Zhejiang Expressway Co., Ltd. and China Merchants Expressway, a connected person of the Company at the subsidiary level, entered into the JV Agreement, pursuant to which the parties agree to form the Joint Venture in the PRC for the purpose of Acquisition. Upon completion of the Acquisition, the Joint Venture will hold 60% of equity interest in the Target Company. As one or more of the percentage ratios applicable to the formation of the Joint Venture exceed 5% and are less than 25%, formation of the Joint Venture constitutes a discloseable transaction for the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

By virtue of Rule 14A.101 of the Listing Rules, as (i) China Merchants Expressway is a connected person of the company at subsidiary level; (ii) the Board has approved formation of the Joint Venture under the JV Agreement; and (iii) the independent non-executive Directors have confirmed that terms of the JV Agreement are fair and reasonable, the JV Agreement is on normal commercial terms or better and in the interests of the Company and Shareholders as a whole, the JV Agreement and formation of the Joint Venture contemplated thereunder are subject to the reporting and announcement needs but are exempted from the circular, independent financial advice and Shareholders' approval requirements under Chapter 14A of the Listing Rules. As the Joint Venture will not be a subsidiary of the Company, the accounts of the Target Company and that of the Joint Venture will not be consolidated into the accounts of the Company. The Company and China Merchants Expressway will jointly establish the Joint Venture to engage in enterprise headquarters management, equity investment, road management and maintenance, expressway investment.

Pursuant to the Equity Acquisition Agreement, upon establishment, the Joint Venture shall act as the acquiring entity in the Acquisition and thus shall assume all the rights and obligations as the transferee under the Equity Acquisition Agreement. Pursuant to the equity Acquisition Agreement and subsequent arrangements, upon completion of the Acquisition, the joint Venture will hold 60% equity interest in the Target Company; Meanwhile, as at September 30, 2023, the outstanding balance of accounts receivable owed by Liantai Communications to the Target Company amounted to RMB 1,332.37 million, where the Joint Venture has agreed to assume 60% of the outstanding balance at the amount of RMB 7799.42 million. As the Joint Venture will Not be a subsidiary of the Company.

As the Joint Venture will no be a subsidiary of the Company., the accounts of the Target Company, the accounts of the target Company and that of the Joint venture will not be consolidated into the account of the Company.