expressway Co., Ltd., Ganzhou Gankang Highway Co., Ltd., Guangdong Yueke Technology Petty Loan Co., Ltd.and Guoyuan Securities Co., Ltd. Guangdong Expressway Co., Ltd. Management (hereinafter referred to as the "Management") considered that it can actively participate in the operation and financial policies of such joint ventures and associates, so Guangdong Expressway Co., Ltd. had a significant influence on them. The financial statements of these joint ventures and associates have a significant impact on the consolidated financial statements of Guangdong Expressway Co., Ltd. ②How our audit addressed the matter We have implemented the following major audit procedures to respond: Check the joint venture agreement, articles of association for the long-term equity investment newly increased in current period, and Guangdong Expressway Co., Ltd. appoints directors and participates in its operation and decision-making; Obtain the capital verification report of the Investee to confirm whether the long-term equity investment meets the provisions of investment contract and the agreement and whether the accounting treatment is correct. Analyze the holding intention and ability of the management of Guangdong Expressway Co., Ltd. on the long-term equity investment and review the correctness of the long-term equity investment classification. Inspect the resolutions of the Board of Directors and the Shareholders’ Meeting of the joint ventures and associates, and evaluate the actual impact of the Guangdong Expressway Co., Ltd. on the major decisions and operation-related activities of such joint ventures and associates. The review procedures are conducted for the financial statements of the joint ventures and associates to verify the net gains and losses of the Investee after adjusting based on the principle of materiality and on the basis of the identifiable assets fair values of the joint ventures and associates obtained during investments. The investment gains and losses recalculated are checked with the investment gains and losses calculated by audited unit and made appropriate adjustments. Pay attention to whether the accounting treatment of Guangdong Expressway is correct in case of its joint ventures and associates generating net loss or achieving profit in subsequent periods. Long-term equity investments are inspected one by one, and judge whether there is any indication of impairment for the long-term equity investment based on various changes such as the operating policies, legal environment, market demand, industry and profitability of Guangdong Expressway Co., Ltd.. At the same time, check the correctness of impairment provision calculation. (2) Depreciation of fixed assets road property ①Factual description As stated in “Section XI Financial Report V, Important Accounting Policies and Accounting Estimates 17, Fixed assets”, “Section XI Financial Report VII, Consolidated Statements Project Chairman 11, Fixed assetst”, as of December 31, 2018, he amount of fixed assets road property of the Company was 15,247.2669 million yuan and the accumulated depreciation amount of road property was 8026. 0744 million yuan. At present, Guangdong Expressway is amortized according to the workload method, which involves the estimation of Guangdong Expressway Co., Ltd.. on the estimated total traffic flow and the estimation is uncertain. 81 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report When there is a significant difference between the estimated total traffic flow and the actual measurement result, the road fixed assets depreciation shall be adjusted accordingly. At the same time, various factors consideration and the related data estimation are involved in the traffic flow forecasting model. If the amortization rate and the annual average increment rate are not estimated properly, the depreciation amount of expressway property will be wrong to generate the risk of material misstatement. Fixed asset road property is the core asset of Guangdong Expressway Co., Ltd. Depreciation of expressway property has a significant impact on annual vehicle travel costs and expenses, so the workload method for amortization of fixed assets road property is recognized as a key audit matter. ②How our audit addressed the matter The procedures of our management for amortization of expressway property with workload method mainly include: Obtain forecast report from an external independent professional organization and review its key assumptions, while comparing its key assumptions with the expressway planning of the government transport sector and reviewing the qualifications, professional competence and independence of external independent professional organization; Check whether the actual traffic flow data applied by Guangdong Expressway Co., Ltd. in the process of depreciation calculation of fixed assets road property is consistent with the actual traffic flow data obtained by Guangdong Expressway Co., Ltd. from external service units; To understand the method of forecasting the traffic flow of the future remaining operation period used in the traffic flow forecast report of an independent external professional organization and to evaluate the reliability of the traffic flow forecast report by comparing the forecasting traffic flow in the past years with the actual traffic flow in the period. Depreciation of fixed assets road property is to be re-calculated to verify the correctness of the depreciation amount of fixed assets road property in the financial statements. (3) Deferred income tax assets related to deductible losses ①Factual description As stated in “Section XI Financial Report V, Important Accounting Policies and Accounting Estimates 29, Deferred Income Tax Assets and Deferred Income Tax Liabilities”, “Section XI Financial Report VII, Consolidated Statements Project Chairman 15, Deferred Income Tax Assets”, as of December 31, 2018, the amount of deferred income tax assets of the Company was 447.485 million yuan of which the deferred income tax asset confirmed without making up for the tax loss was 320.3474 million yuan. The Guangdong Expressway Headquarter has larger tax losses that have not been made up during 2014 to 2016 .In 2018, it offset with the corresponding taxable income generated after absorbing and combining Fokai Company, a wholly-owned subsidiary of Guangdong Expressway . The Company initially estimated and confirmed the deferred income tax assets of 320.3474 million yuan. When confirming the deferred income tax assets, the Management judges the Guangdong Expressway . Headquarter is likely to have sufficient taxable income to offset the deductible losses prior to the expiration of the deductible losses according to the financial forecast of the Guangdong Expressway . Headquarter in the future. As for the evaluation on whether the deferred tax assets will be realized in the future, it needs the Management to make significant judgments and its estimates and assumptions are with certain uncertainties. 82 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report ②How our audit addressed the matter The procedures we have implemented for the accounting estimation of deferred income tax assets by Guangdong Provincial Expressway Development Company include: We communicate with our tax experts to confirm that their unrecovered losses can be compensated by the combined taxable income. Obtain the financial forecast approved by the management for the future period of Guangdong High Speed Company, evaluate whether its compilation conforms to the industry and its own situation, and consider the impact of relevant special matters on the reliability of future financial forecast. To review whether the confirmation of deferred income tax assets is limited to the amount of taxable income likely to be obtained to offset deductible losses in the future; Implement audit procedures such as inspection and recalculation, and review the accuracy of accounting treatment of deferred income tax assets which should be confirmed by Guangdong Provincial Expressway Development Company for deductible losses.. IV. Other information The management of the Company is responsible for the other information. The other information comprises information of the Company's annual report in 2018, but excludes the financial statements and our auditor's report. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard V. Responsibilities of Management and Those Charged with Governance for the Financial Statements The Company's management is responsible for preparing the financial statements in accordance with the requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing, implementing and maintaining internal control that is necessary to ensure that the financial statements are free from material misstatements, whether due to frauds or errors. In preparing the financial statements, management of the Company is responsible for assessing the Company's ability to continue as a going concern, disclosing matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. VI. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatement when it exists. Misstatements can arise from 83 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: (1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, omissions, misrepresentations, or the override of internal control. (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management of the Company. (4) Conclude on the appropriateness of using the going concern assumption by the management of the Company, and conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. (5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. (6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements and bear all liability for the opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit matters, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Guangdong Zhengzhong Zhujiang Certified Public Accountants Co., Ltd.(Special General Partnership) Certified Public Accountant of China:Feng Kuncong(project partner) 84 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Certified Public Accountant of China:Xu Jihong Guangzhou China March 28, 2019 II. Financial Statement Currency unit for the statements in the notes to these financial statements: RMB 1. Consolidated balance sheet Prepared by::Guangdong Provincial Expressway Development Co., Ltd. December 31,2018 In RMB Items At the end of term Beginning of term Current asset: Monetary fund 2,124,524,996.32 2,363,042,700.42 Settlement provision Outgoing call loan Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Notes receivable & account receivable 91,076,995.07 92,642,625.45 Including:Notes receivable Account receivable 91,076,995.07 92,642,625.45 Prepayments 1,912,943.40 4,451,901.75 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Other account receivable 16,487,256.02 15,415,512.07 Including:Interest receivable Dividend receivable 1,205,472.90 Repurchasing of financial assets Inventories 81,017.91 Assets held for sales Non-current asset due within 1 year 51,745.32 55,669.14 Other current asset 76,576.08 Total of current assets 2,234,134,954.04 2,475,684,984.91 85 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items At the end of term Beginning of term Non-current assets: Loans and payment on other’s behalf disbursed Available-for-sale financial assets 1,668,791,594.53 1,751,357,624.93 Held-to-maturity investments Long-term receivable Long term share equity investment 3,145,644,970.07 3,047,275,000.00 Property investment 3,579,007.54 2,755,757.68 Fixed assets 7,600,046,319.91 8,505,434,890.71 Construction in progress 1,089,473,425.63 357,612,211.95 Productive biological assets Oil and natural gas assets Intangible assets 5,739,020.48 7,096,435.17 R & D costs Goodwill Long-germ expenses to be amortized 1,221,781.88 92,768.83 Deferred tax assets 447,485,034.79 335,299,025.28 Other non-current asset 99,794,665.58 40,706,394.26 Total of non-current assets 14,061,775,820.41 14,047,630,108.81 Total of assets 16,295,910,774.45 16,523,315,093.72 Current liabilities Short-term loans Loan from Central Bank Deposit received and hold for others Borrowingf funds Financial liabilities measured at fair value with variations accounted into current income account Derivative financial liabilities Notes payable & account payable 203,779,190.74 266,934,026.99 Advance payment 12,039,708.01 14,856,113.90 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 13,122,437.17 11,334,182.16 Tax payable 104,198,746.06 428,647,394.29 Other account payable 191,254,464.84 121,998,386.07 Including:Interest payable 8,971,576.57 8,494,355.93 Dividend payable 17,191,142.23 26,840,792.20 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities 86 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items At the end of term Beginning of term Liabilities held for sales Non-current liability due within 1 year 2,498,480,000.00 1,218,610,000.00 Other current liability Total of current liability 3,022,874,546.82 2,062,380,103.41 Non-current liabilities: Long-term loan 2,983,040,000.00 4,744,170,000.00 Bond payable Including:preferred stock Sustainable debt Long-term payable 38,022,210.11 2,022,210.11 Long-term payable employees’s remuneration Expected liabilities Deferred income Deferred income tax liability 205,672,389.59 260,632,098.75 Other non-current liabilities Total non-current liabilities 3,226,734,599.70 5,006,824,308.86 Total of liability 6,249,609,146.52 7,069,204,412.27 Owners’ equity Share capital 2,090,806,126.00 2,090,806,126.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 2,536,774,965.31 2,510,069,749.76 Less:Shares in stock Other comprehensive income 245,109,114.81 327,263,824.17 Special reserves Surplus reserves 775,402,561.35 544,821,130.03 Common risk provision Retained profit 3,938,609,136.59 3,550,110,288.49 Total of owner’s equity belong to the 9,586,701,904.06 9,023,071,118.45 parent company Minority shareholders’ equity 459,599,723.87 431,039,563.00 Total of owners’ equity 10,046,301,627.93 9,454,110,681.45 Total of liabilities and owners’ equity 16,295,910,774.45 16,523,315,093.72 Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 87 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2.Parent Company Balance Sheet In RMB Items At the end of term Beginning of term Current asset: Monetary fund 2,096,597,568.04 2,130,475,892.67 Financial assets measured at fair value with variations accounted into current income 0.00 0.00 account Derivative financial assets 0.00 0.00 Notes receivable & account receivable 18,405,847.15 19,001,899.29 Including:Notes receivable 0.00 0.00 Account receivable 18,405,847.15 19,001,899.29 Prepayments 1,532,057.82 1,520,014.23 Other account receivable 9,323,782.66 17,368,588.12 Including:Interest receivable 1,880,148.12 2,070,385.95 Dividend receivable 1,205,472.90 10,000,000.00 Inventories 0.00 0.00 Assets held for sales 0.00 0.00 Non-current asset due within 1 year 100,000,000.00 80,000,000.00 Other current asset 0.00 0.00 Total of current assets 2,225,859,255.67 2,248,366,394.31 Non-current assets: Available-for-sale financial assets 1,668,791,594.53 1,751,357,624.93 Held-to-maturity investments 0.00 0.00 Long-term receivable 0.00 0.00 Long term share equity investment 4,679,309,978.88 8,216,937,219.66 Property investment 3,326,869.29 2,503,619.43 Fixed assets 5,292,898,635.00 5,784,192,105.58 Construction in progress 1,060,230,773.10 353,858,869.95 Productive biological assets 0.00 0.00 Oil and natural gas assets 0.00 0.00 Intangible assets 1,741,277.53 2,856,323.67 R & D costs 0.00 0.00 Goodwill 0.00 0.00 Long-germ expenses to be amortized 0.00 0.00 Deferred tax assets 447,328,530.77 335,050,091.31 Other non-current asset 790,720,727.48 827,775,329.66 Total of non-current assets 13,944,348,386.58 17,274,531,184.19 Total of assets 16,170,207,642.25 19,522,897,578.50 Current liabilities Short-term loans 0.00 0.00 88 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items At the end of term Beginning of term Financial liabilities measured at fair value with variations accounted into current 0.00 0.00 income account Derivative financial liabilities 0.00 0.00 Notes payable and account payable 124,833,335.72 200,070,986.17 Advance payment 0.00 0.00 Employees’ wage payable 5,669,203.37 5,419,848.48 Tax payable 10,297,144.52 12,893,797.03 Other account payable 142,457,135.79 4,503,328,739.76 Including:Interest payable 8,373,096.36 7,901,914.26 Dividend payable 17,191,142.23 14,340,792.20 Liabilities held for sales 0.00 0.00 Non-current liability due within 1 year 2,327,180,000.00 968,610,000.00 Other current liability 977,236,252.44 644,691,748.64 Total of current liability 3,587,673,071.84 6,335,015,120.08 Non-current liabilities: Long-term loan 2,731,990,000.00 4,545,170,000.00 Bond payable 0.00 0.00 Including:preferred stock 0.00 0.00 Sustainable debt 0.00 0.00 Long-term payable 38,022,210.11 2,022,210.11 Employees’ wage payable 0.00 0.00 Expected liabilities 0.00 0.00 Deferred income 0.00 0.00 Deferred income tax liability 88,220,604.00 108,805,411.60 Other non-current liabilities 0.00 0.00 Total of Non-current liabilities 2,858,232,814.11 4,655,997,621.71 Total of liability 6,445,905,885.95 10,991,012,741.79 Owners’ equity Share capital 2,090,806,126.00 2,090,806,126.00 Other equity instrument 0.00 0.00 Including:preferred stock 0.00 0.00 Sustainable debt 0.00 0.00 Capital reserves 2,948,663,196.93 2,921,957,981.38 Less:Shares in stock 0.00 0.00 Other comprehensive income 245,109,114.81 327,263,824.17 Special reserves 0.00 0.00 Surplus reserves 759,558,277.70 528,976,846.38 Retained profit 3,680,165,040.86 2,662,880,058.78 Total of owners’ equity 9,724,301,756.30 8,531,884,836.71 Total of liabilities and owners’ equity 16,170,207,642.25 19,522,897,578.50 89 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 90 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 3.Consolidated Income statement In RMB Items Report period Same period of the previous year I. Income from the key business 3,218,694,083.94 3,089,055,399.21 Incl:Business income 3,218,694,083.94 3,089,055,399.21 Interest income 0.00 0.00 Insurance fee earned 0.00 0.00 Fee and commission received 0.00 0.00 II. Total business cost 1,691,379,458.72 1,700,430,222.02 Incl:Business cost 1,279,095,071.32 1,247,122,353.35 Interest expense 0.00 0.00 Fee and commission paid 0.00 0.00 Insurance discharge payment 0.00 0.00 Net claim amount paid 0.00 0.00 Net amount of withdrawal of insurance 0.00 0.00 contract reserve Insurance policy dividend paid 0.00 0.00 Reinsurance expenses 0.00 0.00 Business tax and surcharge 15,987,266.39 16,000,201.45 Sales expense 0.00 0.00 Administrative expense 183,392,148.68 179,811,709.59 R & D costs 1,318,344.01 9,773,866.38 Financial expenses 212,592,783.74 247,306,751.08 Including:Interest expense 237,334,325.27 276,594,308.94 Interest income 31,889,543.71 33,696,479.00 Asset impairment loss -1,006,155.42 415,340.17 Add:Other incme 1,113,228.32 0.00 Investment gain(“-”for loss) 507,659,683.96 448,268,367.19 Incl: investment gains from affiliates 463,873,066.20 423,940,445.45 Changing income of fair value 0.00 0.00 Gains from currency exchange 0.00 0.00 Income on disposal of assets 66,431,966.75 0.00 III. Operational profit(“-”for loss) 2,102,519,504.25 1,836,893,544.38 Add :Non-operational income 4,175,801.94 65,779,816.71 91 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Report period Same period of the previous year Less: Non-operating expense 8,979,998.49 6,681,492.26 IV.Total profit(“-”for loss) 2,097,715,307.70 1,895,991,868.83 Less:Income tax expenses 194,374,904.99 185,768,181.41 V. Net profit 1,903,340,402.71 1,710,223,687.42 1.Net continuing operating profit 1,903,340,402.71 1,710,223,687.42 2.Termination of operating net profit 0.00 0.00 Net profit attributable to the owners of 1,677,028,179.18 1,509,922,398.70 parent company Minority shareholders’ equity 226,312,223.53 200,301,288.72 VI. Net after-tax of other -82,154,709.36 -75,022,130.07 comprehensive income Net of profit of other comprehensive inc ome attributable to owners of the parent -82,154,709.36 -75,022,130.07 company. (I)Other comprehensive income items that will not be reclassified into 0.00 0.00 gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit pl 0.00 0.00 ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl 0.00 0.00 assified into profit or loss. (II) Other comprehensive income that will b -82,154,709.36 -75,022,130.07 e reclassified into profit or loss. 1.Other comprehensive income under th e equity method investee can be reclassi -20,400,286.56 847,589.37 fied into profit or loss. 2.Gains and losses from changes in fair -61,754,422.80 -75,869,719.44 value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s 0.00 0.00 ale financial assets 4.The effective portion of cash flow hed 0.00 0.00 ges and losses 5.Translation differences in currency fin 0.00 0.00 92 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Report period Same period of the previous year ancial statements 6.Other 0.00 0.00 Net of profit of other comprehensive inc 0.00 0.00 ome attributable to Minority shareholders’ equity VII. Total comprehensive income 1,821,185,693.35 1,635,201,557.35 Total comprehensive income attributable to the owner of the parent 1,594,873,469.82 1,434,900,268.63 company Total comprehensive income 226,312,223.53 200,301,288.72 attributable minority shareholders VIII. Earnings per share (I)Basic earnings per share 0.80 0.72 (II)Diluted earnings per share 0.80 0.72 The current business combination under common control, the net profits of the combined party before achieved ne t profit of RMB 0.00, last period the combined party realized RMB0.00. Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 93 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 4. Income statement of the Parent Company In RMB Items Report period Same period of the previous year I. Income from the key business 1,407,552,753.41 633,884,348.76 Incl:Business cost 715,167,422.95 334,909,223.31 Business tax and surcharge 7,835,359.08 3,307,085.26 Sales expense 0.00 0.00 Administrative expense 110,081,131.38 88,330,754.08 R & D costs 0.00 0.00 Financial expenses 195,110,213.09 161,543,283.48 Including:Interest expenses 223,418,837.71 191,514,874.96 Interest income 31,556,863.82 30,122,893.22 Asset impairment loss -1,013,982.92 0.00 Add:Other income 396,608.55 0.00 Investment gain(“-”for loss) 1,814,856,174.83 1,543,339,240.39 Incl: investment gains from 463,873,066.20 423,940,445.45 affiliates Gains from change of fir value (“-”for 0.00 0.00 loss) Assets disposal income 200,494.75 0.00 II. Operational profit(“-”for loss) 2,195,825,887.96 1,589,133,243.02 Add :Non-operational income 1,131,640.33 1,954,480.96 Less:Non business expenses 3,421,654.59 993,641.04 III.Total profit(“-”for loss) 2,193,535,873.70 1,590,094,082.94 Less:Income tax expenses -112,278,439.46 -188,551,718.47 IV. Net profit 2,305,814,313.16 1,778,645,801.41 1.Net continuing operating profit 2,305,814,313.16 1,778,645,801.41 2.Termination of operating net profit 0.00 0.00 V. Net after-tax of other comprehensive -82,154,709.36 -75,022,130.07 income (I)Other comprehensive income items that will not be reclassified into 0.00 0.00 gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit pl 0.00 0.00 ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl 0.00 0.00 assified into profit or loss. (II) Other comprehensive income that will b -82,154,709.36 -75,022,130.07 e reclassified into profit or loss. 1.Other comprehensive income under th -20,400,286.56 847,589.37 e equity method investee can be reclassi 94 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Report period Same period of the previous year fied into profit or loss. 2.Gains and losses from changes in fair -61,754,422.80 -75,869,719.44 value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s 0.00 0.00 ale financial assets 4.The effective portion of cash flow hed 0.00 0.00 ges and losses 5.Translation differences in currency fin 0.00 0.00 ancial statements 6.Other 0.00 0.00 VI. Total comprehensive income 2,223,659,603.80 1,703,623,671.34 VII. Earnings per share (I)Basic earnings per share (II)Diluted earnings per share Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 95 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 5. Consolidated Cash flow statement In RMB Items Report period Same period of the previous year I.Cash flows from operating activities Cash received from sales of goods or 3,287,727,513.56 3,136,065,844.60 rending of services Net increase of customer deposits 0.00 0.00 and capital kept for brother company Net increase of loans from central bank 0.00 0.00 Net increase of inter-bank loans from 0.00 0.00 other financial bodies Cash received against original insurance 0.00 0.00 contract Net cash received from reinsurance 0.00 0.00 business Net increase of client deposit and 0.00 0.00 investment Net increase of amount from disposal financial assets that measured 0.00 0.00 by fair value and with variation reckoned into current gains/losses Cash received from interest, 0.00 0.00 commission charge and commission Net increase of inter-bank fund received 0.00 0.00 Net increase of repurchasing business 0.00 0.00 Tax returned 0.00 0.00 Other cash received from business 96,620,294.65 100,599,558.66 operation Sub-total of cash inflow 3,384,347,808.21 3,236,665,403.26 Cash paid for purchasing of 282,911,012.21 200,278,429.82 merchandise and services Net increase of client trade and advance 0.00 0.00 Net increase of savings n central bank 0.00 0.00 and brother company Cash paid for original contract claim 0.00 0.00 Cash paid for interest, processing fee 0.00 0.00 and commission 96 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Report period Same period of the previous year Cash paid for policy dividend 0.00 0.00 Cash paid to staffs or paid for staffs 331,709,871.16 317,865,103.86 Taxes paid 778,835,419.88 428,844,550.88 Other cash paid for business activities 74,905,926.92 94,687,393.35 Sub-total of cash outflow from business 1,468,362,230.17 1,041,675,477.91 activities Cash flow generated by business 1,915,985,578.04 2,194,989,925.35 operation, net II.Cash flow generated by investing Cash received from investment 0.00 0.00 retrieving Cash received as investment gains 414,389,169.98 424,307,452.94 Net cash retrieved from disposal of fixed assets, intangible assets, and other 228,222,572.51 619,050.00 long-term assets Net cash received from disposal of 0.00 0.00 subsidiaries or other operational units Other investment-related cash received 0.00 59,995,667.68 Sub-total of cash inflow due to 642,611,742.49 484,922,170.62 investment activities Cash paid for construction of fixed assets, intangible assets 845,371,278.92 429,007,555.79 and other long-term assets Cash paid as investment 0.00 799,999,959.30 Net increase of loan against pledge 0.00 0.00 Net cash received from subsidiaries and 0.00 0.00 other operational units Other cash paid for investment 0.00 0.00 activities Sub-total of cash outflow due to 845,371,278.92 1,229,007,515.09 investment activities Net cash flow generated by investment -202,759,536.43 -744,085,344.47 III.Cash flow generated by financing Cash received as investment 0.00 0.00 Incl: Cash received as investment from 0.00 0.00 minor shareholders 97 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Report period Same period of the previous year Cash received as loans 1,385,000,000.00 1,828,000,000.00 Cash received from bond placing 0.00 0.00 Other financing –related cash 0.00 10,277,777.78 received Sub-total of cash inflow from financing 1,385,000,000.00 1,838,277,777.78 activities Cash to repay debts 1,785,260,000.00 2,225,880,000.00 Cash paid as dividend, profit, or 1,550,437,061.08 1,304,986,387.00 interests Incl: Dividend and profit paid by 210,252,062.66 309,648,023.87 subsidiaries to minor shareholders Other cash paid for financing activities 0.00 0.00 Sub-total of cash outflow due to 3,335,697,061.08 3,530,866,387.00 financing activities Net cash flow generated by financing -1,950,697,061.08 -1,692,588,609.22 IV. Influence of exchange rate -2,267,884.63 1,447,084.51 alternation on cash and cash equivalents V.Net increase of cash and cash -239,738,904.10 -240,236,943.83 equivalents Add: balance of cash and cash 2,363,042,700.42 2,603,279,644.25 equivalents at the beginning of term VI ..Balance of cash and cash 2,123,303,796.32 2,363,042,700.42 equivalents at the end of term Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 98 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 6. Cash Flow Statement of the Parent Company In RMB Items Amount in this period Amount in last period I.Cash flows from operating activities Cash received from sales of goods or 1,376,638,206.96 558,221,855.21 rending of services Tax returned 0.00 0.00 Other cash received from business 451,033,420.59 256,279,744.56 operation Sub-total of cash inflow 1,827,671,627.55 814,501,599.77 Cash paid for purchasing of 129,341,285.43 40,959,738.85 merchandise and services Cash paid to staffs or paid for staffs 140,700,012.09 88,199,907.15 Taxes paid 51,584,160.49 15,211,949.40 Other cash paid for business activities 380,472,347.82 457,568,791.56 Sub-total of cash outflow from business 702,097,805.83 601,940,386.96 activities Cash flow generated by business 1,125,573,821.72 212,561,212.81 operation, net II.Cash flow generated by investing Cash received from investment 0.00 0.00 retrieving Cash received as investment gains 1,045,610,436.49 1,533,378,326.14 Net cash retrieved from disposal of fixed assets, intangible assets, and other 313,375.00 604,520.00 long-term assets Net cash received from disposal of 0.00 0.00 subsidiaries or other operational units Other investment-related cash received 148,330,950.62 167,012,137.44 Sub-total of cash inflow due to 1,194,254,762.11 1,700,994,983.58 investment activities Cash paid for construction of fixed assets, intangible assets 803,184,034.08 60,356,595.71 and other long-term assets Cash paid as investment 0.00 804,499,959.30 Net cash received from subsidiaries and 0.00 0.00 other operational units 99 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Amount in this period Amount in last period Other cash paid for investment 5,000,000.00 20,000,000.00 activities Sub-total of cash outflow due to 808,184,034.08 884,856,555.01 investment activities Net cash flow generated by investment 386,070,728.03 816,138,428.57 III.Cash flow generated by financing Cash received as investment 0.00 0.00 Cash received as loans 636,000,000.00 270,000,000.00 Cash received from bond placing 0.00 0.00 Other financing –related ash received 291,000,000.00 732,162,605.79 Sub-total of cash inflow from 927,000,000.00 1,002,162,605.79 financing activities Cash to repay debts 821,880,000.00 50,200,000.00 Cash paid as dividend, profit, or 1,275,396,189.75 852,788,562.89 interests Other cash paid for financing activities 374,200,000.00 794,300,000.00 Sub-total of cash outflow due to 2,471,476,189.75 1,697,288,562.89 financing activities Net cash flow generated by financing -1,544,476,189.75 -695,125,957.10 IV. Influence of exchange rate -2,267,884.63 1,447,084.51 alternation on cash and cash equivalents V.Net increase of cash and cash -35,099,524.63 335,020,768.79 equivalents Add: balance of cash and cash 2,130,475,892.67 1,795,455,123.88 equivalents at the beginning of term VI ..Balance of cash and cash 2,095,376,368.04 2,130,475,892.67 equivalents at the end of term Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 100 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 7. Consolidated Statement on Change in Owners’ Equity Amount in this period In RMB Amount in this period Owner’s equity Attributable to the Parent Company Other Equity instrument Com Minor Items Less: Total of owners’ Other Special mon shareholders’ Shares equity Share Capital preferred Capital reserves Comprehensive ized Surplus reserves risk Retained profit equity Sustaina Other in stock Income reserve prov ble debt stock ision I.Balance at the end of last year 2,090,806,126.00 0.00 0.00 0.00 2,510,069,749.76 0.00 327,263,824.17 0.00 544,821,130.03 0.00 3,550,110,288.49 431,039,563.00 9,454,110,681.45 Add: Change of accounting 0.00 policy Correcting of previous errors 0.00 Merger of entities under common 0.00 control Other 0.00 II.Balance at the beginning of 2,090,806,126.00 0.00 0.00 0.00 2,510,069,749.76 0.00 327,263,824.17 0.00 544,821,130.03 0.00 3,550,110,288.49 431,039,563.00 9,454,110,681.45 current year III.Changed in the current year 0.00 0.00 0.00 0.00 26,705,215.55 0.00 -82,154,709.36 0.00 230,581,431.32 0.00 388,498,848.10 28,560,160.87 592,190,946.48 (1)Total comprehensive income -82,154,709.36 1,677,028,179.18 226,312,223.53 1,821,185,693.35 (II)Investment or decreasing of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 capital by owners 1.Ordinary Shares invested by sh 0.00 areholders 2.Holders of other equity instrum 0.00 ents invested capital 3.Amount of shares paid and 0.00 accounted as owners’ equity 4.Other 0.00 (III)Profit allotment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 230,581,431.32 0.00 -1,288,529,331.08 -197,752,062.66 -1,255,699,962.42 101 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount in this period Owner’s equity Attributable to the Parent Company Other Equity instrument Com Minor Items Less: Total of owners’ Other Special mon shareholders’ Shares equity Share Capital preferred Capital reserves Comprehensive ized Surplus reserves risk Retained profit equity Sustaina Other in stock Income reserve prov ble debt stock ision 1.Providing of surplus reserves 230,581,431.32 -230,581,431.32 0.00 2.Providing of common risk 0.00 provisions 3.Allotment to the owners (or -1,057,947,899.76 -197,752,062.66 -1,255,699,962.42 shareholders) 4.Other 0.00 (IV) Internal transferring of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 owners’ equity 1. Capitalizing of capital reserves 0.00 (or to capital shares) 2. Capitalizing of surplus reserves 0.00 (or to capital shares) 3.Making up losses by surplus 0.00 reserves. 4.Change amount of defined benefit plans that carry forward Retained earnings 5.Other 0.00 (V). Special reserves 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1. Provided this year 0.00 2.Used this term 0.00 (VI)Other 26,705,215.55 26,705,215.55 IV. Balance at the end of this term 2,090,806,126.00 0.00 0.00 0.00 2,536,774,965.31 0.00 245,109,114.81 0.00 775,402,561.35 0.00 3,938,609,136.59 459,599,723.87 10,046,301,627.93 Amount in last year 102 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report In RMB Amount in last year Owner’s equity Attributable to the Parent Company Items Other Equity instrument Less: Specia Commo Minor Other Total of owners’ Shares lized n risk shareholders’ Share Capital preferre Capital reserves Comprehensive Surplus reserves Retained profit equity Sustainabl Other in reserv provisio equity d stock Income e debt stock e n I.Balance at the end of last 2,090,806,126.00 0.00 0.00 0.00 2,508,408,342.99 0.00 402,285,954.24 0.00 366,956,549.89 0.00 2,920,563,328.27 554,495,287.40 8,843,515,588.79 year Add: Change of 0.00 accounting policy Correcting of previous 0.00 errors Merger of entities under 0.00 common control Other 0.00 II.Balance at the beginning 2,090,806,126.00 0.00 0.00 0.00 2,508,408,342.99 0.00 402,285,954.24 0.00 366,956,549.89 0.00 2,920,563,328.27 554,495,287.40 8,843,515,588.79 of current year III.Changed in the current 0.00 0.00 0.00 0.00 1,661,406.77 0.00 -75,022,130.07 0.00 177,864,580.14 0.00 629,546,960.22 -123,455,724.40 610,595,092.66 year (1)Total comprehensive -75,022,130.07 1,509,922,398.70 200,301,288.72 1,635,201,557.35 income (II)Investment or decreasing of capital by 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 owners 1.Ordinary Shares investe 0.00 d by shareholders 2.Holders of other equity i 0.00 nstruments invested capital 3.Amount of shares paid and accounted as owners’ 0.00 equity 4.Other 0.00 103 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount in last year Owner’s equity Attributable to the Parent Company Items Other Equity instrument Less: Specia Commo Minor Other Total of owners’ Shares lized n risk shareholders’ Share Capital preferre Capital reserves Comprehensive Surplus reserves Retained profit equity Sustainabl Other in reserv provisio equity d stock Income e debt stock e n (III)Profit allotment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 177,864,580.14 0.00 -880,375,438.48 -323,757,013.12 -1,026,267,871.46 1.Providing of surplus 177,864,580.14 -177,864,580.14 0.00 reserves 2.Providing of common 0.00 risk provisions 3.Allotment to the owners -702,510,858.34 -323,757,013.12 -1,026,267,871.46 (or shareholders) 4.Other 0.00 (IV) Internal transferring 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 of owners’ equity 1. Capitalizing of capital reserves (or to capital 0.00 shares) 2. Capitalizing of surplus reserves (or to capital 0.00 shares) 3.Making up losses by 0.00 surplus reserves. 4.Change amount of defined benefit plans that carry forward Retained earnings 5.Other 0.00 (V). Special reserves 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1. Provided this year 0.00 2.Used this term 0.00 (VI)Other 1,661,406.77 1,661,406.77 104 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount in last year Owner’s equity Attributable to the Parent Company Items Other Equity instrument Less: Specia Commo Minor Other Total of owners’ Shares lized n risk shareholders’ Share Capital preferre Capital reserves Comprehensive Surplus reserves Retained profit equity Sustainabl Other in reserv provisio equity d stock Income e debt stock e n IV. Balance at the end of 2,090,806,126.00 0.00 0.00 0.00 2,510,069,749.76 0.00 327,263,824.17 0.00 544,821,130.03 0.00 3,550,110,288.49 431,039,563.00 9,454,110,681.45 this term Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 105 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 8.Statement of change in owner’s Equity of the Parent Company Amount in this period In RMB Amount in this period Other Equity instrument Items Other Less: Shares Specialize Total of owners’ Share Capital preferre Sustaina Capital reserves Comprehensive Surplus reserves Retained profit Other in stock d reserve equity d stock ble debt Income I.Balance at the end of last year 2,090,806,126.00 0.00 0.00 0.00 2,921,957,981.38 0.00 327,263,824.17 0.00 528,976,846.38 2,662,880,058.78 8,531,884,836.71 Add: Change of accounting policy 0.00 Correcting of previous errors 0.00 Other 0.00 II.Balance at the beginning of current 2,090,806,126.00 0.00 0.00 0.00 2,921,957,981.38 0.00 327,263,824.17 0.00 528,976,846.38 2,662,880,058.78 8,531,884,836.71 year III.Changed in the current year 0.00 0.00 0.00 0.00 26,705,215.55 0.00 -82,154,709.36 0.00 230,581,431.32 1,017,284,982.08 1,192,416,919.59 (I)Total comprehensive income -82,154,709.36 2,305,814,313.16 2,223,659,603.80 (II) Investment or decreasing of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 capital by owners 1Ordinary Shares invested by shareho 0.00 lders 2Holders of other equity instruments i 0.00 nvested capital 3.Amount of shares paid and 0.00 accounted as owners’equity 4.Other 0.00 (III)Profit allotment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 230,581,431.32 -1,288,529,331.08 -1,057,947,899.76 106 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 1.Providing of surplus reserves 230,581,431.32 -230,581,431.32 0.00 2.Allotment to the owners (or -1,057,947,899.76 -1,057,947,899.76 shareholders) 3.Other 0.00 (IV) Internal transferring of owners’ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 equity 1. Capitalizing of capital reserves (or 0.00 to capital shares) 2. Capitalizing of surplus reserves (or 0.00 to capital shares) 3.Making up losses by surplus 0.00 reserves. 4.Change amount of defined benefit plans that carry forward Retained earnings 5.Other 0.00 (V) Special reserves 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1. Provided this year 0.00 2.Used this term 0.00 (VI)Other 26,705,215.55 26,705,215.55 IV. Balance at the end of this term 2,090,806,126.00 0.00 0.00 0.00 2,948,663,196.93 0.00 245,109,114.81 0.00 759,558,277.70 3,680,165,040.86 9,724,301,756.30 Amount in last year In RMB Amount in last year Items Share Capital Other Equity instrument Capital reserves Less: Other Specia Surplus reserves Retained profit Total of owners’ Shares Comprehensive lized equity 107 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report preferred Sustaina Other stock ble debt I.Balance at the end of last year 2,090,806,126.00 0.00 0.00 0.00 3,359,791,693.12 0.00 402,285,954.24 0.00 351,112,266.24 1,764,609,695.85 7,968,605,735.45 Add: Change of accounting policy 0.00 Correcting of previous errors 0.00 Other 0.00 II.Balance at the beginning of current year 2,090,806,126.00 0.00 0.00 0.00 3,359,791,693.12 0.00 402,285,954.24 0.00 351,112,266.24 1,764,609,695.85 7,968,605,735.45 III.Changed in the current year 0.00 0.00 0.00 0.00 -437,833,711.74 0.00 -75,022,130.07 0.00 177,864,580.14 898,270,362.93 563,279,101.26 (I)Total comprehensive income -75,022,130.07 1,778,645,801.41 1,703,623,671.34 (II) Investment or decreasing of capital by owners 0.00 0.00 0.00 0.00 -437,833,711.74 0.00 0.00 0.00 0.00 0.00 -437,833,711.74 1.Ordinary Shares invested by shareholders 0.00 2Holders of other equity instruments invested capit 0.00 al 3.Amount of shares paid and accounted as 0.00 owners’equity 4.Other -437,833,711.74 -437,833,711.74 (III)Profit allotment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 177,864,580.14 -880,375,438.48 -702,510,858.34 1.Providing of surplus reserves 177,864,580.14 -177,864,580.14 0.00 2.Allotment to the owners (or shareholders) -702,510,858.34 -702,510,858.34 3.Other 0.00 (IV) Internal transferring of owners’ equity 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1. Capitalizing of capital reserves (or to capital 0.00 shares) 2. Capitalizing of surplus reserves (or to capital 0.00 shares) 3.Making up losses by surplus reserves. 0.00 108 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount in last year Other Equity instrument Less: Specia Other Items Shares lized Total of owners’ Share Capital preferred Sustaina Capital reserves Comprehensive Surplus reserves Retained profit Other in reserv equity stock ble debt Income stock e 4.Change amount of defined benefit plans that carry forward Retained earnings 5.Other 0.00 (V) Special reserves 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1. Provided this year 0.00 2.Used this term 0.00 (VI)Other 0.00 IV. Balance at the end of this term 2,090,806,126.00 0.00 0.00 0.00 2,921,957,981.38 0.00 327,263,824.17 0.00 528,976,846.38 2,662,880,058.78 8,531,884,836.71 Legal Representative:Zheng Renfa General Manager: Wang Chunhua Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 109 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report III. Company Profile (1)History 1.The Company was established in February 1993, which was originally named as Guangdong Fokai Expressway Co., Ltd. On June 30, 1993, it was renamed as Guangdong Provincial Expressway Development Co., Ltd. after reorganization pursuant to the approval of the Office of Joint Examination Group of Experimental Units of Share Holding System with YLSB (1993)No. 68 document. The share capital structure after reorganization is as follows: Composition of state-owned shares: The appraised net value of state-owned assets of Guangdong Jiujiang Bridge Co. and Guangfo Expressway Co., Ltd. as of January 31, 1993 confirmed by Guangdong State-owned Asset Management Dept., i.e., 418.2136 million yuan, was converted into 155.025 million shares. Guangdong Expressway Co. invested cash of 115 million yuan to subscribe for 35.9375 million shares. Other legal persons invested cash of 286.992 million yuan to subscribe for 89.685 million shares. Staff of the Company invested 87.008 million yuan to subscribe for 27.19 million shares. The total is 307.8375 million shares. 2 . Pursuant to the approval of Guangdong Economic System Reform Committee and Guangdong Securities Regulatory Commission with YTG (1996) No. 67 document, part of the shareholders of non-state-owned legal person shares transferred 20 million non-state-owned legal person shares to Malaysia Yibao Engineering Co., Ltd. in June 1996. 3. Pursuant to the approval of Securities Commission under the State Council with WF (1996) No. 24 approval document and that of Guangdong Economic System Reform Committee with YTG (1996) No. 68 document, the Company issued 135 million domestically listed foreign investment shares (B shares) to overseas investors at the price of HKD 3.54 (equivalent to 3.8 yuan) with the par value of each share being 1 yuan during June to July 1996. 4. Pursuant to the reply of the Ministry of Foreign Trade and Economic Cooperation of the People’ s Republic of China with (1996) WJMZYHZ No. 606 document, the Company was approved to be a foreign-invested joint stock company limited. 5.The Company distributed dividends and capitalized capital common reserve for the year 1996 in the following manner: The Company paid 1.7 bonus shares f or each 10 shares and capitalized capital common reserve on 3.3-for-10 basis. 6. Pursuant to the approval of China Securities Regulatory Committee (CSRC) with ZJFZ (1997) No. 486 and No. 487 document, the Company issued 100 million public shares (A shares) at the price of 5.41 yuan in term of “payable in full on application, pro-rate placing and subject to refund” with the par value of each share being 1 yuan in January 1998. 7.In accordance with the Resolutions of the 1999 Shareholders’ General Meeting of the Company and pursuant to the approval of Guangzhou Securities Regulatory Office under CSRC with GZZJH (2000) No. 99 and that of CSRC with ZJGSZ (2000) No. 98, the Company offered 3 Rights for every 10 shares of 764.256249 million shares at the price of 11 yuan per Right.73,822,250 ordinary shares were actually placed to all . 8. Pursuant to the reply of the General Office of the People’ s Government of Guangdong Province with YBH (2000) No. 574 document, the state-owned shares were transferred to Guangdong Communication Group Co., Ltd. (Group Co.) for holding and management without compensation. 9.Pursuant to the approval of Shenzhen Stock Exchange, 53.0205 million staff shares of the Company (132,722 shares held by directors, supervisors and senior executives are temporarily frozen) were listed on February 5, 2001. 10.In accordance with the resolutions of 2000 annual shareholders’ general meeting, the Company capitalized capital common reserve into 419,039,249 shares on 5-for-10 basis with the total share capital as of the end of 2000, i.e., 838,078,499 shares as base. The date of stock right registration was May 21, 2001. The ex-right date was May 110 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 22, 2001. 11 . On March 8, 2004,As approved by China Securities Regulatory Commission by document Zheng-Jian-Gong-Si-Zi [2003]No.3, the 45,000,000 non-negotiable foreign shares were placed in Shenzhen Stock 12. On December 21, 2005, the Company's plan for share holding structure reform was voted through at the shareholders' meeting concerning A shares. On January 26 2006, The Ministry of Commerce of PRC issued “The approval on share converting of Guangdong Provincial Expressway Development Co., Ltd.” to approve the share equity relocation and transformation. On October 9 2006, according to the “Circular about implementing of share equity relocation and relative trading”issued by Shenzhen Stock Exchange, the abbreviation ID of the Company’ s A shares was restored from “G-Expressway” “Expressway A”. 13. Upon the approval document of CSRC No.230-2016 Zheng Jian Xu ke-Approval of the Share-Issuing to Parties such as Guangdong Provincial Expressway Co., Ltd to Purchase Assets and Raise Matching Funds by Guangdong Provincial Expressway Development Co., Ltd, in June 2016 the company issued 33,355,263 shares and paid 803.50 million yuan to Guangdong Provincial Expressway Co., Ltd for purchasing the 25% stake of Guangdong Provincial Fokai Expressway Co., Ltd held by Guangdong Provincial Expressway Co., Ltd; and issued 466,325,020 shares to Guangdong Provincial Highway Construction Co., Ltd for purchasing the 100% stake of Guangzhou Guangzhu Traffic Investment Management Co., Ltd held by Guangdong Provincial Highway Construction Co., Ltd. On June 21, 2016, the company directionally issued 334,008,095 A-shares to Yadong Fuxing Yalian Investment Co.,Ltd, Tibet Yinyue Investment Management Co.,Ltd and GF Securities Co.,Ltd. The issuance of shares have been registered on July 7, 2016, the new shares will be listed on July 8, 2016. (2)Organization structure and the actual controller of the Company As of December 31, 2018 , Registration capital: 2,090,806,126 yuan , Legal representative : Zheng Renfa,Registration place:No.85, Baiyun Road, Guangzhou, Headquarters Office: 45-46/F, Litong Plaza, No.32, Zhujiang East Road, Zhujiang New City, Tihe Disrtict , Guangzhou , The company has set up: Investment Development Dept, Security Affairs Department, Management Department, Financial Management Department, Base construction Department, Audit and Supervise Department, Affairs Department, Personnel Department , Party Work Department, Law affairs Department , Project Office and Labour union etc. Guangdong Communication Group Co., Ltd. is the largest shareholder of the Company. legal representative: Deng Xiaohua. Date of establishment: June 23, 2000. As of December 31, 2018,Registered capital: 26.8 billion yuan. It is a solely state-owned limited company. Business scope:equity management, organization of asset reorganization and optimized allocation, raising funds by means including mortgage, transfer of property rights and joint stock system transformation, project investment, operation and management, traffic infrastructure construction, highway and railway project operation and relevant industries, technological development, application, consultation and services, highway and railway passenger and cargo transport, ship industry, relevant overseas businesses; The value-added communication business. (3)The company’s main business and share ,Holding company The company operated the construction of the highway construction, grading roads, bridges;Management fees and maintenance of roads, bridges, and car rescue, maintenance, cleaning, concurrently with the company's business s upporting motor transport, warehousing operations. The Company is mainly engaged in tolling and maintenance of Guangfo Expressway, Fokai Expressway, investm ent in technological industries and provision of relevant consultation while investing in Shenzhen Huiyan Express way Co., Ltd., Guangzhou Guanghui Expressway Co., Ltd.,Jingzhu Expressway Guangzhu Co., Ltd.,Guangdong J iangzhong Expressway Co., Ltd., Zhaoqing Yuezhao Expressway Co., Ltd.,Ganzhou Kangda Expressway , Ganzh ou Gankang Expressway Co., Ltd.,Guangdong Yueke Technology Micro Loan Co., Ltd.,Guangdong Guangle 111 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Expressway Co.,Ltd. and Guoyuan Securities Co., Ltd. (4)Scope of consolidated financial statements The company's 2018 annual consolidated subsidiaries of total 5 companies, one new business combination was Logout to the scope of consolidate financial statement in reason of being under the same control. Refer to financial statements XI(8),Change of consolidation scope and, financial statements XI(9), Equity in other entities for more details. (5)Approval of the financial statements reported The financial statements have been authorized for issuance by the Board of Directors of the Group on March 29,2019. IV. Basis for the preparation of financial statements 1.Preparation basis The company prepares the financial statements on the basis of a continuous operation, the actual transactions, “Accounting Standards for Enterprises – Basic Standards”, other accounting standards & related regulations. Furthermore, all the materials of financial statements of the company meet the relevant disclosure requirements of financial statements and notes on the “ Editing and Reporting Rules Regarding Information Disclosure for Companies Publicly Issuing Securities No. 15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission. 2.Continuation There will be no such events or situations in the 12 months from the end of the reporting period that will cause material doubts as to the continuation capability of the Company. V. Significant Accounting Policies and Accounting Estimates Whether the Company needs to comply with the disclosure requirements for specific industries No Specific accounting policies and accounting estimates are indicated as follows: Nil 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company comply with the requirements of corporate accounting standards. They truly and completely reflect the financial situations, operating results, equity changes and cash flow, and other relevant information of the company. 2.Fiscal Year The Company adopts the Gregorian calendar year commencing on January 1 and ending on December 31 as the fiscal year. 3.Operating cycle An operating cycle for the Company is 12 months, which is also the classification criteria for the liquidity of its assets and liabilities. 112 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 4.Standard currency for bookkeeping The Company takes RMB as the standard currency for bookkeeping. 5.Accountings for Business Combinations under the Same Control & Business Combinations not under the Same Control 1.Business Combinations under the Same Control The assets and liabilities acquired by the company in the business combination shall be measured as per the obtained book value of owner’s equity of the combined party in the consolidated financial statements. As for the balance between the carrying amount of the net assets obtained by the combining party & the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be adjusted. The direct costs for the business combination of the company, including the expenses for audit, assessment and legal services, shall be recorded into the profits & losses at the current period. The handling fees, commissions & other expenses for the issuance of equity securities for the business combination shall be credited against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall be offset. Where the accounting policies adopted by the combined parties are different from those adopted by the company, the company shall adjust them on the combining date according to the accounting policy it adopts, and shall, pursuant to the Accounting Standards for Enterprises, recognize them on the basis of such adjustments. 2. Business Combinations not under the Same Control The assets paid as the consideration for the business combination & the liabilities assumed on the acquisition date shall be measured in accordance with the fair value. The difference between the fair value & its carrying amount shall be recorded into the profits & losses at the current period. The company will distribute the combination costs on the acquisition date. The company shall recognize the positive balance between the combination costs & the fair value of the identifiable net assets it obtains from the acquire as Goodwill while it shall record the negative balance between the combination costs & the fair value of the identifiable net assets it obtains from the acquire into the profits & losses of the current period. As for the assets other than intangible assets acquired from the acquire in a business combination (not limited to the assets which have been recognized by the acquire), if the economic benefits brought by them are likely to flow into the enterprise and their fair values can be measured reliably, they shall be separately recognized and measured in light of their fair values. As for any intangible asset acquired in a combination, if its fair value can be measured reliably, it shall be separately recognized as an intangible asset and shall measured in light of its fair value. As for the liabilities other than contingent liabilities acquired from the acquire, if the performances of the relevant obligations are likely to result in any out-flow of economic benefits from the enterprise, and their fair values can be measured reliably, they shall be separately recognized and measured in light of their fair values. As for the contingent liabilities of the acquire obtained in a combination, if their fair values can be measured reliably, they shall be separately recognized as liabilities and shall be measured in light of their fair values. 113 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 6.Methods for Preparing the Consolidated Financial Statements The scope of the consolidated financial statements will be recognized on the basis of controlling. All the subsidiaries will be included into the consolidated financial statements. The accounting policies & accounting periods adopted by all the subsidiaries that have been included into the scope of the consolidated financial statements should be consistent with those adopted by the company. If the accounting policies & accounting periods adopted by the subsidiaries are different from those adopted by the company, the company shall make necessary adjustments according to the accounting policies & accounting periods it adopts when preparing the consolidated financial statements. After adjusting the long-term equity investments on its subsidiaries according to the equity method, the company shall prepare the consolidated financial statements based on the financial statements of the company & its subsidiaries, and other related documents. The influences of the internal transactions between the company & its subsidiaries, and its subsidiaries themselves on the consolidated balance sheet, consolidated profit statement, consolidated cash flow statement & consolidated statement of changes in owner’s equity will be counteracted at the preparation of the consolidated financial statements. The portion of a subsidiary’ s equity that is not attributable to the parent is treated as minority shareholders’ interest and presented as “minority interest” in the consolidated balance sheet within owners’ equity. The portion of net profits or losses of subsidiaries for the period attributable to minority interest is presented in the consolidated income statement below the “net profit” line item as “minority interest”. In the consolidated financial statements, when the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders’portion of the opening balance of owners’equity of the subsidiary, the excess amount should be still allocated against minority interest. In the report period, If the subsidiary is added through the business combination under the same control, the beginning balance of the consolidated balance sheet shall be adjusted. The incomes, expenses & profits of the subsidiary incurred from the beginning of the current period to the end of the reporting period shall be included into the consolidated profit statement. The cash flow from the beginning of the current period to the end of the reporting period shall be included into the consolidated cash flow statement. For purchase of minority interests held by the minority shareholders of a subsidiary, when preparing the consolidated financial statements, the difference between the long-term equity investment newly gained by buying minority interests and the portion of net assets consistently calculated from the acquisition date (or the consolidation date) pursuant to newly added shareholding percentage entitled by the subsidiary should be adjusted to the owners’ equity (the capital reserve). If the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. In the report period, If the company disposes its subsidiary, the incomes, expenses & profits incurred from the beginning of the subsidiary to the disposal date shall be included into the consolidated profit statement. The cash flow from the beginning of the subsidiary to the disposal date shall be included into the consolidated cash flow statement. 114 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 7.Joint venture arrangements classification and Co-operation accounting treatment ⑴A joint arrangement refers to an arrangement jointly controlled by two participants or above.,the joint venture arrangements include co-operation and joint ventures. (2)When the joint venture company for joint operations, confirm the following items and share common business interests related to: (1)Confirm individual assets and common assets held based on shareholdings; (2)Confirm individual liabilities and shared liabilities held based on shareholdings; (3)Confirm the income from the sales revenue of co-operate business output (4)Confirm the income from the sales of the co-operate business output based on shareholdings; (5)Confirm the individual expenditure and co-operate business cost based on shareholdings. ⑶ When a company is a joint ventures, joint venture investment will be recognized as long-term equity investments and long-term equity investments are accounted for in accordance with the method of the Notes to Financial State ments. 8.Recognition Standard of Cash & Cash Equivalents The company recognizes its cash in vault & the deposits that are ready for payment at any time as cash when preparing the cash flow statement.which are featured with short term (expire within 3 months since purchased), high liquidity, easy to convert to know cash, low in risk of value change, could be recognized as cash equivalents. Equity investment are not recognized as cash equivalents. 9.Foreign Currency Transaction (1)Foreign Currency Transaction For the company with non-functional currency business, the middle rate of the market exchange rate published by People’s Bank of China on the date of occurrence of business are recorded as the functional currency, and the balances of foreign currency shall be adjusted by the end of the month according to the middle rate of the market exchange rate published by People’s Bank of China at the end of period. The differences between the recording currency amount converted by the exchange rate at the end of period and the carrying currency amount are as “Finance Costs – Exchange Gains and Losses” and recorded into the current profits or losses. The exchange gains and losses related to borrowings on the fixed assets shall be made treatment according to the principles of borrowing costs capitalization. (2)Conversion of Foreign Financial statement If overseas subsidiaries, cooperative enterprises, joint ventures, branches of the company adopt the different functional recording currency and record the overseas business of the company into the financial statements through the consolidated statements and the accounting by the equity method, the overseas financial statements shall be translated as the recording functional currency. Before the translation, the company shall adjust the accounting period and policy of overseas business in order to make the consistent adjustment, and translate the overseas financial statements according to the financial statements of the preparation of corresponding currency after the accounting policy and period adjusted and as per the following methods: 1 For the assets and liabilities in the balance sheet, the shot exchange rate on the balance sheet date is adopted as the translation exchange rate. For the owner’ s equity, the shot exchange rate on the transaction date is adopted as the translation exchange rate, with the exception of “undistributed profits”. 2 The incomes and expenses in the income statement shall be translated at the spot exchange rate or the 115 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report approximate exchange rate on the transaction date. 3 The translation gap of financial statement of foreign currency shall be listed under the owner’s equity in the consolidated balance sheet in the preparation of the consolidated financial statements. 10.Financial tools 1. Categories of financial Tools The Company divides the financial assets into four categories: financial assets measured at fair value and their variations are recognized as current gain/loss, including trade financial assets or financial liabilities and recognized directly as financial assets measured at fair value and their variations are recognized as current gain/loss; Investment hold till expiration; loans and account receivable; saleable financial assets .The company divides the financial liabilities into two categories: financial liabilities measured at fair value and their variations are recognized as current gain/loss; other financial liabilities. 2. Recognition and measurement of financial tools (1) Financial assets and liabilities measured at fair value and their variations are recognized as current gain/loss The fair value (after deducting of announced but not distributed cash dividend or due but not obtained bond interests) is recognized as initial amount when obtained. Interests or cash dividends during the period of holding are recognized as investment gains. The fair value will be adjusted and accounted as current gain/loss. When disposed, the differences between fair value and initial amount are recognized as investment gains, and thus adjust the gain/loss of fair value. (2) Investment hold till expiration The fair value (after deducting of due but not obtained bond interests) plus the related trade expenses is recognized as initial amount when obtained. Interest gains will be calculated at amortizing of costs and actual interest rate (the face rate is adopted when the difference between the actual rate and face rate is minor) during the period of holding, and accounted as investment gains. Actual rate is recognized when obtained, and is not changed in the predictable holding period or applicable shorter period. When disposed, the difference between the obtained price and book value is accounted as investment gains. If the company sells or reclassifies large-amount due investments before the expired date (large amount refers to comparing with the amount before the selling or reclassifying the investments), the company will reclassify the rest of the investments as financial assets for sale, and in the current accounting period or within two complete accounting years, no financial assets will be classified as holding due assets, except for the following situations: the sale date or reclassification date is close to the expired date of the investment (such as three months before the expired), and the change of interest rate has no significant influence on the fair value of the investment; after all the initial principal is mostly recovered according to periodic payments or repay in advance regulated in the contract, the rest part will be sold or reclassified; the sale and reclassification is caused by the independent events which are uncontrollable and unexpected and will not happen any more. (3) Account receivable The receivable debts of selling goods or providing services, and the credits of other company hold by the 116 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report company not including the debt which has price in active market, including accounts receivable, notes receivable, prepaid accounts, other receivables, long-term receivables, etc. The contract or agreement price charging from purchaser should be taken as the initial confirmation amount; if it has the nature of financing, it should be confirmed according its current value. When retrieved or disposed of, the difference between the actual received amount and the book value is accounted as current gain/loss. (4) Saleable financial assets The fair value (after deducting of announced but not distributed cash dividend or due but not obtained bond interests) plus the related trade expenses is recognized as initial amount when obtained. Interest or cash dividend occurred during the period of holding is recognized as investment gains. Change of fair value is accounted as capital reserves (other capital reserves) at the end of term. When disposed, the difference between the obtained price and book value is accounted as investment gains. Meanwhile, the corresponding part of accumulated change of fair value accounted as owners ’ equity is transferred into investment gain/loss. (5) Other financial liabilities Other financial liabilities are recognized initially at the sum of fair value and related trade expenses. Successive measurement will be on the basis of amortized costs. 3. Recognition and measurement basis of financial asset transposition When financial asset transposition occurred, the recognition of this particular financial asset is terminated if almost all risks and rewards attached to the asset have been transferred to the acceptor. If retain all the risks and rewards of ownership of financial assets, the financial assets can be confirmed. When determine whether the transfer of financial assets meet the conditions of confirmation of the above financial assets, the principle of substance being more important than form should be adopted. The transfer of financial assets can be divided into overall transfer and part transfer of financial assets. If the transfer of financial assets meet the conditions of terminating confirmation, the following the difference of the two amounts will be included in the current profit and loss: (1) Book value of the financial asset to be transposed; (2) The sum of price received due to the transposition, and the accumulation of change in fair value originally accounted as owners’ equity (when the asset to be transposed is saleable financial asset). If part transfer of financial assets meet the conditions of terminating confirmation, the book value of the transferred financial assts, the difference between the confirmed part and the unconfirmed part (in this case, the service assets retained should be deemed as the part of unconfirmed financial assets), should be amortized in accordance with their relative fair value, and the difference between the following two amount should be included current profit and loss: ① Book value of the confirmed part; ②All fair values of financial assets and financial liabilities are recognized with reference to the price in the active market. 117 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report If the transfer of financial assets does not meet the conditions of terminating confirmation, the financial assets should be confirmed again, the prices received will recognized as financial liabilities. 4.The conditions to stopping the financial liabilities The obligation of financial liabilities are already cancelled which should be stopped confirming the financial liability or the part of it. Our company could stop confirming the currently financial liability and begin to confirm the newly financial liability if the loaner made an agreement that they would assume the new way of financial liability which replace the current one, and make sure the newly financial liability is totally different from the old one in contract with our company. Stop admitting the financial liability or a part of it, and at mean time we could admit the newly financial liability which is in new insertions of contract as the newly financial liability if the current financial liability has been revised. Stop admitting the balance of value of financial liability and consideration (Including the roll-out of non-cash assets or financial liabilities) which could be consider as current profits and losses. Stop and continue admitting a part of value, and distribute the value of financial liability, if our company repurchased the part of financial liability. And the balance of value of which distributed to the part of stopping admitting and paid (Including the roll-out of non-cash assets or financial liabilities) which could be consider as current profits and losses. 5.Recognition basis of financial assets and financial liabilities All fair values of financial assets and financial liabilities are recognized with reference to the price in the active market(Using valuation technique, etc). 6. Impairment provision for financial assets ①Impairment provision for financial assets for sale: If the fair value of financial assets for sale greatly drops at the end of the period, or after considering all the relevant factors and expecting decrease trend is non-temporary, the impairment should be confirmed, and the accumulative loss formed by the decrease of fair value of owner’ equity originally included should be transferred out altogether and confirmed as impairment loss. ②Holding the impairment provision of expired investments: The measurement of holding the impairment provision of expired investment will be according to the method of the measurement of impairment provision for receivables. 11.Accounts Receivable (1)Accounts receivable with material specific amount and specific provisioned bad debt preparation. The accounts receivable whose single amount is over 1 million Judgment criteria or amount standard of material specific amount yuan & accounts for over 10% of the accounts receivable or amount criterial: amount. Conduct the devalue test separately. Set up the bad debt reserve Provision method with material specific amount and provision of according to the shortfall of the present value of expected future specific bad debt preparation: cash flows against its carrying amount and record it into the profits & losses at the current period. (2)The accounts receivable of bad debt provisions made by credit risk Group 118 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report The basis for determining the combination of Credit risk:The accounts receivable whose single amount is over 1 million yuan & accounts for over 10% of the accounts receivable amount. Conduct the devalue test separately. Set up the bad debt reserve according to the shortfall of the present value of expected future cash flows against its carrying amount and record it into the profits & losses at the current period. In the Groups, adopting aging analysis method to withdraw bad debt provision √ Applicable □ Not applicable Aging Rate for receivables(%) Rate for other receivables(%) Within 1 year(Included 1 year) 0.00% 0.00% 1-2 years 10.00% 10.00% 2-3 years 30.00% 30.00% 3-4 years 50.00% 50.00% 4-5 years 90.00% 90.00% Over 5 years 100.00% 100.00% When the provision for bad debts is made according to the aging analysis method, the provision shall be the balance of the accounts receivable at the end of the period deducted the account current of the subsidiaries within the scope of the consolidated statement. Accounts on percentage basis in group: □ applicable √not applicable Accounts on other basis in group: √ Applicable □ Not applicable Separately carry out the impairment test, prepare the bad debt according to the expected future cash flow present value below the balance of its book value, and take account of the current profit and loss. (3)Account receivable with non-material specific amount but specific bad debt preparation The accounts receivable under 5 years of age which are not Reason of individually withdrawing bad debt provision significant without any business connections any more. Conduct the devalue test separately. Set up the bad debt reserve according to the shortfall of the present value of expected Witharawal method for boad debt provision future cash flows against its carrying amount and record it into the profits & losses at the current period. 12.Inventory Whether the Company needs to comply with the disclosure requirements for specific industrie No 1.Investories class: The company ’ s stocks can be classified as: raw materials, inventory goods, low-value consumables & other materials, etc. 2. Valuation method of inventory issued :The company calculates the prices of its inventories according to the weighted averages method or the first-in first-out method. 3. Recognition Basis of Inventories ’ Net Realizable Values and Counting & Drawing Method of Obsolete 119 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Inventory Reserves: After taking stock at the end of the period, 4. Inventory System: Adopts the Perpetual Inventory System 13. Divided as assets held for sale In the presence of the following conditions are satisfied when non-current assets or a part of the company is classi fied as held for sale: (1) The components should be immediately sold under the current condition only according to the usual terms of the parts sold. (2) The enterprise has made resolution for the disposal of the components, the approval of shareholders’ meeting or relevant authority agency if the shareholder’s approval is requested by the rules. (3) The enterprise has signed the irrevocable transfer agreement with the transferee. (4) The transfer shall be completed within one year. For the non-current assets held for sale (excluding the financial assets and the deferred income tax assets), the less amount after the book value and fair value respectively minus the disposal costs shall be presented as Divided as assets held for sale assets. If the amount of the fair value minus the disposal costs is less than that of the original book value, the assets impairment loss shall be recognized. 14. Long-term equity investment (1) The Classification of Long-term Equity Investments The long-term equity investments of the company should include the investments in the subsidiaries and the investments in cooperative enterprises and joint ventures. (2) The Recognition of Investment Cost 1 For the business combination under common control and the combining party paying in cash, transferring non-monetary assets, bearing debts or issuing the equity securities as the consideration, the initial investment cost shall be recognized according to the shares of the book value in the consolidated financial statement of the ultimate controlling party that acquired by the combined party on the combination date. The capital reserves shall be adjusted for the difference between the initial investment cost of long-term equity investment and the book value of the paid cash, the transferred non-monetary assets and the borne debts. The retained earnings shall be adjusted if the capital reserves are insufficient to offset. For the long-term equity investment after the business combination under common control realized step-by-step through multiple transactions, the shares of the book value of the owner’ equity of the combined party shall be as the initial investment cost in the individual financial statements and the consolidated financial statements as per the shareholding proportion. The capital reserves shall be adjusted for the balance between the sums of the book value of the equity investment of the combined party held on the combination date and the new investment cost increased on the combination date minus the initial investment cost of long-term equity investment. The retained earnings shall be adjusted if the capital reserves are insufficient to offset. ② For the business combination under non-common control, the initial investment cost shall be recognized according to the fair value of the merger consideration paid on the purchase date. For the long-term equity investment after the business combination under non-common control realized step-by-step through multiple transactions, the relevant accounting treatment should be respectively conducted for the individual financial statement and the consolidated financial statements: 1) In the individual financial statements, the sum of the book 120 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report value of equity investment from the purchased party held before the purchase date and the new investment cost at the purchase date shall be as the initial investment cost of the investment. Other comprehensive incomes related to the equity of the purchased party held before the purchase date shall be transferred into the current investment incomes in the disposal of the investment. 2) In the consolidated financial statements, the equity of the purchased party held before the purchase date should be measured again according to the fair value of the equity on the purchase date, and the gap of the fair value and the book value should be recorded into the current investment incomes. Other comprehensive incomes related to the equity of the purchased party held before the purchase date shall be transferred into the current investment incomes on the purchase date. ③With the exception of the business combination: The long-term equity investment acquired by the payment in cash should be as the investment cost as per the actual purchase payment. The investment costs include fees, taxes and other necessary expenses directly related to the achieved long-term equity investment. The long-term equity investment acquired by the issuance of equity securities should be as the investment cost as per the fair value of the issued equity securities. The long-term equity investment acquired by the non-monetary assets exchange (the exchange with the commercial substance) should be as the investment cost as per the fair value of the investment and the payable taxes. For the long-term equity investment acquired by the debt reorganization, the creditors shall recognize the fair value of the enjoyed shares as the investment of the debtors. (3) Subsequent Measurement and Recognition Method of Profit and Loss The cost method shall be adopted to account the long-term equity investment controlled by the invested party and the equity method shall be adopted to account the long-term equity investment with joint control or significant influence. (4) Recognition Criteria for the Invested Party with Joint Control or Significant Influence The joint control on the economic activity appointed as per the contract shall exist when the major finance and the operating decision related to the economic activity are agreed by the invested party sharing the control right, which shall be regarded as the joint control on the invested party implemented by other parties. The decision power to participate in the finance and operating decision on the enterprise, but without control or joint control with other parties to formulate these policies, shall be regarded as the significant influence on the invested party implemented by the investment enterprise. (5) Impairment Test Method and Withdrawing Method For the impairment test method and the withdrawing method of the long-term equity investment, please refer to “ Long-term Assets Impairment in Article 11 of Important Accounting Policies and Accounting Estimates in Notes 5 of Financial Statements”. 15. Entrusted Loans The entrusted loans shall be made bookkeeping according to the actually entrusted loan amount. The receivable interests shall be withdrawn according to the interest rate stated in the entrusted loans. For the impairment test method and the impairment provision withdrawing method of the entrusted loans, please refer to “Long-term Assets Impairment of Important Accounting Policies and Accounting Estimates in Notes 5 of Financial Statements”. 121 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 16..Investment Real Estates The measurement mode of investment property The measurement by the cost method Depreciation or amortization method The term “Investment real estates” refers to the real estates held for generating rentand/orcapital appreciation, including the right to use any land which has already been rented, the right to use any land which is held and prepared for transfer after appreciation & the right to use any building which has already been rented. The company shall make a measurement to the investment real estate through the cost pattern.The company shall adopt the same depreciation policy as its fixed assets for the investment real estates measured by the cost pattern-buildings for renting & the same amortization policy as its intangible assets for the right to use any land for renting. For the impairment test method and the impairment provision withdrawing method of the .Investment Real Estates, please refer to “ Long-term Assets Impairment of Important Accounting Policies and Accounting Estimates in Notes 5 of Financial Statements”. 17.Fixed assets (1)Confirmation conditions of fixed assets Fixed assets refer to physical assets owned for purpose of production, service providing, leasing or management, and operation with service life of more than one year. Fixed assets are recognized when all of the following conditions are satisfied:Financial benefits attached to the fixed asset is possibly inflowing to the Company;(2) The cost of the fixed asset can be reliable measured. (2)Depreciation method Depreciation Expected useful Annual depreciation Type Residual rate(%) method life(Year) rate(%) Highway and bridge: Including:Guangfo Expressway Working flow basis 28 years 0% Working flow basis Fokai Expressway-Xiebian to Sanbao Working flow basis 40 years 0% Working flow basis Section Fokai Expressway-Sanbao to Shuikou Working flow basis 30 years 0% Working flow basis Section Jingzhu Expressway Guangzhu Section Working flow basis 30 years 0% Working flow basis House Building The straight-line 20-30 years 3%—10% 3%-4.85% method The straight-line Machine Equipment 10 years 3%—10% 9%-9.7% method Transportation Equipment The straight-line 5-8 years 3%—10% 11.25%-19.4% method 122 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Depreciation Expected useful Annual depreciation Type Residual rate(%) method life(Year) rate(%) Electric Equipment and other The straight-line 5-15 years 3%—10% 6 %-19.4% method Provision for depreciation of highways and bridges is made with work amount method. Estimated net residual value rate is zero. Estimated useful life is determined according to the period of peration right in respect of charge collection. The concrete calculation method is as follows: The amount of provision for depreciation per standard vehicle traffic volume is to be calculated based on the estimated total standard vehicle traffic volume within expected useful life of highways and bridges and the original value or book value of highways and Bridges. Then provision for depreciation is made according to the actual standard vehicle traffic volume in each fiscal period. The company regularly rechecks the estimate total standard vehicle traffic volume with in the remaining operation period of highways and bridges. When there is big difference between actual standard vehicle traffic volume and estimated standard vehicle traffic volume, the Company will re-estimate future total standard vehicle traffic volume and adjust the provision for depreciation per standard vehicle traffic volume to ensure that the book value of relevant highways and bridges will be completely amortized within useful life. The company adopts the straight line method for the depreciation of fixed assets except highways & bridges, and recognizes the depreciation rate according to the fixed asset group, expected useful life & the expected net salvage value rate. (3) Test Method for Fixed Asset Impairment and Counting & Drawing Method for Fixed Asset Impairment Reserves For the impairment test method and the impairment provision withdrawing method of the Fixed assets, please refer to “Long-term Assets Impairment in Article 11 of Important Accounting Policies and Accounting Estimates in Notes 5 of Financial Statements”. 18.Construction-in process Whether the Company needs to comply with the disclosure requirements for specific industrie No 1. Calculation of Construction-in-process:The constructions in process are classified & accounted according to the established projects. 2. Standard & Time Point for Carrying Constructions in Process Forward to Fixed Assets All the expenditures that bring the construction in process to the expected condition for use shall be the credit value of the fixed asset. If the fixed asset construction in process has already reached the expected condition for use, but hasn’t been made the final account; it shall be carried forward to a fixed asset according to its estimated value based on the budget, cost or actual cost of the construction starting from the date when it reaches the expected condition for use, and the fixed asset shall be depreciated according to the company ’ s depreciation policy for fixed assets. After the final account has been made, the original provisional estimated value shall be adjusted according to the actual cost, but the depreciation which has originally been counted & drawn shall not be adjusted. 3.Test Method for Construction-in-Process Impairment and Counting & Drawing Method For the impairment test method and the impairment provision withdrawing method of the Construction-in process , 123 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report please refer to “Long-term Assets Impairment in Article 11 of Important Accounting Policies and Accounting Estimates in Notes 5 of Financial Statements”. 19.Loan expenses 1. Recognition principles for capitalizing of loan expenses Borrowing expenses occurred to the Company that can be accounted as purchasing or production of asset satisfying the conditions of capitalizing, are capitalized and accounted as cost of related asset. Other borrowing expenses are recognized as expenses according to the occurred amount, and accounted into gain/loss of current term. The assets meeting capital conditions refer to the fixed assets, investment real estates and inventories which are constructed or produced in a long time to reach the predicted use or sale state. When a loan expense satisfies all of the following conditions, it is capitalized: 1. Expenditures on assets have taken place, asset expenditures include the assets used to construct or produce the assets which meet the capitalization conditions, and expend by cash or transferring non-cash assets or bearing interest debt; 2. Loan costs have taken place; 3. The construction or production activities to make assets to reach the intended use or sale of state have begun. 2. Duration of capitalization of Loan costs The capitalization period refers to the period from starting capitalization of loan costs to the stop of capitalization, the period of the break of capitalization of Loan costs is not included. When the construction or production meets the intended use or sale of state of capitalization conditions, the Loan costs should stop capitalization. When the construction or production meets the conditions of capitalization and can be used individually, the capitalization of the loan costs of the assets should be stopped. Where each part of a asset under acquisition and construction or production is completed separately and is ready for use or sale during the continuing construction of other parts, but it can not be used or sold until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased when the asset is completed entirely. 3.Capitalization Suspension Period Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. If the interruption is a necessary step for making the qualified asset under acquisition and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during such period shall be recorded into the profits & losses at the current period, till the acquisition and construction or production of the asset restarts. 4. Calculation of the amount of capitalization of Loan costs Interest expense due to specialized Loan and its auxiliary expenses shall be capitalized before the asset which satisfies the capitalizing conditions reaches its useable or saleable status. Interest amount of common Loan to be capitalized equals to accumulated asset expense less weighted average of specialized loan part of asset expense multiplies capitalizing rate of common Loan occupied. Capitalizing rate is determined according to weighted average interest of common Loan. If the Loan has discount or premium, the discount or premium amount should be determined according to actual interests in each accounting period. The interest amount should be adjusted in each period. 124 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 20.Intangible assets (1) Pricing method, useful life and impairment test 1. The valuation methods of intangible assets (1)The initial measurement is conducted according to the actual cost when the intangible assets are acquired The cost of the purchased intangible assets includes its buying price, relevant tax and the othe expenses that are directly attributed to this assets meeting its predetermined objective and other expenses that occur. The buying price of intangible assets is over the deferred payment under normal credit conditions, which has the nature of financing materially, the cost of intangible assets is determined on the basis of the present value of its buying price. We acquire the mortgaged intangible assets from debtors through debt restructuring and determine the entry value on the basis of the fair value of the intangible assets,we have the balance between the book value of debt restructuring and the fair value of intangible assets used for mortgage charged to the current profit and loss. The entry value of the non-monetary assets exchanged into by the non-monetary assets are determined on the basis of the fair value of the assets exchanged out if the exchange of non-monetary assets has commercial nature and the assets exchanged into or out can be reliably measured, unless there is authentic evidence indicating that the fair value of assets exchanged into are more reliable; if the non-monetary assets that cannot meet the above prerequisite use the book value of the assets exchanged out and relevant taxes payable as the cost of the non-monetary assets, the profit and loss is not confirmed. The entry value of the intangible assets acquired by the absorption merger under the control of one company is determined by the book value of the merged party; the entry value of the intangible assets acquired by the absorption merger that is not under the control of one company is determined by the fair value. The cost of the intangible assets developed internally includes the materials consumed in developing the assets, cost of service, registration fees, other patent used in developing, amortization of concession and interest charges meeting the capitalization conditions and other direct costs that occur before the intangible assets meeting the predetermined objective. (2)Subsequent measurement The Company analyses and makes judgment of its serviceable life when acquiring the intangible assets. The intangible assets that have limited serviceable life are amortized by the straight-line method during the period when the assets can bring about economic interests; The intangible assets are deemed as uncertain serviceable life and are not amortized if it is impossible to expect the period when the assets could bring about economic interests. At the end of period, the Group shall check the service life and amortization method of intangible assets with finite service life, if there is any change, it shall be regarded as a change of the accounting estimates. Besides, the Group shall check the service life of intangible assets without certain service life, if there is any evidence showing that the period of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with the amortization policies for intangible assets with finite service life. (2) Provision for the depreciation of value of the intangible assets For the impairment test method and the impairment provision withdrawing method of the Intangible assets, please refer to “Long-term Assets Impairment of Important Accounting Policies and Accounting Estimates in Notes 5 of Financial Statements”. 125 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 21.Impairment of Long-term assets (1) Scope The assets Impairment main includes long-term equity investment, investment property (the investment property measured by the fair value excluded), fixed assets, projects under construction, engineering material, intangible assets (the capitalized development expenditure included), asset group, combination of asset group, business reputation, etc.. (2) Recognition of Possible Impairment Assets The company makes judgment of the assets if there exists the possible impairment at the balance sheet date. The intangible assets with indefinite goodwill and service life due to the combination of enterprise, shall be conducted the impairment test every year regardless of the impairment. The impairment may occurs for the assets if there is the following status: ① The market price of assets fall sharply in the current period, and the decline is obviously beyond that estimated due to the passage of time or normal use. ② The significant changes in the economy, technology or legal environment operated by the company and the assets market in the current or the near future adversely affect the company. ③ The improvement of the market interest rates or other market investment returns in the current period, influence the company to calculate assets estimating the discount rate of the present value of future cash flow and result in the sharp drop of the recoverable amount of the assets. ④ There is evidence that shows the assets have become obsolete or the entities have been damaged. ⑤ The assets have been or will be idle, terminated the use or planned to dispose in advance. ⑥ The evidence in the internal report of the company shows that the economic performance of assets has been less than or lower than the expected, such as the net cash flow created by assets or the achieved operating profit (or loss) is far below (or above) the estimated amount. ⑦ Other evidences indicate the impairment of assets may have occurred. (3) Measurement of the Recoverable Amount of the Assets The recoverable amount shall be estimated if there exists the impairment for the assets. The recoverable amount should be recognized according to the higher one between the net amount of the fair value minus the disposal costs and the present value of the cash flow of assets expected in the future. (4) Determination of Asset Impairment Loss The measurement results of the recoverable amount show that the book value of assets shall be reduced to the recoverable amount and the reduced amount shall be recognized as the impairment loss of assets and recorded into the current profits and losses, and the impairment provisions of the relevant assets are withdrawn if the recoverable amount of the assets is less than the book value. After the recognition of the assets impairment loss, the depreciation or amortization costs of the impairment assets should be made adjustment accordingly in the future period in order to make the assets to systematically amortize the book value of the assets after adjusted within the remaining service life (the estimated residual value deducted). The impairment loss of assets after recognized shouldn’t be reversed in the future accounting period. (5) Recognition and Impairment Treatment of Assets Group If there is the impairment for one asset, the company shall estimate the recoverable amount based on the individual asset. If it is difficult for the company to estimate the recoverable amount of the individual asset, the recoverable amount of asset group shall be recognized on the basis of the asset group which the asset is belong to. The recognition of the asset group should be made on the basis of the main cash inflow generated by the assets 126 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report group that if is independent to the cash inflow of other assets or assets group. The corresponding impairment loss shall be recognized if the recoverable amount of the assets group or the assets group combination is less the book value (the book value of the assets group or the assets group combination should include the amortization quota relevant to corporate assets and goodwill for the assets group or the assets group combination amortized by the corporate assets and the goodwill). The book value of goodwill in the amortized assets group or assets group combination shall be firstly offset for the impairment losses, and the book value of other assets shall be offset in proportion according to the proportion of the book value of other assets in the assets group or the assets group combination, with the exception of the goodwill. (6) The Goodwill Impairment The company has conducted the impairment test at least every year for the goodwill established by the business combination. The book value of the goodwill generated by the combination shall be amortized into the related asset group from the purchase date. If difficult to amortize into the relevant asset group, the book value shall be amortized into the relevant asset group combination. The relevant asset group or asset group combination refers to that benefitting from the synergistic effect of the business combination and is not more than the report portion recognized by the company. When the relevant asset group or the asset group combination including the goodwill are conducted the impairment test, the impairment test should be firstly conducted for the asset group without the goodwill or the asset group combination, the recoverable amount shall be calculated and the corresponding impairment loss shall be recognized by comparison with the relevant book value if there exists the impairment for the asset group relevant to the goodwill or the asset group combination. Then the impairment test should be conducted for the asset group with the goodwill or the asset group combination, the impairment loss of the goodwill shall be recognized and made the treatment according to the provisions of the asset group impairment stated in the notes if the recoverable amount of the relevant asset group or the asset group combination is less than the book value by comparison of the book value of these relevant asset group or the asset group combination (including the book value of the goodwill amortized) with the recoverable amount. 22.Long-term amortizable expenses Long-term prepaid expenses refer to that enterprises have already spent, and amortization periods of all expenses are more than one year (excluding 1 year), they should be amortized in the regulated years. 23.Remuneration (1)Scope of employees' salary Remuneration refers to all kinds of rewards or compensation that the Company gives to get in return for the services its employees provide or employment termination. It includes short-term compensation, post-employment benefits, demission benefits and other long-term employee benefits.Enterprises to provide employees spouse, child welfare, dependents, survivors and other beneficiaries of deceased employees, etc., also belong to payroll. During the company's accounting staff to provide services, the actual wages, bonuses, allowances and subsidies, w elfare, medical insurance, work injury insurance and maternity insurance and other social insurance, housing fund confirmed, labor union funds, employee education funds and as a liability profit or loss or costs related assets. If t he debt is expected to provide services after the end of the annual reporting period in which an employee can not b e fully paid within twelve months, and the financial impact is material, the amount will be discounted liabilities m easured after. 127 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2) Accounting methods for post-employment benefits Post-employment benefits refer to the compensation and benefits that the Company gives to get in return for employees ’ services for their retirement or employment termination, excluding short-term compensation and demission benefits. It falls into two categories, defined contribution plans and defined benefit plans. ① The defined contribution plan: the company shall no longer bear the further obligation to pay severance benefit plans after the company deposits the fixed costs to the independent funds. The basic pension insurance and the unemployment insurance shall be recognized as the liability according to the payable amount accounted by the defined contribution plans and recorded onto the current profits and losses or the relevant asset costs during the accounting period of the services provided by the staffs. ② The defined benefit plan: the severance benefit plans with the exception of the defined contribution plans. (3) Accounting Treatment Method of Demission Welfare The Company offers compensation to terminate employment with its employees before it expires or encourage them to accept lay-off. Such compensation is demission benefits and counted in current profit and loss. The employee compensation liabilities generated by the demission welfare shall be recognized on the early date and recorded into the current profits and losses: (1) when the company can’ withdraw the demission welfare provided due to the rundown suggestion or the termination of labor relations plans. (2) when the enterprise recognizes the costs or the expenses related to the reorganization of demission welfare payment. The economic compensation before the official retirement date shall be belong to the demission welfare when the implementation of the internal retirement plan for workers. During the period from the termination of service date to the normal retirement date, the paid internal retirement payroll and social insurance charges shall be once recorded into the current profits and losses. The economic compensation after the official retirement date (such as the normal retirement pension) should be handled according to the welfares after the demission. 24.Estimated liabilities The company should recognize the related obligation as a provision for liability when the obligation meets the following conditions: (1) That obligation is a present obligation of the enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be required to settle the obligation; (3) A reliable estimate can be made of the amount of the obligation. On the balance sheet date, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the Contingencies to measure the estimated liabilities in accordance with the best estimate of the necessary expenses for the performance of the current obligation. When all or some of the expenses necessary for the liquidation of an estimated liabilities of an enterprise is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. Besides, the amount recognized for the reimbursement should not exceed the book value of the estimated liabilities 25.Bond payable When the company is issuing bonds, the total price issued should be included in the “Payable bonds” subject. The difference between bond issuance total amount and the total amount of bond face value should be worked as bond premium or discount and be amortized within the bond period according to actual interest rate and 128 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report vertical line method, and be treated according to borrowing costs described below. 26.Other Comprehensive Incomes Other comprehensive incomes refer to the profits and losses unrecognized in the current profits and losses according to other provisions of accounting standards. There are two reports: (1) Other comprehensive incomes that unable to be reclassified into the profits and losses in the future accounting period, mainly including the changes caused by the net liabilities and the net assets of the defined benefit plan that re-measured and the shares of other comprehensive incomes that accounted and unable to be reclassified into the profits and losses for the invested party in the future accounting period according to the equity method. (2) Other comprehensive incomes that reclassified into the profits and losses in the future accounting period when the requirements are met, the shares of other comprehensive incomes that accounted and reclassified into the profits and losses for the invested party in the future accounting period according to the equity method when the requirements are met, the profits or losses caused by the fair value changes of the sellable financial assets, the profits or losses generated by the sellable financial assets reclassified for the held-to-maturity investment, the effective hedging portion of the profits and losses issued by the cash flow hedging instruments, and the translation differences of foreign financial statements. 27. Revenues Whether the Company needs to comply with the disclosure requirements for specific industries No The company’s incomes mainly include the toll service revenues and the services provision. (1) The recognition principle of the toll service revenues is that the toll revenues refer to the charges of operating the toll roads and shall be recognized in the actual charge. (2) The recognition principle of the services provision is as follows: The labor services started and completed within the same fiscal year shall be recognized as the revenues when the labor services finished. If the labor services started and completed in the different fiscal year and under the reliable estimation of the provided services transaction results, the company shall recognize the relevant service incomes according to the completion percentage method at the balance sheet date. The results of the transaction can be estimated reliably when the following requirements are all met: (1) total revenues and total labor costs can be measured reliably. (2) the economic benefits relevant to the transaction will flow into the enterprise. (3) the competition degree of the labor services can be reliably determined. 28. Government Grants (1)Government Grants Government grants means that the Company obtains monetary or non monetary assets free of charge from the government, excluding the capital invested by the government as an owner. The company recognizes the government grants when the company can meet the conditions of government grants and be able to receive the government grants. Thereinto: (1) If the government grant is a monetary asset, it shall be measured according to the amount received or receivable; If the government grant is a non-monetary asset, it shall be measured at fair value, and if the fair value 129 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report cannot be obtained reliably, it shall be measured according to the nominal amount. ⑵ The government grants pertinent to assets are used to write down the carrying value of the underlying assets or are recognized as deferred income. If the government grants pertinent to assets are recognized as deferred gains, it shall be included in the profits and losses in a reasonable and systematic manner within the useful life of the underlying asset. The Government grants, measured in nominal amounts, are directly included in current profits and losses. The government grants pertinent to income that are used to compensate the relevant costs or losses of the subsequent period of the enterprise are recognized as deferred income and are credited to the current profit or loss or are written down to offset the costs for the period when the relevant expenses are recognized; those government grants used for compensating the related expenses or losses incurred shall be directly included in the current profits and losses. ⑶ Government grants related to the daily activities of the enterprise are included in other income or are written down to offset costs in accordance with the economic business nature. Government grants that are not related to the day-to-day activities of the enterprise are included in non-operating income and expenditure. Where the recognized government grant needs to be refunded, then the accounting treatment shall be carried out in the period that it needs to be refunded according to the following stipulations: (1) Where it was written down the book value of the underlying assets at the time of initial recognition, then the book value of the assets shall be adjusted; (2) Where there is a related deferred income, it shall write-down the book balance of related deferred income and the excess part shall be included in the current profit and loss; (3) Where belongs to other cases, that shall be directly included in the current profits and losses. 29.Deferred income tax assets and deferred income tax liabilities The company is likely to determine the deferred income tax assets produced from deductible temporary differences with the limit of offsetting the taxable income of temporary difference. The Company confirms the temporary differences of the taxable that is not paid in the current and prior periods as the deferred income tax liabilities. However, the goodwill, the transactions formed from non-business merger and those will affect either accounting profit or the temporary differences of the taxable income when the transactions occur are not included in the deferred income tax liabilities. 30.Accounting Methods of Income tax The company’s income tax is accounted in Balance sheet liability approach. The company recognizes the sum of current income tax and deferred tax as the income tax expenses(or income) in the income statement on the basis of calculating and determining the income tax of the current period(namely the current taxes payable) and the deferred tax (the deferred tax expenses or income ), but excluding the effects of the business combination and the income taxes related to the transactions or events directly recorded in the owner’s rights and interests. 31.Change of main accounting policies and estimations ⑴Change of accounting policies √ Applicable □Not applicable 130 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report On June 26,2018, The Ministry of Finance issued the Notice on Revising and Issuing the Format of General Enterprise Financial Statements for 2018 (Caikuai [2018] No. 15), which adjusted the format of enterprise financial statements accordingly and merged the original "notes receivable" and "accounts receivable" line items into "notes receivable and accounts receivable"; The items in the original "interest receivable", "dividend receivable" and "other receivables" lines are merged into "other receivables"; The items in the original "fixed assets" and "fixed assets liquidation" lines are merged into "fixed assets"; The items in the original "engineering materials" and "construction in progress" lines are merged into "construction in progress"; The items in the original "notes payable" and "accounts payable" lines are merged into "notes payable and accounts payable"; The items in the original "interest payable", "dividend payable" and "other payables" lines are merged into "other payables"; The items in the original "long-term payables" and "special payables" lines are merged into "long-term payables"; In the income statement, the detailed items of "management expenses" and "research and development expenses" are broken down under the item of "management expenses"; The detailed items of "interest expense" and "interest income" are broken down under "financial expense" in the income statement. The Company adopts retrospective adjustment method for this accounting policy change, and retroactively adjusts the items reported in 2017 financial statements. The details are as follows: 2017.12.31/ Year 2017 Before adjustment After adjustment Increase/decrease Notes receivable and account 92,642,625.45 92,642,625.45 receivable Notes receivable Account receivable 92,642,625.45 -92,642,625.45 Construction in process 356,062,655.95 357,612,211.95 1,549,556.00 Engineering material 1,549,556.00 -1,549,556.00 Notes payable and account payable 266,934,026.99 266,934,026.99 Notes payable Account payable 266,934,026.99 -266,934,026.99 Interest payable 8,494,355.93 -8,494,355.93 Dividend payable 26,840,792.20 -26,840,792.20 Other account payable 86,663,237.94 121,998,386.07 35,335,148.13 Adminisstrative expenses 189,585,575.97 179,811,709.59 -9,773,866.38 R & D Costs 9,773,866.38 9,773,866.38 ⑵Change of accounting estimations □ Applicable √ Not applicable VI. Taxation 1. Major category of taxes and tax rates Tax category Tax basis Tax rate Toll income, Rent income and Labour VAT 3%、5%、6%、10%、11%、16%、17% income City maintenance and construction tax The actual payment of turnover tax 7%、5% Enterprise income tax Taxable income 25% 131 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Tax category Tax basis Tax rate .Education surcharges The actual payment of turnover tax 3% Local Education surcharges The actual payment of turnover tax 2% 2.Preferential tax Nil VII. Notes to the major items of consolidated financial statement 1.Monetary Capital In RMB Items Amount in year-end Balance Year-beginning Cash 53,211.49 66,065.04 Bank deposit 2,123,807,010.07 2,362,279,050.70 Other 664,774.76 697,584.68 Total 2,124,524,996.32 2,363,042,700.42 Other note The balance of restricted bank deposits at the end of the period was 1,221,200.00 yuan, which was the land reclamation fund deposited into the fund custody account for the reconstruction and expansion project of sanbao to shuikou section of Fokai Expressway. 2.Notes receivable and Account receivable In RMB Items Amount in year-end Balance Year-beginning Account receivable 91,076,995.07 92,642,625.45 Total 91,076,995.07 92,642,625.45 132 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2. Account receivable 1.Classification account receivables. In RMB Amount in year-end Balance Year-beginning Category Book Balance Bad debt provision Book Balance Bad debt provision Amount Proportion(%) Amount Proportion Book value Amount Proportion Amount Proportion Book value (%) (%) (%) Account receivable with single major amount and 45,159,424.41 48.95% 45,159,424.41 65,760,470.23 70.64% 65,760,470.23 withdrawal bad debt provision for single item Account receivable withdrawal bad debt 47,094,450.65 51.05% 1,176,879.99 2.50% 45,917,570.66 27,331,295.37 29.36% 449,140.15 1.64% 26,882,155.22 provision by group of credit risk characteristics Total 92,253,875.06 100.00% 1,176,879.99 1.28% 91,076,995.07 93,091,765.60 100.00% 449,140.15 0.48% 92,642,625.45 133 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Receivable accounts with large amount individually and bad debt provisions were provided √ Applicable □Not applicable In RMB Amount in year-end Receivable accounts(Unit) Bad debt Receivable accounts Proportion Reason provision Guangdong Union Electronic Services It is expected to be fully 45,159,424.41 Co., Ltd. recovered after a single test Total 45,159,424.41 -- -- Account receivable on which bad debt provisions are provided on age basis in the group: √ Applicable □Not applicable In RMB Balance in year-end Aging Receivable accounts Bad debt provision Withdrawal proportion Subitem within 1 year Subtotal within 1 year 41,182,465.65 0.00% 1-2 years 3,463,964.90 346,396.49 10.00% 2-3 years 2,109,716.10 632,914.83 30.00% 3-4 years 278,304.00 139,152.00 50.00% 4-5 years 15,833.33 14,250.00 90.00% Over 5 years 44,166.67 44,166.67 100.00% Total 47,094,450.65 1,176,879.99 2.50% Notes of the basis of recognizing the group: In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Not applicable In the groups, accounts receivable adopting other methods to accrue bad debt provision: Nil Accounts receivable with individually insignificant amount and individual provision for bad debts: Nil (2)Accrual period, recovery or reversal of bad debts situation The current amount of provision for bad debts is 727,739.84 yuan ; recovery or payback for bad debts Amount is 0.00 yuan. Where the current bad debts back or recover significant amounts: Nil 134 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3)The current accounts receivable write-offs situation Nil (4)The ending balance of other receivables owed by the imputation of the top five parties Name Amount Aging Proportion(%) Bad debt provision Guangdong Union Electronic Services Co., Ltd. 45,159,424.41 Within 1 year 48.96 - Guangdong Humen Bridge Co., Ltd. 12,579,159.31 Within 1 year 13.64 - Shandong Boan Intelligent Technology Co., Ltd 11,885,923.95 Within 2 years 12.88 230,236.00 Guangdong Jingzhu Expressway Guangzhu North 5,280,850.02 Within 1 year 5.72 - Section Co., Ltd. Gansu Ziguang Intelligent Transportation & 1,901,000.00 Within 1 year 2.06 - Control Technology Co., Ltd. Total 76,806,357.69 -- 83.26 230,236.00 (5)Account receivable which terminate the recognition owning to the transfer of the financial assets Nil (6)The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Nil Other note: 3. Prepayments (1)Age analysis In RMB Balance in year-end Balance Year-beginning Age Amount Proportion(%) Amount Proportion(%) Within 1 year 1,708,205.40 89.30% 4,238,442.26 95.20% 1-2 years 8,721.49 0.20% 2-3 years 35,000.00 0.79% Over 3 years 204,738.00 10.70% 169,738.00 3.81% Total 1,912,943.40 -- 4,451,901.75 -- Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time: Nil (2) Top 5 of the closing balance of the prepayment collected according to the prepayment target Name Amount Time Proportion(%) Guangdong Litong Real estate Investment Co., Ltd. 735,092.38 Within 1 year 38.43 135 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report CPIC 594,467.44 Within 1 year 31.08 Guangzhou Maritime Court 169,738.00 Over 5 years 8.87 Zhaoqing Yuezhao Highway Co., Ltd. 144,702.50 Within 1 year 7.56 Dongguan Yongyao Photoelectricity Technology 93,000.00 Within 1 year 4.86 Co., Ltd. Total 1,737,000.32 90.80 Other note: 4.Other accounts receivable In RMB Items Balance in year-end Balance Year-beginning Dividend receivable 1,205,472.90 Other receivable 15,281,783.12 15,415,512.07 Total 16,487,256.02 15,415,512.07 (1)Dividend receivable 1)Dividend receivable In RMB Items Balance in year-end Balance Year-beginning Guangdong Radio and Television Networks 1,205,472.90 investment No.1 Limited partnership enterprise Total 1,205,472.90 (2)Significant dividend receivable aged over 1 year Nil 136 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2).Other accounts receivable (1) Other accounts receivable disclosed by category In RMB Balance in year-end Balance Year-beginning Category Book Balance Bad debt provision Book Balance Bad debt provision Amount Proportion Amount Proportion( Book value Amount Proportion( Amount Proportion( Book value (%) %) %) %) Other Account receivable with single major amount and 51,535,736.09 77.11% 51,535,736.09 100.00% 53,351,565.01 75.72% 53,351,565.01 100.00% withdrawal bad debt provision for single item Other Account receivable withdrawal bad debt provision 15,298,012.11 22.89% 16,228.99 0.11% 15,281,783.12 17,110,594.66 24.28% 1,695,082.59 9.91% 15,415,512.07 by group of credit risk characteristics Total 66,833,748.20 100.00% 51,551,965.08 77.13% 15,281,783.12 70,462,159.67 100.00% 55,046,647.60 78.12% 15,415,512.07 137 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report - Other receivable accounts with large amount and were provided had debt provisions individually at end of period. √ Applicable □Not applicable In RMB Balance in year-end Other receivable(Unit) Other receivable Bad debt provision Proportion Reason The parent company once paid 33,683,774.79 yuan into Kunlun Securities Co., Ltd, Guangdong Expressway technology investment Co., Ltd once paid 18,000,000.00 yuan into Kunlun Securities Co., Ltd. Qinghai Province Xining City’s intermediate people’s court made a adjudication under law declared that Kunlun Securities Co., Ltd went bankrupt and repaid debt in November 11, 2006. On March 2007, The Company and Kunlun Securities Co.,Ltd. 47,528,056.18 47,528,056.18 100.00% Guangdong Expressway Technology Investment Co., Ltd had switched the money that paid into Kunlun Securities Co., Ltd to other account receivable, and follow the careful principle to doubtful debts provision. The 710,349.92 yuan Credit was Recovered in 2008, The 977,527.77 yuan credit was recovered in 2011, The 652,012.00 yuan Credit was recovered in 2014, The 1,815,828.92 yuan Credit was recovered in 2018, and the provision for had debt is deducted. Guangdong Expressway Technology investment Co., Ltd .should charge Beijing Gelin Enze Organic Fertilizer Co., Ltd.for 12,220,079.91 yuan. Eight millions of it was entrust loan, three million was temporary borrowing 12,400.00 yuan is the commission loan interest, the rest of it was advance money for another, Beijing Gelin Enze Organic Beijing Gelin Enze Fertilizer Co., Ltd’s operating status was had and had already ceased producing, 4,007,679.91 4,007,679.91 100.00% Organic Fertilizer Co., Ltd. Accordingly, the controlling subsidiary of the company Guangdong Expressway Investment Co., Ltd. accounted full provision for Bad debt 12,220,079.91 yuan provision. The company in 2014 recovered arrears of 8,000,000.00 yuan, rushed back to the provision for bad debts and write off uncollected interest entrust ed loans according to The settlement agreement of 212,400.00 yuan. 51,535,736.09 51,535,736.09 -- -- 138 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Other receivable accounts in Group on which bad debt provisions were provided on age analyze basis: √Applicable □Not applicable In RMB Amount in year-end Aging Other receivable Bad debt provision Withdrawal proportion Subitem within 1 year Subtotal within 1 year 6,988,839.31 1-2 years 10.00% 2-3 years 30.00% Over 3 years 32,457.98 16,228.99 50.00% 3-4 years 90.00% 4-5 years 100.00% Over 5 years 7,021,297.29 16,228.99 0.23% Total Notes of the basis of recognizing the group: In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Not applicable In the groups, other accounts receivable adopting other methods to accrue bad debt provision: √ Applicable □ Not applicable Amount in year-end Name Other account Bad debt provision Withdrawal Reason receivable proportion(%) Shandong Boan Intelligent Technology Co., 1,725,155.40 Guarantees fund Ltd Guangdong Litong Real estate Investment 1,505,864.00 Deposit Co., Ltd Guangdong Guanghui Expressway Co., Ltd 1,462,587.90 Guarantees fund, deposit Guangdong Expressway Co., Ltd. 630,254.38 Administration expenses, Guarantees fund Zhaoqing Yuezhao Highway Co., Ltd. 429,558.65 Guarantees fund, deposit Guangdong Xinyue Traffic Investment 415,442.60 Guarantees fund Co.,Ltd. Beijing Shibang Weilishi Property 393,331.00 Guarantees fund, Management Services Co., Ltd. deposit Guangdong Qinglian Highway Development 313,000.00 Guarantees fund Co., Ltd. Guangdong Guangzhu West Line Expressway 185,366.60 Guarantees fund Co., Ltd. 139 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount in year-end Name Other account Bad debt provision Withdrawal Reason receivable proportion(%) Guangshen Zhu Expressway Co., Ltd. 185,014.40 Guarantees fund Guangdong Hongkong Zhuhai Macao 149,947.50 Guarantees fund BridgeShuttle Bus Co., ltd. Beijing Gongke Feida Transport Engineering 111,335.20 Guarantees fund Development Co., Ltd. Guangdong Feida Transportation Engineering 90,920.75 Guarantees fund Development Co., Ltd. Guangdong Highway Construction Co., Ltd. 123,283.25 Guarantees fund Guangdong Road & Bridge Construction 73,773.60 Guarantees fund Development Co., Ltd. Chengdu Shuguang Fibre-optical Network 59,758.09 Guarantees fund Co., ltd. Guangdong Boda Expressway Co., Ltd. 51,808.80 Guarantees fund Guangzhou Chengcheng Auto Leasing 30,000.00 Deposit Service Co., ltd. Guangdong Jiangzhong Expressway Co., Ltd. 28,120.00 Guarantees fund Guangzhou Tuzhiling Computer Technology 25,438.80 Guarantees fund Co., Ltd. Guangzhou Express Transportation 22,094.40 Guarantees fund Construction Co., Ltd. Guangzhou Longfeng Auto Leasing Co., Ltd. 20,000.00 Guarantees fund Guangzhou Beihuan Expressway Co., Ltd. 16,590.40 Guarantees fund Guangzhou Huanan Road & Bridge Co., Ltd. 16,000.00 Guarantees fund Guangzhou Saitisi Electromechanical 15,875.00 Guarantees fund Installation Engineering Co., Ltd. Shanxi Hantang Computer Co., Ltd. 14,250.00 Guarantees fund Guangzhou Daguang Expressway Co., Ltd. 12,749.60 Guarantees fund Guangdong Shenshan Expressway East 12,000.00 Guarantees fund Section Co., Ltd. Guangdong Gaoda Property Development 11,748.00 Guarantees fund Co.,ltd. Guangzhou Dingrong Information 10,950.00 Guarantees fund Technology Co., Ltd. Guangzhou Suihua Expressway Co., Ltd. 10,400.00 Guarantees fund Zhongshan Global Environmental 10,000.00 Guarantees fund Engineering Co., Ltd. Guangdong Zhonglin Electrical Installation 8,820.00 Guarantees fund Engineering Co., Ltd. 140 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount in year-end Name Other account Bad debt provision Withdrawal Reason receivable proportion(%) Guangdong Maozhan Expressway Co., Ltd. 8,747.20 Guarantees fund Guangdong Humen Bridge Co., Ltd. 8,606.50 Guarantees fund Guangdong Shanfen Expressway Co., Ltd. 8,028.80 Guarantees fund Guangdong Baomao Expressway Co., Ltd. 7,633.60 Guarantees fund Guangdong Yuedong Expressway Industry 7,367.20 Guarantees fund Development Co., Ltd. Guangdong Guangle Expressway Co., Ltd. 7,248.00 Guarantees fund Foshan Guangsan Expressway Co., Ltd. 6,492.00 Guarantees fund Guangdong Jingzhu Expressway Guangzhu 6,064.00 Guarantees fund North section Co., Ltd. Guangdong Yangmao Expressway Co., Ltd. 6,004.80 Guarantees fund Huishen(Yantian)Expressway Huizhou Co., 5,600.00 Guarantees fund Ltd. Guangdong Litong Technology Investment 5,273.00 Guarantees fund Co., Ltd. Guangdong Maoming Nanda Electric Power 5,000.00 Deposit Construction Co., ltd. Guangdong Zhaoyang Expressway Co., Ltd. 4,304.00 Guarantees fund Guangdong Guangshao Expressway Co., Ltd. 3,762.70 Guarantees fund Guangdong Yueyun Traffic Co., Ltd. 3,032.00 Guarantees fund Hongkong Zhuhai Macao Bridge Zhuhai 3,000.00 Guarantees fund Connecting Line Management Center Jiangmen Jianghe Expressway Co., Ltd. 2,539.20 Guarantees fund Guangzhou Guangcong Expressway Co., Ltd. 2,027.20 Guarantees fund Foshan Nanhai Jiasheng Drinking Water 1,800.00 Deposit Chain Shanxi Sihe Traffic Engineering Co., Ltd. 1,600.00 Guarantees fund Beijing Zhonghe Tianxia Management 1,000.00 Guarantees fund Consultation Co., Ltd. Guangdong Weishi Highway Engineering 146.30 Guarantees fund Co., Ltd. Total 8,276,714.82 (2)Accrual period, recovery or reversal of bad debts situation The current amount of provision for bad debts is 0.00 141 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report yuan ; recovery or payback for bad debts Amount is 1,960,695.26 yuan. Where the current bad debts back or recover significant amounts In RMB Name Amount Way Reason Basis Kunlun Securities Co., Received bank Liquidation group It is not expected to recover the full 1,815,828.92 Ltd. deposit allocation provision for bad debts Total 1,815,828.92 -- (3)The actual write-off other accounts receivable In RMB Items Amount The actual write-off other accounts receivable 1,533,987.26 Including significant other receivable:: In RMB Writing-off Name Nature Amount Reason Related transaction procedure Heshan Traffic Real estate It is not expected to Other 1,470,000.00 Board approval No Development Co.,Ltd. recover Total -- 1,470,000.00 -- -- -- Note: (4) Other accounts receivable classified by the nature of accounts In RMB Nature Closing book balance Opening book balance Securities trading settlement funds balance 47,528,056.18 49,343,885.10 Guarantee deposit 7,813,222.94 5,973,582.34 Current account of Gelin enze 4,007,679.91 4,007,679.91 Pretty cash 3,800,100.00 3,950,100.00 Advertising and service fee 924,266.65 2,187,578.36 Other 2,760,422.52 4,999,333.96 Total 66,833,748.20 70,462,159.67 (5) Top 5 of the closing balance of the other accounts receivable colleted according to the arrears party In RMB Proportion of the total year end Closing balance of Name Nature Closing balance Aging balance of the bad debt provision accounts receivable(%) Kunlun Securities Securities trading set 47,528,056.18 Over 5 years 71.11% 47,528,056.18 142 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Co.,Ltd tlement funds Beijing Gelin Enze Current account 4,007,679.91 Over 5 years 6.00% 4,007,679.91 Shandong Boan Intelligent Retention Money 1,725,155.40 Within 1 year 2.58% Technology Co., Ltd. Guangdong Litong Real Estates Deposit 1,505,864.00 1-2 years 2.25% Investment Co., Ltd. Guangdong Guanghui Within 4 year and Deposit 1,478,904.68 2.21% Expressway Co., Over 5 years Ltd. Total -- 56,245,660.17 -- 84.15% 51,535,736.09 (6) Accounts receivable involved with government subsidies Nil (7) Other account receivable which terminate the recognition owning to the transfer of the financial assets Nil (8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable Nil Other note: 5.Inventory Whether the Company needs to comply with the disclosure requirements for specific industries No (1)Inventory types In RMB Year-end balance Year-beginning balance Items Provision for bad Provision for bad Book Balance Book value Book Balance Book value debts debts Raw material 81,017.91 81,017.91 Total 81,017.91 81,017.91 Whether the company is required to comply with the "Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 4 - listed companies engaged in seed industry, planting business" disclosure requirements No The company is required to comply with the "Shenzhen Stock Exchange Industry Information Disclosure Guidelines No.11 - listed companies engaged in Jewelry industry " disclosure requirements 143 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report No (2)Inventory falling price reserves Nil (3)Description of The closing balance of inventories contain the amount of borrowing costs capitalized Nil (4) Completed unsettled assets formed from the construction contact at the period-end Nil 6.Non-current asset due within 1 year In RMB Items Year-end balance Year-beginning balance Advance business tax 51,745.32 55,669.14 Total 51,745.32 55,669.14 Other note: 7.Other current assets In RMB Items Year-end balance Year-beginning balance Input tax to be deducted 76,576.08 Total 76,576.08 Other note: 8. Available-for-sale financial assets (1) List of available-for-sale financial assets In RMB Amount in year-end Balance Year-beginning Items Bad debt Bad debt Book balance Book value Book balance Book value provision provision Available-for-sale equity 1,705,811,594.53 37,020,000.00 1,668,791,594.53 1,788,150,824.93 36,793,200.00 1,751,357,624.93 Instruments Measured by fair value 870,443,292.80 870,443,292.80 952,782,523.20 952,782,523.20 Measured by cost 835,368,301.73 37,020,000.00 798,348,301.73 835,368,301.73 36,793,200.00 798,575,101.73 Total 1,705,811,594.53 37,020,000.00 1,668,791,594.53 1,788,150,824.93 36,793,200.00 1,751,357,624.93 (2) Available-for-sale financial assets measured by fair value at the period-end In RMB 144 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Available-for-sale Available-for-sale Debt Type equity Total instruments instruments Cost of the equity instruments/amortized 517,560,876.80 517,560,876.80 cost of the liabilities instruments Fair value 870,443,292.80 870,443,292.80 Changed amount of the fair value accumulatively 352,882,416.00 352,882,416.00 included in other comprehensive income As at the end of the period, the company holds shares 235,254,944 shares of China Everbright Bank According to the closing price of December 31, 2018 of 3.70 yuan, the final calculation of fair value was 870,443,292.80 yuan. 145 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3) Available-for-sale financial assets measured by cost at the period-end In RMB Book balance Impairment provision Shareholdin Cash bonus of g proportion Investee the reporting Period-begin Period-begin among the Increase Increase Decrease Period -end period investees Huaxia Securities Co., Ltd. 5,400,000.00 5,400,000.00 5,400,000.00 5,400,000.00 0.27% (Note 1) Huazheng Assets Management 1,620,000.00 1,620,000.00 1,393,200.00 226,800.00 1,620,000.00 0.54% Co. Ltd.(Note 2) Guangdong Guangle 748,348,301.73 748,348,301.73 9.00% Expressway Co., Ltd. Guangdong Radio and Television Networks investment 50,000,000.00 50,000,000.00 3.11% 1,205,472.90 No.1 Limited partnership enterprise Kunlun Securities Co., Ltd. 30,000,000.00 30,000,000.00 30,000,000.00 30,000,000.00 5.74% (Note 3) Total 835,368,301.73 835,368,301.73 36,793,200.00 226,800.00 37,020,000.00 -- 1,205,472.90 Note 1: The owner's equity of Huaxia Securities Co., Ltd. was negative and it entered liquidation procedure in December 2005. The Company made full provision for impairment in respect of this long-term equity investment of RMB 5.4 million. Note 2: According to De Wei Ping Gu Zi 2005 No. 88 Appraisal Report issued by Beijing Dewei Appraisal Co., Ltd. As the June 30, 2005, the amount of net assets of Huazheng Asset Management Co., Ltd. in book was 279.132 million yuan and the appraised value was - 2299.5486 million yuan ,On October 14, 2005, Jianyin CITIC Asset Management Co., Ltd. issued the Letter of Soliciting Opinions on Equity Assignment to the Company. Jianyin CITIC Asset Management Co., Ltd. was willing to pay the price of not more than 42 million yuanto acquire 100% equity of Huazheng Asset Management Co., Ltd. and solicited the Company's opinions. The Company replied on December 5, 2005, abandoning the preemptive right under the same conditions. The Company made provision of 1.3932 million yuan for impairment in respect of this long-term equity investment of 1.62 million yuan. During the reporting period,The company judged that the possibility of recovery of the investment was very small and made a provision of 226,800 yuan for impairment. Note 3.The owner's equity of Kunlun Securities Co., Ltd. was negative and it entered liquidation procedure in October 2005. A wholly owned subsidiary of Guangdong Expressway Technology Investment Co., Ltd. Will invest Kunlun Securities Co., Ltd.'s full provision for impairment of 30 million yuan. 146 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (4) Changes of the impairment of the available-for-sale financial assets during the reporting period In RMB Available-for-sale Available-for-sale Type Total Equity instruments Debt instruments Balance of the withdrawn 36,793,200.00 36,793,200.00 impairment at the period-begin Current period withdrawal 226,800.00 226,800.00 Balance of the withdrawn 37,020,000.00 37,020,000.00 impairment at the period-end ⑸Relevant description of the end of the fair value of the equity instruments at the end of a serious decline in fair value or non temporary decline but not related to impairment provision Nil 147 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 9. Long-term equity investment In RMB Increase/decrease Investment Withdraw Closing Additi Negat Adjustment of Cash bonus or balance of Investees Opening balance profit and loss al of Closing balance onal ive other Changes of profits impairment recognized impairme Other invest invest comprehensive other equity announced to provision under the equity nt ment ment income issue method provision I. Joint venture Guangdong Guanghui 949,906,833.96 290,709,616.82 26,710,620.00 274,805,847.20 992,521,223.58 Expressway Co., Ltd. Zhaoqing Yuezhao Highway 291,906,117.18 58,355,080.40 43,088,859.48 307,172,338.10 Co., Ltd. Subtotal 1,241,812,951.14 349,064,697.22 26,710,620.00 317,894,706.68 1,299,693,561.68 2. Affiliated Company Shenzhen Huiyan Expressway 196,197,198.21 34,356,558.66 230,553,756.87 Guangdong Jiangzhong Expressway 173,502,304.11 11,806,234.72 9,983,895.07 175,324,643.76 Co.,. Ltd. Ganzhou Kangda Expressway 208,768,922.86 32,216,095.66 21,000,000.00 219,985,018.52 Gan Ganzhou Gankang Expressway 204,404,703.35 5,591,207.36 209,995,910.71 Guangdong Yueke Technology Petty 215,548,332.90 15,134,350.84 10,989,125.47 219,693,558.27 Loan Co., Ltd. Guoyuan Securities Co., Ltd. 807,040,587.43 15,703,921.74 -20,400,286.56 -5,404.45 11,940,297.90 790,398,520.26 Subtotal 1,805,462,048.86 114,808,368.98 -20,400,286.56 -5,404.45 53,913,318.44 1,845,951,408.39 Total 3,047,275,000.00 463,873,066.20 -20,400,286.56 26,705,215.55 371,808,025.12 3,145,644,970.07 Other note 148 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 10. Investment property (1) Investment property adopted the cost measurement mode √ Applicable □Not applicable In RMB Items Houses and buildings Land use right Construction in progress Total I.Original value 1.Opening balance 12,664,698.25 12,664,698.25 2.Increased amount of 2,971,831.10 2,971,831.10 the period (1)Outsourcing (2)Inventory, Fixed assets and Construction 2,971,831.10 2,971,831.10 project into (3)Enterprise consolidation 3.Decreased amount of the period (1)Disposal (2)Other Out 4.Closing balance 12,664,698.25 2,971,831.10 15,636,529.35 II.Accumulated depreciation accumulated amortization 1.Opening balance 9,908,940.57 9,908,940.57 2.Increased amount of 464,213.40 1,684,367.84 2,148,581.24 the period (1)Withdrawal or 464,213.40 36,784.68 500,998.08 amortization (2)Fixed assets 1,647,583.16 1,647,583.16 reclassification transfer 3.Decreased amount of the period (1)Disposal (2)Other Out 4.Closing balance 10,373,153.97 1,684,367.84 12,057,521.81 III. Impairment provision 1.Opening balance 2.Increased amount of the period (1)Withdrawal 149 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Houses and buildings Land use right Construction in progress Total 3.Decreased amount of the period (1)Disposal (2)Other Out 4.Closing balance IV. Book value 1.Closing book value 2,291,544.28 1,287,463.26 3,579,007.54 2.Opening book 2,755,757.68 2,755,757.68 (2) Investment property adopted fair value measurement mode □Applicable√ Not applicable (3) Details of investment property failed to accomplish certification of property In RMB Items Book balue Reason Transportation and other ancillary Transportation and other ancillary facilities 1,587,844.98 facilities, Not accreditation Other note 150 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 11. Fixed assets In RMB Items Year-end balance Year-beginning balance Fixed assets 7,600,046,319.91 8,505,434,890.71 Total 7,600,046,319.91 8,505,434,890.71 (1) List of fixed assets In RMB Jingzhu Electricity Guangfo House and Machinery Transportation Items Fokai Expressway Expressway equipment and Total Expressway buildings equipment equipment Guangzhu section other I. Original price 1.Opening balance 1,460,270,190.66 8,947,295,870.80 5,130,574,408.53 351,864,147.46 126,486,080.83 60,529,297.78 640,530,500.31 16,717,550,496.37 2.Increased amount of 44,402,479.10 -3,779,939.72 1,333,386.45 26,318,552.25 68,274,478.08 the period (1)Purchase 53,235,440.68 -3,779,939.72 1,333,386.45 15,622,813.44 66,411,700.85 (2)Transfer of project -8,832,961.58 10,695,738.81 1,862,777.23 under construction (3)Increased of Enterprise consolidation 3.Decreased amount of the 2,971,831.10 332,304,199.42 9,266,189.87 7,500.00 13,117,212.16 7,425,369.21 365,092,301.76 period (1)Disposal or scrap 332,304,199.42 3,524,279.83 7,500.00 13,117,212.16 13,167,279.25 362,120,470.66 (2)Other Out 2,971,831.10 5,741,910.04 -5,741,910.04 2,971,831.10 4.Closing balance 1,460,270,190.66 8,988,726,518.80 4,798,270,209.11 342,597,957.59 122,698,641.11 48,745,472.07 659,423,683.35 16,420,732,672.69 II. Accumulated depreciation 1.Opening balance 1,460,270,190.66 3,440,540,410.91 2,553,720,215.76 224,291,495.10 60,384,283.80 48,027,809.99 424,881,199.44 8,212,115,605.66 151 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Jingzhu Electricity Guangfo House and Machinery Transportation Items Fokai Expressway Expressway equipment and Total Expressway buildings equipment equipment Guangzhu section other 2.Increased amount of 501,266,009.29 243,518,482.36 13,782,643.27 10,770,659.92 2,703,051.23 35,336,751.07 807,377,597.14 the period (1)Withdrawal 501,266,009.29 243,518,482.36 13,782,643.27 10,770,659.92 2,703,051.23 35,336,751.07 807,377,597.14 3.Decreased amount of the 1,647,583.16 171,593,287.96 5,740,973.99 7,200.00 12,311,357.21 7,506,447.70 198,806,850.02 period (1)Disposal or scrap 171,593,287.96 1,264,757.51 7,200.00 12,311,357.21 11,982,664.18 197,159,266.86 1,647,583.16 4,476,216.48 -4,476,216.48 1,647,583.16 4.Closing balance 1,460,270,190.66 3,940,158,837.04 2,625,645,410.16 232,333,164.38 71,147,743.72 38,419,504.01 452,711,502.81 8,820,686,352.78 II. Accumulated depreciation 1.Opening balance 2.Increased amount of the period (1)Withdrawal 3.Decreased amount of the period (1)Disposal or scrap 4.Closing balance IV. Book value 1.Closing book value 5,048,567,681.76 2,172,624,798.95 110,264,793.21 51,550,897.39 10,325,968.06 206,712,180.54 7,600,046,319.91 2.Opening book 5,506,755,459.89 2,576,854,192.77 127,572,652.36 66,101,797.03 12,501,487.79 215,649,300.87 8,505,434,890.71 ⑵Temporarily idle fixed assets Nil 152 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report ⑶Fixed assets through financial leasing Nil ⑷Tenancy of fixed assets through operating lease Nil ⑸Details of fixed assets failed to accomplish certification of property In RMB Items Book value Reason Transportation and other ancillary House and buildings 83,230,578.60 facilities, Not accreditation Other note (6)Liquidation of fixed assets Nil 153 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 12. Project under construction In RMB Items Year-end balance Year-beginning balance Project under 1,087,923,869.63 356,062,655.95 construction Engineering material 1,549,556.00 1,549,556.00 Total 1,089,473,425.63 357,612,211.95 (1)Project under construction In RMB Year-end balance Year-beginning balance Items Book balance Provision for Book value Book balance Provision Book value devaluation for devaluation Sanbao To Shuikou Expansion 1,052,834,193.16 1,052,834,193.16 347,299,458.95 347,299,458.95 project Xiebian To Sanbao Expansion project Xiebian To Sanbao Overhaul project Bridge deck pavement project of 1,382,928.49 1,382,928.49 155,000.00 155,000.00 hailong Bridge Minzhong Service area 18,210,698.73 18,210,698.73 reconstruction project Urban toll station project 5,008,642.53 5,008,642.53 Odd project 10,487,406.72 10,487,406.72 8,608,197.00 8,608,197.00 Total 1,087,923,869.63 1,087,923,869.63 356,062,655.95 356,062,655.95 154 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2) Changes of significant construction in progress In RMB Including: Capitaliz Source Capitaliz ation of of Opening Transferred to Other Project capitalization of Name of project Budget Increase End balance Proportion % ation of interest balance fixed assets decrease process Interest this fundin interest period rate (%) g Sanbao To Shuikou 3,426,206,700.00 347,299,458.95 705,534,734.21 1,052,834,193.16 43.74% 43.74% 44,224,352.01 38,289,580.04 4.25% Other Expansion project Xiebian To Sanbao 4,002,409,100.00 -8,837,172.44 -8,837,172.44 100.00% 100.00% Expansion project Xiebian To Sanbao 548,586,600.00 4,210.86 4,210.86 100.00% 100.00% Overhaul project Bridge deck pavement project 42,927,400.00 155,000.00 1,227,928.49 1,382,928.49 3.22% 3.22% Other of hailong Bridge Minzhong Service area reconstruction 35,500,000.00 18,210,698.73 18,210,698.73 51.30% 51.30% Other project Urban toll station 9,382,500.00 5,008,642.53 5,008,642.53 53.38% 53.38% Other project Odd project 8,608,197.00 12,574,948.53 10,695,738.81 10,487,406.72 Other Total 8,065,012,300.00 356,062,655.95 733,723,990.91 1,862,777.23 1,087,923,869.63 -- -- 44,224,352.01 38,289,580.04 -- 155 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3)Provision for impairment of construction projects in the current period Nil (4)Engineering material In RMB Balance in year-end Balance Year-beginning Items Book balance Provision for Book value Book balance Provision for Book value devaluation devaluation Signpost 1,549,556.00 1,549,556.00 1,549,556.00 1,549,556.00 Total 1,549,556.00 1,549,556.00 1,549,556.00 1,549,556.00 Other note: 13. Intangible assets (1) List of intangible assets In RMB Items Land use right Patent right Non-patent right Software Total I. Original price 1.Opening balance 1,311,658.00 27,358,986.21 28,670,644.21 2.Increased amount of the period 1,260,147.36 1,260,147.36 (1) Purchase 1,260,147.36 1,260,147.36 (2)Internal Development (3)Increased of Enterprise Combination 3.Decreased amount of the period (1)Disposal 4.Closing balance 1,311,658.00 28,619,133.57 29,930,791.57 II.Accumulated amortization 1.Opening balance 1,311,658.00 20,262,551.04 21,574,209.04 2.Increased amount of the period 2,617,562.05 2,617,562.05 (1) Withdrawal 2,617,562.05 2,617,562.05 3.Decreased amount of the period (1)Disposal 4.Closing balance 1,311,658.00 22,880,113.09 24,191,771.09 III. Impairment provision 1.Opening balance 156 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Land use right Patent right Non-patent right Software Total 2.Increased amount of the period (1) Withdrawal 3.Decreased amount of the period (1)Disposal 4.Closing balance IV. Book value 1.Closing book value 5,739,020.48 5,739,020.48 2.Opening book value 7,096,435.17 7,096,435.17 The intangible assets by the end of the formation of the company's internal R & D accounted of the proportion of the balance of intangible assets ⑵Details of Land use right failed to accomplish certification of property Nil 14. Long-term amortize expenses In RMB Balance in Increase in this Amortized Items Other loss Balance in year-end year-begin period expenses Rental fee for Guangzhu 1,230,700.00 8,918.12 1,221,781.88 North Section sport ground Advertising column 92,768.83 92,768.83 property insurance Total 92,768.83 1,230,700.00 101,686.95 1,221,781.88 Other note 15. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets had not been off-set In RMB Balance in year-end Balance Year-beginning Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Deductible loss 1,281,389,685.73 320,347,421.43 773,658,624.73 193,414,656.18 Amortization of 626,016.08 156,504.02 995,735.86 248,933.97 intangible assets Asset valuation 507,924,437.36 126,981,109.34 566,541,740.54 141,635,435.13 appreciation Total 1,789,940,139.17 447,485,034.79 1,341,196,101.13 335,299,025.28 157 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2) Deferred income tax liabilities had not been off-set In RMB Balance in year-end Balance Year-beginning Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference liabilities difference liabilities Changes in fair value of available 352,882,416.00 88,220,604.00 435,221,646.40 108,805,411.60 for sale financial assets Deductible temporary differences in 469,807,142.34 117,451,785.59 607,306,748.61 151,826,687.15 the formation of asset impairment Total 822,689,558.34 205,672,389.59 1,042,528,395.01 260,632,098.75 (3)Details of unrecognized deferred tax assets In RMB Items Balance in year-end Balance Year-beginning Deductible temporary differences 89,748,845.07 92,288,987.75 Deductible losses 8,796,952.44 11,374,068.41 Total 98,545,797.51 103,663,056.16 Note: Because it is uncertain that whether the wholly-owned subsidiary ---- Guangdong Expressway Technology Investment Co., Ltd., Guangdong Expressway Capital Investment (Hengqin) Co., Ltd., Guangzhou Guangzhu Traffic Investment Management Co., Ltd. can obtain taxable income in the future, the deductible temporary differences of this part are not recognized as deferred tax assets. (4)Deductible losses of the un-recognized deferred income tax asset will expire in the following years In RMB Year Balance in year-end Balance Year-beginning Remark 2018 4,932,481.22 2019 3,456,570.30 3,456,570.30 2020 2021 2022 2,121,083.91 2,985,016.89 2023 3,219,298.23 Total 8,796,952.44 11,374,068.41 -- Other note: 16. Other Non-current assets In RMB Items Balance in year-end Balance Year-beginning Prepaid fixed assets engineering fees 49,890,408.41 39,871,644.68 158 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Advance software payment 268,155.00 Prepaid business tax 518,773.08 566,594.58 Deductible import tax 49,385,484.09 Total 99,794,665.58 40,706,394.26 Other note: 17.Notes payable and account payable In RMB Items Balance in year-end Balance Year-beginning Account payable 203,779,190.74 266,934,026.99 Total 203,779,190.74 266,934,026.99 (1)Classification of notes Payable Nil (2)Account payable In RMB Items Balance in year-end Balance Year-beginning Within 1 year(Including 1 year) 84,200,629.90 104,264,020.37 1-2 years(including2 years) 8,911,247.40 135,095,312.76 2-3 years(including 3 years) 84,119,053.06 16,838,384.14 Over 3 years 26,548,260.38 10,736,309.72 Total 203,779,190.74 266,934,026.99 (3)Significant payable aging more than 1 year In RMB Items Balance in year-end Reason Heshan Land and resources Bureau 38,186,893.60 Unsettled Foshan Land and resources Bureau 30,507,598.21 Unsettled Guangdong Highway Construction Co., 25,630,651.00 Unsettled Ltd. Guangdong Expressway Co., Ltd. 8,746,491.18 Unsettled The third Research Institute of the 6,066,090.40 Unsettled Ministryof Public Security Dongguan Yongyao Photoelectricity 2,328,261.50 Unsettled Technology Co., Ltd. Luochun Street Office(Finance Office) 1,043,431.50 Unsettled Total 112,509,417.39 -- 159 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Other note: 18. Prepayment received (1) List of Prepayment received In RMB Items Balance in year-end Balance Year-beginning Within 1 year(Including 1 year) 516,610.46 2,413,914.18 1-2 years(Including 2 years) 459,858.97 2-3 years(Including 3 years) 419,601.44 Over 3 years 11,103,496.11 11,982,340.75 Total 12,039,708.01 14,856,113.90 (2) Significant advance from customers aging over one year In RMB Items Balance in year-end Unpaid/Uncarry over reason Guangzhou Huanlong Expressway Co., 9,652,029.86 Land rent is not in the settlement period Ltd. Guanghdong Xinle Technology 1,322,993.29 The Rental is not in the settlement period Development Co., Ltd. Total 10,975,023.15 -- ⑶The completion of the final construction contract has been completed and the project is not completed Nil 19. Payable Employee wage (1)Payable Employee wage In RMB Items Year-beginning balance Increase in the current Decrease in the current Year-end balance period period I. Short-term compensation 11,334,182.16 312,445,957.81 310,657,702.80 13,122,437.17 II.Post-employment benefits - define 33,274,962.97 33,274,962.97 d contribution plans III. Dismiss welfare 142,050.00 142,050.00 Total 11,334,182.16 345,862,970.78 344,074,715.77 13,122,437.17 (2)Short-term Remuneration In RMB Items Year-beginning balance Increase in the current Decrease in the current Year-end balance period period 1.Wages, bonuses, 1,630,363.29 232,214,558.56 233,216,358.36 628,563.49 160 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report allowances and subsidies 2.Employee welfare 21,683,497.37 21,683,497.37 3. Social insurance 18,198,699.81 18,198,699.81 premiums Including :Medical 13,916,477.21 13,916,477.21 insurance Work injury insurance 537,037.33 537,037.33 Maternity insurance 1,419,032.27 1,419,032.27 Supplementary medical 2,326,153.00 2,326,153.00 insurance 4.Public reserves for 27,595,125.52 27,595,125.52 housing 5.Union funds and staff 9,563,059.92 10,124,509.86 7,869,701.04 11,817,868.74 education fee 8.Other 140,758.95 2,629,566.69 2,094,320.70 676,004.94 Total 11,334,182.16 312,445,957.81 310,657,702.80 13,122,437.17 (3)List of drawing scheme In RMB Items Balance Year-beginning Increase in this period Payable in this period Balance in year-end 1. Basic old-age 22,193,513.59 22,193,513.59 insurance premiums 2.Unemployment 844,560.24 844,560.24 insurance 3.Enterprise annuity 10,236,889.14 10,236,889.14 payment Total 33,274,962.97 33,274,962.97 Other note: 20. Tax Payable In RMB Items Balance in year-end Balance Year-beginning VAT 13,473,944.70 14,248,594.77 Enterprise Income tax 85,375,209.49 404,574,001.58 Individual Income tax 3,551,727.77 6,572,617.38 City Construction tax 793,960.96 1,022,178.29 Land use tax 200,454.00 1,050,431.75 Property tax 155,413.34 253,014.94 Education subjoin 371,885.57 466,899.60 Locality Education subjoin 233,892.04 297,234.60 Stamp tax 26,304.47 63,071.56 Other 15,953.72 99,349.82 Total 104,198,746.06 428,647,394.29 161 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Other note: 21.Other accounts payable In RMB Items Balance in year-end Balance Year-beginning Interest payable 8,971,576.57 8,494,355.93 Dividend payable 17,191,142.23 26,840,792.20 Other account payable 165,091,746.04 86,663,237.94 Total 191,254,464.84 121,998,386.07 (1)Interest payable In RMB Items Balance in year-end Balance Year-beginning Pay the interest for long-term loans by 7,832,311.57 8,494,355.93 installments. Interest payable on entrusted loans 1,139,265.00 Total 8,971,576.57 8,494,355.93 - Particulars of significant overdue unpaid interest Nil (2)Dividends payable In RMB Items Balance in year-end Balance Year-beginning Common stock dividends 17,191,142.23 14,340,792.20 Xinyue Highway Construction Co., Ltd. 12,500,000.00 Total 17,191,142.23 26,840,792.20 Note: Including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed: Final dividend payable 14,338,121.94yuan for more than a year in unpaid dividends to shareholders over the year was mainly due to non-payment of shareholder dividends did not provide information on interest-bearing bank, di d not share reform of shareholders to receive dividends or provide application to receive dividends the bank infor mation is incorrect, resulting in failure to pay a dividend or refund. (3)Other accounts payable (1) Other accounts payable listed by nature of the account In RMB Items Year-end balance Year-Beginning balance Quality guarantee fund 67,696,625.43 36,254,269.95 Deposit 1,876,467.00 1,676,667.00 162 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Items Year-end balance Year-Beginning balance Other 50,518,653.61 48,732,300.99 Borrowing 45,000,000.00 Total 165,091,746.04 86,663,237.94 (2) Other significant accounts payable with aging over one year In RMB Items Closing balance Unpaid/un-carry over reason Project Quality guarantees/ Bid Guangdong Changda Engineering Co., Ltd 2,494,464.08 Gruarantees/Deposit Guangdong Nengda Grade Highway Project Quality Guarantees,Project 2,181,568.50 Maintenance Co., Ltd. performance fund Guangdong Guanyue luqiao Co., Ltd. 1,897,611.12 Project Quality guarantees, Deposit China Railway 18 Bureau Group Co., Ltd. 1,759,428.85 Project Quality guarantees Dongguan Yueyu Optoelectronic 1,534,850.00 Project Quality guarantees Technology Co., Ltd. Guangdong Xinyue Traffic Investment 1,505,467.30 Project Quality guarantees Co., Ltd. Total 11,373,389.85 -- Other note 22. Non-current liabilities due within 1 year In RMB Items Balance year-end Year-beginning balance Long-term loans due within 1 year 2,498,480,000.00 1,218,610,000.00 Total 2,498,480,000.00 1,218,610,000.00 Other note: 23. Long-term loan (1) Category of long-term loan In RMB Items Balance year-end Year-beginning balance Pledge loan 251,050,000.00 199,000,000.00 Guaranteed loan 375,000,000.00 1,125,000,000.00 Credit loan 2,356,990,000.00 3,420,170,000.00 Other 2,983,040,000.00 4,744,170,000.00 Other notes including interest rate range: The interest rate of pledge loan is 4.275% - 4.75%, the guaranteed loan rate is 5.6%, and the credit loan rate is 4.20% - 4.90%. 163 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 24. Long-term payable In RMB Items Balance year-end Year-beginning balance Long-term payable 38,022,210.11 2,022,210.11 Total 38,022,210.11 2,022,210.11 (1) Long-term payable listed by nature of the account In RMB Items Balance year-end Year-beginning balance Non-operating asset payable 2,022,210.11 2,022,210.11 Guangdong Jiangzhong Expressway Co., 36,000,000.00 Ltd. Entrusted loan Other note: (2)Special payable Nil 25. Stock capital In RMB Balance Year-beginning Balance Issuing of new Transferred Balance year-end Year-beginning Bonus shares Other Subtotal share from reserves Total of capital 2,090,806,126.00 2,090,806,126.00 shares Other note: 26. Capital reserves In RMB Items Year-beginning balance Increase in the current Decrease in the current Year-end balance period period Share premium 2,508,408,342.99 2,508,408,342.99 Other capital reserves 1,661,406.77 26,705,215.55 28,366,622.32 Total 2,510,069,749.76 26,705,215.55 2,536,774,965.31 - The situation of change in the current capital reserve is as follows: The capital reserve in this period was increased 26,710,620.00 yuan due to the change of the owner's equity of the joint-stock company --- Guangdong Guanghui Expressway Co., Ltd. and was decreased 5,404.45 yuan due to the change of owner's equity of the joint-stock company ---- Guoyuan securities Co., Ltd. 164 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 27. Other comprehensive income In RMB Amount of current period Less: Previously recog Year-beginning Amount for the nized in profit or After - tax at Year-end Items After - tax attrib balance Less:Income tributable to balance period before in loss in other co utable to the par tax minority sha come tax mprehensive inc ent company reholders ome 1.Other comprehensive income will be reclassified into income or 0.00 loss in the future Including: remeasurement of net assets or net liabilities of defined 0.00 benefit plans Share of other comprehensive income of the investee that cannot be transferred to profit or 0.00 loss accounted for using the equity method 2.Other comprehensive income reclassifiable to profit or loss in 327,263,824.17 -102,739,516.96 -20,584,807.60 -82,154,709.36 245,109,114.81 subsequent periods Including:Share of other comprehensive income of the investee that cannot be transferred to 847,589.37 -20,400,286.56 -20,400,286.56 -19,552,697.19 profit or loss accounted for using the equity method Gains and losses from changes in fair value of financial assets available 326,416,234.80 -82,339,230.40 -20,584,807.60 -61,754,422.80 264,661,812.00 for sale Held-to-maturity investment that is reclassified as financial 0.00 assets available for sale Effective gains(losses) arising from cash flow 0.00 hedging instruments Translation 0.00 differences of 165 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report financial statements denominated Total of other comprehensive income 327,263,824.17 -102,739,516.96 -20,584,807.60 -82,154,709.36 0.00 245,109,114.81 Other notes, including the adjustment of the recognition of initial amount of effective part of the cash flow hedging gains and losses transfer into arbitraged items: The initial balance and the ending balance refer to other comprehensive incomes in the balance sheet. The initial balance + other comprehensive incomes belong to the parent company after taxes = the ending balance. The occurrence amount in the period refers to other comprehensive incomes in the profit statement, and the occurrence amount before income tax in the period – Other comprehensive income recorded in the earlier stage and transferred into the profits and losses in the current period – income taxes = other comprehensive incomes belong to the parent company after taxes + other comprehensive incomes belong to the minority shareholders after taxes. 28. Surplus reserve In RMB Items Year-beginning balance Increase in the current Decrease in the current Year-end balance period period Statutory surplus 544,821,130.03 230,581,431.32 775,402,561.35 reserve Total 544,821,130.03 230,581,431.32 775,402,561.35 Note: 29. Retained profits In RMB Items Amount of this period Amount of last period Before adjustments: Retained profits in last period 3,550,110,288.49 2,920,563,328.27 end After adjustments: Retained profits at the period 3,550,110,288.49 2,920,563,328.27 beginning Add:Net profit belonging to the owner of the 1,677,028,179.18 1,509,922,398.70 parent company Less: Statutory surplus reserve 230,581,431.32 177,864,580.14 Common stock dividend payable 1,057,947,899.76 702,510,858.34 Retained profit at the end of this term 3,938,609,136.59 3,550,110,288.49 As regards the details of adjusted the beginning undistributed profits (1)As the retroactive adjustment on Enterprise Accounting Standards and its related new regulations, the affected beginning undistributed profits are RMB 0.00. (2) As the change of the accounting policy, the affected beginning undistributed profits are RMB 0.00. 166 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3) As the correction of significant accounting error, the affected beginning undistributed profits are RMB 0.00 . (4) As the change of consolidation scope caused by the same control, the affected beginning undistributed profits are RMB 0.00. (5) Other adjustment of the total affected beginning undistributed profits are RMB 0.00 . 30.Operation income and operation cost In RMB Amount of this period Amount of last period Items Income Cost Income Cost Main operation 3,174,342,835.65 1,250,876,481.00 3,038,375,611.56 1,220,538,502.82 Other operation 44,351,248.29 28,218,590.32 50,679,787.65 26,583,850.53 Total 3,218,694,083.94 1,279,095,071.32 3,089,055,399.21 1,247,122,353.35 31. Business tax and subjoin In RMB Items Amount of this period Amount of last period Urban construction tax 6,257,072.93 6,251,001.50 Education surcharge 2,943,233.19 2,910,849.26 Property tax 2,510,760.22 2,078,526.94 Land use tax 1,744,091.50 1,824,262.72 Business tax 62,845.97 52,777.05 Locality Education surcharge 1,961,948.53 1,940,251.33 Defend expense 207.08 384.04 Stamp tax 370,956.91 644,841.06 Vehicle use tax 62,306.65 136,920.13 Cultural construction expenses 53,046.83 160,387.42 Other 20,796.58 Total 15,987,266.39 16,000,201.45 Other note: 32. Administrative expenses In RMB Items Amount of this period Amount of last period Wage 124,523,644.86 122,014,401.26 Depreciation and Amortization 10,846,662.10 13,686,060.04 Low consumables amortization 669,751.05 858,414.10 167 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Travel expenses 951,373.50 699,038.04 Office expenses 7,113,887.43 6,768,155.85 Leased expenses 11,350,401.58 10,987,865.79 The fee for hiring agency 3,700,667.16 3,938,990.41 Consultation expenses 4,243,970.38 3,359,297.28 Listing fee 903,551.56 558,490.56 Information cost and maintenance fee 1,254,978.71 2,039,350.41 Other 17,833,260.35 14,901,645.85 Total 183,392,148.68 179,811,709.59 Other note: 33. R & D cost In RMB Items Amount of this period Amount of last period Labor cost 1,236,840.49 5,810,338.41 Direct input fee 1,610,228.69 Depreciation expenses 26,107.33 64,922.48 Commissioned research & development 349,207.54 Other 55,396.19 1,939,169.26 Total 1,318,344.01 9,773,866.38 Other note: 34.Financial expenses In RMB Items Amount of this period Amount of last period Interest expenses 237,334,325.27 276,594,308.94 Deposit interest income(-) -31,889,543.71 -33,696,479.00 Exchange Income and loss(Gain-) 2,348,188.17 -1,522,372.61 Bank commission charge 4,799,814.01 5,931,293.75 Total 212,592,783.74 247,306,751.08 Other note: 35. Asset impairment loss In RMB Items Amount of this period Amount of last period I. Bad debt loss -1,232,955.42 415,340.17 III. Impairment losses on financial 226,800.00 assets available for sale Total -1,006,155.42 415,340.17 168 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Other note: 36.Other gains In RMB Items Amount of this period Amount of last period Maternity allowance 599,573.55 Return of personal tax handing fee 295,702.41 Stable job subsidies 217,952.36 Total 1,113,228.32 37. Investment income In RMB Items Amount of this period Amount of last period Long-term equity investment income by equity 463,873,066.20 423,940,445.45 method Hold the investment income during from 43,786,617.76 24,327,921.74 available-for-sale financial assets Total 507,659,683.96 448,268,367.19 Other note: 38.Assets disposal income In RMB Source Amount of this period Amount of last period Income from disposal of fixed assets 66,431,966.75 39. Non-Operation income In RMB Recorded in the amount of the Items Amount of this period Amount of last period non-recurring gains and losses Government Subsidy 385,932.17 Road property claim income 1,646,322.85 3,539,319.69 1,646,322.85 Other income(Notes) 2,529,479.09 61,854,564.85 2,529,479.09 Total 4,175,801.94 65,779,816.71 4,175,801.94 - Government subsidy reckoned into current gains/losses In RMB 169 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Whether the impact of Whether Amount of Issuing Issuing Amount of current Assets-related/inco Subsidy items Nature subsidies on the special previous body reason period me –related current profit and loss subsidies period Research on "Blue Channel" Project based on "Internet 120,000.00 Related to income Plus" Recognition and Payment Technology Stable job subsidies 265,932.17 Related to income Other note: 40. Non-Operation expense In RMB Amount of current period Amount of previous period The amount of non-operating Items gains & losses Loss of destruction of assets 3,368,846.52 2,926,481.49 3,368,846.52 Fine 382,973.69 465,323.21 382,973.69 Other 5,228,178.28 3,289,687.56 5,228,178.28 Total 8,979,998.49 6,681,492.26 8,979,998.49 Other note: 41. Income tax expense (1) Lists of income tax expense In RMB Items Amount of current period Amount of previous period Current income tax expense 340,935,816.06 636,893,843.60 Deferred income tax expense -146,560,911.07 -451,125,662.19 Total 194,374,904.99 185,768,181.41 (2) Adjustment process of accounting profit and income tax expense In RMB Items Amount of current period Total profits 2,097,715,307.70 Current income tax expense accounted by tax and relevant 524,428,826.62 regulations Influence of income tax before adjustment -3,267,087.41 Influence of non taxable income -372,925,462.18 Impact of non-deductible costs, expenses and losses 6,621,587.60 Affect the use of deferred tax assets early unconfirmed -394,522.89 170 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report deductible losses The current period does not affect the deferred tax assets 804,824.56 recognized deductible temporary differences or deductible loss Other 39,106,738.69 Income tax expense 194,374,904.99 Other note 42. Items of Cash flow statement (1) Other cash received from business operation Items Amount of current period Amount of previous period Newwork received toll income 1,058,049.17 7,830,682.35 Interest income 31,889,543.71 33,696,479.00 Unit current account 63,672,701.77 59,072,397.31 Total 96,620,294.65 100,599,558.66 In RMB Note: (2)Other cash paid related to operating activities Items Amount of current period Amount of previous period Management expense 45,920,848.02 48,176,229.85 Unit current account 28,708,531.18 45,078,758.91 Network received toll income 276,547.72 1,432,404.59 Total 74,905,926.92 94,687,393.35 In RMB Note: (3)Other Cash received related to investment activities In RMB Items Amount of current period Amount of previous period Jiujiang bridge to receive compensation 59,995,667.68 Total 0.00 59,995,667.68 Note: (4)Other Cash received related to Financing activities In RMB Items Amount of current period Amount of previous period Interest discount 10,277,777.78 Total 0.00 10,277,777.78 Note: 171 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 43. Supplement Information for cash flow statement (1)Supplement Information for cash flow statement In RMB Supplement Information Amount of current period Amount of previous period I. Adjusting net profit to cash flow from -- -- operating activities Net profit 1,903,340,402.71 1,710,223,687.42 Add: Impairment loss provision of assets -1,006,155.42 415,340.17 Depreciation of fixed assets, oil and gas 807,609,480.04 823,038,155.84 assets and consumable biological assets Amortization of intangible assets 2,526,983.05 3,128,134.31 Amortization of Long-term deferred 101,686.95 1,671,197.24 expenses Loss on disposal of fixed assets, intangible -66,431,966.75 assets and other long-term deferred assets Fixed assets scrap loss 3,258,828.50 2,745,683.68 Financial cost 249,543,624.55 275,071,936.33 Loss on investment -507,659,683.96 -448,268,367.19 Decrease of deferred income tax assets -112,186,009.51 -324,488,702.34 Increased of deferred income tax liabilities -34,374,901.56 -17,831,548.25 Decrease of inventories -81,017.91 323,888.89 Decease of operating receivables 245,477,300.99 -44,132,575.54 Increased of operating Payable -574,132,993.64 213,093,094.79 Net cash flows arising from operating 1,915,985,578.04 2,194,989,925.35 activities II. Significant investment and financing -- -- activities that without cash flows: 3.Movement of cash and cash equivalents: -- -- Ending balance of cash 2,123,303,796.32 2,363,042,700.42 Less: Beginning balance of cash equivalents 2,363,042,700.42 2,603,279,644.25 Net increase of cash and cash equivalents -239,738,904.10 -240,236,943.83 (2) Net Cash paid of obtaining the subsidiary Nil (3) Net Cash receive of disposal of the subsidiary Nil (4)Composition of cash and cash equivalents In RMB Items Balance in year-end Balance in year-Beginning I. Cash 2,123,303,796.32 2,363,042,700.42 Of which: Cash in stock 53,211.49 66,065.04 Bank savings could be used at any time 2,122,585,810.07 2,362,279,050.70 172 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Other monetary capital could be used at any 664,774.76 697,584.68 time III. Balance of cash and cash equivalents at 2,123,303,796.32 2,363,042,700.42 the period end Other note: 44. The assets with the ownership or use right restricted In RMB Items Book value at the end of the period Restricted reason Land reclamation funds in fund escrow Monetary fund 1,221,200.00 accounts Total 1,221,200.00 -- Other note: Up to December 31, 2018, Jingzhu Expressway Guangzhu Section Co., Ltd., the controlling grandchildren company of the Company, with the toll collection right of Panyu Tangkeng-Zhuhai Jinding section project in Jingzhu expressway, asked for 449,000,000.00 yuan of loan from Guangzhou Wuyang Branch of ICBC to provide pledge guarantee(of which the non-current debt balance with 1-year expiration was 100,000,000.00 yuan, In addition, a pledge guarantee was provided to the Industrial and Commercial Bank of China Guangzhou Wuyang Sub-branch for a loan of 729,000,000.00 yuan by the collateral of the 18.5% right of charge of the Beijing-Zhuhai Expressway Guangzhu Section Project (the balance of non-current liabilities due within one year was 71,300,000.00 yuan and the long-term loan balance was 251,050,000.00 yuan). 45. Foreign currency monetary items (1) Foreign currency monetary items Nil (2) Note to oversea entities including: for significant oversea entities, shall disclose main operating place, recording currency and selection basis, if there are changes into recording currency, shall also disclose the reason. □ Applicable √ Not applicable VIII.Changes of consolidation scope 1.Enterprise consolidation not under the same control Nil 2. Enterprise consolidation not under the same control Nil 173 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 3. Counter purchase Nil 4. The disposal of subsidiary Nil 5. Other reasons for the changes in combination scope Notes to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant information In August 2018, Guangdong Fokai Expressway Co., Ltd. completed the industrial and commercial cancellation, and obtained the “Notice of Approval for Cancellation Registration” and the “Notice of Permit for Cancellation Registration”. From August 2018, Guangdong Fokai Expressway Co., Ltd. was no longer included in the scope of consolidated statements. 6.Other Nil IX. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Shareholding Ratio Main Places of Registratio Name of Subsidiary Nature of Business (%) Obtaining Method Operation n Place direct indirect Under the same Expressway Guangfo Expressway Co., Ltd. Guangzhou Guangzhou 75.00% control business Management combination Investment in Guangdong Expressway Technology technical industries Guangzhou Guangzhou 100.00% Investment Investment Co., Ltd. and provision of relevant Guangzhuo Guangzhu Traffic Under the same Investment Management Co., Ltd. Investment Guangzhou Guangzhou 100.00% control business management combination Under the same Jingzhu Expressway Guangzhu Expressway Zhongshan Guangzhou 20.00% 55.00% control business Section Co.,Ltd.(Notes) Management combination Yuegao Capital Investment Guangzhou Zhuhai 100.00% Investment Investment(Hengqin)Co., Ltd. management Notes: holding proportion in subsidiary different from voting proportion:Nil Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been controlled investee:Nil 174 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Significant structure entities and controlling basis in the scope of combination:Nil Basis of determine whether the Company is the agent or the principal: Nil Other notes: Jingzhu Expressway Guangzhu Section Co., Ltd. is a non-wholly owned subsidiary of Guangzhou Guangzhu Traffic Investment Management Co., Ltd. (2) Important Non-wholly-owned Subsidiary In RMB Profit or Loss Owned by Dividends Distributed to Shareholding Equity Balance of the the Minority the Minority Name of Subsidiary Ratio of Minority Minority Shareholders in Shareholders in the Shareholders in the Shareholders (%) the End of the Period Current Period Current Period Guangfo Expressway Co., Ltd. 25.00% 66,239,599.34 53,528,891.62 140,004,307.04 Jingzhu Expressway Guangzhu 25.00% 160,072,624.19 144,223,171.04 319,595,416.83 Section Co.,Ltd. Holding proportion of minority shareholder in subsidiary different from voting proportion Nil Other note:Nil 175 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3) The main financial information of significant not wholly owned subsidiary In RMB Year-end balance Year-beginning balance Name Non- current Current Non- current Total Non- current Current Non- current Total Current assets Total assets Current assets Total assets assets Liabilities liabilities liabilities assets Liabilities liabilities liabilities Guangfo Expressway 544,211,527.0 565,665,919.6 590,663,709.13 27,675,485.80 618,339,194.93 58,321,966.77 58,321,966.77 21,454,392.65 56,491,522.41 56,491,522.41 Co., Ltd. 4 9 Jingzhu Expressway 2,301,876,076. 2,734,157,149. 419,370,011.8 1,036,405,470. 1,455,775,482 168,092,185.2 2,692,035,039 2,860,127,224 526,412,997.5 1,118,730,372. 1,645,143,369 Guangzhu Section 432,281,073.29 48 77 5 57 .42 5 .19 .44 5 13 .68 Co.,Ltd. In RMB Amount of current period Amount of previous period Name Total Total Cash flows from Cash flows from Business income Net profit Comprehensive Business income Net profit Comprehensive operating activities operating activities income income Guangfo Expressway Co., Ltd. 478,698,151.01 264,958,397.35 264,958,397.35 269,630,338.75 439,509,806.68 218,485,271.91 218,485,271.91 269,140,164.40 Jingzhu Expressway Guangzhu 1,340,650,149.26 640,290,496.74 640,290,496.74 890,454,604.43 1,318,255,057.77 582,719,882.98 582,719,882.98 950,191,703.45 Section Co.,Ltd. Other note:Nil 176 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (4) Significant restrictions of using enterprise group assets and pay off enterprise group debt Nil (5) Provide financial support or other support for structure entities incorporate into the scope of consolidated financial statements Nil 2. The transaction of the Company with its owner’s equity share changed but still controlling the subsidiary (1)Description of changes in share of owners' equity in subsidiaries Nil (2)The influence of transaction on minority shareholders' equity and ownership of parent company Nil 3. Equity in joint venture arrangement or associated enterprise (1) Significant joint venture arrangement or associated enterprise Proportion Accounting treatment of the Main operating Name Registration place Business nature investment of joint venture or place Directly Indirectly associated enterprise Guangdong Guanghui Guangzhou, Guangzhou, Expressway 30.00% Equity method Expressway Co., Ltd. Guangdong Guangdong Management Zhaoqing Yuezhao Zhaoqing, Zhaoqing, Expressway 25.00% Equity method Highway Co., Ltd. Guangdong Guangdong Management Shenzhen Huiyan Shenzhen Shenzhen Expressway 33.33% Equity method Expressway Co., Ltd. Guangdong Guangdong Management Guangdong Jiangzhong Zhongshan , Guangzhou,Guan Expressway 15.00% Equity method Expressway Co., Ltd. Guangdong gdong Management Ganzhou kangda Gangzhou, Gangzhou, Expressway 30.00% Equity method Expressway Co., Ltd. Jiangxi Jiangxi Management Ganzhou Gankang Gangzhou, Gangzhou, Expressway 30.00% Equity method Expressway Co., Ltd. Jiangxi Jiangxi Management Guangdong Yueke Guangzhou, Guangzhou, Hande all kinds Technology Petty Loan 20.00% Equity method Guangdong Guangdong of small loans Co., Ltd. Guangyuan Securities Hefei, Anhui Hefei, Anhui Security business 2.37% Equity method Co., Ltd. Notes to holding proportion of joint venture or associated enterprise different from voting proportion: Nil Basis of holding less than 20% of the voting rights but has a significant impact or holding 20% or more voting rights but does not have a significant impact: Guangdong, Jiangzhong Expressway Co., Ltd and Guangyuan Securities Co., Ltd... holds 20% of the voting rights, but has the power to participate in making decisions on their financial and op erating decisions, and therefore deemed to be able to exert significant influence over the investee. (2) Main financial information of significant joint venture In RMB 177 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Year-end balance/ Amount of current period Year-beginning balance/ Amount of previous period Guangdong Guanghui Zhaoqing Yuezhao Guangdong Guanghui Zhaoqing Yuezhao Expressway Co., Ltd. Highway Co., Ltd. Expressway Co., Ltd. Highway Co., Ltd. Current assets 886,631,849.70 196,254,075.84 635,522,495.58 181,912,624.81 Including:Cash and cash 621,540,000.54 180,784,827.23 459,088,314.91 168,071,076.84 equivalent Non-current assets 3,813,612,927.86 1,565,557,770.89 4,004,796,494.08 1,680,394,842.72 Total assets 4,700,244,777.56 1,761,811,846.73 4,640,318,989.66 1,862,307,467.53 Current liabilities 544,082,765.04 151,065,956.20 412,938,473.00 176,531,063.96 Non-current liabilities 847,757,933.94 382,056,538.13 1,061,024,403.48 518,151,934.87 Total liabilities 1,391,840,698.98 533,122,494.33 1,473,962,876.48 694,682,998.83 Attributable to shareholders of the 3,308,404,078.58 1,228,689,352.40 3,166,356,113.18 1,167,624,468.70 parent company Share of net assets 992,521,223.58 307,172,338.10 949,906,833.96 291,906,117.18 calculated by stake Book value of equity investment in joint 992,521,223.58 307,172,338.10 949,906,833.96 291,906,117.18 ventures Operating income 1,855,658,219.29 555,636,181.75 1,844,690,103.83 511,470,748.89 Financial expenses 33,863,147.93 21,465,696.78 41,164,514.80 27,476,635.96 Income tax expenses 323,116,545.35 79,594,368.12 313,823,801.69 66,259,297.93 Net profit 969,032,056.06 233,420,321.62 940,021,656.29 194,923,285.58 Total comprehensive 969,032,056.06 233,420,321.62 940,021,656.29 194,923,285.58 income Dividends received from 274,805,847.20 43,088,859.48 297,106,373.29 55,172,678.59 joint ventures this year Other note 178 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3) Main financial information of significant associated enterprise In RMB Year-end balance/ Amount of current period Year-beginning balance/ Amount of previous period Guangdong Guangdong Shenzhen Guangdong Ganzhou Shenzhen Guangdong Ganzhou Ganzhou Yueke Guoyuan Ganzhou Yueke Guoyuan Huiyan Jiangzhong Gankang Huiyan Jiangzhong Gankang Kangda Technology Securities Co., Kangda Technology Securities Co., Expressway Expressway Expressway Expressway Expressway Expressway Expressway Petty Loan Ltd. Expressway Petty Loan Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd Co., Ltd 153,631,998.0 270,093,954.2 1,394,967,072 42,721,180,653. 430,404,563.5 147,279,650.9 208,757,705.5 1,573,602,864 45,296,573,799. Current assets 86,313,236.14 35,495,996.32 21,995,366.33 0 7 .45 50 0 8 5 .36 43 569,633,252.7 1,701,322,494 1,463,543,288 1,372,121,014 35,374,232,070. 190,289,654.6 1,697,555,010 1,509,053,324 1,434,291,913 34,917,940,371. Non-current assets 8,047,674.82 40,112,141.62 1 .90 .08 .40 51 6 .40 .26 .76 90 723,265,250.7 1,787,635,731 1,499,039,284 1,642,214,968 1,403,014,747 78,095,412,724. 620,694,218.1 1,844,834,661 1,531,048,690 1,643,049,619 1,613,715,005 80,214,514,171. Total assets 1 .04 .40 .67 .27 01 6 .38 .59 .31 .98 33 170,304,772.6 109,921,418.2 46,417,460,063. 129,152,634.0 100,119,184.6 114,676,781.5 236,708,624.0 36,083,651,550. Current liabilities 31,603,980.10 72,629,731.89 40,797,858.70 32,102,623.52 7 6 63 1 0 3 1 94 448,500,000.0 693,126,157.4 832,307,181.3 6,989,817,868.7 559,000,000.0 735,033,096.4 847,023,826.6 18,738,432,070. Non-current Liabilities 636,518.58 2,006,250.00 0 4 9 7 0 7 3 64 618,804,772.6 765,755,889.3 942,228,599.6 53,407,277,932. 688,152,634.0 835,152,281.0 961,700,608.1 238,714,874.0 54,822,083,621. Total liabilities 31,603,980.10 41,434,377.28 32,102,623.52 7 3 5 40 1 7 6 1 58 Minority Shareholders’ 263,112,578.6 297,258,467.4 11,368,910.62 12,064,185.84 Equity 3 5 Shareholders’ equity attributable to 691,661,270.6 1,168,830,958 733,283,395.0 699,986,369.0 1,098,467,791 24,676,765,880. 588,591,594.6 1,156,682,027 695,896,409.5 681,349,011.1 1,077,741,664 25,380,366,363. shareholders of the 1 .37 7 2 .36 99 4 .37 2 5 .52 91 parent Pro rata share of the net 230,553,756.8 175,324,643.7 219,985,018.5 209,995,910.7 219,693,558.2 196,197,198.2 173,502,304.1 208,768,922.8 204,404,703.3 215,548,332.9 583,672,702.24 600,314,769.41 assets calculated 7 6 2 1 7 1 1 6 5 0 --Goodwill 206,725,818.02 206,725,818.02 179 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report The book value of equit 230,553,756.8 175,324,643.7 219,985,018.5 209,995,910.7 219,693,558.2 196,197,198.2 173,502,304.1 208,768,922.8 204,404,703.3 215,548,332.9 y investments in joint ve 790,398,520.26 807,040,587.43 7 6 2 1 7 1 1 6 5 0 ntures Fair value of equity investment of associated 555,621,862.28 875,621,846.00 enterprises with open quotation 246,387,205.4 511,026,031.4 244,708,403.6 169,762,652.7 181,963,049.2 2,569,814,200.0 233,738,236.9 487,119,486.4 245,700,515.4 152,521,263.8 177,208,471.5 3,502,796,791.7 Buinsess incme 4 2 0 9 0 0 5 2 3 7 6 7 103,069,675.9 107,386,985.5 101,285,140.5 1,223,834,271.4 Net profit 78,708,231.50 18,637,357.87 75,671,754.19 663,937,167.17 73,587,145.53 83,900,834.10 13,325,048.18 65,212,691.74 7 5 7 8 Other comprehensive -862,492,101.21 -172,970,719.38 income Total comprehensive 103,069,675.9 107,386,985.5 101,285,140.5 1,050,863,552.1 78,708,231.50 18,637,357.87 75,671,754.19 -198,554,934.04 73,587,145.53 83,900,834.10 13,325,048.18 65,212,691.74 income 7 5 7 0 Dividends received fro 110,000,000.0 m associates during the 53,000,000.00 9,983,895.07 21,000,000.00 10,989,125.47 11,940,297.90 11,041,691.10 21,000,000.00 9,600,000.00 6,058,788.22 0 year Other note Nil 180 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (4) Summary financial information of insignificant joint venture or associated enterprise Nil (5) Note to the significant restrictions of the ability of joint venture or associated enterprise transfer funds to the Company Nil (6)The excess loss of joint venture or associated enterprise (7) The unrecognized commitment related to joint venture investment Nil (8) Contingent liabilities related to joint venture or associated enterprise investment Nil 4. Significant common operation Nil 5. Equity of structure entity not including in the scope of consolidated financial statements Notes: Nil 6.Other Nil X. Risks Related to Financial Instruments The major financial instruments of the company include monetary capital, notes receivable and accounts payable. These financial instruments are primarily related to operating and financing. For the details of the financial instruments, please refer to the related projects in Notes 5. The risk relevant to these financial instruments and the risk management policy adopted by the company for reducing these risks are described as below: 1. Credit Risk The credit risk means that the party of the financial instrument fails to perform the obligations, and the risk of the financial loss is caused for the other party. The company is mainly facing the customer credit risk due to the credit sale. In order to reduce the credit risk, the company only makes transactions with the recognized and reputable customers, and carries out the continuous monitoring of accounts receivable through monitoring the credit of the existing customers and the aging analysis, in order to ensure the company not facing the risk of bad debts and control the overall credit risk within the controllable range. 2. Interest Rate Risk The interest rate risk refers to the fluctuation risk appearing for the fair value of financial instruments or future cash flows due to the changes in market interest rate. The interest rate risk faced by the company is mainly from the bank borrowings. Through the establishment of good relations between banks and enterprises, the company 181 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report makes the reasonable design of credit range, credit variety and credit limit to guarantee the sufficient credit range of the banks and meet the financing demands. Shortening the duration of single borrowings and especially stating the prepayment terms is to reasonably reduce the risk of the interest rate fluctuations. 3. Foreign Exchange Risk The foreign exchange risk refers to the fluctuation risk appearing for the fair value of financial instruments or future cash flows due to the changes in foreign exchange rate. The company matches the income and expenditure of foreign currency as far as possible in order to reduce the foreign exchange risk. During the reporting period, the company has little effect on the foreign exchange risk due to the short credit term of revenue and expenditure related to the foreign currency. 4. Liquidity Risk The liquidity risk means that the risk of the shortage of funds occurs when the settlement obligations by the delivery of the cash or other financial assets are fulfilled by the company. The policy of the company is to ensure the sufficient cash for repaying the matured debts. The liquidity risk is under the centralized control of Finance department of the company, and Finance department shall guarantee the company having the sufficient funds to repay the debts under any reasonable forecast through monitoring the cash balance, the marketable securities available to be cash and the rolling forecast for the cash flow of the next six months. 5. Other Price Risk The company holds the equity investment of other listed companies, and the management believes that these investments facing the market price risk is acceptable. For the equity investment of other listed companies held by the company, please refer to “ Available-for-Sale Financial Assets in Article 8 of Consolidated Financial Statement in Notes 5 of Financial Statements”. XI. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value In RMB Closing fair value Items Fir value measurement Fir value measurement Fir value measurement Total items at level 1 items at level 2 items at level 3 I. Consistent fair value -- -- -- -- measurement (II)Available-for-sale 870,443,292.80 870,443,292.80 Financial Assets (2)Equity instrument 870,443,292.80 870,443,292.80 investment Total of Consistent fair 870,443,292.80 870,443,292.80 value measurement II.Non-continuous -- -- -- -- measurement fair value 182 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1. As at the end of the period, the company holds shares 235,254,944 shares of China Everbright Bank According to the closing price of December 31, 2018 of 3.70 yuan, the final calculation of fair value was 870,443,292.80 yuan. 3. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 2. Nil 4. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3. Nil 5. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3. Nil 6. Explain the reason for conversion and the policy governing when the conversion happens if conversion happens among consistent fair value measurement items at different levels Nil 7. Changes in the valuation technique in the current period and the reason for change Nil 8. Fair value of financial assets and liabilities not measured at fair value Nil 9.Other Nil XII. Related parties and related-party transactions 1. Parent company information of the enterprise The parent company The parent company Name Registered address Nature Redistricted capital of the Company's of the Company’s shareholding ratio vote ratio Equity management, No.83,85, Baiyun Guangdong traffic infrastructure Road, Yuexiu communication construction and 26.8 billion 24.55% 50.12% District, Group Co., Ltd railway project Guangzhou operation Notes : Guangdong Communication Group Co., Ltd. is the largest shareholder of the Company. legal representative: Deng 183 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Xiaohua. Date of establishment: June 23, 2000. As of December 31, 2018,Registered capital: 26.8 billion yuan. It is a solely state-owned limited company. Business scope:equity management, organization of asset reorganization and optimized allocation, raising funds by means including mortgage, transfer of property rights and joint stock system transformation, project investment, operation and management, traffic infrastructure construction, highway and railway project operation and relevant industries, technological development, application, consultation and services, highway and railway passenger and cargo transport, ship industry, relevant overseas businesses; The value-added communication business. The finial control of the Company was State owned assets supervision and Administration Commission of Guangdong Provincial People's Government. Other notes: 2.Subsidiaries of the Company Subsidiaries of this enterprise, see NoteXI(9) the rights of other entity 3. Information on the joint ventures and associated enterprises of the Company Information on other joint venture and associated enterprise of occurring related party transactions with the Company in reporting period, or form balance due to related party transactions in previous period: Nil 4. Other Related parties Name Relation with the Company Guangdong Baomao Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Boda Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Chaohui Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong East Thinking Management Technology Fully owned subsidiary of the parent company Development Co., Ltd. Guangdong Two Guang Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Gaoda Property Development Co., Ltd. Fully owned subsidiary of the parent company Guangdong Expressway Media Co., Ltd. Fully owned subsidiary of the parent company Guangdong Guangfozhao Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Guanghui Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Guangle Expressway Co., ltd. Fully owned subsidiary of the parent company Guangdong Hehui Expressway Co., ltd. Fully owned subsidiary of the parent company Guangdong Humen Bridge Co., Ltd. Fully owned subsidiary of the parent company Guangdong Hualu Traffic Technology Co., Ltd. Fully owned subsidiary of the parent company Guangdong Traffic and Technology Testing Co., Ltd. Fully owned subsidiary of the parent company Guangdong Traffic Industry Investment Co., Ltd. Fully owned subsidiary of the parent company Guangdong Kaiyang Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Litong Technology Investment Co., Ltd. Fully owned subsidiary of the parent company Guangdong Litong Real Estate Investment Co., Ltd. Fully owned subsidiary of the parent company Guangdong Union Electron Service Co., ltd. Fully owned subsidiary of the parent company Guangdong Lulutong Co., Ltd. Fully owned subsidiary of the parent company Guangdong Luoyang Expressway Co., Ltd. Fully owned subsidiary of the parent company 184 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name Relation with the Company Guangdong Maozhan Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Meihe Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Ninghua Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Pingxing Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Shanfen Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Shenshan Expressway East Section Co.,Ltd. Fully owned subsidiary of the parent company Guangdong Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Highway Construction Co., Ltd. Fully owned subsidiary of the parent company Guangdong Road & Bridge Construction Co., Ltd. Fully owned subsidiary of the parent company Guangdong Taishan Coastal Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Tongyi Expressway Service Area Co., Ltd. Fully owned subsidiary of the parent company Guangdong Yueyun Traffic Co., Ltd. Fully owned subsidiary of the parent company Guangdong Yangmao Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangdong Yuedong Expressway Industry Development Fully owned subsidiary of the parent company Co.,Ltd. Guangdong Yueyun Traffic Co., Ltd. Fully owned subsidiary of the parent company Guangdong Zhaoyang Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangshenzhu Expressway Co., Ltd. Fully owned subsidiary of the parent company Guangzhou Xinyue Asphalt Co., Ltd. Fully owned subsidiary of the parent company Heyuan Helong Expressway Co., Ltd. Fully owned subsidiary of the parent company Yunfo Guangyun Expressway Co., Ltd. Fully owned subsidiary of the parent company Zhongshan Yueyun Airoort Express Passenger Co., Ltd. Fully owned subsidiary of the parent company Guangdong Litong Investformation Technology Investment Fully owned subsidiary of the parent company, Has been Co., Ltd. cancelled Fully owned subsidiary of the parent company, Has been Guangdong West Coastal Expressway Xinhui Section Co., Ltd cancelled Fully owned subsidiary of the parent company, Has been Guangdong West Coastal Expressway Co., Ltd cancelled Fully owned subsidiary of the parent company, Has been Guangdong West Coastal Expressway Zhuhai Section Co., Ltd cancelled Hongkong- Zhuhai-Macao Connection line management center Managed by the parent company Guangdong Jiangzhao Expressway Management Center Managed by the parent company Guangdong Nanyue Traffic Chaozhang Expressway Managed by the parent company Management Center Guangdong Nanyue Traffic Renbo Expressway Management Managed by the parent company Center Guangdong Nanyue Traffic Shaogan Expressway Management Managed by the parent company Center Guangdong Nanyue Traffic Yunzhan Expressway Management Managed by the parent company Center Guangzhongjiang Expressway Project Management Managed by the parent company Controlled by the same parent company and equity participation Guangdong Changda Highway Engineering Co., Ltd. unit 185 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name Relation with the Company Xinyue Highway Construction Co., Ltd. Minority shareholders of the holding Sun-Subsidiarie Controlled by the same parent company and equity participation Guangdong Guangzhu West Line Expressway Co., Ltd. unit Guangdong Jingzhu Expressway Guangzhu North Section Co., Controlled by the same parent company and equity participation Ltd. unit Other note 5. List of related-party transactions (1)Information on acquisition of goods and reception of labor service Acquisition of goods and reception of labor service In RMB Content of Amount of current Amount of Over the trading Amount of Related parties related period previous period limit or not? last period transaction Guangdong Changda highway Co., Ltd. Project fund 29,662,147.00 24,378,346.43 Guangdong Union electronic services co., Project fund 15,478,247.27 Ltd. Guangdong Hualu Traffic Technology Co., Project fund 6,084,009.00 7,535,263.53 Ltd. Guangdong Traffic Technology Testing Project fund 5,380,171.92 Co.,Ltd. Guangdong Litong Technology Investment Project fund 3,517,587.00 1,431,442.00 Co., Ltd. Guangdong Lulutong Co., Ltd. Project fund 1,985,356.36 Project Guangdong Humen Bridge Co., Ltd. 1,470,696.80 174,000.00 fund,service Guangdong Xinyue traffic Investment Co., Project fund 770,454.00 9,500.00 Ltd. Guangdong Tongyi Expressway Service Area Service 747,966.07 820,276.93 Co., Ltd Guangdong East Thinking Management Project fund 369,650.00 Technology Development Co., Ltd. Guangdong Expressway Co., Ltd. Project fund 144,221.17 Guangdong Guanghai Expressway Co., Ltd. Interest 3,231,506.25 Ganzhou Gankang Expressway Co., Ltd. Interest 765,623.34 1,051,109.99 Guangdong Jiangzhong Expressway Co., Ltd. Interest 187,920.00 Guangdong Expressway Media Co., Ltd. Service 606,132.08 Guangdong East Thinking Management Service 404,091.29 470,705.00 Technology Development Co., Ltd. Guangdong Changda Highway Engineering Project fund 1,152,297.42 Co., Ltd. Guangdong Litong Technology Investment Project fund 39,000.00 186 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Content of Amount of current Amount of Over the trading Amount of Related parties related period previous period limit or not? last period transaction Co., ltd. Guangdong Litong Technology Investment Purchasing 427,500.00 323,000.00 Co., ltd. assets Purchasing Guangdong Lulutong Co., Ltd. 56,680.00 assets Guangdong Xinyue Traffic Investment Co., Purchasing 219,756.38 Ltd. assets Guangdong Hualu Traffic Technology Co., Purchasing 45,913.29 Ltd. assets Guangdong East Thinking Management Purchasing 297,950.00 614,275.80 Technology Development Co., Ltd. assets Guangdong Litong Information Technology Purchasing 185,000.00 950,000.00 Investment Co., Ltd. assets Purchasing Guangdong Lulutong Co., Ltd. 144,000.00 assets Guangdong Hualu Traffic Technology Co., Purchasing 12,405.71 Ltd. assets Purchasing Guangdong Changda highway Co., Ltd. 181,773,095.95 24,709,006.46 assets Guangdong Hualu Traffic Technology Co., Purchasing 5,156,328.48 2,717,447.60 Ltd. assets Guangdong Xinyue Traffic Investment Co., Purchasing 1,136,466.97 2,858,773.68 Ltd. assets Guangdong Litong Information Technology Purchasing 859,450.00 678,996.00 Investment Co., Ltd. assets Related transactions on sale goods and receiving services In RMB Related party Content Amount of current period Amount of previous period Jingzhu Expressway Guangzhu North section Commission 17,120,754.74 16,328,018.89 Co., Ltd. management fee Guangdong Expressway Co., Ltd. Project fund 5,622,814.88 6,304,510.75 Guangdong Guanghui Expressway Co., Ltd. Project fund 2,437,801.44 5,873,759.61 Guangdong Luqiao Construction Project fund 2,379,137.37 839,724.05 Development Co., Ltd. Guangdong Xinyue Traffic Investment Co., Project fund 1,883,038.06 3,534,631.70 Ltd. Zhaoqing Yuezhao Highway Co., Ltd. Project fund 856,469.13 325,814.39 Guangdong Guangzhu West Line Expressway Project fund 729,132.79 758,317.15 Co., Ltd. Guangdong Highway Construction Co., Ltd. Project fund 594,659.08 397,676.19 Guangdong Boda Expressway Co., Ltd. Project fund 520,924.53 317,618.56 Guangdong Kaiyang Expressway Co., Ltd. Project fund 507,128.03 682,612.31 Guangdong Chaohui Expressway Co., Ltd. Project fund 384,835.85 457,548.31 Guangdong Guangfo Expressway Co., Ltd. Project fund 342,452.84 297,452.82 187 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Related party Content Amount of current period Amount of previous period Guangdong Guangle Expressway Co., Ltd. Project fund 290,094.34 445,418.32 Guangdong Jiangzhong Expressway Co., Ltd. Project fund 276,415.10 319,266.57 Guangdong Maozhan Expressway Co., Ltd. Project fund 206,603.77 350,468.19 Guangdong Zhongjiang Expressway Project Project fund 197,169.81 Management Dept Guangdong Baomao Expressway Co., Ltd. Project fund 189,622.64 328,602.10 Guangdong Zhaoyang Expressway Co., Ltd. Project fund 172,641.51 246,214.16 Guangdong Yangmao Expressway Co., Ltd. Project fund 166,981.13 269,627.28 Guangdong Two Guang Expressway Co., Ltd. Project fund 164,396.55 Guangdong Jiangzhao Expressway Project fund 147,169.81 Management Center Guangdong Humen Bridge Co., Ltd. Project fund 133,435.27 115,477.34 Guangdong Triffic Industry Investment Project fund 118,867.92 101,018.80 Co.,Ltd. Guangdong Luoyang Expressway Co., Ltd. Project fund 107,547.17 53,773.58 Yunfo Gufangyun Expressway Co., Ltd. Project fund 94,622.64 50,943.40 Guangdong Taishan Coastal Expressway Project fund 59,433.96 118,867.92 Co.,Ltd. Shezhen Huiyan Expressway Co., Ltd. Project fund 53,773.58 103,765.52 Guangdong Yueyun Triffic Co., Ltd. Project fund 42,452.83 56,603.78 Guangdong Litong Technology Investment Project fund 35,384.62 208,504.28 Co., Ltd. Guang-Shen-Zhu Expressway Co., Ltd. Project fund 1,683,819.56 Guangdong West Coastal Expressway Zhuhai Project fund 312,705.95 Section Co., Ltd. Guangdong Shanfen Expressway Co., Ltd. Project fund 137,244.44 Guangdong Yuedong Expressway Industry Project fund 125,935.04 Development Co., Ltd. Guangdong West Coastal Expressway Xinhui Project fund 64,691.05 Section Co., Ltd. Guangdong Xinyue Triffic Investment Co., Bid 862.07 Ltd. Guangdong Lulutong Co., Ltd. Bid 862.07 Note (2)Related trusteeship/contract Related trusteeship or contracting in which the Company is the undertake Nil Lists of entrust/contractee Nil (3) Information of related lease The Company was lessor: 188 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report In RMB The lease income confirmed in The lease income confirmed in Name of lessee Category of lease assets this year last year Guangdong Expressway Media Co., Advertising lease 3,436,468.80 3,912,772.37 Ltd. Guangdong Tongyi Expressway Service Area Lease 5,859,573.97 6,009,052.78 Service Area Co., Ltd. Guangdong Changda Highway Equipment lease 118,974.36 Engineering Co., Ltd. - The company was lessee: In RMB The lease income confirmed in Lessor Category of leased assets Category of leased assets this year Guangdong Litong Real Eatate Office space 9,254,826.21 8,619,987.40 Investment Co., Ltd Guangdong Guanghui Advertising column lease 551,400.00 948,300.00 Expressway Co., Ltd. Zhaoqing Yuezhao Highway Advertising column lease 248,062.50 234,609.00 Co., Ltd. Zhaoqing Yuezhao Highway Equipment 116,504.85 116,504.85 Co., Ltd. Guangdong Kaiyang Equipment lease 116,504.85 116,504.85 Expressway Co., Ltd. Guangdong Maozhan Equipment lease 103,448.28 102,564.10 Expressway Co., Ltd. Guangdong Gaoda Property Office space 60,999.64 Development Co., Ltd. Guangdong Jingzhu Expressway Guangzhu North Installation lease 8,918.12 Section Co., Ltd. Guangdong Highway Office space 109,182.36 Construction Co., Ltd. Note (4)Related-party guarantee The Company was Guarantor Nil The Company was secured party In RMB Execution accomplished Guarantor Guarantee amount Start date End date or not Guangdong Communication 1,725,000,000.00 September 25,2012 March 25,2020 No Group Co., Ltd. Note: Controlling shareholder Guangdong Communication Group Co., Ltd. accepted Pacific Asset Management Co., 189 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Ltd. insurance debt investment plan to provide joint liability guarantee of principal and interest in full and unconditional irrevocable. The company held Guangzhou Guangzhu Traffic Investment Management Co., Ltd. 75% stake in Guangdong Communication Group Co., Ltd. to provide a counter-guarantee. (5) Inter-bank lending of capital of related parties In RMB Amount borrowed Related party Initial date Due date Notes and loaned Borrowed Guangdong Guanghui Expressway Co., Ltd. 45,000,000.00 May 22,2018 May 21,2019 Guangdong Guanghui Expressway Co., Ltd. 105,000,000.00 March 22,2018 September 21,2018 Ganzhou Gankang Expressway Co., Ltd. 50,000,000.00 February 2,2018 June 3,2018 Guangdong Jiangzhong Expressway Co., Ltd. 36,000,000.00 November 14,2018 November 13,2023 Loaned (6) Related party asset transfer and debt restructuring Nil (7) Rewards for the key management personnel In RMB Items Amount of current period Amount of previous period Rewards for the key management 6,638,600.00 6,003,229.80 personnel Number for the key management personnel 25 32 (8) Other related-party transactions -Capital Deposit Situation of Guangdong Provincial Communication Group Finance Co., Ltd. Items Amount of current period Amount of previous period Balance of Deposit 640,041,849.19 366,841,521.49 Interest Income 5,695,294.50 Pricing Principle Reference to the deposit rate of the people's Bank of China for the same period On December 25, 2017 and December 22, 2017, the Company signed the Cash Management Business Cooperation Agreement with Guangdong Communications Group Finance Co., Ltd. and Industrial and Commercial Bank of China Guangdong Branch and signed the Cash Management Business Cooperation Agreement with Guangdong Communications Group Finance Co., Ltd. and China Construction Bank Corporation. Guangdong Branch respectively, to join in the cash pool of Guangdong Communications Group Finance Co., Ltd. -On June 15, 2016,The company ’ s 29th meeting (Provisional) of the seventh board of directors was convened. The Proposal on Entrustment of Construction Management of the Renovation and Expansion Project of 190 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Sanbao-to-Shuikou Section of Shengyang-to-Haikou National Expressway was deliberated in the meeting, agreed that Guangdong Provincial Fokai Expressway Co., Ltd entrusts Guangdong Provincial Highway Construction Co., Ltd with the construction management of the renovation and expansion project of Sanbao-to-Shuikou Section of Shengyang-to-Haikou National Expressway, and handling the related matters of the entrustment of the construction management. 6. Receivables and payables of related parties (1)Receivables In RMB Amount at year end Amount at year beginning Name Related party Balance of Book Bad debt Provision Balance of Book Bad debt Provision Guangdong Union electron Account receivable 45,159,424.41 45,447,260.32 Servce Co., Ltd. Guangdong Humen Bridge Account receivable 12,579,159.31 9,425,822.31 Co., Ltd. Jingzhu Expressway Account receivable Guangzhu North Section 5,280,850.02 4,821,700.01 Co., Ltd. Guangdong Xinyue Traffic Account receivable 1,828,273.53 202,508.01 3,848,556.04 65,052.00 Investment Co., Ltd. Guanghui Expressway Co., Account receivable 901,822.65 4,025,633.55 Ltd. Guangdong Expressway Account receivable 873,408.00 1,274,749.50 Co., Ltd. Guangdong Highway Account receivable 358,484.00 109,152.00 626,304.00 65,491.00 Construction Co., Ltd. Guangdong Guangzhu West Account receivable 294,260.00 356,850.40 Line Expressway Co., Ltd. Guangdong Kaiyang Account receivable 178,157.15 379,837.72 Expressway Co., Ltd. Guangdong Jiangzhao Account receivable Expressway Management 156,000.00 Center Guangdong Zhongjiang Account receivable Expressway Project 95,000.00 Management Dept Guangdong Account receivable LitongTechnology 68,542.00 6,854.20 201,342.00 Investment Co., Ltd. Guangdong Taishan coastal Account receivable 63,000.00 Expressway Co., Ltd. Guangdong Yueyun Traffic Account receivable 45,000.00 Co., Ltd. Account receivable Zhaoqing Yuezhao Highway 4,829.98 191 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount at year end Amount at year beginning Name Related party Balance of Book Bad debt Provision Balance of Book Bad debt Provision Co., Ltd. Guangdong Expressway Account receivable 1,799,600.00 Media Co., Ltd. Guang-Shen-Zhu Account receivable 189,000.00 Exparessway Co., Ltd. Guangdong Nanyue Traffic Account receivable Shaogan Expressway 179,424.00 Management Center Guangdong Maozhan Account receivable 166,196.80 Expressway Co., Ltd. Guangdong Baomao Account receivable 145,038.40 Exparessway Co., Ltd. Guangdong Yuedong Account receivable Expressway Development 139,976.80 Co., Ltd. Guangdong West Coastal Account receivable 30,000.00 2,830.00 Expressway Co., Ltd. Guangdong Litong Real Advanced payment 735,092.38 700,087.62 Estate Investment Co., Ltd. Zhaoqing Yuezhao Highway Advanced payment 144,702.50 144,703.00 Co., Ltd. Other Account Guangdong Litong Real 1,505,864.00 1,505,864.00 receivable Estate Investment Co., Ltd. Other Account Guangdong Guanghui 1,478,904.68 1,463,995.66 receivable Expressway Co., Ltd. Other Account Guangdong Expressway 630,778.47 597,164.23 receivable Co., Ltd. Other Account Zhaoqing Yuezhao Highway 437,463.87 427,478.09 receivable Co., Ltd. Other Account Guangdong Xinyue Traffic 415,442.60 415,442.60 receivable Investment Co., Ltd. Other Account Guangdong Expressway 275,166.57 1,213,926.84 receivable Media Co., Ltd. Other Account Guang-Shen-Zhu 187,533.46 223,371.78 receivable Exparessway Co., Ltd. Other Account Guangdong Guangzhu West 186,371.32 187,560.16 receivable Line Expressway Co., Ltd. Other Account Guangdong Highway 129,529.29 115,058.75 receivable Construction Co., ltd. Guangdong Road &Bridge Other Account Construction Development 121,948.14 93,172.08 receivable Co., ltd. Other Account Guangdong Boda 52,467.45 52,689.46 receivable Expressway Co., Ltd. Other Account Guangdong Kaiyang 45,999.77 88,827.08 receivable Expressway Co., Ltd. 192 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount at year end Amount at year beginning Name Related party Balance of Book Bad debt Provision Balance of Book Bad debt Provision Other Account Guangdong Guangle 29,832.90 104,353.10 receivable Expressway Co., ltd. Other Account Guangdong Yangmao 29,265.49 46,778.36 receivable Expressway Co., Ltd. Other Account Guangdong Jiangzhong 28,474.26 28,942.41 receivable Expressway Co., Ltd. Other Account Guangdong Maozhan 14,074.11 17,591.49 receivable Expressway Co., Ltd. Other Account Guangdong Shenshan 12,081.56 receivable Expressway Co., ltd. Other Account Guangdong Gaoda Property 11,748.00 9,940.70 receivable Development Co., Ltd. Other Account Guangdong Humen Bridge 9,141.89 58,139.05 receivable Co., Ltd. Guangdong Other Account ShanfenExpressway Co., 8,028.80 8,028.80 receivable Ltd. Other Account Guangdong Baomao 7,633.60 7,633.60 receivable Expressway Co., Ltd. Guangdong Yuedong Other Account Expressway Industry 7,367.20 7,367.20 receivable Development Co., Ltd. Guangdong Jingzhu Other Account Expressway Guangzhu 6,202.46 63,612.63 receivable Section Co., Ltd. Other Account Yunfo Guangyun 5,831.32 11,628.49 receivable Expressway Co., Ltd. Guangdong Litong Other Account Technology Investment 5,273.00 5,273.00 receivable Co., Ltd. Other Account Guangdong Zhaoyang 4,304.00 4,309.15 receivable Expressway Co., Ltd. Other Account Guangdong Guangfozhao 3,619.10 1,685.28 receivable Expressway Co., Ltd. Other Account Guangdong YueyunTraffic 3,032.00 3,032.00 receivable Co., Ltd. Hongkong Zhuhai Macao Other Account Bridge Connection line 3,000.00 receivable management center Other Account Guangdong Chaohui 2,819.90 5,617.45 receivable Expressway Co., Ltd. Other Account Guangdong Two Guang 1,656.69 556.32 receivable Expressway Co., Ltd. Other Account Guangdong Meihe 574.17 3,367.47 receivable Expressway Co., Ltd. Other Account Heyuan Helong Expressway 467.14 1,428.35 receivable Co., Ltd. 193 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Amount at year end Amount at year beginning Name Related party Balance of Book Bad debt Provision Balance of Book Bad debt Provision Other Account Guangdong Ninghua 271.81 receivable Expressway Co., Ltd. Other Account Guangdong Hehui 90.20 receivable Expressway Co., Ltd. Guangdong West coastal Other Account Expressway Zhuhai Section 40,967.05 receivable Co., Ltd. Guangdong Jiangzhao Other Account Expressway Management 9,098.40 receivable Center Guangdong West coastal Other Account Expressway Xinhui Section 5,753.20 receivable Co., Ltd. Guangdong Nanyue Traffic Other Account Shaogan Expressway Co., 1,860.07 receivable Ltd. Other Account Guangdong Pingxing 243.34 receivable Expressway Co., Ltd. Guangdong Changda Other Non-Current Highway Engineering Co., 4,216,292.57 15,937,725.40 Assets Ltd. Other Non-Current Guangdong Xinyue Traffic 823,423.25 Assets Investment Co., ltd. Other Non-Current Guangdong Hualu Traffic 796,711.00 Assets Technology Co., Ltd. Guangdong East Thinking Other Non-Current Management Technology 268,155.00 Assets Development Co., Ltd. Guangdong Jingzhu Long-term Expressway Guangzhu 1,221,781.88 amortization costs North Section Co., Ltd. (2)Payables In RMB Name Related party Amount at year end Amount at year beginning Account payable Guangdong Highway Construction Co., Ltd. 25,630,651.00 75,980,021.00 Account payable Guangdong Changda Highway Engineering Co.,Ltd. 12,166,883.00 14,449,499.60 Account payable Guangdong Expressway Co., Ltd. 8,746,491.18 8,746,491.18 Account payable Guangdong Hualu Traffic Technology Co., Ltd. 2,913,206.00 383,282.00 Account payable Guangzhou Xinyue Asphalt Co., Ltd. 2,537,848.10 Account payable Guangdong Xinyue Traffic Investment Co., Ltd. 1,829,141.32 776,543.24 Account payable Guangdong Litong Technology Investment Co., Ltd. 1,631,800.00 2,152,850.00 Account payable Guangdong Guanghui Expressway Co.,Ltd. 551,400.00 948,300.00 Account payable Guangdong Maozhan Expressway Co.,Ltd. 120,000.00 120,000.00 194 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name Related party Amount at year end Amount at year beginning Account payable Guangdong Union Electron Service Co.,Ltd. 1.59 Interest payable Guangdong Guanghui Expressway Co.,Ltd. 1,096,200.00 Interest payable Guangdong Jiangzhong Expressway Co., Ltd. 43,065.00 Received in Guangdong Jingzhu Expressway Guangzhu North Section Co., 0.06 advance Ltd. Other Payable Guangdong Guanghui Expressway Co.,Ltd. 45,000,000.00 20,221.75 account Other Payable Guangdong Changda Highway Engineering Co.,Ltd. 11,346,061.22 3,953,559.55 account Other Payable Guangdong Union Electron Service Co.,Ltd. 3,800,226.36 2,238,981.27 account Other Payable Guangdong Xinyue Traffic Investment Co., Ltd. 1,779,918.51 1,636,943.30 account Other Payable Guangdong Hualu Communication Technology Co., Ltd. 786,185.88 181,253.14 account Other Payable Guangdong East Thinking Management Technology 531,573.69 230,713.19 account Development Co., Ltd. Other Payable Guangdong Litong Technology Investment Co., Ltd. 203,655.20 465,228.30 account Other Payable Guangzhong Jiang ExpresswayCo., Ltd. 200,491.55 200,000.00 account Other Payable Guangdong Lulutong Co., Ltd. 165,249.80 133,249.80 account Other Payable Guangdong Tongyi Expressway Service Area Co., Ltd. 120,000.00 120,000.00 account Other Payable Guangdong Expressway Media Co., Ltd. 70,000.00 70,000.00 account Other Payable Guangdong Expressway Co., Ltd. 15,342.09 350,680.10 account Other Payable Guangdong Jingzhu Expressway Guangzhu North Section Co., 9,327.00 13,553.00 account Ltd. Other Payable Guangdong Jiangzhao Expressway Management Center 7,217.12 62,047.64 account Other Payable Guangdong Baomao Expressway Co., Ltd. 3,206.11 48,950.59 account Other Payable Guangdong Traffic Industry Investment Co.,Ltd. 2,347.68 account Other Payable Guangdong Zhaoyang Expressway Co., Ltd. 2,145.78 49,171.27 account Other Payable Guangdong Yuedong Expressway Industry Development Co., 1,018.37 2,566.50 account Ltd. Other Payable Guangdong Nanyue Traffic Yunzhan Expressway Management 821.38 account Center Other Payable Guangdong Shanfen Expressway Co., Ltd. 751.35 5,843.90 account Other Payable Guangdong Highway Construction Co., Ltd. 689.83 11,158.46 account 195 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name Related party Amount at year end Amount at year beginning Other Payable Guangdong Road &Bridge Construction Development Co., Ltd. 551.99 2,435.71 account Other Payable Guangdong Nanyue Traffic Shaogan Expressway Management 546.89 account Center Other Payable Shenzhen Huiyan Expressway Co., Ltd. 391.36 946.81 account Other Payable Guangdong Luoyang Expressway Co., Ltd. 319.21 1,202.48 account Other Payable Guangdong Nanyue Traffic Zhaozhang Expressway 282.67 account Management Center Other Payable Guangdong Nanyue Traffic Renbo Expressway Management 225.79 account Center Other Payable Guangdong Boda Expressway Co., Ltd. 100.97 408.23 account Other Payable Guangdong Pingxing Expressway Co., Ltd. 45.41 account Other Payable Guangdong Kaiyang Expressway Co., Ltd. 272,445.68 account Other Payable Guangdong Jiangzhong Expressway Co., Ltd. 215,384.63 account Other Payable Guangdong Maozhan Expresswa Co., Ltd. 188,931.56 account Other Payable Guangdong West Coastal Expressway Zhuhai Section Co., 48,146.64 account Ltd. Other Payable Zhongshan Yueyun Airport EXPRESS Pessenger Transport Co., 34,568.85 account Ltd. Other Payable Guang-Shen-Zhu Expressway Co., Ltd. 20,344.23 account Other Payable Guangdong Guangzhu West Line Expressway Co., Ltd. 18,981.84 account Other Payable Guangdong Litong Information Technology Investment Co., 16,376.20 account Ltd. Other Payable Guangdong West Coastal Expressway Co., Ltd. 3,342.12 account Other Payable Guangdong Yangmao Expressway Co., Ltd. 2,817.71 account Other Payable Zhaoqing Yuezhao Highway Co., Ltd. 2,388.80 account Other Payable Guangdong Two Guang Expressway Co., Ltd. 1,603.02 account Other Payable Heyuan Helong Expressway Co., Ltd. 896.89 account Other Payable Guangdong Hehui Expressway Co., Ltd. 216.43 account Dividend Xinyue Highway Construction Co., Ltd. 12,500,000.00 payable Long-term Guangdong Jiangzhong Expressway Co., Ltd. 36,000,000.00 196 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Name Related party Amount at year end Amount at year beginning Payable XIII. Stock payment 1. The Stock payment overall situation □ Applicable √ Not applicable 2. The Stock payment settled by equity □ Applicable √ Not applicable 3. The Stock payment settled by cash □ Applicable √ Not applicable 4. Modification and termination of the stock payment Nil 5.Other Nil XIV. Commitments 1. Significant commitments Significant commitments at balance sheet date On June 15, 2016, the Company’ 29th meeting (Provisional) of the seventh board of directors was convened. In the meeting, the Proposal on Increasing Funding for Guangdong Fokai Expressway Co., Ltd pertaining to the Renovation and Expansion Project of Sanbao-to-Shuikou Section of Shengyang-to-Haikou National Expressway was examined and approved, agreed that based on the approved total investment amount by relevant government department, then the company’s subsidiary- Guangdong Fokai Expressway Co., Ltd carries out the investment and construction of the renovation and expansion project of Sanbao-to-Shuikou Section of Shengyang-to-Haikou National Expressway; the company increases funding for Guangdong Provincial Fokai Expressway Co., Ltd pertaining to the renovation and expansion project of Sanbao-to-Shuikou Section of Shengyang-to-Haikou National Expressway, with the contributed funds as a proportion of 35% of the total investment amount approved by relevant government department. The afore-said item had been examined and approved in the first extraordinary general shareholder meeting, The Company had received the approval of the National Development and Reform comission about the uandongProvincial Santbao-Shuikou Expressway Section Rebubuilding and Expansion Project(NO.1874-2016-NDRC Infrastructure Document)from Guangdong Provincel Development and reform Commission On October 11, 2016, agreed with the implementation of the Guangdong Provincial 197 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Sanbao-Shuikou Expressway Section Rebuilding and Expansion Project. It’s estimated that the total investment of this project is about 3.513 billion yuan(the static investment is about 3.289 billion yuan), of which the project capital is 1.23 billion yuan that accounts for 35% of the total investment and such amount of the project capital will be provided by Guangdong Provincial Fokai Expressway Co., Ltd, and the rest amount of 2,283 billion yuan will be solved by using bank loans. According to the "Official Reply to the preliminary design of reconstruction and extension project of Guangdong Sanbao to Shuikou Road by Ministry of Transport" (No.73-2017 Transport Road Document) issued by Guangdong Provincial Department of Transport, the Ministry of Transport checked and ratified that the general estimate of the preliminary design of reconstruction and extension project of Guangdong Sanbao to Shuikou Road is 3.426 billion yuan. As of December 31,2018, The accumulated expenses occurred of Sanboto Shuikou Highway extension project was 1.498 billion yuan. The performance of major contracts is as follows: Economic No Contract Counterparty Contract Amount Fulfilled as of December 31, 2018 Content China Railway Tunnel Group Co., Civil 1 251,026,485.00 201,831,670.00 Ltd. Engineering Guangdong Changda Highway Civil 2 624,878,240.00 195,635,425.40 Engineering Co., Ltd. Engineering China Railway 18th Bureau Group Civil 3 219,974,609.00 148,619,889.20 Co., Ltd. Engineering CCCC First Navigation Engineering Civil 4 355,014,108.00 206,039,193.12 Bureau Co., Ltd Engineering 2. Contingency (1) Significant contingency at balance sheet date This matter. did not occur in this accounting period. (2) The Company have no significant contingency to disclose, also should be stated There was no significant contingency in the Company. XV. Enents after balance sheet date 1. Significant events had not adjusted Nil 2.Profit distribution In RMB Profits or dividends to be distributed 1,175,033,042.81 Profits or dividends declared to issue after examination 1,175,033,042.81 198 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report 3.Sales return Nil 4.Notes of other significant event after balance sheet date Nil l XVI.Other significant events 1.The accounting errors correction in previous period This matter. did not occur in this accounting period. During the reporting period. 2.Debt restructuring This matter. did not occur in this accounting period. During the reporting period. 3.Replacement of assets (1)Non-monetary assets exchange Nil (2)Replacement of other assets Nil 4.Pension plan The company does not disclose the pension plan undisclosed matter should exist. 5.Discontinuing operation This matter did not occur in this accounting period. During the reporting period,. 6. Segment information The company's business for the Guangfo Expressway , the Fokai Expressway and Jingzhu Expressway Guangzhu Section toll collection and maintenance work, the technology industry and provide investment advice, no other nature of the business, no reportable segment. (4)Other note 7.Other important transactions and events have an impact on investors decision-making 8.Other (1)June 15,2007 early in the morning, The 325 Jiujiang Bridge collapsed on # 23 pier for ―Nanguijii 035# collision owned by the controlling subsidiary of the company Guangdong Fokai Expressway Company leads the collapse and the traffic jam of 200 meters long of the Jiujiang Bridge. On June 10, 2009, Jiujiang Bridge opened 199 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report to traffic has been restored. On June 19,2007 , The Ministry of Communications, the State Production Safety Supervision and Administration Commission issued the JiaoAnWeiming File [2007] No. 8 "Notification on the Guangdong"6.15 "Jiujiang Bridge Collision Accident", initially determined the causes of the accident are: the incident ship suddenly met heavy fog on the way from Foshan Gaoming to Sunde, the captain neglected looking out, did not take proper measures and deviated from the main channel, touched the 325 National Road Jiujiang Bridge the non-navigation bridge pier and caused the collapsion of part of the Jiujiang bridge. The accident was an unilateral On July 19,2007,Fokai Company applied preservation of property to Guangzhou Maritime Court.On August 22,2007,Fokai Company officially prosecuted to Guangzhou Maritime Court, asking Foshan South Sea Shipping Company Limited and Yang Xiong to undertake the compensation 25,587,684 yuan for the loss caused by collapsing of Jiujiang Bridge. On August 28, 2007, Guangzhou Maritime Court accepted the case. According to the (2007)-Canton Haifa No. 332 ruling book issued by Guangzhou Maritime Court, the proceeding of the case was suspended. After the court accepted the case, the incident investigation team of Guangdong Provincial Government had not made the final report of Jiujiang Bridge accident. The Court, on November 5, 2007, decided to suspend the proceeding. In September 2008, Jiujiang Bridge accident investigation report was officially reported and resumed the proceedings. On December 5, 2008, Guangzhou Marine Court opened a court trial to procceeded the case. Currently, Guangzhou Haizhu prosecutorial office was intend to prosecute the accident captain Shi Guide, therefore, on January 5, 2009, Guangzhou Maritime Court ruled the suspension of the case. On September 17, 2013, the Guangzhou Maritime Court issued a notice of civil and eliminate the cause of suspension of proceedings, the court decided to resume the trial. On December 19, 2013, the Guangzhou Maritime Court opened a court session, has not yet made the first-instance judgment. On March 7, 2014 the Court made the first instance verdict: the defendant Foshan Nanhai Yuhang ship Services Co., Ltd. and Yang Xiong compensated the plaintiff Fokai Expressway Co., Ltd. toll revenue losses of 19,357,500.96 yuan; the court dismissed the plaintiff other aspirations. The defendant appealed to the Higher People's Court of Guangdong Province, the Guangdong Provincial Higher People's Court ruled on June 5, 2014, the case discontinued proceedings. By the end of the report period, the abatement of action causes are already removed and the provincial higher court restores the hearing and conducts the investigation on April 21, 2017. (2)The 26th (Provisional)Meeting of the sixth board of directors of Guangdong Provincial Expressway Development Co., Ltd. was held of May 10, 2012. The meeting examined and adopted the proposal Concerning the Company ’ s Accepting the insurance Bond Investment Plan of Pacific Asset Management Co., Ltd. The Company was approved to accept the insurance bond investment plan made by Pacific Asset Management Co., Ltd. The amount of proceeds to be raised is not more than 1.5 billion yuan . Floating interest rate plus guaranteed base interest rate applies as the interest rate. The Floaing interest rate shall not exceed the basic interest rate of RMB loan with a term of over five years on the day when the investment fund of the insureance company is transferred into the Company’s account and the corresponding days of the future years, which shall be adjusted once each year. The guaranteed base interest rate is 5.6%. The concrete amount of raised proceeds shall be within maximum limit of investment fund filed with CIRC. The actual amount wholly transferred to the Company shall apply. The final interest rate is subject to investment Contract for Bond Investment Plan between Pacific and Guangdong Expressway Filed with CIRC. It was approved to authorize the management of the Company to implement the above-mentioned matters. The Company was approved to provide counter guarantee to Guangdong Communication Group 200 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Co.,Ltd.with 75% equity of Guangdong Fokai Expressway Co., Ltd. Held by it . as of December 31, 2016, the company has borrowed 1.5 billion yuan. (3)On February 5, 2016, the company received the Approval of the Share-Issuing to Parties such as Guangdong Provincial Expressway Co., Ltd to Purchase Assets and Raise Matching Funds by Guangdong Provincial Expressway Development Co., Ltd(CSRC No.230-2016 Zheng Jian Xu ke) issued from CSRC; the company’s scheme on share-issuance for purchasing assets and raising matching funds had been examined and approved by the Audit Committee of CSRC on Verifying and Approving Mergers, Acquisitions and Restructuring of Listed Companies. The company has completed asset restructuring in June 2016. During the profit compensation period, in the case that the actual profits of the underlying company were less than the committed profits, respectively the counterparts of Guangdong Provincial Expressway Co., Ltd and Guangdong Provincial Highway Construction Co., Ltd shall assume the obligation of compensation for the profit difference according to their equity proportion of Guangdong Provincial Fokai Expressway Co., Ltd and Guangzhou Guangzhu Traffic Investment Management Co., Ltd. The profit compensation period is three years from 2016-2018. Agreed by the company and Guangdong Provincial Expressway Co., Ltd, the profits of Fokai Expressway Co., Ltd in year-2016, year-2017 and year-2018 by estimation shall accordingly be 250.6973 million yuan, 260.0802 million yuan and 403.1197 million yuan, with the aggregated non-recurring gains and losses were expected to be 105.5743 million yuan. During the compensation period, in the case that the cumulative net profits of Fokai Expressway Co., Ltd in a certain year realized at the end of the year are less than the estimated cumulative net profits of the year, the company will, at the price of 1.0 yuan per share, buy-back the shares calculated in accordance with the agreement for the purpose of compensation and those shares will be written off, and if the amount of compensation exceeds the consideration of those shares being bought-back, Guangdong Provincial Expressway Co., Ltd will compensate that part in cash. At the expiration of the compensation period, if the accumulative actual non-recurring gains and losses (referring to the government ’ s compensation to Guangdong Provincial Fokai Expressway Co., Ltd due to the cancellation of toll charge of Jiujiang bridge, hereinafter shortly named as “Jiujiang Bridge Compensation”) of Fokai Expressway Co., Ltd were less than the estimated accumulative non-recurring gains and losses, Guangdong Provincial Expressway Co., Ltd will, upon the basis of the stake proportion held by Fokai Expressway Co., Ltd before the major asset restructuring, compensate in cash to the company in accordance with the agreement; If it is after the expiration of the compensation period, every time when Fokai Expressway Co., Ltd received Jiujiang Bridge Compensation, the company should refund the corresponding part which had been paid by Guangdong Provincial Expressway Co., Ltd for the compensation in accordance with the agreement to Guangdong Provincial Expressway Co., Ltd within 30 working days started from the date Fokai Expressway Co., Ltd received such compensation. Agreed by the company and Guangdong Provincial Highway Construction Co., Ltd, the profits of Guangzhou Guangzhu Traffic Investment Management Co., Ltd in year-2016, year-2017 and year-2018 by estimation shall accordingly be 230.3606 million yuan, 263.2329 million yuan and 286.5018 million yuan. During the compensation period, in the case that the cumulative net profits of Guangzhou Guangzhu Traffic Investment Management Co., Ltd realized at the end of the year are less than the estimated cumulative net profits of the year, the company will, at the price of 1.0 yuan per share, buy-back the shares held by Guangdong Provincial Highway Construction Co., Ltd with the quantity being calculated upon the agreement for compensation and those shares will be written off. Guangdong Fokai Expressway Co., Ltd. in 2016 the actual profit (excluding non-) by 286.1655 million yuan, more than the commitment to profit more than 35.4682 million yuan; In 2017 ,the simulated actual profit 201 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (excluding non-) by 314.7091 yuan, more than the commitment to profit more than 54.6289 million yuan; In 2018 ,the simulated actual profit (excluding non-) by 373.7611 yuan, more than the commitment to profit more than 29.3586 million yuan; As of the end of 2018, the cumulative simulated actual profit (deducted the non-recurring gains and losses) was 974,635,700 yuan, which was 60,738,500 yuan more than the accumulated promised profit. And the compensation of 140,765,700 yuan for the losses arising from the promised ahead-of-time cancellation of fees charge of Jiujiang Bridg was received in full. Guangzhou Guangzhu Traffic Investment Management Co., Ltd. in 2016 the actual profit (excluding non-) by 271.7759 million yuan, more than the commitment to profit more than 41.4153 million yuan; In 2017 ,the actual profit (excluding non-) by 321.5034 yuan, more than the commitment to profit more than 58.2705 million yuan; In 2018 ,the simulated actual profit (excluding non-) by 324.7562 yuan, more than the commitment to profit more than 38.2544 million yuan; As of the end of 2018, the cumulative actual profit was 918.0355 yuan, which was 137.9402 million yuan more than the accumulated promised profit. (4)On April 10, 2018, the company received a letter from the shareholder Yadong Fuxingn Yalian Investment Co., Ltd. On February 8, 2018, Yadong Fuxing Company pledged in batches of the Guangdong Expressway A shares that were previously pledged in the Guotai Junan Securities Co., Ltd, and handled the stock pledge financing agreement of Guangdong Expressway A shares with the China Yinhe Securities Co., Ltd. The 141,600,000 shares held by the Yadong Fuxing Company and accounted for 6.77% of the company's total share capital were pledged to the China Yinhe Securities Co., Ltd for the financing, with the pledge period starting from April 3, 2018. On June 28, 2018, Yadong Fosun added 15,052,500 shares of Guangdong Expressway A shares in pledge to China Galaxy Securities Co., Ltd. to replenish the pledge in order to withdrawal of stock dividends in the account. As of the date of approval of report of this financial statement, Yadong Fosun holds 202,429,149 A shares of the Company, accounting for 9.68% of the total share capital of the Company, of which 156,652,500 shares are pledged-accounting for 7.49% of the total share capital of the Company. (5) The nineteenth (interim) meeting of the eighth board of directors of the company was held on August 7, 2018. The meeting deliberated and adopted the proposal on the Issuance of medium-term bills , agreeing that the company's registration quota in the China Interbank Market Traders Association (hereinafter referred to as "Traders Association") should not exceed 3.4 billion yuan (including) of the votes, and the quota should be within 40% of the company's net assets audited in the latest issue. Apply for one-time or staged issuance, the period is not less than 5 years (including 5 years), raise funds for repayment of loans and supplementary operating funds, etc. The matter has been adopted by the first provisional shareholders'meeting in 2018. On January 4, 2019, the Traders'Association issued the Notice of Acceptance of Registration (MTN9 of Zhongshi Association [2019]), accepting the registration amount of the company's medium-term bills for 3.4 billion yuan. The amount of registration is valid for two years from the date of accepting the payment of the registration notice, and is jointly underwritten by Industrial and Commercial Bank of China and China Construction Bank Limited. From February 27 to 28, 2019, the company issued the first interim bills of 2019 with a total amount of 680 million yuan. The fund raised was transferred to the designated account of the company on March 1, 2019. 202 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report XVII.Notes of main items in financial reports of parent company 1.Note receivable and Account receivable In RMB Items Year-end balance Year-beginning Note receivable 0.00 0.00 Account receivable 18,405,847.15 19,001,899.29 Total 18,405,847.15 19,001,899.29 (1)Note receivable Nil (2)Account receivable (1)Account receivable classified by category In RMB Year-end balance Year-beginning Provision Provision for Book balance for bad Book balance bad debts Category debts Book value Book value Prop Propor Proporti Amou Proportio Amoun Amount ortio Amount tion(% on(%) nt n(%) t n(%) ) Account receivable with single major amount and 18,405,847.15 100.00% 18,405,847.15 19,001,899.29 100.00% 19,001,899.29 withdrawal bad debt provision for single item Total 18,405,847.15 100.00% 18,405,847.15 19,001,899.29 100.00% 19,001,899.29 - Receivable accounts with large amount individually and bad debt provisions were provided √Applicable □Not applicable In RMB Year-end balance Name Receivable accounts Bad debt provision Proportion Reason Guangdong Union It is expected to be fully recovered after a Electronic Services Co., 18,405,847.15 single test Ltd. Total 18,405,847.15 -- -- Account receivable on which bad debt provisions are provided on age basis in the group: □ Applicable √ Not applicable In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: 203 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report □ Applicable √ Not applicable In the groups, accounts receivable adopting other methods to accrue bad debt provision:: Nil (2)Accrual period, recovery or reversal of bad debts situation The current amount of provision for bad debts is 0.00 yuan ; recovery or payback for bad debts Amount is 0.00 yuan. Where the current bad debts back or recover significant amounts:Nil (3)The current accounts receivable write-offs situation Nil (4)The ending balance of other receivables owed by the imputation of the top five parties Name Amount Aging Proportion(%) Bad debt provision Guangdong Union Electronic Services Co., Ltd. 18,405,847.15 Within 1 year 100.00 Total 18,405,847.15 100.00 (5)Account receivable which terminate the recognition owning to the transfer of the financial assets Nil (6)The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Nil 4.Other accounts receivable In RMB Items Balance in year-end Balance in year-begin Interest receivable 1,880,148.12 2,070,385.95 Dividend receivable 1,205,472.90 10,000,000.00 Other 6,238,161.64 5,298,202.17 Total 9,323,782.66 17,368,588.12 (1)Interest receivable 1) Classification of interest receivable In RMB Items Balance in year-end Balance in year-begin Entrusted loan 1,880,148.12 2,070,385.95 Total 1,880,148.12 2,070,385.95 2) Important overdue interest Nil 204 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2)Dividend receivable 1) Dividend receivable In RMB Items Balance in year-end Balance in year-begin Jingzhu Expressway Guangzhu Section Co., Ltd. 10,000,000.00 Guangdong Radio and Television Networks investment No.1 Limited partnership 1,205,472.90 enterprise Total 1,205,472.90 10,000,000.00 (2)Significant dividend receivable aged over 1 year Nil 205 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3)Other accounts receivable (1) Other accounts receivable disclosed by category In RMB Balance in year-end Balance in year-begin Book Balance Bad debt provision Book Balance Bad debt provision Type Amount Proportion Amount Proportion(%) Book value Amount Proportion Amount Proportion(%) Book value (%) (%) Other Account receivable with single major amount 30,844,110.43 83.18% 30,844,110.43 100.00% 32,084,893.35 82.44% 32,084,893.35 100.00% and withdrawal bad debt provision for single item Other Account receivable withdrawal bad debt 6,238,161.64 16.82% 6,238,161.64 6,832,189.43 17.56% 1,533,987.26 22.45% 5,298,202.17 provision by group of credit risk characteristics Total 37,082,272.07 100.00% 30,844,110.43 83.18% 6,238,161.64 38,917,082.78 100.00% 33,618,880.61 86.39% 5,298,202.17 206 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Other receivable accounts with large amount and were provided had debt provisions individually at end of period. √ Applicable □ Not applicable In RMB Other Balance in year-end receivable Bad debt (Unit) Other receivable Proportion Reason provision The parent company once paid 33,683,774.79 yuan into Kunlun Securities Co., Ltd, Guangdong Expressway technology investment Co., Ltd once paid 18,000,000.00 yuan into Kunlun Securities Co., Ltd. Qinghai Province Xining City’s intermediate people’s court made a adjudication under law declared that Kunlun Securities Co., Ltd went bankrupt and repaid debt in November 11, 2006. On March Kunlun 2007, The Company and Guangdong Expressway Technology Sercurities 30,844,110.43 30,844,110.43 100.00% Investment Co., Ltd had switched the money that paid into Kunlun Co.,Ltd. Secutities Co., Ltd to other account receivable, and follow the careful principle to doubtful debts provision. The 485,392.67 yuan Credit was Recovered in 2008, and the provision for bad debt is deducted, The 667,959.27 yuan credit was recovered in 2011, and the provision for had debt is deducted.The 445,529.50 yuan Cridit was recovered in 2014, The 1,240,782.92 yuan Cridit was recovered in 2018, and the provision for had debt is deducted. Total 30,844,110.43 30,844,110.43 -- -- Other receivable accounts in Group on which bad debt provisions were provided on age analyze basis: √Applicable □Not applicable In RMB Amount in year-end Aging Other receivable Bad debt provision Withdrawal proportion Subitem within 1 year Subtotal within 1 year 3,193,326.76 Total 3,193,326.76 Notes of the basis of recognizing the group: In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Not applicable In the groups, other accounts receivable adopting other methods to accrue bad debt provision: √ Applicable □ Not applicable Amount in year-end Name Other account Bad debt Withdrawal Reason receivable provision proportion(%) Quality guarantee 1,930,943.00 Deposit, Guarantee Related party transactions within the scope of 650,400.00 Related party merger transactions Other 463,491.88 Related party transactions Total 3,044,834.88 Other receivables with minor individual amount and bad debt provision provided individually Nil 207 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2)Accrual period, recovery or reversal of bad debts situation The current amount of provision for bad debts is 0.00 yuan; recovery or payback for bad debts Amount is1,240,782.92 yuan. Where the current bad debts back or recover significant amounts In RMB Name Amount Way Reason Basis It is not expected to Kunlun Securities Co., Ltd. 1,240,782.92 Received bank deposit recover the full provision Liquidation group allocation for bad debts Total 1,240,782.92 -- (3)The actual write-off other accounts receivable In RMB Items Amount The actual write-off other accounts receivable 1,533,987.26 Including significant other receivable: In RMB Writing-off Name Nature Amount Reason Related transaction procedure Heshan Traffic Real estate It is not expected to Other 1,470,000.00 Board approval No Development Co.,Ltd. recover Total -- 1,470,000.00 -- -- -- Note: (4) Other accounts receivable classified by the nature of accounts In RMB Nature Closing book balance Opening book balance Securities trading settlement funds balance 30,844,110.43 32,084,893.35 Guarantee deposit 1,930,943.00 1,929,135.70 Pretty cash 1,605,100.00 1,505,100.00 Advertising and service fee 203,133.13 Other 2,051,718.64 3,194,820.60 Related transactions within the scope of consolidation 650,400.00 Total 37,082,272.07 38,917,082.78 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party In RMB Name Nature Closing balance Aging Proportion of the Closing balance of 208 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report total year end bad debt provision balance of the accounts receivable(%) Kunlun Securities Securities trading se 30,844,110.43 Over 5 years 83.18% 30,844,110.43 Co.,Ltd ttlement funds Guangdong Litong Real Estates Deposit 1,505,864.00 1-2 years 4.06% Investment Co., Ltd. Pretty cash Pretty cash 1,270,000.00 Within 1 year 3.42% Guangdong Expressway Receivable rent 650,400.00 Within 1 year 1.75% Technology Investment Co., Ltd. Guangdong Entrustment 463,491.88 3-4 years 1.25% Expressway Co., Ltd. management fee Total -- 34,733,866.31 -- 93.66% 30,844,110.43 (6) Accounts receivable involved with government subsidies Nil (7) Other account receivable which terminate the recognition owning to the transfer of the financial assets Nil (8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable Nil 3. Long-term equity investment In RMB End of term Beginning of term Items Impairment Impairment Book Balance Book value Book Balance Book value provision provision Investment in 1,533,665,008.81 1,533,665,008.81 5,169,662,219.66 5,169,662,219.66 subsidiaries Investment in joint ventures and 3,145,644,970.07 3,145,644,970.07 3,047,275,000.00 3,047,275,000.00 associates Total 4,679,309,978.88 4,679,309,978.88 8,216,937,219.66 8,216,937,219.66 (1)Investment to the subsidiary In RMB Withdrawn Closing balance impairment Name Opening balance Increase Decrease Closing balance of impairment provision in the provision reporting period Guangfo 154,982,475.25 154,982,475.25 209 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Expressway Co., ltd. Guangdong Expressway Technology 95,731,882.42 95,731,882.42 Investment Co., Ltd. Guangdong Fokai Expressway Co., 3,635,997,210.85 3,635,997,210.85 0.00 Ltd. Guangzhou Guangzhu Communication 859,345,204.26 859,345,204.26 Investment Management Co., Ltd. Jingzhu Expressway 419,105,446.88 419,105,446.88 Guangzhu Section Co., Ltd. Yuegao Capital Investment 4,500,000.00 4,500,000.00 (Hengqin) Co., Ltd. Total 5,169,662,219.66 3,635,997,210.85 1,533,665,008.81 210 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (2)Investment to joint ventures and associated enterprises In RMB Increase /decrease in reporting period Closing Adjustment of balance of Name Opening balance Declaration of Closing balance Add Decreased Gain/loss of other Other equity Withdrawn impairment impairmen cash dividends Other investment investment Investment comprehensive changes provision t provision or profit income I. Joint ventures Guangdong Guanghui 949,906,833.96 290,709,616.82 26,710,620.00 274,805,847.20 992,521,223.58 Expressway Co., Ltd. ZhaoqingYuezhao 291,906,117.18 58,355,080.40 43,088,859.48 307,172,338.10 Highway Co., Ltd. Subtotal 1,241,812,951.14 349,064,697.22 26,710,620.00 317,894,706.68 1,299,693,561.68 II. Associated enterprises ShenzhenHuiyan 196,197,198.21 34,356,558.66 230,553,756.87 Expressway Co., Ltd. Guangdong Jiangzhong 173,502,304.11 11,806,234.72 9,983,895.07 175,324,643.76 Expressway Co., Ltd. Ganzhou Kangda 208,768,922.86 32,216,095.66 21,000,000.00 219,985,018.52 Expressway Co., Ltd. Ganzhou Gankang 204,404,703.35 5,591,207.36 209,995,910.71 Expressway Co., Ltd. Guangdong Yueke Technology Petty 215,548,332.90 15,134,350.84 10,989,125.47 219,693,558.27 Loan Co., Ltd. Guoyuan Securities 807,040,587.43 15,703,921.74 -20,400,286.56 -5,404.45 11,940,297.90 790,398,520.26 Co.,Ltd. Subtotal 1,805,462,048.86 114,808,368.98 -20,400,286.56 -5,404.45 53,913,318.44 1,845,951,408.39 Total 3,047,275,000.00 463,873,066.20 -20,400,286.56 26,705,215.55 371,808,025.12 3,145,644,970.07 211 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report (3)Other note 4. Business income and Business cost In RMB Amount of current period Amount of previous period Items Revenue Cost Revenue Cost Main business 1,327,567,186.19 707,219,409.98 553,779,699.47 330,893,919.46 Other 79,985,567.22 7,948,012.97 80,104,649.29 4,015,303.85 Total 1,407,552,753.41 715,167,422.95 633,884,348.76 334,909,223.31 Other note 5.Investment income In RMB Items Amount of current period Amount of previous period Long-term equity investment income 621,221,266.51 1,095,070,873.20 accounted by cost method Long-term equity investment income 463,873,066.20 423,940,445.45 accounted by equity method Investment loss through disposal of 685,975,224.36 long-term equity investment Investment income received from holding of 43,786,617.76 24,327,921.74 available-for –sale financial assets Total 1,814,856,174.83 1,543,339,240.39 XVIII. Supplementary Information 1.Current non-recurring gains/losses √ Applicable □Not applicable In RMB Items Amount Notes Gains/Losses on the disposal of non-current assets 63,173,138.25 Government grants recognized in the current period, except for those acquired in the ordinary course of 1,113,228.32 business or granted at certain quotas or amounts according to the country’s unified standards Net amount of non-operating income and expense -1,545,368.05 except the aforesaid items After the cancellation of Guangdong Fokai Expressway Co., Ltd., the deferred income tax assets of Less: .Amount of influence of income tax -230,679,518.30 246,010,541.19 yuan were recognized for the loss of equity disposal. Amount of influence of minority interests 11,833,729.46 212 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report Total 281,586,787.36 -- For the Company ’ s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Companies Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason. □ Applicable √Not applicable 2. Return on equity (ROE) and earnings per share (EPS) EPS(Yuan/share) Profit as of reporting period Weighted average ROE (%) EPS-basic EPS-diluted Net profit attributable to common 18.37% 0.80 0.80 shareholders of the Company Net profit attributable to common shareholders of the Company after deduction of non-recurring profit 15.29% 0.67 0.67 and loss 3. Differences between accounting data under domestic and overseas accounting standards (1) Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards □ Applicable √Not applicable (2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards □ Applicable √Not applicable (3) Explain reasons for the differences between accounting data under domestic and overseas accounting standards, for audit data adjusting differences had been foreign audited, should indicate the name of the foreign institutions Nil 213 Guangdong Provincial Exppressway Development Co., Ltd. 2018 Annual Report XII. Documents Available for Inspection 1. Accounting statements carried with personal signatures and seals of legal representative, Chief Financial officer and Financial Principal. 2. Original of Auditors’ Report carried with the seal of Certified Public Accountants as well as personal signatures of certified Public accountants. 3. The texts of all the Company's documents publicly disclosed on the newspapers and periodicals designated by China Securities Regulatory Commission in the report period. 214