CAR : Annual Report 2020

• 2 Chief Executive Officer's Statement

• 4 Financial Highlights

• 5 Business Overview and Strategies

• 8 Management Discussion and Analysis

• 22 Profile of Directors and Senior Management

• 31 Corporate Governance Report

• 51 Report of the Directors

• 81 Environmental, Social and Governance Report

• 123 Independent Auditors' Report

• 129 Consolidated Statement of Profit or Loss

• 130 Consolidated Statement of Comprehensive Income

• 131 Consolidated Statement of Financial Position

• 134 Consolidated Statement of Changes in Equity

• 135 Consolidated Statement of Cash Flows

• 138 Notes to Financial Statements

• 274 Five-Year Financial Summary

• 275 Corporate Information

CHIEF EXECUTIVE OFFICER'S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors (the "Board") of CAR Inc. ("CAR" or the "Company"; together with its subsidiaries, the "Group"), I am pleased to present the Group's annual results for the year ended 31 December 2020 (the "Reporting Period").

In 2020, the COVID-19 pandemic has spread across the world and the domestic economy has experienced unprecedented challenges. The impacts were relatively severe in the first and second quarters. Along with the effective control of the pandemic in the second half of the year, and the gradual recovery of social order and the retail consumption, the economy has recovered significantly. The gross domestic product ("GDP") of the fourth quarter increased by over 6.5% year-on-year. Throughout the year, the growth rate of GDP was 2.3%.

On the other hand, China's automobiles related industries were challenging, particularly in the pandemic during the beginning of the year. The consumption sentiment got slowdown and the activity restrictions imposed in different places resulted in even worse situation. Facing the challenging automobile travel market, the Company has adopted a flexible pricing strategy and launched a rental programme with longer rental discount term, while enhancing the intelligent mobile business to satisfy the demand of customers for self-served and touchless car rental services during the pandemic. At the end of December in the previous year, self-served transactions represented 91% of the total reservations, and 99% car rental reservation were made through the mobile APP (2019: 94%).

Along with the economic recovery, and the various optimization management, the Company's business has significantly improved in the second half of the year. The rental revenue and the sales revenue of used vehicles increased by 28% and 24%, respectively as compared to those in the first half of the year, which did not fully offset the impacts brought by the demand decline in the first half, resulting in total revenue and adjusted EBITDA of the year amounted to RMB6,124 million and RMB2,019 million, respectively, decreased by 20.4% and 41.7% year-on-year, respectively.

To optimize the debt structure, the Company has repaid all maturities on time during the Reporting Period and prepaid indebtedness before maturities to support long term bank relationships. During the Reporting Period, the Company has sold 38,378 used vehicles, representing an increase of approximately 30% as compared with that in the last year.

CHIEF EXECUTIVE OFFICER'S STATEMENT

During the Reporting Period, the equity change caused no effects to the operation of the Company. The Company has always kept track of the business operating strategies thoroughly. MBK Partners, a Korean private fund, has become the largest shareholder of the Company. MBK Partners has proposed to privatize CAR Inc. as a wholly-owned subsidiary of MBK Partners. The privatization is expected to be completed in mid-2021.

In fact, as the leader of the car rental industry in China, CAR Inc. is well-equipped with high brand awareness, strong fleet size and optimized operating management, and understanding of the Chinese market and preference and needs of consumers and possessed a good business foundation. With the abundant experience of MBK Partners in the industry and strong financial capability, the Company will maintain our business innovation and seek for improvement in stability to provide the best car rental service to consumers and consolidate our leadership in the industry.

The Company will learn from the experience of MBK Partners investing in the travel industry, continue to explore new business model, expand and upgrade automation and reduce operational costs, further enhance operational efficiency and leverage the strong the big data analytic system. In terms of business exploration, the Company will enhance the sales in operation with better deployment, compete for new customers and cultivate new needs of existing customers and seize the opportunities amongst the rapid rebound after the pandemic.

In addition, the Company will also proactively optimize the repayment amounts and schedules while enhancing the cost control to maximize liquidity. As the acquisition of the Company's equity by MBK Partners materialized, the shareholding structure has been stabilized. CAR Inc. will have significant improvements in terms of capital structure and creditworthiness.

Looking forward, despite the uncertainties in market and fierce competition in the industry, a new setting of double-cycle development that China focuses on domestic cycle and international and local sectors facilitate mutually is duly formed. The domestic demand increases stably with large market potential of servicing industry including car rental business. CAR Inc. will work closely with MBK Partners to move forward under the strong corporate operational foundation with its own advantages and develop a more energetic and healthier car rental industry in China.

Finally, on behalf of the Board and the management, I would like to express our gratitude to our shareholders for their tremendous support during the past year. Furthermore, the Company would also like to express its gratitude to all employees for their efforts to overcome challenges with CAR Inc. and express its gratitude to our customers for their continuous support and recognition.

Yifan SONG

CAR Inc.

Chief Executive Officer

Hong Kong, 15 March 2021

FINANCIAL HIGHLIGHTS

Year ended 31 December

(in RMB millions, except otherwise stated)

• (1) Adjusted EBITDA, adjusted net (loss)/profit and free cash flow are non-IFRS measures. Please refer to "Management Discussion and Analysis - Non-IFRS Financial Reconciliation" for details.

• (2) These margins are presented as a percentage of total rental revenue.

I. BUSINESS OVERVIEW

2020 ended with a promising start. Towards the end of 2020, the Company moved several big steps ahead. The Company ultimately brought in a reputable shareholder and subsequently raised a sizeable funding to strengthen liquidity. In December 2020, MBK Partners, through its affiliate Indigo Glamour Company Limited (the "Offeror"), completed the acquisition of approximately 21% of the total issued share capital of the Company. In the following month, Mcqueen SS Ltd., an affiliate of MBK Partners, subscribed for an aggregate of USD175 million convertible bonds of the Company. The two milestones signalled a reboot of the Company after the prolonged impact of novel coronavirus ("COVID-19") and uncertainty of shareholding structure.

Despite the periodic disruption of mobility activities by the outbreak of COVID-19 throughout 2020 and the normal seasonal declines in the fourth quarter, the Company experienced an increasing pace of recovery in the second half of the year. During the Reporting Period, the Company recorded a recovered adjusted EBITDA of approximately RMB2,019 million, RMB1,202 million of which was generated in the second half of 2020, representing an increase of 47.2% as compared with that in the first half of 2020. Rental revenue and revenue from sales of used vehicles also showed a meaningful rebound at the same time. For the six months ended 31 December 2020, rental revenue was RMB2,187 million, representing an increase of 21.1% over the first half of 2020, revenue from sales of used vehicles was RMB1,179 million, representing an increase of 23.8% over the first half of 2020. In 2020, the Company generated a record high inflow of free cash flow of RMB4,929 million, safeguarding the Company against the outbreak of the COVID-19 pandemic and temporal financing limitations resulted from delicate shareholding structure at the time. In the difficult year of 2020, the Company has repaid all interests and maturities on time, and proactively communicated with lenders from time to time to prepay loans before maturities in a manageable manner to relieve lenders' concerns in order to support long term relationship. During the Reporting Period, the Company repaid a total of over RMB8 billion to lenders.

Looking back to the year of 2020, since early 2020, the outbreak of COVID-19 has caused an unprecedented decline in rental demand, which materially affected the Company's business performance. For the year of 2020, the Company's total revenue, which includes rental revenue and revenue from sales of used vehicles, was RMB6,124 million, representing a decrease of 20.4% year-over-year. During the Reporting Period, the Company recorded a net loss of RMB4,163 million, compared with a net profit of RMB31 million during the year ended 31 December 2019, mainly due to a decrease of 28.2% in rental revenue to RMB3,994 million, mostly attributed to the outbreak of COVID-19, the significant impairments of (a) the equity investment in UCAR Inc. ("UCAR") of approximately RMB2,801 million; (b) trade receivables from related parties and other customers, who were mostly customers leasing vehicles from the Company, of approximately RMB593 million; (c) the prepayment of the subscription price of the shares and convertible bonds to be issued by FDG Electric Vehicles Limited (a company listed on the main board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), stock code: 729, "FDG") of approximately RMB86 million; and (d) adjustment of approximately RMB499 million of the residual values of all vehicles manufactured by Beijing Borgward Auto Co., Ltd. ("Borgward").

During the Reporting Period, car rental revenue was RMB3,755 million, representing a decrease of 23.6% year-over-year due to the significant impact of the outbreak of COVID-19. ADRR decreased by 13.8% year-over-year to RMB181, as a result of pricing initiatives to stimulate demand. Utilization rate was 53.3% due to weak demand as a result of the outbreak of COVID-19. Digital and paperless operations have continued to evolve. In December 2020, the Company's self-served transactions increased to 91% of total reservations. In the fourth quarter, 99% of the Company's car rental reservations were made through the Company's mobile APP.

As at 31 December 2020, the total fleet size was 109,688(1). During the Reporting Period, the Company disposed of 38,378 used vehicles, compared with 29,203 vehicles for the same period of 2019. The sales of used vehicles generated a revenue of RMB2,131 million. The cost-to-sales ratio of used vehicles was 103.7%.

Note:

(1) The total fleet size was 109,688, including 5,000 vehicles leased from a financial institution.

II. STRATEGIES

Since the outbreak of COVID-19 in early 2020, the government of the People's Republic of China (the "PRC") has continued to implement a variety of measures to contain the spread of COVID-19, including travel restrictions, quarantine advisories, required closure of business units, practice of social distancing, etc. The strain of COVID-19 and the resulting economic conditions, coupled by financing constrains, have placed the Company in the most difficult time ever. Now this is all behind and the Company is ready to move in to a new year.

Sustaining the business through 2020 has proven that efficient asset management is a crucial protection to the Company. The proven track record of strong operation capability and cost discipline allowed the Company to react swiftly to different market conditions. Looking into 2021, the Company is committed to getting back on track to recovery, restoring stable business performance, and improving profitability.

On the operational side, the Company aims to increase revenue by optimizing pricing mechanism, new customer acquisition, and fleet network redeployment. On the cost end, the Company will focus on improving cost structure through further upgrade of used car sales program and control of costs. The Company will continue to focus on digitalization across various aspects, through developing various mobile APPs, i.e. the car rental APP to serve customers with hassle free experience, the Smart Assistant APP to increase the efficiency of store operation and management, and new APPs for other programs.

At the management level, the Company will introduce new incentive schemes to incentivise business performance, strengthen succession planning at each level to identify the best-fit talent for different positions, and further elevate corporate governance.

The health and safety of customers and staff will continue to be the Company's priority post COVID-19. Cleanliness and disinfection of rental facilities and vehicles are the top focuses of store operation. The Company will continue to enhance business performance while keeping customers and staff safe.

On 4 March 2021, the Offeror and the Company jointly announced the closure of the conditional voluntary general cash offers (the "Offer") to acquire all of the issued shares of the Company, after receiving a valid acceptance of approximately 92% of the disinterested shares in respect of the Offer. The acceptance results in the Offeror holding over 94% of the issued shares of the Company. Having MBK Partners as the controlling shareholder of the Company will bring the shareholding uncertainty (since April 2020) to an end, which in turn will help to stabilize the Company's business operations and support positive views on the Company's outlook and further strengthen the ability of the Company to meet its obligations.

1. REVENUES AND PROFITABILITY ANALYSIS

Rental revenue

Year ended 31 December 2020

2019

(in thousands, except percentages)Car rental revenue

Fleet rental & other revenue

3,755,109 238,670

Total rental revenue

3,993,779

Car rental metrics

FY' 19

FY' 20

1Q' 19

2Q' 19

3Q' 19

4Q' 19

1Q' 20

2Q' 20

3Q' 20

4Q' 20

Average daily fleet(1)

111,636

105,769

ADRR(2) (RMB)

210 181

Utilization rate(3) (%) 57.5% 53.3%RevPAC(4) (RMB)

121 97

103,384 226 60.4% 136

109,047 208 60.2% 125

118,104 213 60.0% 128

115,799 193 50.1% 97

113,325 176 48.4% 85

108,147 157 50.0% 79

105,382 96,332 195 196 56.9% 58.8% 111 115

Notes:

• (1) Average daily car rental fleet is calculated by dividing the aggregate days of our car rental vehicles in operation in a given period by the aggregate days of that period. "Car rental vehicles in operation" refers to our entire car rental fleet, including those temporarily unavailable for customer use due to repair or maintenance and those that are being transported.

• (2) Average daily rental rate or ADRR is calculated by dividing our car rental revenue in a given period by the rental days in that period. Rental days are the total rental days for all vehicles in our car rental fleet in a given period.

• (3) Car utilization rate is calculated by dividing the aggregate days that our vehicles are rented out for car rentals by the aggregate days that our car rental vehicles are in operation.

• (4) RevPAC refers to average daily rental revenue per car rental vehicle, which is calculated by multiplying the average daily rental rate in a given period by the car utilization rate in that same period.

The Company's total rental revenue decreased by 28.2% year-over-year to RMB3,993.8 million for the year ended 31 December 2020.

• • Car rentals. Revenue from car rentals decreased by 23.6% year-over-year to RMB3,755.1 million for the year ended 31 December 2020, mainly due to the decrease in RevPAC as a result of the outbreak of COVID-19. The car utilization rate was 53.3%, compared with 57.5% for the year ended 31 December 2019, mainly due to the sharp decline in rental demand in the first half of 2020, which recovered steadily in the second half of 2020. During the Reporting Period, the average daily fleet decreased by 5.3% year-over-year to 105,769.

• • Fleet rentals and others. Revenue from fleet rentals and others decreased by 62.8% year-over-year to RMB238.7 million for the year ended 31 December 2020, mainly due to the decrease in fleet rented by UCAR.

Depreciation of rental vehicles and direct operating expenses of rental services

Year ended 31 December

2020

2019

Depreciation of rental vehicles. Depreciation expenses increased by 9.6% to RMB2,011.2 million for the year ended 31 December 2020, mainly due to the decrease in the residual values of Borgward vehicles. The depreciation expenses as a percentage of rental revenue increased mainly as a result of (i) the decrease in car rental RevPAC due to the outbreak of COVID-19 (ii) the decreased residual value of Borgward vehicles.

Direct operating expenses of rental services. Total direct operating expenses decreased by 19.7% year-over-year to RMB1,468.6 million for the year ended 31 December 2020. The decrease was mainly due to the reduction of the social security contributions under the government's COVID-19 relief policy, reduced insurance fees and less repair and maintenance costs due to the outbreak of COVID-19. Total direct operating expenses as a percentage of rental revenue increased as a result of the decrease in car rental RevPAC due to the outbreak of COVID-19.

Sales of used vehicles (revenue & cost)

Year ended 31 December 2020

RMB

2019 RMB

(in thousands, except percentages)

The Company disposed of 38,378 used vehicles for the year ended 31 December 2020, compared with 29,203 used vehicles for the year ended 31 December 2019.

Cost of sales of used vehicles was 103.7% of revenue from the sales of used vehicles for the year ended 31

December 2020, compared with 102.7% for the year ended 31 December 2019.

Gross profit

Year ended 31 December 2020

RMB

2019 RMB

(in thousands, except percentages)

Total gross profit margin as a percentage of rental revenue was 10.9% for the year ended 31 December 2020, compared with 33.0% for the year ended 31 December 2019, mainly due to the decrease in rental revenue as a result of the outbreak of COVID-19 and the increased depreciation as a result of the adjustment of residual values of Borgward vehicles, offset by decreased direct operating expenses.

Selling and distribution expenses

Year ended 31 December

2020

2019

% of rental

RMB revenue RMB

% of rental revenue

(in thousands, except percentages)Payroll costs Advertising expenses Share-based compensation Others

6,899 93,765 22 27,206

0.2% 2.3% 0.0% 0.7%

1,350 0.0%

2,341 0.0%

146 0.0%

23,918 0.5%

Total

127,892

3.2%

27,755 0.5%

Selling and distribution expenses increased considerably to RMB127.9 million for the year ended 31 December 2020. As a percentage of rental revenue, selling and distribution expenses were 3.2% for the year ended 31 December 2020. The increase was mainly due to increased advertising and promotion activities to stimulate rental demand, including marketing on short video sharing platform, search engine marketing, etc, and increased payroll costs as a result of more marketing support needs.

Administrative expenses

Year ended 31 December

2020

2019

Administrative expenses was RMB1,362.2 million for the year ended 31 December 2020. As a percentage of rental revenue, administrative expenses increased by 23.2 percentage points year-over-year to 34.1%. The increase was mainly due to increased other expenses, including a total impairments of approximately RMB679.7 million on the trade receivables from UCAR and other customers, finance lease receivables, prepayment of the subscription price of the shares and convertible bonds to be issued by FDG.

The Company entered into a non-legally binding memorandum of understanding (the "MOU") in respect of a possible subscription with FDG on 11 July 2018, and paid a prepayment of the possible subscription. But the subscription was not proceeded subsequently and the MOU lapsed and ceased to have any effect on 10 August 2019. During the Reporting Period, FDG experienced a sequences of liquidation events, and trading in the shares of FDG on the Stock Exchange has been suspended since 2 July 2020. Therefore, the Company is of the view that the chance of recovering the prepayment is low and therefore has recognized 100% impairment loss of the prepayment.

Other income and expenses, net

Year ended 31 December 2020

2019

(RMB in thousands)

Net loss was RMB2,351.2 million for the year ended 31 December 2020, compared with a net gain of RMB47.9 million for the year ended 31 December 2019. The net loss for the year of 2020 was mainly due to the fair value loss from equity investment in UCAR but offset by the unrealized exchange gain related to USD-denominated liabilities due to appreciation of RMB.

Finance costs. Finance costs decreased by 30.8% to RMB681.2 million for the year ended 31 December 2020 mainly due to decreased debt.

Loss before tax. Loss before tax was RMB4,092.5 million for the year ended 31 December 2020, compared with a profit before tax of RMB272.0 million for the year ended 31 December 2019. It was mainly due to the decreased car rental revenue as a result of the outbreak of COVID-19 and fair value loss from equity investment in UCAR.

Income tax expenses. Income tax expenses was RMB70.7 million for the year ended 31 December 2020, compared with RMB241.3 million for the year ended 31 December 2019.

Net loss. As a result of the aforementioned factors, the net loss was RMB4,163.1 million for the year ended 31 December 2020, compared with a net profit of RMB30.8 million for the year ended 31 December 2019.

Adjusted net loss. As a result of the aforementioned factors, adjusted net loss was RMB1,626.2 million for the year ended 31 December 2020, compared with a net profit of RMB292.3 million for the year ended 31 December 2019.

Adjusted EBITDA. Adjusted EBITDA was RMB2,019.3 million for the year ended 31 December 2020, and the adjusted EBITDA margin was 50.6% for the year ended 31 December 2020.

Key performance indicators ("KPIs")

Due to COVID-19, the KPIs of the Group for the first half of this year focused more on cost control, service quality and demand generation. Moving into the second half of the year, key car rental operation metrics including utilization and growth of revenue, in terms of the improvement of demand generation were in consideration again. Cost control refers to costs controllable by the operation of the branch offices and stores, including fuel cost, store and branch operation related costs and vehicle dispatch cost, etc. Service quality refers to the assessment scores given to a service location based on their level of compliance with the central operation policies, customer satisfaction scores and the number of complaints received. Demand generation refers to car rental revenue generated during a specific period of time. At the company-level, growth of revenue is the main KPI for the management and support departments, while at the city-level, cost control and services quality are the key KPIs for the operation and frontline departments. With the development of the Company and constant review of the performance assessment system, the Group is adapting the KPIs from time to time to accommodate for the best interests of the employees and the Group.

2.

FINANCIAL POSITION

As at

31 December 2020

31 December 2019

(RMB in millions)

(1)Adjusted EBITDA is calculated based on the total of the most recent four quarters.

Cash

As at 31 December 2020, the Company's total cash balance was RMB2,191.6 million, compared with RMB5,884.3 million as at 31 December 2019.

Trade receivables and due from a related party

Trade receivables were RMB57.4 million and RMB96.8 million as at 31 December 2020 and 31 December 2019, respectively.

Due from a related party, which relates to the receivables from UCAR and its affiliates, was RMB134.2 million and RMB443.9 million as at 31 December 2020 and 31 December 2019, respectively, the decrease was mainly due to the impairments on the trade receivables from UCAR.

The Company's impairment for UCAR was made for prudence as UCAR's business has been significantly affected due to the outbreak of COVID-19, resulting in an uncertainty in recovering the overdue receivables. Furthermore, since UCAR has not published its financial statements for the year of 2019, the first half of 2020 and the year of 2020, the Company is unable to access UCAR's financial conditions. The Company has maintained close communications with the senior management of UCAR to recover receivables and has taken the following measures to collect the overdue receivables from UCAR:

• • The Company has consistently communicated with the senior management of UCAR to request for the payment of the receivables.

• • Since the outbreak of COVID-19 in January 2020, the Company has followed up with UCAR closely to understand its status of operations and financial position, including but not limited to their current business status, relationship with creditors and refinancing and fund raising progress. UCAR also reconfirmed their intention to repay.

• • The management is also aware that UCAR is also engaging in friendly negotiations with its creditors in connection with the payment schedule and the Company believes that, at this stage, commercial negotiation is a more appropriate approach to resolve the issue.

The Company will continue to monitor the business operation and financial position of UCAR closely and continuously assess all the options that could best resolve the issue.

Impairment of the equity investment in UCAR

UCAR has experienced significant decrease in its business and operations due to the outbreak of COVID-19 and change of operational environment during the Reporting Period. The Company is uncertain as to the recovery of UCAR's business. It may bring challenges to UCAR's going concern basis. Trading in the shares of UCAR on NEEQ (as defined below) was suspended on 1 July 2020. The closing price of the shares of UCAR immediately before the suspension was RMB2.25 per share. Trading in the shares of UCAR on NEEQ was resumed on 20 August 2020 with a closing price of RMB1.06 per share, representing a decrease of 52.89% as compared with the closing price on the date of suspension of trading. The Company had also observed that the trading volume of UCAR was low and, under such circumstance, there is a low chance that the Company could dispose of its equity interest in UCAR in the stock market in near future. Therefore, in light of significant uncertainty of UCAR's operation, the Company has recognized 100% fair value loss on the equity investment in UCAR.

Capital expenditures

The majority of the Company's capital expenditures was RMB84.7 million on purchases of other property, plant and equipment, and other intangible assets during the Reporting Period. For the year ended 31 December 2020, the Company purchased rental vehicles valued at the amount of RMB14.2 million.

Borrowings

As at 31 December 2020, the Company had total debt of RMB6,660.9 million and net debt of RMB4,469.3 million, compared with RMB14,879.5 million and RMB8,995.2 million as at 31 December 2019, respectively. As at 31 December 2020, the current debt portion was RMB3,570.5 million, representing 53.6% of the total debt.

As at 31 December 2020, the gearing ratio of the Company was 37%, compared with the gearing ratio of 37% as at 31 December 2019. The gearing ratio is derived from dividing the net debt by total assets.

Foreign exchange risk management

As at 31 December 2020, the Company had no outstanding foreign exchange contract. The Company had entered into forward currency contracts with an aggregate contractual amount of US$300.0 million, which has been settled in January 2020.

Free cash flow

The Company generated an inflow of RMB4,929.4 million free cash flow for the year ended 31 December 2020, compared with an inflow of RMB1,516.5 million for the same period of 2019 mainly due to the significant decrease in vehicles purchase, stable operation and efficient used car disposals.

Pledge of assets

Details of the Group's bank borrowings, which are secured by certain assets of the Group, are included in note 36 to the Financial Statements.

Significant investments held

During the Reporting Period, the Group has no significant investments.

Material acquisitions and disposals

During the Reporting Period, the Group has no material acquisitions and disposals of subsidiaries, associates and joint ventures.

Share repurchases

At the Company's annual general meeting on 12 May 2020, the shareholders granted a general mandate to the directors of the Company (the "Directors") to repurchase shares of the Company (the "Repurchase Mandate"). Pursuant to the Repurchase Mandate, the Company is allowed to repurchase up to 212,022,435 shares, being 10% of the total number of issued shares of the Company as at the date of the annual general meeting, on the Stock Exchange.

For the year ended 31 December 2020, the Company has not repurchased any shares through the Stock Exchange. For 2021, as of the date of this annual report, the Company has not repurchased any shares through the Stock Exchange.

NON-IFRS FINANCIAL RECONCILIATION

A. Adjusted net (loss)/profitFor the year ended 31 December 2020 2019

(RMB in thousands, except percentages)

For the year ended 31 December 2020 2019

(RMB in thousands, except percentages)

The Group employed certain non-IFRS financial measures in measuring the performance of the Group. The presentation of these non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. The Group believes that, used in conjunction with IFRS financial measures, these non-IFRS financial measures provide meaningful supplemental information regarding the Group's performance, and both management and investors shall benefit from referring to these non-IFRS financial measures in assessing the Group's performance and for planning and forecasting future periods. The Group's management believes that adjusted net (loss)/profit and adjusted EBITDA are useful financial metrics to assess the Group's operating and financial performance. The adjusted net (loss)/profit is defined as earnings before finance costs of senior notes exchange offer, share-based compensation, foreign exchange (gain)/loss, fair value loss from investment in equity shares, fair value changes on derivative instrument-transaction not qualifying as hedges and share of loss/(profit) of associates and impairment on investment in an associate. The adjusted EBITDA is defined as earnings before interest, income tax expenses, depreciation and amortization, impairment of trade receivables, share-based compensation, foreign exchange (gain)/loss, fair value loss from investment in equity shares and redeemable preference shares, fair value changes on derivative instrument-transaction not qualifying as hedges and share of loss/(profit) of associates. In addition, the non-IFRSs financial measures may not be calculated in the same manner by all companies, therefore they may not be comparable to other similar titled measures used by other companies.

Foreign exchange loss, fair value gain from investment in equity shares and redeemable preference shares, gain on disposal of subsidiaries, and share of profit of an associate had been added in the reconciliation in 2016 due to the change in economic situation and the Group's business strategies. Gain on disposal of investments in redeemable preference shares had been added in the reconciliation in 2017. Fair value changes on derivative instrument-transactions not qualifying as hedges had been added in the reconciliation in 2018. Finance costs of senior notes exchange offer had been added in the reconciliation in 2019. Impairment on investment in an associate has been added in the reconciliation in 2020. The management believes that these items do not relate to the Group's business operations. The Group operates mainly in China and its foreign exchange (gain)/loss mainly results from its USD-denominated senior notes. Finance costs of senior notes exchange offer mainly results from the exchange offer for the USD-denominated senior notes due 2020. Fair value loss from investment in equity shares and redeemable preferences shares represents the non-cash fair value gain/(loss) on investments which is recognized in accordance with IFRS 9 Financial Instruments. Fair value changes on derivative instrument-transactions not qualifying as hedges are recognized based on the market price of the foreign exchange contract that the Company entered into during the Reporting Period. These accounting recognitions and measurements do not relate to the Group's business operations. Share of loss/ (profit) of associates relates to the share of (profit)/loss from two associates that the Group acquired during the second quarter of 2016 and the first quarter of 2019 respectively.

Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. Capital expenditures are defined as net expenditures of other property, plant and equipment, other intangible assets and prepaid lease payments. Free cash flow represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.

EXECUTIVE DIRECTOR

Yifan SONG (҂ɓɭ), aged 44, was appointed as the Chief Executive Officer and an Executive Director on 11 April 2016. Ms. Song has worked as a vice-president for the Group from September 2007 to August 2013, and was promoted to an executive vice-president since September 2013. She is also a founding member of the Group. Before her appointment as the Chief Executive Officer of the Company, she was responsible for general management of processes and standardization; in particular, stores, fleet, repair and maintenance facilities and call centers. Ms. Song has over 22 years of industry experience. She was the head of customer services for Beijing Huaxia United Automobile Association Co. Ltd. (̏ԯശࢀᑌΥӛԓࡆᆀ௅Ϟࠢʮ̡) from March 2005 to August 2007 and she served as the head of customer services at Beijing Yingtong Information System Co., Ltd. (̏ԯޮஷ༟ৃӻ୕Ϟࠢʮ̡), an internet service provider company, from January 2003 to March 2005. Ms. Song worked as the head of customer services at Shouchuang Internet Co., Ltd. (࠯௴ၣഖϞࠢʮ̡), another internet service provider company, from May 2000 to December 2002 and at Beijing Youheng Technology Co., Ltd. (̏ԯʾ㛬߅ҦϞࠢʮ̡) as a technical support manager from June 1999 to May 2000. She was a member of the technical support department at Beijing Ruide Hengchang Computer System Co., Ltd. (̏ԯ๿੻㛬׹ࠇၑዚӻ ୕ණϓϞࠢʮ̡) from May 1998 to May 1999. Ms. Song obtained a master degree in business administration from Central University of Finance and Economics of China (ʕ̯ৌ຾ɽኪ) in June 2009. She graduated from the College of Electric Automation Engineering of Beijing Union University (̏ԯᑌΥɽኪཥɿІਗʷʈ ೻ኪ৫) and received her bachelor's degree in communication engineering in July 1998.

NON-EXECUTIVE DIRECTORS

Mr. Hongfei YU (ɲݳ࠭), aged 44, was appointed as a Non-executive Director on 15 December 2020. Mr. Yu has been appointed as a member of the Remuneration Committee of the Company (the "Remuneration Committee") on 2 March 2021. Mr. Yu is a Partner and Co-head of Greater China at MBK Partners ("MBK Partners"), an affiliate of Indigo Glamour Company Limited, which in turn is a substantial shareholder of the Company. Mr. Yu has over 19 years of experience in the private equity and investment banking industries. Prior to joining MBK Partners, from 2006 to 2010, Mr. Yu was a Vice President in the investment banking division of Morgan Stanley in Hong Kong. From 2005 to 2006, he worked as an Associate in the investment banking division of HSBC in Hong Kong. From 2003 to 2005, he worked as a Business Development Manager in Alcoa China in Beijing. From 2002 to 2003, he worked as an Associate in ICEA Finance Holdings Limited in Beijing. Mr. Yu received a Bachelor of Science degree in economics and a Master of Science degree in finance from University of International Business and Economics in Beijing. Mr. Yu currently serves on the boards of directors of Apex Logistics International Inc., Wendu Education Group and Shanghai Siyanli Industrial Co., Ltd.

Mr. Xuan YAN (ᘌૅ), aged 58, was appointed as a Non-executive Director on 15 December 2020. Mr. Yan has been appointed as a member of the Nomination Committee of the Company (the "Nomination Committee") on 2 March 2021. Mr. Yan is an Operating Partner of MBK Partners. Mr. Yan has more than two decades of business leadership, corporate governance, legal and government relations experience in both China and the U.S. Concurrently, he is the Chief Executive Officer of Wendu Education Group. Prior to joining MBK Partners, he was a Vice President at Microsoft Corporation. He currently serves on the board of directors of Las Vegas Sands Corporation, and was a member of the boards of directors of Alibaba Health Information Technology Limited and Shanghai Shenhua Holdings Co., Ltd. Before Microsoft, he was a public policy partner with the global law firm of Squire Patton Boggs. He served as a Senior Advisor to the French private equity firm Eurazeo and to China's largest grocery distributor and solutions provider Yiguo Fresh. Mr. Yan also held executive positions with leading global companies including AT&T/Lucent, Oracle, Qualcomm and Nielsen. Mr. Yan received his Bachelor of Arts and Juris Doctor degrees from Beijing Institute of Foreign Languages and Duke University School of Law, respectively.

Mr. Stephen LE Ee Boon (ҽᆇ˖), aged 45, was appointed as a Non-executive Director on 15 January 2021. Mr. Le is a Partner at MBK Partners and is based in Hong Kong. Prior to joining MBK Partners, he was a Managing Director, Head of Asian Distressed Product Group, Strategic Investment Group and Co-head of the Asia Pacific Credit Division for Deutsche Bank. Mr. Le was also a member of the Global Credit Executive Committee of Deutsche Bank. Before joining Deutsche Bank, Mr. Le worked at Goldman Sachs & Co. focusing on equity research of the energy and petrochemical sector in Asia Pacific. Mr. Le received a Bachelor of Arts degree with First Class Honours in Accountancy from Nanyang Technological

University, Singapore.

Mr. Jun XU (ࢱڲ), aged 37, was appointed as a non-executive Director and a member of the Audit and Compliance Committee of the Company (the "Audit and Compliance Committee") on 2 March 2021. He is a Director at MBK Partners. Mr. Xu has over 10 years of experience in the private equity and investment banking industries. Prior to joining MBK Partners, Mr. Xu was a Vice President at Ally Bridge Group in Hong Kong from 2015 to 2017. From 2011 to 2015, he worked as an Associate in the corporate finance division of China International Capital Corporation and Houlihan Lokey in Hong Kong. From 2006 to 2009, he worked as a Senior Consultant at Booz & Company in Shanghai. Mr. Xu received a Bachelor of Business Administration degree from Fudan University in Shanghai and an MBA degree from the Wharton School of University of Pennsylvania. Mr. Xu currently serves on the board of directors of Wendu Education Group.

Ms. Shengping YU (ں໋റ), aged 36, was appointed as a non-executive Director on 2 March 2021. She is a Director at MBK Partners. Ms. Yu has over 10 years of experience in the private equity and investment banking industries. Prior to joining MBK Partners, from 2010 to 2011, Ms. Yu was a Senior Associate in the investment banking division of Morgan Stanley in Hong Kong. From 2006 to 2008, she worked as a consultant at Oliver Wyman in New York. Ms. Yu received a Bachelor of Arts degree in economics from Harvard College and an MBA from the Wharton School of University of Pennsylvania. Ms. Yu currently serves on the board of directors of

Shanghai Siyanli Industrial Co., Ltd.

INDEPENDENT NON-EXECUTIVE DIRECTORS

Sam Hanhui SUN (࢑ўฯ), aged 48, has served as an Independent Non-executive Director since 18 August 2014. Mr. Sun is currently the Chairman of the Audit and Compliance Committee and a member of the Nomination Committee. He is responsible for participating in the decision making of the Company's significant events; and participating in making decisions and advising on issues relating to corporate governance and audit. Mr. Sun has over 26 years of industry experience. Mr. Sun was appointed as an independent director and the chairman of the audit committee of each of iQiyi Inc. (listed on the NASDAQ, Stock Code: IQ) in March 2018. From March 2018 to July 2019, Mr. Sun has served as an independent director and chairman of the audit committee of Sunlands Technology Group (formerly known as Sunlands Online Education Group, a company listed on the New York Stock Exchange; Stock Code: STG). Since December 2015, Mr. Sun has served as an independent director and the chairman of the audit committee of Yirendai Ltd., a company listed on the New York Stock Exchange (Stock Code: YRD). From September 2010 to May 2019, Mr. Sun has served as an independent director and the chairman of the audit committee of Fang Holdings Limited (formerly named "SouFun Holdings Limited") which is a company listed on the New York Stock Exchange (Stock Code: SFUN). From January 2010 to May 2015, Mr. Sun served as the chief financial officer of Qunar Cayman Islands Ltd, a NASDAQ-listed company (Stock Code: QUNR). Mr. Sun was also an independent director and audit committee member of KongZhong Corporation, a NASDAQ-listed company, from July 2005 to January 2007. He was the chief financial officer of KongZhong Corporation from February 2007 to April 2009. From 2004 to 2007, Mr. Sun served in several financial controller positions at Fang Holdings Limited, Maersk China Co., Ltd. and Microsoft China R&D Group. Mr. Sun worked in KPMG's auditing practice group from April 1995 to October 2004, including eight years at the Beijing office of KPMG where he was an audit senior manager, and two years at KPMG in Los Angeles, California. In May 1998, Mr. Sun was admitted as a China certified public accountant by the Chinese Institute of Certified Public Accountants. Mr. Sun graduated from the Beijing Institute of Technology in July 1993 with a bachelor degree in engineering, majoring in business administration.

Wei DING (ɕ⒜), aged 61, has served as an Independent Non-executive Director since 18 August 2014. Mr. Ding is currently the Chairman of the Remuneration Committee. He is responsible for participating in the decision making of the Company's significant events and participating in making decisions and advising on issues relating to corporate governance and remuneration of Directors and senior management. Mr. Ding has nearly 34 years of industry experience in international finance, commercial banking, investment banking, and private equity industry. Since May 2016, Mr. Ding has been serving as managing director and the head of private equity business of China International Capital Corporation Limited. Since June 2012, Mr. Ding has been serving as a member of the board for Hwa Pao Investment. From February 2011 to December 2013, Mr. Ding served as the senior managing director and head of Temasek Greater China, where he was responsible for Temasek's China strategy and investments. From October 2002 to February 2011, Mr. Ding worked at China International Capital Corporation as the managing director and later served as the head of investment banking division. From March 1999 to September 2002, Mr. Ding served as the chief country officer for China at Deutsche Bank. Mr. Ding worked at the World Bank and the International Monetary Fund in Washington, D.C. from November 1987 to February 1999, serving as an economist, project manager, divisional manager and the chief representative. In January 1998, Mr. Ding completed the executive development program at Harvard Business School, which was tailor-made for the World Bank. Mr. Ding received a bachelor degree majoring in finance from

Renmin University of China in July 1982.

Li ZHANG (ੵኇ), aged 53, was appointed as an Independent Non-executive Director, the chairman of the Nomination Committee and members of the Audit and Compliance Committee and the Remuneration Committee on 27 February 2018. He is responsible for participating in the decision making of the Company's significant events and participating in making decisions and advising on issues relating to the corporate governance, nomination of directors and remuneration of directors and senior management. He was an Independent Non-executive Director, a chairman of the Nomination Committee and the member of the Remuneration Committee from 18 August 2014 to 13 January 2016, and a member of the Audit and Compliance Committee from 17 November 2015 to 13 January 2016. Mr. Zhang has over 25 years of industry experience. Mr. Zhang has served as an independent director of China Quanjude (Group) Co. Ltd since November 2020. Mr. Zhang has served as an Independent director of China United Property Insurance Company Limited since January 2020. From October 2013 to May 2016, Mr. Zhang has been serving as a deputy dean of the National School of Development at Peking University. From October 2013 to January 2017, Mr. Zhang has been serving as the dean of BiMBA Business School of the National School of Development at Peking University where he was responsible for education in business administration, research and administration of school affairs. From September 2008 to September 2013, he was working as a professor and deputy dean of Beijing International MBA at Peking University, where he was mainly responsible for education in management studies, research and administration of school affairs. From September 2003 to August 2008, he was working as an associate professor and assistant dean of Beijing International MBA at Peking University, where he was mainly responsible for teaching and research. From January 2002 to August 2003, Mr. Zhang was employed by Peking University to participate in project management and teaching. Mr. Zhang received a doctor of philosophy degree from the Ohio State University in September 1999, a master degree in commodity sciences from Renmin University of China in July 1995 and a bachelor degree in textile engineering from Tianjin Institute of Textile Science &

Technology (now known as Tianjin Polytechnic University) in July 1989.

SENIOR MANAGEMENT

Guangyu CAO (૎Έρ), aged 44, was appointed as the Chief Financial Officer and vice president of the Company on 1 September 2018. Mr. Cao is registered as a Certified Public Accountant and Certified Tax Agent in the PRC. He has over 20 years' experience in accounting and financial management. Mr. Cao is a founding member of the Company and he built the financial system and financial team of the Company and laid the solid foundation for the Company's rapid growth. Mr. Cao served as the senior vice president of UCAR Inc. from April 2016 to August 2018 and the vice-president and financial controller of the Company from September 2007 to April 2016. Mr. Cao worked in different roles in the finance field from 2000 to 2007 in various companies. Mr. Cao obtained a master's degree in accountancy from Peking University in January 2014. He graduated from Nankai University with a bachelor's degree in accountancy in July 2000.

Yandong ZENG (ಀ㋄̆), aged 45, was appointed as the Company's senior management on 11 April 2016. Mr. Zeng has been working as a vice-president for the Group since June 2009 and is responsible for strategic development. Prior to joining us, Mr. Zeng worked as a vice-president at Zhongyida Commercial Trading Group Co., Ltd (଺່༺ਠ൱ණྠϞࠢʮ̡) from September 2008 to May 2009. From June 2006 to September 2008, he worked as a sales director at APV Far East Ltd. (APVჃ؇Ϟࠢʮ̡). From March 2001 to May 2006, he worked as a national sales manager at Tetrapak China Co., Ltd. (лᆀʕ਷Ϟࠢʮ̡). From September 1998 to March 2001, he worked as a manufacturing engineer at Ford Motor (China) Ltd. (၅तӛԓ(ʕ਷)Ϟࠢʮ̡). From August 1997 to September 1998, he worked as a process engineer at Beijing Warner Gear Co., Ltd. (̏ԯശॶ኉ቃϞࠢʮ̡). Mr. Zeng received an Executive Master of Business Administration degree from Peking University (̏ԯɽኪ) in July 2008. He graduated from Tsinghua University (૶ശɽኪ) and obtained a bachelor's degree in automotive engineering in July 1997.

COMPANY SECRETARY

Ka Man SO (ᘽྗઽ), aged 47, was appointed as our company secretary on 30 July 2014. Ms. So has over 22 years of experience in the corporate secretarial field and has been providing professional corporate services to Hong Kong listed companies as well as multinational, private and offshore companies. From August 2000 to December 2003, Ms. So worked at Tengis Limited (currently known as Tricor Tengis Limited). She is currently a director at the corporate services division of Tricor Services Limited ("Tricor"), a global professional service provider specializing in integrated Business, Corporate and Investor Services. Ms. So is currently the company secretary of Embry Holdings Limited (τ஁ٹછٰϞࠢʮ̡) (Stock Code: 1388), China Logistics Property Holdings Co., Ltd (ʕ਷يݴ༟ପછٰ Ϟࠢʮ̡) (Stock Code: 1589) and Maoye International Holdings Limited (ุ߱਷ყ છٰϞࠢʮ̡) (Stock Code: 848), all companies are listed on the Stock Exchange. Ms. So is also the joint company secretary of Xiaomi Corporation (ʃϷණྠ ) (Stock Code: 1810), China Yongda Automobiles Services Holdings Limited (ʕ਷͑༺ӛԓ ؂ਕછٰϞࠢʮ̡) (Stock Code: 3669) and Kuaishou Technology (Ҟ˓߅Ҧ) (Stock Code: 1024), all companies are listed on the Stock Exchange. Ms. So is a chartered secretary and a fellow of both the Hong Kong Institute of Chartered Secretaries ("HKICS") and The Chartered Governance Institute in the United Kingdom. She is a holder of the Practitioner's Endorsement from HKICS. (Note: The Company has engaged Tricor as external service provider and appointed Ms. So as the company secretary since 30 July 2014.)

CORPORATE GOVERNANCE PRACTICES

The Board has committed to achieving good corporate governance standards.

The Board believes that good corporate governance standards are essential to providing a framework for the Company to safeguard the interests of shareholders and to enhance corporate value and accountability.

The Company has applied the principles as set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules").

The Board is of the view that during the year ended 31 December 2020, the Company has complied with all the code provisions as set out in the CG Code, save and except for code provisions A.1.1, A.2.7 and E.1.2, and the details are set out in sections below.

• A. MODEL CODE FOR SECURITIES TRANSACTIONS

  The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules.

  Specific enquiry has been made of all the Directors and the Directors have confirmed that they have complied with the Model Code during the year ended 31 December 2020.

  The Company has also established written guidelines no less exacting than the Model Code (the "Employees Written Guidelines") for securities transactions by employees who are likely to be in possession of unpublished inside information of the Company. No incident of non-compliance of the Employees Written Guidelines by the relevant employees was noted by the Company.

• B. BOARD OF DIRECTORS

  As at 31 December 2020, the Board comprised as follows:

  Executive Director:

  Ms. Yifan SONG (Chief Executive Officer)

  Non-executive Directors:

  Mr. Linan ZHU (Member of Nomination Committee)

  Mr. Leping YAN (Member of Audit and Compliance Committee)

  Mr. Hongfei YU

  Mr. Xuan YAN

Independent Non-executive Directors:

Mr. Sam Hanhui SUN (Chairman of Audit and Compliance Committee and member of Nomination Committee)

Mr. Wei DING (Chairman of Remuneration Committee)

Mr. Li ZHANG (Chairman of Nomination Committee and members of Audit and Compliance Committee and Remuneration Committee)

During the year ended 31 December 2020, the Company was once unable to meet the following requirements due to the resignation of Ms. Xiaogeng LI as a Non-executive Director, a member of the Audit and Compliance Committee and a member of the Remuneration Committee with effect from 1 August 2020: (i) Listing Rule 3.21 and terms of reference of the Audit and Compliance Committee, which prescribe that the Audit and Compliance Committee comprising only non-executive directors with a minimum of three members; and (ii) terms of reference of the Remuneration Committee, which prescribes that the Remuneration Committee comprising of not less than three members.

The Company had subsequently fully complied with the aforesaid Listing Rule and terms of reference requirements upon its appointment of (i) Mr. Leping YAN as a member of the Audit and Compliance Committee with effect from 3 November 2020; and (ii) Mr. Hongfei YU as a member of the Remuneration Committee with effect from 2 March 2021.

Besides, the Board and Board Committees have the following changes subsequent to the year ended 31 December 2020: (i) Mr. Stephen LE Ee Boon was appointed as a Non-executive Director with effect from 15 January 2021; (ii) Mr. Linan ZHU resigned as a Non-executive Director and a member of Nomination Committee with effect from 2 March 2021; (iii) Mr. Leping YAN resigned as a Non-executive Director and a member of Audit and Compliance Committee with effect from 2 March 2021; (iv) Mr. Hongfei YU was appointed as a member of Remuneration Committee with effect from 2 March 2021; (v) Mr. Xuan YAN was appointed as a member of Nomination Committee with effect from 2 March 2021; (vi) Mr. Jun XU was appointed as a Non-executive Director and a member of Audit and Compliance Committee with effect from 2 March 2021; and (vii) Ms. Shengping YU was appointed as a Non-executive Director with effect from 2 March 2021.

The biographical information of the existing Directors and relationships among the members of the Board, if any, are set out in the section headed "Profile of Directors and Senior Management" in this annual report.

• (1) Chairman and Chief Executive Officer

  The position of Chief Executive Officer is held by Ms. Yifan SONG, who generally focuses on the Company's business development and daily management and operations. As disclosed in the Company's announcement dated 10 June 2020, Mr. Charles Zhengyao LU resigned from his offices as the Chairman of the Board and a Non-executive Director with effect from 9 June 2020. Since then, the Board has been in the process of identifying a suitable candidate to fill the vacancy of the Chairman, and will make further announcement(s) in respect of the appointment of Chairman as soon as practicable.

• (2) Independent Non-executive Directors

  During the year ended 31 December 2020, the Board at all times met the requirements of the Listing Rules with respect to the Board comprising of at least three Independent Non-executive Directors representing at least one-third of the Board, with at least one of whom possessing appropriate professional qualifications or accounting or related financial management expertise.

  The Company has received written annual confirmation from each of the Independent Non-executive Directors in respect of his independence in accordance with the independence guidelines set out in Rule 3.13 of the Listing Rules. The Company is of the view that all Independent Non-executive Directors are independent.

  Members of the Board and senior management did not have any financial, business, family or other material relationship with each other save for working relationship in the Company.

(3) Non-executive Directors and Directors' Re-election

Code provision A.4.1 of the CG Code stipulates that Non-executive Directors shall be appointed for a specific term, subject to re-election, whereas code provision A.4.2 states that all directors appointed to fill a casual vacancy shall be subject to election by shareholders at the first general meeting after appointment and that every director, including those appointed for a specific term, shall be subject to retirement by rotation at least once every three years.

Each of the directors of the Company is appointed for a specific term of three years and is subject to retirement by rotation once every three years under the Company's Articles of Association (the "Articles of Association").

(4) Responsibilities, Accountabilities and Contributions of the Board and Management

The Board is responsible for leading and controlling the Company, oversees the Group's businesses, strategic decisions and performance, and is collectively responsible for promoting the success of the Company by directing and supervising its affairs. Directors of the Board make decisions objectively in the interests of the Company.

The Board directly, and indirectly through its committees, leads and provides direction to the management by laying down strategies and overseeing their implementation, monitors the Group's operational and financial performance, and ensures that sound internal control and risk management systems are in place.

All Directors, including Non-executive Directors and Independent Non-executive Directors, have brought a wide spectrum of valuable business experience, knowledge and professionalism to the Board for its efficient and effective functioning.

All Directors have full and timely access to all the information of the Company as well as the services and advice from the company secretary and senior management. The Directors may, upon request, seek independent professional advice in appropriate circumstances, at the Company's expenses for discharging their duties to the Company.

The Directors shall disclose to the Company details of other offices held by them and the Board regularly reviews the contribution required from each Director to perform his/her responsibilities to the Company.

The Board reserves for its decision on all major matters relating to policy matters, strategies and budgets, internal control and risk management, material transactions (in particular those that may involve conflict of interests), financial information, appointment of Directors and other significant operational matters of the Company. Responsibilities relating to implementing decisions of the Board, directing and co-ordinating the daily operation and management of the Company are delegated to the management.

(5) Continuous Professional Development of Directors

Directors keep abreast of responsibilities as a director of the Company and of the conduct, business activities and development of the Company.

Every newly appointed Director will receive formal, comprehensive and tailored induction on the first occasion of his/her appointment to ensure appropriate understanding of the business and operations of the Company and full awareness of director's responsibilities and obligations under the Listing Rules and relevant statutory requirements.

Directors should participate in appropriate continuous professional development to develop and refresh their knowledge and skills to ensure that their contribution to the Board remains informed and relevant. Internally-facilitated briefings for Directors will be arranged and reading material on relevant topics will be issued to Directors where appropriate. All Directors are encouraged to attend relevant training courses at the Company's expenses.

During the year ended 31 December 2020, the Company organized several training sessions for all Directors. Such training sessions cover a wide range of relevant topics including directors' duties and responsibilities, corporate governance and update on Listing Rule amendments etc. In addition, relevant reading materials including directors' memorandum and seminar handouts have been provided to the directors for their reference and studying.

Training records that have been received from the existing Directors as of 31 December 2020 for the year ended 31 December 2020:

* the Directors has been notified by the Company of the directors' duties and responsibilities in the voluntary general offers.

A: Attending/studying training sessions, including but not limited to briefings, seminars, conferences and workshops.

C. BOARD COMMITTEES

The Board has established 3 committees, namely, the Audit and Compliance Committee, Remuneration Committee and Nomination Committee, for overseeing particular aspects of the Company's affairs. All Board committees of the Company are established with defined written terms of reference. The terms of reference of the Board committees are posted on the websites of the Company and the Stock Exchange and are available to shareholders upon request.

The majority of the members of each Board committee are Independent Non-executive Directors and the composition of each Board committee is set out under "Corporate Information" in this annual report.

(1) Audit and Compliance Committee

The Board has established an Audit and Compliance Committee in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 as well as paragraph D.3 of the CG Code.

The main duties of the Audit and Compliance Committee are to assist the Board in reviewing the Company's financial information and relationship with external auditors; overseeing and monitoring the Company's risk management, financial reporting system, internal control procedures and corporate governance functions; reporting to the Board of any suspected frauds, irregularities, failures of the risk management or internal control systems; meeting with the internal and external auditors or senior management to discuss the audit plans; and reviewing arrangements to enable employees of the Company to raise, in confidence, concerns about possible improprieties in financial reporting, internal control or other matters of the Company.

The Audit and Compliance Committee oversees and monitors the risk management and internal control systems of the Company on an ongoing basis and review with our external auditors and senior management periodically. The Audit and Compliance Committee shall review, at least annually, the scope, adequacy and effectiveness of the Group's corporate accounting and financial controls, risk management and internal control systems, and any related significant findings regarding risks or exposures and consider recommendations for improvement of such controls. Further details regarding the annual review conducted by the Audit and Compliance Committee are set out in the section headed "G. Risk Management and Internal Control".

The Audit and Compliance Committee is also responsible for performing the functions set out in the code provision D.3.1 of the CG Code and such functions include the following: (a) reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory requirements; (b) reviewing and monitoring the training and continuous professional development of Directors and senior management; (c) developing, reviewing and monitoring the code of conduct and compliance manual (if any) applicable to employees and Directors; (d) developing and reviewing the Company's policies and practices on corporate governance and making recommendations to the Board and reporting to the Board on matters; (e) reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report; and (f) reviewing and monitoring the Company's compliance with the Company's whistleblowing policy.

During the year ended 31 December 2020, the Audit and Compliance Committee held three meetings to review the quarterly, half-year and annual results of the Company; to review continuing connected transactions of the Group; to review financial reporting system and the risk management and internal control systems of the Group and make relevant recommendation to the Board; to consider and recommend to the Board on the re-appointment of the auditors; and to review the Company's corporate governance policies, practices and related matters.

(2) Remuneration Committee

The primary functions of the Remuneration Committee include making recommendations to the Board on the Company's policy and structure for all Directors' and senior management's remuneration (that is, the model described in the code provision B.1.2(c)(ii) of the CG Code is adopted) and on establishing a formal and transparent procedure for developing remuneration policy; making recommendations to the Board on the remuneration of Directors and senior management; and ensuring that no Director or any of his/her associates will participate in deciding his/her own remuneration.

During the year ended 31 December 2020, the Remuneration Committee met twice to review the remuneration of the Directors and senior management of the Company.

Pursuant to code provision B.1.5, the annual remuneration (including share options) of the members of the senior management by band for the year ended 31 December 2020 is set out below:

Number of individuals

Nil to RMB2,000,000 RMB2,000,001 to RMB10,000,000 Over RMB10,000,000

1 0 1

2

Details of the remuneration of each of the Directors and chief executive for the year ended 31 December 2020 are set out in note 9 to the Financial Statements.

(3) Nomination Committee

The principal duties of the Nomination Committee include reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board annually and making recommendations on any proposed changes to the Board to complement the Company's corporate strategy; making recommendations to the Board on the appointment and succession planning for Directors, in particular the Chairman of the Board and the Chief Executive Officer; and assessing the independence of Independent Non-executive Directors and identifying suitable candidates to become Board members.

The Company has adopted a Director Nomination Policy which sets out the selection criteria and process in the nomination and appointment of Directors which aims to ensure that the Board has a balance of skills, experience and diversity of perspectives appropriate to the Company and the continuity of the Board and appropriate leadership at Board level.

The Director Nomination Policy sets out the factors for assessing the suitability and the potential contribution to the Board of a proposed candidate, including but not limited to the following:

• • Character and integrity;

• • Qualifications including professional qualifications, skills, knowledge and experience that are relevant to the Company's business and corporate strategy;

• • Diversity in all aspects, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service;

• • Requirements of Independent Non-executive Directors on the Board and independence of the proposed Independent Non-executive Directors in accordance with the Listing Rules; and

• • Commitment in respect of available time and relevant interest to discharge duties as a member of the Board and/or Board committee(s) of the Company.

The Director Nomination Policy also sets out the procedures for the selection and appointment of new Directors and re-election of Directors at general meetings. The Nomination Committee will review the Director Nomination Policy, as appropriate, to ensure its effectiveness.

The Company also recognises and embraces the benefits of having a diverse Board and sees increasing diversity at the Board level as an essential element in maintaining the Company's competitive advantage. The Company believes that greater diversity of directors is good for corporate governance and is committed to attract and retain candidate(s) for Board with a combination of competencies from the widest possible pool of available talents; to assess regularly the diversity profile of the Board and, where applicable, senior management prepared for Board positions under the succession planning of the Company and the progress on achieving diversity objectives, if any; and to ensure that changes to the Board's composition can be managed without undue disruption. A Board diversity policy was adopted by the Company, pursuant to which the Board and the Nomination Committee is responsible for reviewing and assessing the Board composition under diversified perspectives (including but not limited to, gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge, industry and regional experience and length of service). The Nomination Committee shall report its findings and make recommendation to the Board, if any. Such policy and objectives, if any, will be reviewed from time to time to ensure their appropriateness in determining the optimum composition of the Board that are aligning with the Company's strategy and objectives. The current Board's composition under diversified perspectives is disclosed in the biographical information of the Directors set out in the section headed "Profile of Directors and Senior Management" in this annual report.

During the year ended 31 December 2020, the Nomination Committee met three times to review the nomination procedures; to review the composition and diversity of the Board, Nomination Committee, Remuneration Committee and Audit and Compliance Committee and the change in the composition of the Board and Board Committee during the year; to consider and recommend to the Board on the re-election of Directors at the Company's annual general meeting; and to assess the independence of the independent non-executive Directors. The Nomination Committee was satisfied with the current procedures and composition.

D. ATTENDANCE RECORD OF DIRECTORS AND BOARD COMMITTEE MEMBERS

The attendance record of each Director at the Board, Board Committee and shareholders' meetings of the Company held during the year ended 31 December 2020 is set out in the table below:

Attendance/Number of Meetings

• (1) Mr. Charles Zhengyao LU resigned as a Non-executive Director, the Chairman of the Board and a member of the Nomination Committee with effect from 9 June 2020.

• (2) Mr. Linan ZHU appointed his representatives to attend eight Board meetings and one Nomination Committee meeting held during the year. Mr. ZHU was appointed as a member of the Nomination Committee with effect from 12 June 2020. Subsequently, he resigned from the aforesaid offices with effect from 2 March 2021.

• (3) Ms. Xiaogeng LI resigned as a Non-executive Director and a member of each of the Audit and Compliance Committee and Remuneration Committee with effect from 1 August 2020.

• (4) Mr. Zhen WEI resigned as a Non-executive Director with effect from 3 November 2020, and he appointed his representatives to attend two Board meetings held during his tenure.

• (5) Mr. Leping YAN was appointed as a Non-executive Director and a member of the Audit and Compliance Committee with effect from 12 June 2020 and 3 November 2020 respectively. He appointed his representatives to attend one Board meeting held during his tenure. Subsequently, he resigned from the aforesaid offices with effect from 2 March 2021.

• (6) Mr. Hongfei YU was appointed as a Non-executive Director and a member of the Remuneration Committee with effect from 15 December 2020 and 2 March 2021 respectively.

• (7) Mr. Xuan YAN was appointed as a Non-executive Director and a member of the Nomination Committee with effect from 15 December 2020 and 2 March 2021 respectively.

• (8) Mr. Stephen LE Ee Boon was appointed as a Non-executive Director with effect from 15 January 2021.

• (9) Mr. Jun XU was appointed as a Non-executive Director and a member of the Audit and Compliance Committee with effect from 2 March 2021.

• (10) Ms. Shengping YU was appointed as a Non-executive Director with effect from 2 March 2021.

During the year ended 31 December 2020, an annual general meeting was held on 12 May 2020 and an extraordinary general meeting was held on 4 December 2020. Code provision A.1.1 of the CG Code stipulates that the board should meet regularly and board meetings should be held at least four times a year at approximately quarterly intervals. During the year ended 31 December 2020, the Board held three regular Board meetings only. However, the significant matters concerning the business activities and operation of the Group had been either duly reported, discussed and resolved at the aforesaid three regular Board meetings and the other five Board meetings. Code provision A.2.7 stipulates that the chairman should at least annually hold meetings with the independent non-executive directors without the presence of other directors. But the Company did not hold the meeting between the Chairman and the independent non-executive Directors without the executive Director, non-executive Directors or senior management present during the year ended 31 December 2020 due to the resignation of the Chairman on 9 June 2020.

E. DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors acknowledge their responsibility for preparing the financial statements of the Company for the year ended 31 December 2020.

The Directors are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern.

The statement of the independent auditors of the Company about their reporting responsibilities on the financial statements is set out in the section headed "Independent Auditors' Report" in this annual report.

F. AUDITORS' REMUNERATION

The remuneration paid/payable to the Company's external auditors for the year ended 31 December 2020 amounted to RMB5,000,000.

An analysis of the remuneration paid/payable to the external auditors of the Company, Ernst & Young, in respect of audit services and non-audit services for the year ended 31 December 2020 is set out below:

According to the requirements under Code Provision C.2.1 of the CG Code set out in Appendix 14 to the Listing Rules, the directors should conduct a review at least once annually on the effectiveness of the risk management and internal control systems of the issuer and its subsidiaries and report to the shareholders that they have completed such review in their Corporate Governance Report. The review should cover all material aspects including financial, operational and compliance controls as well as the risk management functions. By combining the internal control system and evaluation method of the Company and on the basis of regular and special supervision of internal controls, the Board conducted an evaluation on the effectiveness of the Company's risk management and internal control for the year of 2020.

I. Organizational Structure of Risk Management and Internal Control

The Board takes overall responsibility for the risk management and internal control systems, and is responsible for reviewing the effectiveness of these systems, evaluating and determining the nature and extent of risks that the Company is willing to take in achieving strategic objectives, and maintaining sound and effective risk management and internal control systems of the Company (including reviewing the relevant functions), so as to safeguard shareholders' investment and the Company's assets. To achieve this, the Group's management has established a risk management and internal control organizational structure by making reference to the internal framework of corporate management issued by The Committee of Sponsoring Organizations of The National Commission of Fraudulent Financial Reporting (the "COSO Standard"), adopting the following model with three lines of defence, considering the practical circumstances of the Company and under the supervision and guidance of the Board:

First line of defence - Operation and Management

The first line of defence is primarily comprised of the business departments of the Company and all of its branches and subsidiaries which are responsible for daily business operation and management, and are responsible for design and execute the relevant control to safeguard against risks.

Second line of defence - Risk Management

The second line of defence is comprised of functional departments such as operation center, finance management department, legal department and human resources department, which are responsible for the formulation of the relevant policies of risk management and internal control of the Company, providing assistance to the first line of defence by streamlining relevant business process, establishing and improving risk management, internal control and authorization systems, and performing supervision functions to reasonably ensure the effective implementation of the risk management and internal control tasks under the first line of defence.

Third line of defence - Assurance of Independence

The third line of defence is mainly constituted by the internal control and supervisory department.

The internal control team of the President's Office is responsible for performing the internal audit function and conducting independent review on the sufficiency and effectiveness of the risk management and internal control systems, as well as overseeing the continuous improvement and enhancement of the management over the risk management and internal control aspect, with a high degree of independence, and is responsible for receiving reports from multiple channels and conducting timely follow-up actions and investigations on alleged corruption cases, while at the same time assisting the management to promote the anti-corruption mechanism among staffs of the Company to establish correct values.

A direct reporting relationship has been established between the internal control team and the Audit and Compliance Committee.

The three lines of defence aim at managing, but cannot fully eliminate, the risks that may lead to the failure of achieving our strategic objectives, and providing reasonable, and not absolute, assurance against serious misstatements or losses.

The Company and its business operation environment undergo continuous development and changes, and the risks faced by the Company also undergo continuous evolutions. The Company will continue to review the sufficiency of the risk management and control structure, will always seek improvement opportunities and will increase relevant resources as and when necessary.

II. Corporate Risk Management Procedure

The Company places great emphasis on the establishment of risk management system, and gradually clarifies and enhances the overall risk management mechanism in the course of implementing operation management. The Company adopts various risk management methods with qualitative and quantitative combinations. The Company attaches great importance to the risks relating to strategy, operation, reporting and compliance on the basis of strategic objectives and operating objectives. The risk management procedure is as follows:

Stage 1: Risks Identification

On the basis of strategic and operating objectives, the Company identifies uncertainties and risk exposures which could affect the realization of its strategic and operational objectives in major areas, including strategy, operation, marketing, finance, law, human resources, information security and reputation.

Stage 2: Risks Evaluation

For various risks identified, the Company evaluates and rates such risks in two aspects, namely the probability and magnitude of impact from the occurrence of risks, and then ranks such risks as high, moderate and low based on the risk rating to formulate a risk heat map.

Stage 3: Risks Respond

Based on the results of risk identification and risk evaluation, the management adopts appropriate risk response strategy to design and implement relevant process and internal control activities to manage and control the risks. The risk response process and the internal control activities are implemented and executed by all branches and subsidiaries of the Company and all departments of the Group's headquarters.

Stage 4: Risks Supervision and Enhancement

The management continues to monitor the implementation of measures of risk tackling, continues to evaluate the risk level and the adequateness of existing controls by combining the changes in external environment and internal business model, and continues to enhance and improve the effectiveness of design and implementation of internal control.

The internal control team performs independent evaluation on the effectiveness of the design and implementation of the process for tackling various risks at least once per year through procedures such as information gathering, interview with management, walk through test and sampling test. The results of evaluation will be passed to the management and then the management would promote the continuous enhancement and improvement of the design and implementation of the risk control.

Stage 5: Risk Reporting

The internal control team reports the effectiveness of design, implementation and operation of the risk management and internal control systems to the Audit and Compliance Committee at least once per year.

III. High-Risk Areas

With expansion in the size of business, diversification of business modes and continuous changes in the external environment, changes may occur in the risk conditions of the Company.

According to the risk evaluation results for the year of 2020, the major risks faced by the Company and the risk tackling measures implemented are as follows:

Significant Risks

Tackling Measures

Impact of COVID-19

Due to the outbreak of COVID-19, strict restrictions on travel and domestic activities nationwide led to a sharp decline in rental demand. The Company promotes business situations by adopting the following:

• 1. Introducing discounted rental packages with longer rental term and discount coupons to stimulate demand;

• 2. Further optimizing the strong big data driven dynamic pricing system with finer differentiation;

• 3. Applying different initiatives towards existing and new customers to expand the volume of business;

• 4. Reducing human contact, improving customer experience and enhancing operating efficiency by significantly increasing the numbers of self-renting cars and increasing the density of self-renting points.

Through the above methods, the Company continues to expand profit channels and user coverage and improves customer experience as a response to cope with the impact caused by COVID-19.

Significant Risks

Liquidity riskData security risk

Tackling Measures

Due to the impact of the uncertainty on the change of shareholding structure of the Company during the year of 2020, the Company maintains liquidity by adopting the following:

• 1. The Company has sustained the business steadily and maintained healthy cashflow through close communication with creditors, pre-arrangement of payment schedule and increasing used car sales;

• 2. The Company has optimized its financing structure by diversifying its financing channels, whilst adopting a steady financial policy to ensure the balance between leverage ratio and credit indicators at the same time.

The Company has lowered information security risk by adopting the following measures:

• 1. Continuously strengthening the input of resources for information technology infrastructure construction, and constantly optimizing disaster recovery mechanism in order to provide steady support to business development;

• 2. Establishing management standards of operational maintenance and protection mechanism of business continuity in information system in order to ensure smooth and continuous system operation;

• 3. Establishing relevant management standards including the collection, transmission, secure storage, encryption, authorized access and destruction of data; safeguarding sensitive information through various measures such as encryption technology, data access authorization control and process control; in addition, network safety monitoring has been continuously strengthened in order to lower the risk of leaking sensitive information.

Significant Risks

Tackling Measures

Vehicle residual risk

The Company determines the timing of retirement by considering vehicle condition, selling price of used vehicle, and demand and supply of vehicles; and strives to enhance the used cars disposal capabilities and lower the risk of vehicle residual value by penetrating to the B2C channels of used cars.

Corruption risk

To further improve the professional conduct risk prevention system, the Company has established an anti-corruption mechanism to promote the anti-corruption policy of the Company, and has conducted anti-corruption training and provided channels for reporting and collecting various types of reported information for the prevention and discovery of business corruption. The Company performs internal anticorruption function and conducts special investigations to exercise the supervisory function.

IV. Internal Control

The Company determines the major businesses and high-risk areas to be included in the scope of evaluation based on the risk-oriented principle. Based on business generation subjects of various principal businesses, management process and frequency of control and operation, the Company comprehensively determines the major units that need to be incorporated into the scope of evaluation. The major units, businesses and items and high-risk areas included in the abovementioned scope of evaluation cover the major aspects of operation and management of the Company, including aspects at the organizational, operational, financial reporting and IT system levels. During the Reporting Period, no significant control failings occurred and no material control weakness was identified in the Company.

The internal control team of the Company has started the internal control and evaluation work in the third quarter of 2020. Individual interviews, suitability tests, walk-through tests and sample tests were comprehensively adopted during the evaluation procedure. The internal control team analyzed and identified whether deficit existed in the design of internal control and whether the implementation of internal control is effective by broadly gathering the evidences of effective operation of internal control within appraised units, and formulating the working paper. The working paper records contents of evaluation in detail, including risks of elements in evaluation, control measures taken, relevant evidence information and result of evaluation.

The internal control team consolidates and formulates the internal control evaluation report and submits such report to the Audit and Compliance Committee for their consideration. The Audit and Compliance Committee meets quarterly to evaluate reports from the Company's internal control team.

V. Annual Review on Risk Management and Internal Control Systems

For risk management and monitoring, the Audit and Compliance Committee meets the heads of business units, departments and divisions from time to time to monitor risks identified and comes up with measures and response plans to manage and mitigate risks identified in day-to-day business operations. The Audit and Compliance Committee also follows up periodically the implementation of such measures and response plans.

During the year, the management and internal control team have conducted an annual review on risk management and internal control systems of the Company, consolidated and formulated the audit report proposal and submitted such proposal to the Audit and Compliance Committee for consideration in accordance with the guidelines of disclosure policy formulated by the Company. Through a review on the work and findings of the internal control team, the Audit and Compliance Committee considered and audited the effectiveness of the risk management and internal control systems in monitoring fraud and non-compliance.

According to the findings of the internal control team, the Audit and Compliance Committee concluded that, for the year ended 31 December 2020: (i) the Company should refer to COSO Standard as and when needed, the effectiveness of the Company's risk management and internal control systems are sufficient and adequate, and the Company maintains effective internal control in respect of financial reporting in all material aspects; (ii) the Company has already adopted appropriate mechanism which is necessary for monitoring and rectifying non-compliance; and (iii) the Company has already been in compliance with the requirements on risk management and internal control under the CG Code.

The Audit and Compliance Committee has also reviewed the Company's resources for accounting, internal audit and financial reporting functions, the qualifications and experience of the staffs as well as training courses attended by staff and the relevant budget, and it is satisfied with the sufficiency of the resources of abovementioned items.

VI. Disclosure of Inside Information

The Company has developed appropriate disclosure policies which provide a general guide to the Company's Directors, officers, senior management and relevant employees in the handling of confidential information, monitoring information disclosure and responding to enquiries.

Control procedures have been implemented to ensure that unauthorized access and use of inside information are strictly prohibited.

• H. COMPANY SECRETARY

  Ms. Ka Man SO of Tricor Services Limited, an external service provider, has been engaged by the Company as its company secretary. Her primary contact person at the Company is Ms. Siu Wan PAAU, vice president of Investor Relations of the Company.

• I. SHAREHOLDERS' RIGHTS

  To safeguard shareholders' interests and rights, a separate resolution is proposed for each substantially separate issue at general meetings, including the election of individual Directors. All resolutions put forward at general meetings will be voted on by poll pursuant to the Listing Rules and poll results will be posted on the websites of the Company and the Stock Exchange after each general meeting.

  (1) Convening a General Meeting

Shareholder(s) holding at the date of deposit of the requisition not less than one-tenth of the paid-up capital of the Company may request the Board to convene an extraordinary general meeting pursuant to Article 58 of the Articles of Association by sending a written requisition to the Board or the company secretary. The objects of the meeting must be stated in the written requisition.

(2) Putting Forward Proposals at General Meeting

If a shareholder wishes to propose a person other than a retiring Director for election as a Director of the Company at a general meeting, pursuant to Article 85 of the Articles of Association, the shareholder (other than the person to be proposed) duly qualified to attend and vote at the general meeting shall send a written notice, duly signed by the shareholder, of his/her intention to propose such person for election and also a notice signed by the person to be proposed of his/ her willingness to be elected. These notices should be lodged at the Company's head office or the office of the Company's branch share registrar. The period for lodgement of such notices shall commence on the day after the despatch of the notice of such general meeting and end no later than 7 days prior to the date of such general meeting.

(3) Putting Forward Enquiries to the Board

For putting forward any enquiries to the Board of the Company, shareholders may send written enquiries to the Company. The Company will not normally deal with verbal or anonymous enquiries.

(4) Contact Details

The contact details of the Company are set out in the Company's website (www.zuche.com) in order to enable the shareholders to make any query that they may have with respect to the Company.

Shareholders should direct their enquiries about their shareholdings to the Company's Hong Kong branch share registrar. Their contact details are as follows:

Tricor Investor Services Limited

Level 54, Hopewell Centre

183 Queen's Road East Hong Kong

Shareholders may at any time make a request for the Company's information to the extent such information is publicly available.

(5) Articles of Association

The Articles of Association was adopted pursuant to the written resolutions of sole shareholder of the Company passed on 18 August 2014 and took effect from 19 September 2014. Since then, there have been no changes to the Articles of Association and an up-to-date version of the Articles of Association is available on the websites of the Company and the Stock Exchange. Shareholders may refer to the Articles of Association for further details of the rights of shareholders.

J. COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

The Company considers that effective communication with shareholders is essential for enhancing investor relations and investor understanding of the Group's business performance and strategies. The Company endeavours to maintain an on-going dialogue with shareholders and in particular, through annual general meetings and other general meetings. At the annual general meeting, the Directors (or their delegates as appropriate) are available to meet shareholders and answer their enquiries.

Code provision E.1.2 of the CG Code stipulates that the chairman of the board of directors should attend the annual general meeting. Mr. Charles Zhengyao LU, the then Chairman of the Board, was unable to attend the Company's annual general meeting held on 12 May 2020 due to other engagement. In view of his absence, Mr. LU had arranged for Ms. Yifan SONG, who is well-versed in the Company's business and affairs, to attend the meeting and communicate with shareholders of the Company.

The Board presents this annual report together with the audited consolidated financial statements of the Group for the year ended 31 December 2020 (the "Financial Statements").

PRINCIPAL ACTIVITIES

The Group is a leading auto mobility provider in China, offering car rental and fleet rental services to individual and corporate customers. The principal activities of the Group are as follows:

• (i) car rental;

• (ii) fleet rental; and

• (iii) sales of used rental vehicles.

Details of the principal activities of the principal subsidiaries are set out in note 1 to the Financial Statements. There were no significant changes in the nature of the Group's principal activities during the Reporting Period.

RESULTS

The results of the Group for the year ended 31 December 2020 are set out in the Financial Statements of this annual report.

BUSINESS REVIEW

Overview and Performance of the Year

A review of the business of the Group and analysis of the Group's performance using key performance indicators is provided in the section headed "Management Discussion and Analysis" of this annual report.

Environmental Policies and Performance

Car rental is a mobility solution that reduces car ownership and hence helps solve traffic congestion and carbon dioxide emission. As the largest car rental company in China, our goal is to provide anyone with any car at any time anywhere. With a fleet size of 109,688 cars at the end of 2020, we were able to provide green travel solutions to customers in the 172 major cities across the country. As the electric vehicle technology gets more mature, we also aim to increase the portion of our electric vehicles in our total fleet to operate our business in a more environmental way.

Internally, we encourage green work by promoting paperless communications and the adoption of the office administration system where certain approval processes and internal communications were done electronically. We also place recycle boxes at designated area for employees to re-use paper. We have also assigned certain employees to check the conditions of the electric appliances after office hours to maximize savings.

Please refer to the section headed "Environmental, Social and Governance Report" in this annual report for more details.

Compliance with Relevant Laws and Regulations

The Company is subject to laws and regulations governing its relationship with its employees, including wage and hour requirements, working and safety conditions, and social insurance, housing funds and other welfare. Employers of People's Republic of China (the "PRC") are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity leave insurance, and to housing funds. These payments are made to local administrative authorities and any employer who fails to contribute may be fined and ordered to remediate on payments within a stipulated time period. During the Reporting Period, there was no under-contributed social insurance housing fund and other employee benefit.

In accordance with Road Traffic Safety Law and Provisions on the Registration of Motor Vehicles promulgated by the Ministry of Public Security, all automotive vehicles must be registered and equipped with license plates. As of 31 December 2020, our vehicles have been registered with relevant local administration authorities and are equipped with license plates. The car rental industry is primarily regulated by government authorities at local levels, where regulatory requirements on operating entities and vehicles vary from one locale to another. The Company is in compliance with local rules on car rental industry in general.

Save as disclosed elsewhere in this annual report, the Group has complied with the requirements under the Companies Ordinance, the Listing Rules, the Securities and Futures Ordinance (the "SFO") and the CG Code for, among other things, the disclosure of information and corporate governance. The Group has adopted the Model Code.

The Board has overall responsibility for our environmental, social and governance ("ESG") strategy and reporting. The Board is responsible for evaluating and determining our ESG-related risks, and ensuring that appropriate and effective ESG risks management and internal control systems are in place. A confirmation regarding the effectiveness of these systems has been provided to the Board during the year ended 31 December 2020.

During the Reporting Period, the Company has been in compliance with the laws and regulations which would have a material impact on the Group.

Key Relationships with Stakeholders

Employees

In 2020, the number of our employees has decreased from 5,914 to 5,132, which was mainly due to the enhanced productivity and efficiency with the optimized proprietary Smart Assistant APP, and the slow down of hires after turnover. As the outbreak of COVID-19 had a material impact on car rental demand, the Company had put more efforts on internal operation efficiency management and training of staff, on top of increased marketing to stimulate demand. Throughout 2020, the Company continued to heighten the hygiene standard to safeguard the health and safety of our staff. Different measures were taken to make sure disinfection of vehicles and stores was in place. During 2020, we recorded no COVID-19 infection case. Looking into 2021, the Company is committed to restoring business and growth, and formulate a new incentive scheme to line up the Company's goal with employees' return.

Customers

As compared with 2019, the customer base increased by 15% and registered members increased by 70%. Different initiatives had been applied towards existing and new customers to expand the customer base. We also continued to strive to upgrade customer experience from time to time by providing better fleet condition, more convenient and value services. In the fourth quarter of 2020, 99% of the car rental reservations were made through the Company's mobile APP. The percentage of self-served transaction increased by 3 percentage points to 91% in December 2020, providing faster and more convenient service experience to our customers. The Company will also reprogramme the membership scheme to be launched in 2021 to reward frequent customers.

OEM suppliers

OEM suppliers are one of the most important business partners of the Company. In 2020, the Company strategically limited car purchase due to the outbreak of COVID-19, due to decreased car rental demand and the ability to obtain financing. Nevertheless, the Company maintained communications with key OEM suppliers to maintain long term relationships and ensured the readiness to start purchasing vehicles again.

Creditors

In 2020, although COVID-19 and the resulting economic conditions had a worldwide impact across most industries, the Company repaid all interests and maturities on time, and proactively communicated with lenders to prepay loans before maturities in a manageable manner to relieve lenders' concerns in order to support long term relationship. During the Reporting Period, the Company repaid a total of over RMB8 billion to creditors. Protecting creditors from loss is the Company's basis for continued development. In the past year, the Company was able to leverage flexible disposal of used cars to replenish cash level during difficult times, and maintain solid operation to generate revenue. The Company will continue to maintain strong financial position and work closely with creditors to operate the business.

Key Risks and Uncertainties

The car rental business is capital intensive. Our business requires a large amount of capital to finance the expansion and replenishment of our fleet. Failure to manage our liquidity and cash flows or inability to obtain additional financing in the future may materially and adversely affect our business, results of operations and financial condition.

Restrictive covenants contained in credit facilities and issued senior notes and other debt agreements may limit our ability to incur additional indebtedness and restrict our future operations, and failure to comply with these restrictive covenants may adversely affect our liquidity, financial condition and results of operations.

We face risks related to the residual value of our rental vehicles and may not be able to dispose of our used cars at desirable prices and volume. As used cars constitute a significant portion of our assets and our business requires us to constantly replenish our fleet, risks related to the residual value of our rental vehicles and failure to dispose of our used cars at desirable prices and volume may materially and adversely affect our financial condition and business prospects.

Our business, financial condition and results of operations may be adversely affected by the downturn in the PRC or global economy and weakness in travel demand. Our growth may be adversely impacted by uncertainties in China's car rental industry, which is at an early stage of development and may experience unexpected downturns for various reasons.

The car rental industry in China is competitive and fragmented. We compete in the car rental market with local car rental companies and other smaller car rental companies. Alliances or mergers among our existing competitors or with new entrants into the car rental industry may present additional challenges. In order to protect our market share, we may deploy countermeasures such as increasing promotional activities or lowering rental rates, which may impact our financial performance. If we do not compete successfully against existing and new competitors, we may lose customers and market share.

We strategically lowered our price and utilization rate for our car rental business over the past few years for market expansion and defending our leadership position. Although we target to stabilize these key operating metrics in the future, it could be a challenge for us if we failed to manage customer expectation and new forms of competition.

The outbreak of COVID-19 has affected the Company's business performance since late January 2020, and has caused a decline of our business. In early 2020, certain of our service locations were temporarily closed due to the outbreak and our employees were unable to go to our service locations for extended periods of time, which negatively impacted our operations. Travel restrictions imposed by local governments and suppress on tourism and travel activities had negatively impacted the car rental market in China. More than a year since the outbreak, there is great uncertainty as to the future progression of the disease and whether countries around the world (including China) could be hit by subsequent waves of COVID-19 infections, which may continue to disrupt our business and financial performance.

Please refer to section headed "Business Overview and Strategies" in this annual report for more details.

Prospects

According to the joint announcement by the Offeror and the Company dated 4 March 2021, the Offeror had received valid acceptances and will privatise the Company by exercising its rights, pursuant to the Cayman Islands Companies Law and the Takeovers Code, to compulsorily acquire those offer Shares not already acquired by the Offeror on the same terms as the Share Offer.

MBK Partners has become the controlling shareholder of the Company. We believe MBK Partners' investment will: (a) bring stability to the Company's shareholding base, which in turn will help stabilise the Company's business operations and support positive views on the Company's outlook and ability to meet its obligations, which were negatively impacted by movements in the shareholding structure of the Company; and (b) through MBK Partners' strong industry expertise and strong financial position, allow the Company to be well-positioned to benefit from the long-term growth trends in the PRC.

Please refer to section headed "Strategies" in this annual report for more details.

DIVIDEND POLICY

The Company has adopted a Dividend Policy on payment of dividends. The Company does not have any pre-determined dividend payout ratio. Depending on the financial conditions of the Company and the Group and the conditions and factors as set out in the Dividend Policy (including but not limited to the Group's financial results, cash flow situation, business conditions and strategies, future operations and earnings, capital requirements and expenditure plans), dividends may be proposed and/or declared by the Board during a financial year and any final dividend for a financial year will be subject to the shareholders' approval.

FINAL DIVIDEND

The Board does not recommend the payment of any dividend for the year ended 31 December 2020.

SHARE CAPITAL AND SHARE OPTIONS

Details of movements in the Company's share capital and share options during the Reporting Period are set out in notes 32 and 33 to the Financial Statements.

TAX RELIEF

The Company is not aware of any tax relief or exemption available to the shareholders of the Company by reason of their holding of the Company's securities.

RESERVES

Details of the movements in reserves of the Group during the Reporting Period are set out in the consolidated statement of changes in equity on page 134 of this annual report.

DISTRIBUTABLE RESERVES

As at 31 December 2020, the Company had no distributable reserves.

FINANCIAL SUMMARY

A summary of the published results of the assets and liabilities of the Group for the last five financial years, as extracted from the audited financial statements and restated/reclassified as appropriate, is set out on page 274 of this annual report. This summary does not form part of the audited financial statements.

CHARITABLE CONTRIBUTION

During the year ended 31 December 2020, the Group made charitable contributions totaling RMB39,000.

RETIREMENT BENEFITS

Details of the retirement benefits of the Group during the Reporting Period are set out in note 2.4 to the Financial Statements.

RENTAL VEHICLES, OTHER PROPERTY, PLANT AND EQUIPMENT

Details of movements in rental vehicles, other property, plant and equipment of the Group during the Reporting Period are set out in note 13 and note 14 to the Financial Statements.

BANK LOANS AND OTHER BORROWINGS

Details of bank loans and other borrowings of the Group during the Reporting Period are set out in note 27 to the Financial Statements.

CONTINGENCY LIABILITIES

As at 31 December 2020, the Group had no significant contingent liabilities.

PUBLIC FLOAT

The Stock Exchange had granted a waiver under Rule 8.08(1)(d) of the Listing Rules to accept a lower public float percentage of the Company's issued share capital (the "Minimum Public Float") subject to:

• (i) the Minimum Public Float of 15%; and

• (ii) appropriate disclosure of the lower prescribed percentage of public float and confirmation of sufficiency of public float in successive annual reports after listing.

Pursuant to the waiver, the Company has complied with the public float requirement which is at the higher of such percentage (being 21.6%) shares held by the public immediately after the completion of the issue and allotment by the Company of the over-allotment shares. As at the date of this annual report, 127,287,337 Shares, representing approximately 5.99% of the entire issued share capital of the Company, were held by the public (as defined in the Listing Rules). Accordingly, the minimum public float requirement of 21.6% as specified by the Stock Exchange under Rule 8.08(1)(d) of the Listing Rules is not satisfied. For details, please refer to the announcement jointly issued by the Offeror and the Company dated 4 March 2021.

PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights under the Articles of Association and there is no restriction against such rights which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders.

DIRECTORS

The Directors during the Reporting Period and up to the date of this annual report are:

Executive Director

Ms. Yifan SONG (Chief Executive Officer)

Non-executive Directors

Mr. Charles Zhengyao LU (resigned on 9 June 2020)

Ms. Xiaogeng LI (resigned on 1 August 2020)

Mr. Linan ZHU (resigned on 2 March 2021)

Mr. Zhen WEI (resigned on 3 November 2020)

Mr. Leping YAN (appointed on 12 June 2020, subsequently resigned on 2 March 2021)

Mr. Hongfei YU (appointed on 15 December 2020)

Mr. Xuan YAN (appointed on 15 December 2020)

Mr. Stephen LE Ee Boon (appointed on 15 January 2021)

Mr. Jun XU (appointed on 2 March 2021)

Ms. Shengping YU (appointed on 2 March 2021)

Independent Non-executive Directors

Mr. Sam Hanhui SUN

Mr. Wei DING

Mr. Li ZHANG

Each of the Directors is appointed for a specific term of three years and is subject to retirement by rotation once every three years pursuant to the Articles of Association.

Pursuant to Articles 83(3) of the Articles of Association, Mr. Hongfei YU and Mr. Xuan YAN who were appointed as Non-executive Directors on 15 December 2020, Mr. Stephen Ee Boon LE who was appointed as a Non-executive Director on 15 January 2021, and Mr. Jun XU and Ms. Shengping YU who were appointed as Non-executive Directors on 2 March 2021 shall hold office until the annual general meeting to be held on 18 May 2021 (the "2021 AGM"). Pursuant to Articles 84 of the Articles of Association, Ms. Yifan SONG and Mr. Sam Hanhui SUN shall retire by rotation at the 2021 AGM. All of the above retiring Directors, being eligible, offered themselves for re-election at the 2021 AGM.

DIRECTORS' AND SENIOR MANAGEMENT'S BIOGRAPHIES

Biographical details of the directors of the Company and the senior management of the Group are set out in the section headed "Profile of Directors and Senior Management" in this annual report.

DIRECTORS' SERVICE AGREEMENT AND LETTERS OF APPOINTMENT

Our executive Director has entered into a service agreement and each of our five non-executive Directors and three independent non-executive Directors has signed a letter of appointment with the Company. The initial term of the appointment is three years commencing from the execution date of the service agreement or letter of appointment (subject always to re-election as and when required under the Articles of Association) until terminated in accordance with the terms and conditions of the service agreement or letter of appointment or by either party giving to the other not less than one month's prior notice in writing.

None of the Directors proposed for re-election at the 2021 AGM has an unexpired service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation, other than statutory compensation.

CONFIRMATION OF INDEPENDENCE FROM THE INDEPENDENT NON-EXECUTIVE DIRECTORS

We have received from each of the Independent Non-executive Directors, namely Mr. Sam Hanhui SUN, Mr. Wei DING and Mr. Li ZHANG, the confirmation of their respective independence pursuant to the Listing Rules. The Company has duly reviewed the confirmation of independence of each of these Directors. We consider that our Independent Non-executive Directors have been independent during the Reporting Period and remain so as at the date of this annual report.

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at 31 December 2020, the interests of the Directors and chief executive in the shares and underlying shares of the Company which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code as contained in Appendix 10 to the Listing Rules, were as follows:

Long position in the shares of the Company

Approximate Percentage of

Number ofthe Company's

Shares

Issued Share

Long position in the underlying shares of the Company - physically settled unlisted equity derivatives (share options)

* The percentage represents the number of ordinary/underlying shares divided by the number of the Company's issued shares as at 31 December 2020.

Save as disclosed above, none of the Directors or chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations as at 31 December 2020.

SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 31 December 2020, the persons, other than the Directors or chief executive of the Company, who had interests in the shares and underlying shares of the Company as recorded in the register of interests required to be kept by the Company pursuant to section 336 of Part XV of the SFO, or as the Company was aware of, were as follows:

Long position in the shares of the Company

Approximate Percentage of the Company's

Approximate Percentage of the Company's

(1) Grand Union Investment Fund, L.P. is an exempted liability partnership which is controlled by a sole general partner, Infinity

Wealth Limited and a sole limited partner, Right Lane Limited. Infinity Wealth Limited is a wholly-owned subsidiary of Right Lane Limited, which in turn, is wholly owned by Legend Holdings Corporation. Legion Elite Limited is a wholly-owned subsidiary of Right Lane Limited. Thus, Legend Holdings Corporation and Right Lane Limited were deemed to be interested in 562,668,025 shares and 915,000 shares of the Company held by Grand Union Investment Fund, L.P. and Legion Elite Limited respectively. Infinity Wealth Limited was deemed to be interested in 562,668,025 shares of the Company held by Grand Union Investment Fund, L.P.

• (2) Warburg Pincus Private Equity XI, L.P. owns 41.42% of the equity interest in Amber Gem Holdings Limited ("Amber Gem"). Warburg Pincus Private Equity XI, L.P. is a wholly-owned subsidiary of Warburg Pincus XI, L.P., which, in turn, is wholly owned by WP Global LLC. WP Global LLC is wholly owned by Warburg Pincus Partners II, L.P., which, in turn, is wholly owned by Warburg Pincus Partners GP LLC. Warburg Pincus Partners GP LLC is wholly owned by Warburg Pincus & Co. Thus, Warburg Pincus Private Equity XI, L.P., Warburg Pincus XI, L.P., WP Global LLC, Warburg Pincus Partners II, L.P., Warburg Pincus Partners GP LLC and Warburg Pincus & Co. were deemed to be interested in 157,039,260 shares of the Company held by Amber Gem.

• (3) UBS AG and UBS Asset Management (Singapore) Ltd are wholly owned subsidiaries of UBS Group AG. Thus, UBS Group AG was deemed to be interested in the 94,332,299 and 18,855,000 shares held by UBS AG and UBS Asset Management (Singapore) Ltd, respectively.

• (4) Based on the information set out in the relevant disclosures made by the said substantial Shareholder(s), Indigo Glamour Company Limited is an indirect wholly-owned subsidiary of Indigo Glamour Holdings Limited. Indigo Glamour Holdings Limited is wholly-owned by MBK Partners JC IV, L.P. In respect of MBK Partners JC IV, L.P. (which indirectly owns 100% of Indigo Glamour Company Limited): (i) Michael ByungJu Kim controls MBK GP IV, Inc., which in turn controls MBK Partners GP IV, L.P. which in turn controls MBK Partners Fund IV, L.P., which is the sole limited partner of MBK Partners JC IV, L.P.; and (ii) Teck Chien Kong controls MBK Partners JC IV GP, Inc., which in turn controls MBK Partners JC IV GP, L.P., which in turn controls MBK Partners JC IV, L.P. Thus, Michael ByungJu Kim, Teck Chien Kong, MBK GP IV, Inc., MBK Partners Fund IV, L.P., MBK Partners GP IV, L.P., MBK Partners JC IV GP, Inc., MBK Partners JC IV GP, L.P., MBK Partners JC IV, L.P. and Indigo Glamour Holdings Limited were deemed to be interested in 442,656,855 Shares held by Indigo Glamour Company Limited.

* The percentage represents the number of ordinary shares divided by the number of the Company's issued shares as at 31 December 2020.

Long position in the underlying shares of the Company - unlisted derivatives (convertible instrument)

Number of

Number of

Name

Capacity

Instruments

MBK Partners Special Situations I,

Interest in Controlled Corporations

339,062,500 15.98%

L.P.(1)

British Columbia InvestmentInterest in Controlled Corporations

339,062,500 15.98%

Management Corporation(2)

Notes:

• (1) Based on the information set out in the relevant disclosures made by the substantial shareholder(s), Mcqueen SS Ltd. is indirectly wholly-owned by MBK Partners Special Situations I, L.P. MBK Partners Special Situations I, L.P. is controlled by MBK Partners Special Situations GP I, L.P., which is controlled by MBKSS GP I, Inc., which in turn is controlled by Mr Michael ByungJu Kim. Thus, MBK Partners Special Situations I, L.P., MBK Partners Special Situations GP I, L.P., MBKSS GP I, Inc. and Mr Michael ByungJu Kim were deemed to be interested in 339,062,500 underlying shares in respect of convertible instruments of the Company held by the Mcqueen SS Ltd.

• (2) Based on the information set out in the relevant disclosures made by the said substantial Shareholder(s), Mcqueen SS Ltd. is indirectly wholly-owned by MBK Partners Special Situations I, L.P., which, in turn, is owned by bcIMC PEPL 2017 WSAF Inc. and bcIMC PEPL 2017 Inc. in the proportions of 5.54% and 32.69% respectively. bcIMC PEPL 2017 WSAF Inc. and bcIMC PEPL 2017 Inc. are wholly-owned by British Columbia Investment Management Corporation. Thus, British Columbia Investment Management Corporation, bcIMC PEPL 2017 Inc., bcIMC PEPL 2017 WSAF Inc. and MBK Partners Special Situations I, L.P. were deemed to be interested in 339,062,500 underlying shares in respect of convertible instruments of the Company held by the Mcqueen SS Ltd.

Save as disclosed above, the Company is not aware of any other person (other than the Directors or chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO as at 31 December 2020.

DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES

Save as disclosed in the section headed "Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures of the Company" above and the section headed "Summary of the Share Option Schemes" below, at no time during the year ended 31 December 2020 and up to the date of this annual report was the Company or any of its subsidiaries or holding company or any subsidiary of the Company's holding company, a party to any arrangement that would enable the Directors to acquire benefits by means of acquisition of shares in, or debentures of, the Company or any other body corporate, and none of the Directors or any of their spouses or children under the age of 18 were granted any right to subscribe for the equity or debt securities of the Company or any other body corporate or had exercised any such right.

DIRECTORS' AND CONTROLLING SHAREHOLDERS' INTERESTS IN COMPETING BUSINESS

For the year ended 31 December 2020 and up to the date of this annual report, so far as the Directors were aware, the following controlling shareholder and directors of the Company were considered to have interests in businesses apart from the Group's businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules as set out below:

MBK Partners, the controlling shareholder of our Company, is also holds a minority beneficial ownership interest in eHi Car Services Ltd. Mr. Hongfei YU, Mr. Xuan YAN, Mr. Stephen LE Ee Boon, Mr. Jun XU and Ms. Shengping YU are MBK Partners investment professionals. eHi Car Services Ltd. is engaged in the business of providing car rental services in the PRC which might compete with the rental business of our Group. As the Board is independent of the board of directors of eHi Car Services Ltd. and the above directors are subject to fiduciary duties to act in the best interests of the shareholders of the Company and the Group as a whole at all times, the Group is therefore capable of carrying on its businesses independently of, and at arm's length from the businesses of eHi Car Services Ltd. and its subsidiaries.

Save for disclosed above, none of the directors and controlling shareholder of the Company was interested in any business which competes or is likely to compete with the businesses of the Group for the year ended 31 December 2020 and up to the date of this annual report.

CONTINUING CONNECTED TRANSACTIONS AND CONNECTED TRANSACTIONS

Upon Mr. Lu's resignation from his directorship of the Company in June 2020, Mr. Lu remains a director of the Company within the last 12 months and hence, a connected person of the Company pursuant to Rule 14A.07 of the Listing Rules until such 12-month period has lapsed. Since Mr. Lu has been the actual controller of UCAR, UCAR constitutes a connected person of the Company and the following transactions between the Company and UCAR, are required to be disclosed in this annual report in accordance with Chapter 14A of the Listing Rules.

As the applicable percentage ratio exceeds the de minimis threshold as stipulated under Rule 14A.76 of the Listing Rules, the Company is required to comply with the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

Renewed Framework Agreement with UCAR dated 13 December 2018

To facilitate the operation and growth of the Company's business, on 13 December 2018, the Company entered into a renewed framework agreement with UCAR in relation to fleet rental, technical services, leasing and other services with a term of not more than three years. The renewed framework agreement replaced the framework agreement with UCAR dated 16 March 2016 upon its expiry on 31 December 2018. For details of the original framework agreement with UCAR dated 16 March 2016, please refer to the announcement dated 17 March 2016, the circular dated 28 April 2016 and the disclosure in the 2018 Annual Report of the Company.

The Company convened an extraordinary general meeting on 22 February 2019 to seek independent Shareholders' approval of the transactions under the renewed framework agreement and the aggregate annual caps for the financial years ending 31 December 2019 to 2021. The renewed framework agreement was approved by the independent shareholders of the Company.

For the year ended 31 December 2020, the aggregate amount paid by UCAR to the Group in relation to fleet rental, technical services and leasing services under the renewed framework agreement was approximately RMB83,258,000, RMB9,068,000 and RMB793,000, respectively, and the aggregate amount paid by the Group to UCAR Inc. in relation to leasing services was approximately RMB3,380,000, which did not exceed the aggregate annual cap of RMB780,000,000. For details, please refer to the announcement of the Company dated 13 December 2018 and the circular dated 18 January 2019.

New Framework Agreement with UCAR dated 25 June 2018

To facilitate and provide a new and efficient channel to dispose vehicles as an additional option to the existing channels, on 25 June 2018, the Company entered into a new framework agreement with UCAR in relation to its sale of vehicle business, with a term of not more than three years and subject to terms and conditions provided therein. The new framework agreement replaced the framework agreement with UCAR dated 29 June 2016 upon its expiry on 31 December 2018. For details of the original framework agreement with UCAR dated 29 June 2016, please refer to the announcement dated 29 June 2016, the circular dated 27 July 2016 and the disclosure in the 2018 Annual Report of the Company.

The Company convened an extraordinary general meeting on 16 August 2018 to seek independent shareholders' approval of the transactions under the new framework agreement and the aggregate annual caps for the financial years ended 31 December 2018 to 2020. The new framework agreement was approved by the independent shareholders of the Company.

For the year ended 31 December 2020, the aggregate amount of commission paid to UCAR Group for sale of vehicles to end-users through UCAR Group's sales platform was nil, which did not exceed the aggregate annual cap of RMB340,000,000. For details, please refer to the announcement of the Company dated 25 June 2018 and the circular dated 17 July 2018.

Continuing Connected Transactions with Beijing Borgward pursuant to Rule 14A.60 of the Listing Rules

To facilitate the operation of the Company's business, on 24 September 2020, Beijing China Auto Rental Co., Ltd. ("CAR Beijing"), an indirectly wholly-owned subsidiary of the Company, entered into a procurement framework agreement (the "Procurement Framework Agreement") with Borgward Auto (China) Co., Ltd.

("Borgward China") and Borgward Auto Technology (Xiamen) Co., Ltd. ("Borgward Xiamen"). Both Borgward China and Borgward Xiamen are wholly owned subsidiaries of Borgward and Borgward is a non-wholly owned subsidiary of UCAR. Therefore, Borgward China and Borgward Xiamen, and their respective associates are connected persons of the Company and the transactions contemplated under the Procurement Framework Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

From 24 September 2020 to 31 December 2020, the aggregate amount paid by CAR Beijing to Borgward China and Borgward Xiamen was approximately RMB22,070,000, which did not exceed the aggregated annual cap of RMB25,000,000. For details, please refer to the announcement dated 24 September 2020 of the Company.

Connected transaction in relation to the issuance of convertible bonds

On 3 December 2020, the Company entered into a subscription agreement with Mcqueen SS Ltd. (the "Subscription Agreement"), pursuant to which the Company has conditionally agreed to issue, and Mcqueen SS Ltd. has conditionally agreed to subscribe for, or procure other investor(s) to subscribe for, the Company's convertible bonds in the aggregate principal amount of US$175,000,000 (equivalent to HK$1,356,250,000).

Mcqueen SS Ltd. is wholly-owned by MBK Partners Special Situations I, L.P. The general partner of MBK Partners Special Situations I, L.P. is MBK Partners Special Situations GP I, L.P., and the general partner of MBK Partners Special Situations GP I, L.P. is MBKSS GP I, Inc., affiliates of MBK Partners. Furthermore, Indigo Glamour Holdings Limited is wholly-owned by MBK Partners Fund IV, L.P. The general partner of MBK Partners Fund IV, L.P. is MBK Partners GP IV, L.P., and the general partner of MBK Partners GP IV, L.P. is MBK GP IV, Inc., affiliates of MBK Partners. At the time of completion of the Subscription Agreement, Indigo Glamour Holdings Limited was holding approximately 20.86% of the issued capital of the Company and hence, a connected person of the Company by virtue of being a substantial shareholder of the Company. As a result, Mcqueen SS Ltd. is a connected person of the Company by virtue of being an associate of Indigo Glamour Holdings Limited and the subscription under the Subscription Agreement constitute a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement, and independent shareholders' approval requirements under the Listing Rules.

The transaction under the Subscription Agreement was approved by the independent shareholders by poll at the extraordinary general meeting of the Company on 6 January 2021. All conditions of the Subscription Agreement have been fulfilled and completion of the Subscription Agreement took place on 15 January 2021.

Methods and procedures adopted by the Company to monitor the continuing connected transactions

To monitor the abovementioned continuing connected transactions, the Company has designated the special compliance committee, which consists of senior management from business operation, legal and finance departments (the "Special Compliance Committee") to continuously monitor the transactions and ensure that the pricing mechanism has been followed. The Special Compliance Committee also ensures that the management and business operations are independent among the Company, UCAR Inc., Beijing Borgward, Borgward China and Borgward Xiamen, and that the transactions between the two companies are conducted within arm's length basis.

The Special Compliance Committee continuously traces and regularly monitors the progress of the continuing connected transactions and report to management of the Company. The Special Compliance Committee reviews the continuing connected transactions with the finance department to ensure that annual caps are not exceeded. The heads of different departments of the Company will also be informed on a periodic basis in relation to the terms and pricing policies of the continuing connected transactions. Quarterly or as needed, the Special Compliance Committee will communicate with the Company's Audit and Compliance Committee to report the progress of the continuing connected transactions, and request for approval of new or significant changes of existing transaction terms. Audit and Compliance Committee has also assigned the independent internal audit team to ensure that the Company's internal control measures in respect of the continuing connected transactions are conducted in accordance with the terms of the relevant agreement, pricing policies and on normal commercial terms that are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

The Independent Non-executive Directors and the auditor of the Company have reviewed the nature and process of the business transactions, discussed the pricing methodology of the referred transactions, and have confirmed that the above continuing connected transactions have been entered into by the Group: (i) in the ordinary and usual course of its business; (ii) on normal commercial terms; and (iii) in accordance with the relevant agreement governing it and on terms that were fair and reasonable and in the interests of the Company and the shareholders as a whole.

The Company has confirmed that the execution had enforcement of the implementation agreements under the continuing connected transactions set above for the year ended 31 December 2020 has followed the pricing principles of such continuing connected transactions.

The auditor of the Company has issued its letter containing its findings and conclusions in respect of the abovementioned continuing connected transactions in accordance with Rule 14A.56 of the Listing Rules, confirming that (i) nothing has come to their attention that causes the auditor to believe that the abovementioned continuing connected transactions have not been approved by the Board, (ii) for transactions involving provision of goods or services by the Group, nothing has come to their attention that causes the auditor to believe that the transactions were not entered into, in all material respects, in accordance with the pricing policies of the Group, (iii) nothing has come to their attention that causes the auditor to believe that the transactions were not entered into, in all material respects, in accordance with the relevant agreement governing such transactions, and (iv) with respect to the aggregate amount of each of the continuing connected transactions, nothing has come to their attention that causes the auditor to believe that the disclosed continuing connected transactions have exceeded the relevant annual cap as set by the Company. A copy of the auditor's letter has been provided by the Company to the Stock Exchange.

For details, please refer to (i) the announcement of the Company dated 3 December 2020, (ii) the circular of the Company dated 16 December 2020 in relation to, among other things, the Subscription Agreement; and (iii) the announcement of the Company dated 15 January 2021.

Save as disclosed above, the related party transactions disclosed in note 38 to the Financial Statements, do not constitute continuing connected transactions or connected transactions of the Company. The Directors confirm that for continuing connected transactions and connected transaction, the Company has complied with disclosure requirements in accordance with Chapter 14A of the Listing Rules.

Save for the above, during the Reporting Period, we have not entered into any connected transaction or continuing connected transaction which should be disclosed in this annual report pursuant to the Listing Rules.

DIRECTORS' PERMITTED INDEMNITY PROVISION

Pursuant to the Articles of Association, every director or other officer of the Company shall be indemnified and secured harmless out of the assets and profits of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them may sustain or incur in connection with their duties or the exercise of their powers. The Company arranged appropriate directors' and officers' liability insurance coverage for the directors and officers of the Group during the year ended 31 December 2020.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF SIGNIFICANCE

Save as disclosed in this annual report, none of the Directors or entities connected with the Directors is or was materially interested, either directly or indirectly, in any transaction, arrangement or contract which is significant in relation to the business of the Group to which the Company, its holding company, or any of its subsidiaries or fellow subsidiaries was a party during the year ended 31 December 2020 and up to the date of this annual report.

CONTRACT OF SIGNIFICANCE WITH CONTROLLING SHAREHOLDERS

Save as disclosed in this annual report, there is no other contract of significance entered into between the Company and our controlling shareholders.

MANAGEMENT CONTRACTS

No contracts other than the employment contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the Reporting Period and up to the date of this annual report.

REMUNERATION POLICY AND DIRECTORS' REMUNERATION

As at 31 December 2020, the Group had 5,132 employees. The Group's remuneration policies are mainly based on the performance of individual employees and the Group as a whole, along with benchmarks with companies in similar industries and companies with similar size in the market. The policy is reviewed regularly based on the Company Strategy. The remuneration of our employees includes salaries and allowances and most employees receive salaries based on the KPIs set by headquarters and branch offices. Due to COVID-19, the KPIs of the Group for the first half of this year focused more on cost control, service quality and demand generation. Moving into the second half of the year, key car rental operation metrics including utilization and growth of revenue, in terms of the improvement of demand generation were in consideration again. Cost control refers to costs controllable by the operation of the branch offices and stores, including fuel cost, store and branch operation related costs and vehicle dispatch cost, etc. Service quality refers to the assessment scores given to a service location based on their level of compliance with the central operation policies, customer satisfaction scores and the number of complaints received. Demand generation refers to car rental revenue generated during a specific period of time. At the Company-level, growth of revenue is the main KPI for the management and support departments, while at the city-level, cost control and services quality are the key KPIs for the operation and frontline departments. With the development of the Company and constant review of the performance assessment system, the Group is adapting the KPIs from time to time to accommodate for the best interests of the employees and the Group. The Group offers competitive remuneration packages to the Directors, and the Directors' fees are subject to shareholders' approval at general meeting. The packages were set by benchmarking with companies in similar industries, companies with similar size in the market, volume and complexity of work. Other emoluments are determined by the Board with reference to the Directors' duties, responsibilities and performance and the results of the Group.

Details of the Directors' remuneration during the Reporting Period are set out in note 9 to the Financial Statements.

RELATIONSHIP WITH EMPLOYEES

We have not experienced any significant disputes with our employees. As of 31 December 2020, none of our employees was represented by any labour union that engages in collective bargaining.

2014 PRE-IPO SHARE OPTION SCHEME I

The Company has adopted the 2014 Pre-IPO Share Option Scheme I by a resolution of its shareholders on 15

June 2014 and amended on 30 July 2014.

On 16 June 2014, pursuant to the 2014 Pre-IPO Share Option Scheme I, options to subscribe for an aggregate of 14,035,595 shares of the Company were conditionally granted to a total of two members of the senior management and 274 other grantees under Tranche A and Tranche B of the 2014 Pre-IPO Share Option Scheme I. On 31 July 2014, options to subscribe for an aggregate of 4,456,688 shares of the Company under Tranche C of the 2014 Pre-IPO Share Option Scheme I were conditionally granted to three members of the senior management and 18 other grantees under the 2014 Pre-IPO Share Option Scheme I. On 3 July 2014, the Company effected a share split, pursuant to which each ordinary share was subdivided into five ordinary shares. In light of the share split, the total number of options granted under the 2014 Pre-IPO Share Option Scheme I were adjusted to 92,461,415. No further option can be granted under the 2014 Pre-IPO Share Option Scheme I.

As at 31 December 2020, a total of 24,962,596 options were outstanding under the 2014 Pre-IPO Share Option Scheme I. Set out below are details of the outstanding options granted to senior management under the 2014 Pre-IPO Option Scheme I:

Relevant Grantee

Number of Shares under the Options

Exercise

GrantedDate of Grant Vesting Period

Option Period

PriceOutstanding as of 1 January 2020

OutstandingExercisedCancelledLapsedas ofduringduringduring 31 Decemberthe yearthe yearthe year 2020

Yifan SONG (҂ɓɭ)

816,730

16 June 2014 100% on the date of grant

10 years from 20 December 2013

US$0.058

730 - - - 730

1,596,510

16 June 2014 25% each on 31 December 2014, 2015, 2016 and 2017

10 years from 20 December 2013

US$0.174

1,197,510 - - - 1,197,510

2,250,000

31 July 2014 25% each on 31 July 2015, 2016, 10 years from 31 JulyUS$0.174

1,691,000 - - - 1,691,000

2017 and 2018

2014

4,663,240

2,889,240 - - - 2,889,240

Relevant Grantee

Number of Shares under the Options

Exercise

GrantedDate of Grant Vesting Period

Option Period

PriceOutstanding as of 1 January 2020

OutstandingExercisedCancelledLapsedas ofduringduringduring 31 Decemberthe yearthe yearthe year

2020

Employees 34,272,260

16 June 2014 100% on the date of grant

10 years from 20 December 2013

US$0.058

6,381,840

(333,480) - - 6,048,360

Employees 33,492,475

16 June 2014 25% each on 31 December 2014, 2015, 2016 and 2017

10 years from 20 December 2013

US$0.174

10,722,496 (1,720,690) - - 9,001,806

Employees 18,533,440

31 July 2014 25% each on 31 July 2015, 2016, 10 years from 31 JulyUS$0.174

7,543,190

(520,000) - - 7,023,190

2017 and 2018

2014

Employees 1,500,000

31 July 2014 1/3 each on 31 July 2015, 2016

10 years from 31 JulyUS$0.174

-

-

-

-

-

and 2017

2014

Total 92,461,415

27,536,766

(2,574,170)

-

- 24,962,596

The weighted average closing price of the Company's shares immediately before the dates on which the options were exercised during the year ended 31 December 2020 is approximately HK$2.88.

In accordance with the terms of the 2014 Pre-IPO Share Option Scheme I, in the event a general offer is made to all the shareholders and such offer becomes or is declared unconditional prior to the expiry of the options, the optionholders are entitled to exercise the options (to the extent not already exercised) in full at any time after the general offer becomes or is declared unconditional and up to the close of such offer. The Offers was declared unconditional on 18 February and closed on 4 March 2021, and as at the date of this annual report, no options were outstanding under the 2014 Pre-IPO Share Option Scheme I.

For further details of the 2014 Pre-IPO Share Option Scheme I, please refer to the section headed "Report of the Directors - Summary of the Share Option Schemes" in this report and note 33 to the Financial Statements.

2014 PRE-IPO SHARE OPTION SCHEME II

The Company has adopted the 2014 Pre-IPO Share Option Scheme II by a resolution of its shareholders on 15

June 2014.

On 16 June 2014, pursuant to the 2014 Pre-IPO Share Option Scheme II, options to subscribe for an aggregate of 1,232,428 shares of the Company were conditionally granted to our former Chief Financial Officer. On 3 July 2014, the Company effected a share split, pursuant to which each ordinary share was subdivided into five ordinary shares. In light of the share split, the total number of options granted under the 2014 Pre-IPO Share Option Scheme II were adjusted to 6,162,140. No further option can be granted under the 2014 Pre-IPO Share Option Scheme II.

As at 31 December 2020, no options were outstanding under the 2014 Pre-IPO Share Option Scheme II.

For further details of the 2014 Pre-IPO Share Option Scheme II, please refer to the section headed "Report of the Directors - Summary of the Share Option Schemes" in this report and note 33 to the Financial Statements.

POST-IPO SHARE OPTION SCHEME

The Company adopted the Post-IPO Share Option Scheme by an ordinary resolution passed by its shareholders at the extraordinary general meeting held on 5 April 2016.

The Post-IPO Share Option Scheme has become effective for the period of 10 years commencing on the effective date. The maximum number of the Company's shares in respect of which options may be granted pursuant to the Post-IPO Share Option Scheme is 239,494,759 shares, being 10% of the total issued shares of the Company on the date of approval of the Post-IPO Share Option Scheme. The details of the Post-IPO Share Option Scheme are set out in the section headed "Report of the Directors - Summary of the Share Option Scheme" in this report and note 33 to the Financial Statements.

As at 31 December 2020, 102,241,408 options were outstanding under the Post-IPO Share Option Scheme and the fair value of the options was HK$211,844,197.38 (i.e., the fair value was HK$2.072 for each option granted).

Closing Price of Shares immediately before the

Relevant Grantee

Number of Shares under the Options

date on OutstandingDate of

Granted

Grant Vesting PeriodOption PeriodExercise Pricewhich the Options were grantedas of 1 January 2020

Exercised during the yearCancelled during the year

LapsedOutstanding as of

during 31 Decemberthe year

2019

Yifan SONG (҂ɓɭ)

• 20,433,308 18 October One third of Options have vested 10 years from 2019 on 18 October 2019, one-third of 18 October 2019 the Options have been vested on

HK$6.360

HK$6.380

20,433,308

-

-

• - 20,433,308

  18 October 2020 and one-third of the Options will be vested on 18 October 2021; and the Options granted will be exercisable until the expiry date of the Option Period.

  20,433,308

  20,433,308

  -

  -

• - 20,433,308

Closing Price of Shares immediately before the

Relevant Grantee

Number of Shares under the Options

date on OutstandingDate of

Granted

Grant Vesting PeriodOption PeriodExercise Pricewhich the Options were grantedas of 1 January 2020

Exercised during the yearCancelled during the year

LapsedOutstanding as of

during 31 Decemberthe year

2019

Employees 99,314,071

18 October One third of Options have vested 10 years from 2019 on 18 October 2019, one-third of 18 October 2019 the Options have been vested on

HK$6.360

HK$6.380 99,314,071

-

• (80,000) (17,425,971)

  81,808,100

  18 October 2020 and one-third of the Options will be vested on 18 October 2021; and the Options granted will be exercisable until the expiry date of the Option Period.

  Total 119,747,379

  119,747,379

  -

• (80,000) (17,425,971) 102,241,408

In accordance with the terms of the Post-IPO Share Option Scheme, in the event a general offer is made to all the shareholders and such offer becomes or is declared unconditional prior to the expiry of the options, the optionholders are entitled to exercise the options (to the extent not already exercised) in full at any time after the general offer becomes or is declared unconditional and up to the close of such offer. The Offers were declared unconditional on 18 February 2021 and closed on 4 March 2021, and as at the date of this annual report, no options were outstanding under the Post-IPO Share Option Scheme.

SUMMARY OF THE SHARE OPTION SCHEMES

2014 Pre-IPO

Details Share Option Scheme I

1.

2014 Pre-IPO Share Option Scheme IIPost-IPO Share Option Scheme

Purpose

To promote the success and enhance the value of the Company by linking the personal interests of the members of the Board, Chief Financial Officer and employees to those of the Company's shareholders, and is intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of the members of the Board, the Chief Financial Officer and the employees upon whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent.

2.

ParticipantsEligible participants include (i) any Director (including executive Director, non-executive Director and independent non-executive Director) of any member of the Group from time to time; and (ii) any employee or officer of any member of the Group.

The only eligible participant is the Chief Financial Officer.

Eligible participants include (i) the full-time employees of the Company; (ii) the full-time employees of any of the subsidiaries; and (iii) any other persons who, in the sole opinion of the Board, have contributed or will contribute to the Company and/or any of its subsidiaries.

Details

2014 Pre-IPO Share Option Scheme I

3.

Total number of As at 31 December 2020, shares available for options to subscribeissue

for an aggregate of 6,049,090 shares were outstanding under Tranche A, options to subscribe for an aggregate of 10,199,316 shares were outstanding under Tranche B and options to subscribe for an aggregate of 8,714,190 shares were outstanding under Tranche C, representing approximately 0.2850%, 0.4805% and 0.4106% of the issued capital of the Company as at 31 December 2020, respectively. In total, options to subscribe for an aggregate of 24,962,596 shares were outstanding under the 2014 Pre-IPO Share Option Scheme I. No further option could be granted under the 2014 Pre-IPO Share Option Scheme I.

2014 Pre-IPO Share Option Scheme II

As at 31 December 2020 and the date of this report, no share options were outstanding. No further option could be granted under the 2014 Pre-IPO Share Option Scheme II.

Post-IPO Share Option Scheme

The maximum number of the Company's shares in respect of which options may be granted and have been granted pursuant to the Post-IPO Share Option Scheme is 239,494,759 shares, representing approximately 11.26% of the number of issued shares of the Company as at the date of this annual report.

As at 31 December 2020, 119,747,379 options were granted to the eligible participants.

Details

4.

Maximum entitlement of each participant

2014 Pre-IPOShare Option Scheme I

Determined by the Board

2014 Pre-IPO Share Option Scheme II

Determined by the Board

Post-IPO Share Option Scheme

Substantial shareholders/ Independent Non-executive Directors: 0.1% of the issued Shares/aggregate value not exceeding HK$5 million.Other participants: 1% of the issued Shares. Details of the maximum entitlement are set out in Rules 17.03(4) and 17.04(1) of the Listing Rules.

5.

Option periodTranche A: 10 years from 20 December 2013

Tranche B: 10 years from 20 December 2013

Tranche C: 10 years from 31 July 2014

10 years from 1 March 2014

6.

Acceptance of offer

Options granted must be accepted within 5 days of the offer date by the grantee. Acceptance is deemed when the grantee duly signs the duplicate letter and the Company receives a remittance in favor of the Company of RMB1.00 as stated in the offer letter by way of consideration for the grant.

10 years from 18 October 2019.

An offer shall be deemed to have been accepted and to have taken effect when the duplicate letter comprising acceptance of the offer is duly signed by the grantee, together with a remittance in favor of the Company of RMB1.00 by way of consideration for the grant.

Details

7.

Exercise price

2014 Pre-IPO Share Option Scheme I

Exercise price for each of Tranche A options, Tranche B options and Tranche C options are US$0.058, US$0.174 and US$0.174 respectively.

2014 Pre-IPO Share Option Scheme II

Exercise price is US$0.174

Post-IPO Share Option Scheme

Exercise price shall not be less than the highest of (i) the nominal value of a share; (ii) the closing price of the shares as stated in the Stock Exchange's daily quotations sheet on the date on which an option is granted, which must be a business day; and (iii) the average closing prices of the shares as stated in the Stock Exchange's daily quotations sheets for the five business days immediately preceding the date on which an option is granted.

8.

Basis of determining the exercise priceThe exercise price was determined based on estimated reward level to grantees.

See above disclosure under "7. Exercise price".

9.

Remaining life of the scheme

The 2014 Pre-IPO Share Option Scheme I shall be valid and effective until terminated on the 10th anniversary of its adoption date, i.e. from 15 June 2014 to 14 June 2024.

The 2014 Pre-IPO Share Option Scheme II shall be valid and effective until terminated on the 10th anniversary of its adoption date, i.e. from 1 March 2014 to 29 February 2024.

The Post-IPO Share Option Scheme shall be valid and effective for the period of 10 years commencing on the effective date, i.e. from 11 April 2016.

MAJOR CUSTOMERS AND SUPPLIERS

During the Reporting Period, the amount of the Group's revenue derived from the Group's five largest customers accounted for approximately 5.6% of the Group's revenue and the revenue derived from the largest customer included therein amounted to 1.5%. Our five largest suppliers accounted for approximately 18.2% of our purchases during the year ended 31 December 2020 and the purchases from the largest supplier included therein amounted to 5.1%.

None of our Directors or any of their close associates or any shareholders (which to the best knowledge of our Directors owned more than 5% of the Company's issued share capital) had a material interest in our five largest customers and vehicle suppliers.

PROPERTY INTERESTS

As at 31 December 2020, the Group had no properties held for development and/or sale or for investment where any of the percentage ratios (as defined under Rule 14.04(9) of the Listing Rules) exceeds 5%.

EQUITY-LINKED AGREEMENT

Save as disclosed in this annual report, there was no equity-linked agreement entered into by the Company during the year ended 31 December 2020.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the year ended 31 December 2020, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

EVENTS AFTER THE REPORTING PERIOD

In January 2021, the Company has completed the issuance of convertible bonds in the aggregate principal amount of US$175 million to Mcqueen SS Ltd.

In February 2021, the Company fully repaid the US$300 million 6% senior notes due in the same month.

On 13 November 2020, the Offeror and the Company jointly announced that the Financial Advisers on behalf of the Offeror firmly intended, subject only to the satisfaction or waiver of the Pre-Conditions, to make voluntary conditional cash offers (i) to acquire all of the outstanding shares in the issued share capital of the Company held by Qualifying Shareholders; and (ii) to cancel all of the outstanding Options.

Upon and after the fulfillment of the Pre-Conditions, a conditional voluntary general cash offer was made by the Financial Advisers on behalf of the Offeror to acquire all of the Offer Shares, and to cancel all of the outstanding Options, as detailed in the Composite Document (as defined below). The offer price for each Offer Share was HK$4.00 and further details relating to the option Offer was set forth in the Composite Document.

On 18 February 2021, the Offers have been announced unconditional in all respects. And on 4 March 2021, the Offeror had received valid acceptances in respect of 1,556,617,734 shares under the Share Offer (representing approximately 73.20% of the issued share capital and voting rights of the Company as at the date of this announcement and 92.44% of the Offer Shares and 92.44% of the Disinterested Shares). As the Offeror received valid acceptances in respect of not less than 90% of the Offer Shares and not less than 90% of the Disinterested Shares, the Offeror will privatise the Company by exercising its rights, pursuant to Section 88 of the Cayman Islands Companies Law and Rule 2.11 of the Takeovers Code, to compulsorily acquire those Offer Shares not already acquired by the Offeror under the Share Offer on the same terms as the Share Offer.

For further details relating to the Offer, please refer to (i) the announcement dated 13 November 2020 jointly issued by the Offeror and the Company in relation to, among other things, the Offer; (ii) the announcement dated 25 January 2021 jointly issued by the Offeror and the Company in relation to the fulfilment of all the Pre-Conditions; (iii) the composite document dated 1 February 2021 jointly issued by the Offeror and the Company in relation to the conditional voluntary general cash offers by the Financial Advisers on behalf of the Offeror to acquire all of the issued Shares of the Company held by Qualifying Shareholders and to cancel all of the outstanding Options of the Company (the "Composite Document"); (iv) the announcement dated 18 February 2021 jointly issued by the Offeror and the Company in relation to, among other things, the Offer having become unconditional; and (v) the announcement dated 4 March 2021 jointly issued by the Offeror and the Company in relation to, among other things, close of the Offers.

Unless otherwise stated, capitalized terms used in this section headed "Events after the Reporting Period" shall have the same meanings as those defined in the Composite Document.

As previously reported that the outbreak of COVID-19 in January 2020 has caused certain impact on the car rental business of the Group due to travel restrictions and suppress on tourism. The Group's business operations have been disrupted by the outbreak of COVID-19 and the subsequent precautionary measures as well as restrictions on travel imposed around China.

The Group estimated that the degree of COVID-19 impact depends on the epidemic preventive measures and the duration of the epidemic. Given the dynamic circumstance and uncertainties of COVID-19 situation, the Group will keep continuous attention on the development of COVID-19 situation and react actively to its impacts on the operation and financial position of the Group, and in the event that there are any significant financial impacts, the Company will reflect it in the Group's 2021 financial statements.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company has applied the principles and code provisions as set out in the CG Code contained in Appendix 14 to the Listing Rules. During the year ended 31 December 2020, the Company has complied with the code provisions in the CG Code, save and except for code provisions A.1.1, A.2.7 and E.1.2, details of which are set out in the Corporate Governance Report.

AUDITORS

The consolidated financial statements of the Group for the year ended 31 December 2020 have been audited by Ernst & Young, certified public accountants.

Ernst & Young shall retire and being eligible, and will offer itself for re-appointment, and a resolution to this effect shall be proposed at the 2021 AGM. There has no change in auditors of the Company in any of the preceding three years

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 13 May 2021 to 18 May 2021 (both days inclusive), during which period no transfer of shares will be registered. In order to qualify for attending and voting at the 2021 AGM, unregistered holders of shares of the Company shall lodge share transfer documents with the Company's branch share registrar in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration before 4:30 p.m. (Hong Kong time) on 12 May 2021.

By order of the Board

Yifan Song Executive Director

Hong Kong, 15 March 2021

EXPLANATION OF THE REPORT

The Company believes that a healthy environmental, social and governance ("ESG") performance is decisive for sustainable development in the future, achieving our long-term goals and creating values for our shareholders in the long run. While enhancing our steady and strong financial performance, the Company pays close attention to the fulfilment of corporate social responsibility and sustainable development.

Report release cycle and scope

According to the materiality principle, this report covers the ESG subject areas in relation to lease-related business as the Company's main source of operating income during the period from 1 January to 31 December 2020 (the "Reporting Period" or "FY2020") (the "ESG Report"). The Company manages to select the Company's relevant important ESG policies and include them in the ESG Report through communications with stakeholders, important identification and assessment.

Basis for compilation of the Report

This ESG Report was prepared in accordance with the Environmental, Social and Governance Reporting Guide set forth in Appendix 27 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.

ESG reporting principles

Materiality: This ESG Report discloses ESG issues considered by the Board and ESG working group in compliance with the materiality principle of the Stock Exchange. For the details of communication with stakeholders, identification and results of material issues, please refer to the corresponding sections below.

Quantitative: Statistical standards, methods, assumptions and/or calculation tools for qualitative key performance indicators herein and source of conversion factors are all explained in the definitions of the Report.

Balance: This ESG Report shall provide an unbiased picture of the ESG performance of our Group during the Reporting Period. It should avoid selections, omissions, or presentation formats that may inappropriately influence the decision or judgement by the Report readers.

Consistency: The statistical methodologies applied to the data disclosed in this ESG Report shall be consistent.

ESG governance

The Board of Directors takes responsibility for the strategies and reports on environmental, society and governance of the Company. In particular, we have set up a special environmental, social and governance group to be responsible for coordinating with departments of the Company involving in the relevant subject, in order to prepare this ESG Report in accordance with the Environmental, Social and Governance Reporting Guide of The Stock Exchange of Hong Kong Limited.

COMMUNICATION WITH STAKEHOLDERS

The Company has established diversified communication channels with stakeholders to reduce potential social risks, protect the rights and interests of various stakeholders and effectively implement ESG management.

Stakeholders Shareholders/investors

Government/regulatory authorities

UsersEmployeesSuppliers/partnersEnvironmentCommunities/public

Expectations and concerns

Protecting shareholders' rights and interests

Investment return Information disclosure Operation and management in compliance with laws and regulations

Legal and compliance supervision Fulfillment of tax obligations Business and economic development Social contribution

Operation safety

Personal data privacy protection Product safety

Quality service experience

Protecting employee's rights and interests

Occupational health and safety Improving employee's welfare Equal opportunity in employment and diversified development

Long-term business relationship Fair and reasonable price Product quality assurance

Enhancing environmental and ecological protection

Energy and resource conservation Spread the concept of low carbon travel

Community engagement Social fusion

Public welfare events

Communication method(s)

General meeting of shareholders Press releases and announcements Financial reports of the Company

The Stock Exchange/Company website Investor conferences and roadshowsCompliance reports On-site inspections

Attending conference/seminars Special enquiries/inspections Reporting documents

Company website Multi-channel customer serviceContracts Employees meetings Daily communicationField visits

Daily communication Regular meetingsEnvironmental inspection Environmental information disclosureVolunteer activities Charitable activities

ASSESSMENT OF MAJOR ISSUES

The following table sets out the ESG issues that were important to the Company during the Reporting Period based on the assessment conducted by ESG Working Group.

Major issues on ESG of the Company

A. Environment

Greenhouse gas management and waste management Green operation and low-carbon transportation Advocating green travel

B. Society

Combat COVID-19 pandemic

Equal employment and employee rights and interests Occupational health and safety & care for employees Employee training and development

Put an end to child labour and forced labour

Safe procurement source and fair and public procurement Safety experience, quality service and customer data privacy protection

Combat corruption and uphold integrity Charity and volunteer activities

Topics of ESG Guideline

A1 Emissions

A2 Use of resources

A3 Environment and natural resourcesB1 Employment

B2 Health and safety

B3 Development and training B4 Labour standards

B5 Supply chain management B6 Product responsibility

B7 Anti-corruption

B8 Community investment

SPECIAL SUBJECT: FIGHT AGAINST COVID-19 AND SAFEGUARD HEALTH

Ensure the Prevention and Control of the Epidemic

In the beginning of 2020, the sudden outbreak of COVID-19 made a significant impact on lifestyle in the PRC and economic activities in various regions were suspended. CAR Inc. quickly responded, flexibly deployed, activated various emergency mechanisms, adjusted work arrangements, and took practical actions to protect the lives and health of employees and customers.

On 23 January 2020, CAR Inc. immediately set up a special emergency management office to help frontline employees respond to emergencies during the epidemic. Facing the lockdown of Wuhan City where all exits from Wuhan were closed, the Company contacted, by telephone, all customers that were affected by this pandemic prevention measure and informed them that they could return cars when the pandemic eased and gave them fee reduction incurred during that period. During the lockdown, the Company also proactively coordinated and solved our employees' difficulties to purchase daily necessities, which put our cares to their actual needs.

Subsequently, the Company issued the Implementation Plan for the Prevention and Control of COVID-19 Epidemic on 17 February 2020, to protect employees' health and lives after operation resumption and give them guidelines on the normal operation of our business activities during the special period. Despite a shortage in anti-epidemic resources during the beginning period, the Company managed to equip frontline employees with pandemic prevention supplies, such as masks, thermometers and disinfectant powder. Meanwhile, vehicle disinfection was added to normal preparation process and a guideline video about vehicle disinfection was produced and distributed for employee trainings. Every vehicle will have all-round disinfection after return and pick-up, which effectively enhances travel safety for customers.

After the epidemic eased, the Company conscientiously implemented the prevention regulations imposed by local governments where we operate to safeguard employees' health and safety during the pandemic period. The Company performed daily disinfection to office premises, temperature check and distribution of face masks, and proactively cooperate with local epidemic prevention work. The Company investigated and reported to personnel in medium and high-risk areas, appropriately arranged working hours, carried out home office work, and reduced personnel gathering.

Case 1: Non-stop Call Centre Operation During Pandemic Period

The outbreak of COVID-19 pandemic occurred in early 2020. Two of our top three operating cities of CAR. Inc. Call Centre, which are Wuhan and Harbin, were significantly affected and locked down, resulting in suspension of operation of the call centres. The call centres immediately responded and launched the emergency mechanism. We deployed our manpower from different areas and conducted the home-office working system, and launched remote working trial program within 24 hours, and completed the installation guidelines and inquiries for remote working within two days, which guaranteed the operational continuity of the call centres.

Meanwhile, along with the launch of home office, the accuracy and timeliness of business communication and consultancy have become important to customer service. To cope with the situation, the call centres have conducted comprehensive optimization of our database system for the purposes of "accessibility" and "intelligence" since March 2020. For the contents of database system, we coordinated all business contents and rebuilt the knowledge framework; for database system, we optimized the entry of knowledge base to floating window mode, which can freely adjust the position to make inquiries easily and functions such as smart keywords, collection pool, new business pinning and footprint recording will be added. This will greatly improve the timeliness of receiving business and accessibility of operation. During the pandemic, the new version of our database has become our important platform tool of home office, business learning and information transfer.

Devotion to Anti-epidemic Public Welfare

Case 2: Provision of vehicles for medical rescue team for Wuhan and media

The outbreak of COVID-19 pandemic in Wuhan before the Spring Festival in 2020 has changed the public sentiment across the country. Facing the severe pandemic, all parts of the country gave supports and helps. Medical rescue teams across the country arrived and gave helps to Wuhan. Meanwhile, multiple news media have also sent teams to Wuhan for news report of the pandemic campaigns.

Since 10:00 on 23 January 2020, the operation of public transport, mass transit, ferry and long-haul carriers in Wuhan had been suspended and made a difficulty in transportation. CAR Inc. has not forgotten its original aspirations and proactively fulfilled its social responsibilities. On 25 January, the Company firstly published an announcement to provide guarantee of cars to medical institutions and media participating in rescue activities across the country.

CAR Inc. has come forward in the critical moment of the fighting against the pandemic and helped to effectively solve the difficulties of travel inconvenience during the pandemic, accumulating a total of 133 car orders, of which 69 orders were requests from media and 64 from non-media. We provided cars to more than 30 media, such as Xinhua News Agency, Caixin Media and The Beijing News, and to more than 20 governmental institutions and medical rescue teams, such as China Centre for Disease Control and Prevention and National Health Commission of the People's Republic of China.

Figure 1: Zhu Bin, a rescue "angel" called for emergency helps from CAR Inc. as he found difficulty to return the frontline, then he showed gratitude to CAR Inc. in the interview with Hubei TV channelFigure 2: Wuhan rescue team from Ningxia successfully arrived Hubei with the help of CAR Inc. and praised CAR Inc. as a responsible corporate during the severe pandemic

Figure 3: Huashan Hospital and Wuhan Central Hospital which secured assistance from CAR Inc.

presented their commemorative certificate and thank you letter

1. TECHNOLOGY MAKES TRAVEL EASIER

1.1 Intelligent travel

The Company remains the mission to provide best-in-class smart and convenient mobility solutions to customers, providing a "better experience" and "more choices" to our customers. During the Reporting Period, the Company continued to optimise the physical network and expand the coverage of self-served services at multiple service locations and launch new rental car system, and to conduct upgrade of car rental APP, and continued to optimize customer experience by leveraging intelligent technology, so that customers can enjoy car rental services more conveniently.

• • Convenient car rental services

  During the Reporting Period, the Company has conducted an upgrade to the car rental system and continued to optimize the car rental location setting and expanded the coverage of self-served services at multiple service locations, so as to provide a more-convenient car rental services to customers. As of 31 December 2020, the Company's physical locations expanded to 2,560 directly-operated service locations in 172 cities, including 439 stores and 2,121 self-served locations. Cities where we conducted our self-served services business have covered all major tier 1 and tier 2 cities, certain tier 3 and tier 4 cities with higher economic development growths, and key tourist destinations.

Distribution of Business

Heilongjiang

InnerMongolia

Jilin

Figure 4: Distribution of Business in Car Inc.

• • Application of Intelligent Technology

  •  On 4 March 2020, the new car rental system has been officially launched. New system supports the separation of bookers, guarantors and lessees and additional functions like ordering assistance, disbursements, self-served ordering modification, real-life map mode with physical stores and self-reported car change, and optimize the car picking process by leveraging big data analysis and artificial intelligence technology and enhance the accessibility of our platform comprehensively.

  •  On 22 April 2020, the car rental APP was updated with additional functions of reminders of expiring vouchers, network enquiry, hotspot landmark notification and reminder of non-reservable range. We also optimized the purchase function of the exclusive service. In addition, reminder function and restriction mechanism for customers in arrears when picking cars were also added into the new version, in order to guarantee car safety.

  •  On 27 October 2020, car rental APP, car rental back-office and operating assistances have conducted system upgrade simultaneously. The upgraded system not only operates more stably, but also increase system entries to improve the customer experiences, such as new user vouchers, following our public accounts, car rental guidelines for new drivers, assured-quality rental for big brands and hitchhiker rental. Moreover, a new travel protection product has been launched to expand customers' protection range and increase their protection amounts.

1.2 Quality Experience

The Company upholds our service philosophy of "Any One, Any Time, Any Car, Any Where". During the Reporting Period, the Company is committed to strengthen our service quality and continue to optimize customers' service experience in different dimensions of enhancing car rental service quality, protecting customer personal and privacy safety, reasonable promotion of products and services, as well as strengthening communications with customers.

• • Enhancing car rental service quality

  •  Launching on-site product pick-up: To respond the customer needs of pick-up at different places, on 17 June 2020, the Company has launched on-site pick-up and cooperated with third parties to establish vehicle delivery project in certain domestic cities. On one hand, on-site pick-up service can immediately satisfy the demands in peak hours, and on the other hand, store staff can also obtain more time for vehicle preparation, achieving the increase in pick-up efficiency and guarantee of vehicle hygiene. As of December 2020, the number of cities providing on-site service across the country was 155 while the number of pilot cities with cooperation spots with third parties was 20.

  •  Improvement in operating vehicles: Since March 2020, the Company has launched special campaigns, such as interior decoration change, vehicle cleaning and vehicle repair. During the campaign, the Company has focused on the changes of seat leather and mats of certain operating vehicles, and provided trainings of intensive cleaning to store staff, randomly checked the tyre condition of operating vehicle and urged the branches to change the damaged tyres immediately. As of July 2020, it is accumulated that more than 18,000 operating vehicles had seat leather change and more than 14,000 operating vehicles had mats changed. This campaign has optimized vehicle conditions and reduced the occurrence of malfunctioning, and effectively increased customers' rental experience.

  •  Phone holder available in vehicles: On September 2020, the Company has purchased phone holders and allocated them to every branch. They were placed to all operating vehicles as an accessory. Customers no longer need to bring their own holders when renting a car, which meets the needs of customers using mobile navigation.

•  Downgrade of Sesame Credit deposit-free amount: During the update of a new version of the car rental APP on 22 April 2020, Sesame Credit required for pre-authorization exemption of the credit card in relation to car rental or regulation breach was adjusted. The Sesame Credit required was downgraded from 700-750 to 650-700, which lowered the threshold of deposit-free amount and allow a greater coverage of deposit-free service to more customer groups.

•  Free exchange of restricted vehicles: Since 6 June 2020, road space rationing to small and micro passenger cars was implemented in Tianjin. For this policy, the Company has added a free exchange service for affected customers in Tianjin area, in order to guarantee their smooth car experience.

•  Model label recommendation: On 27 October 2020, CAR Inc. APP has added model labels, allowing customers to receive vehicle information through APP. With the car reservation function and self-served pick-up service in APP, full remote car rental without psychical contacts can be achieved, which maximized the customers' accessibility.

• • Comprehensive safety protection

  •  Protect customer personal safety

    Addition of travel protection products: On 27 October 2020, the Company has launched 3 travel protection service products, namely Million Exclusive Service (యԮϵ ຬ؂ਕ), Driving Exclusive Guardian (యԮቷ࠱ςᚐ) and Hassle-free Service (Ό೻ೌᅊ), which form a all-round protection of vehicles, passengers and third-party together with the original exclusive services, to eliminate the concerns of customers from the risk of car accidents and reduce their loss arising from accidents.

    Establishment of rescue teams: In September 2020, the customer service department established rescue teams, which are responsible for the emergency rescue services for unmovable vehicles under the circumstances of difficulty, remoteness and high-speed and other dangerous situations. As of the end of Reporting Period, the emergency rescue teams have handled a total of 12,776 cases.

•  Protect customer privacy safety

  Management of information safety: The Company has formulated the Rule for the Management of Data Security in the Customer Service of the Company in accordance with the Regulations on Security Protection of Computer Information Systems of the People's Republic of China ( ʕശɛ͏΍ձ਷ࠇၑዚڦࢹӻ୕τΌڭᚐૢԷ'), the Administrative Measures for International Networking of Public Computer Internet ( ʮ͜ཥ໘ʝᑌၣ਷ყᑌၣ၍ଣ፬ج'), the Interim Provisions on the Management for International Networking of Computer Information Network( ࠇၑዚڦࢹၣ༩਷ყᑌၣ၍ ଣᅲБ஝֛', the Decisions on maintaining Internet Security of NPC( Ό਷ɛɽ੬։ึᗫ ׵ၪᚐʝᑌၣτΌٙӔ֛') and Rule 185 and 286 of the new Criminal Law( Αج'), which defines the relevant confidentiality scope such as customer information, the Company's software system, staff training, technical documents and commercial activities, and clarifies the confidentiality duties of each level of staff and regulates/forbids relevant acts of leakage of potential confidential information; formulates a series of layered penalty and accountability mechanism such as economic penalties, personnel penalties and legal recourse based on the severity of disclosure behaviour and the outcome; and attached "Data Confidential Agreement of Car Inc.'s Customer Centre"( ग़ψॡԓ܄؂ʕːڦࢹڭ ੗՘֛') to require all staff in the Call Centre of the Company to acknowledge and sign the Confirmation to the Staff Regulations on Information Security Management of Call Centre of the Company"( ग़ψॡԓխ̣ʕːڦࢹτΌ၍ଣ஝֛ࡰʈᆽႩࣣ').

  Multiple steps of password authentication: In the process of customer service of the Company, the Company has designed a logical and rigorous authentication process including password authentication and password reset to protect customers' information and privacy. Customer service representatives can only inform the customer in the call of the private information regarding his/her own account if the customer passes the authentication process. In terms of business regulations, for customers who call for modifying important member information, an authentication process for taking photos with hand-held identity documents will be added to ensure that the modified information is at the request of customers, which ensures the safety of customer funds and information.

  Optimization of service procedures: In March 2020, the Company has optimized the order modification procedure, which cancels the function of order modification by back office staff and solely supports the self-served order modification through APP. This not only enhanced self-control on the need modification of customers and strengthened their experience, but also reduced the contact of privacy information by back office staff, which protect the privacy interests of customers.

• • Reasonable advertising promotion

  During the Reporting Period, the Company strictly complied with the relevant laws and regulations of advertising promotion under the Laws of Advertisement of the People's Republic of China ( ʕശɛ͏΍ձ਷ᄿѓج'), the Anti-Unfair Competition Law ( ˀʔ͍຅ᘩنج') and the Law on the Protection of Consumer Rights and Interests( ऊ൬٫ᛆूڭᚐج'), to promote products and services legally and reasonably. The Company has established an internal review process for advertising content: In terms of selecting advertising materials, we select positive, encouraging, healthy, and true materials; before advertising publicly, we review the legality and reasonableness of advertising contents from multiple dimensions, such as business, technology and law. For promotion involving specific information, we request the department to verify the information. For promotion involving interests of third party, we request relevant department to obtain the prior authorization of interest holders and utilize the relevant advertising elements by strictly complying with the laws and regulations and authorization range, to demonstrate the elements such as contents, functions and prices of the Company's products and services in true and accurate manner, so as to eradicate deceptive advertisement. During the Reporting Period, the Company did not experience litigations and related compensation led by the breach of laws and regulations regarding advertisement and promotion.

• • Enhancement of customer communication

  •  7x24 service in multiple channels: In order to provide 7x24 service in 365 days to customers, the Company has established three customer service centres in Tianjin, Wuhan and Harbin, respectively. They operate in respective places and supplement each other, which reduces the impacts of force majeures to the operation of customer service centres. The size of customer service centre increases along with the continuous growth of the Company's development. Under reasonable manpower planning, the scale has continued to grow, and it has currently become the largest customer service centre in the industry. Meanwhile, the Company has set up multiple customer service channels, such as online customer service in the official website, WeChat customer service and official Weibo to improve the accessibility of customer service in all aspects. Customer service satisfaction in 2020 reached 98.23%.

•  Customer complaint handling process: The Company has set up a comprehensive mechanism to handle customers' feedbacks and complaints; Customer service centres collect feedbacks and complaints through all channels such as satisfaction rating in our official website, official Weibo, WeChat, online customer service in the official website and telephone customer service, and the complaints will be handled, accounted and remedied by different responsible departments. We implemented the accountability mechanism that customers' issues are reported to the customer service centre, a complaint officer will keep following up until completely resolved. This can guarantee that complaints are handled immediately, and the remedial measures can be followed up simultaneously. In addition, customer service centres will monthly and quarterly analyse information of the current month and quarter, and results will be used to improve the business system, business procedures and service quality in stores of the Company and reduce the customers' dissatisfaction.

•  Intelligent customer service robots: In early 2020, the Company has integrated the technology of intelligent robot into Wechat and the APP of car rental, to handle customers' issues in a more convenient manner.

Case 3: Establish handling teams for "high risk" and "emergency"

In the second half of 2020, the customer service department of the Company has established high-risk emergency handling team, high-risk major handling team and special protection team. The high-risk emergency handling team is responsible for the classification of emergency, major and special cases. The high-risk major handling team is responsible for the classification of high-risk and major cases in respects of customer personal safety, asset safety and illegal acts. The special protection team is responsible for handling sophisticated cases regarding primary illegal acts, accidents, malfunctioning and enquires of car rents. As of December 2020, the high-risk emergency and major handling team has handled 3,095 high-risk cases and retained approximately RMB170,000 of economic losses of customers and company assets. The special protection team has solved 10,093 cases in respect of customer rental issues and received 19 compliments from customers. The establishment of the three special protection service teams has resolved the pressure of frontline staff and guaranteed the steady operation of our hotlines, so as to enhance the handling efficiency of our customer service, which in turn enables customers to secure better service experience.

2. SHARING MAKES LIFE BETTER

2.1 Low-carbon transport

As a corporate in car rental industry, the Company has been promoting the concept of low-carbon transport and green travel to the public by its own operation, encouraging the public to use vehicles with low emissions, reduce vehicle ownership and production, using and carbon emission generated from construction of carparks, while improving urban lifestyle and ecological environment. Meanwhile, we gradually shifted to electric servicing, reduced the use of paper and carbon footprint in our operation process, to achieve the concept of sustainable development.

• • Promotion of green travel

  The Company prioritizes the purchase of environmental-friendly vehicle model from procurement. In 2020, we purchased new cars of new-energy model from Beijing Hyundai as rental vehicles, and we proactively promote the use of clean energy. Meanwhile, the Company fully considers the factors of environment and safety in our operation process by regularly eliminating the vehicles that reach certain years of life or kilometres in order to strictly control the periodic scrapping time of vehicles. We are responsible not only for customers' safety, but also guarantee that exhaust emission complies with the relevant standards of environmental protection.

• • Electronic service

  Since March 2019, the Company has launched a new unmanned self-served mode across the country. Customers can complete the car rental service by phone without the use of paper-based document for confirmation for vehicle examination, rental and settlement in psychical stores. As at the end of the Reporting Period, business city with unmanned self-served mode has accounted for 98.8%, which is widely acclaimed. The model not only shortens the time for users to pick up the car and enhance customers' rental experience, while significantly lowering paper consumption in the operation process.

2.2 Emission Management

In continuous compliance with the laws such as the Environmental Protection Law of the People's Republic of China( ʕശɛ͏΍ձ਷ᐑྤڭᚐج'), the Atmospheric Pollution Prevention and Control Law of the People's Republic of China ( ʕശɛ͏΍ձ਷ɽंϮݑԣطج'), the Water Law of the People's Republic of China ( ʕശɛ͏΍ձ਷˥ج'), the Water Pollution Prevention and Control Law of the People's Republic of China( ʕശɛ͏΍ձ਷˥Ϯݑԣطج'), the Environmental Impact Assessment Law of the People's Republic of China( ʕശɛ͏΍ձ਷ᐑྤᅂᚤ൙ᄆج') and the Law on the Prevention and Control of Environmental Pollution by Solid Wastes of the People's Republic of China ( ʕശɛ͏΍ձ਷ո᜗ᄻيϮݑᐑྤԣطج'), and the administrative regulations such as the Regulations on Urban Drainage and Sewage Treatment ( ۬ᕄર˥ၾϮ˥ஈଣૢԷ') and the Administrative Regulations on Environmental Protection for Construction Projects ( ܔணਖ਼ࣩᐑ ྤڭᚐ၍ଣૢԷ') as well as other rules and regulatory requirements, the Company formulated and implemented a series of measures to save energy and reduce emission. During the Reporting Period, the Company had not been subject to any litigation and related penalties arising from any environmental non-compliance of the relevant environmental laws and regulations.

In the course of our operations, the major emissions include greenhouse gas, waste gas, waste water and wastes, of which the greenhouse gas is mainly generated from the emission of three major types of greenhouse gas, i.e. carbon dioxide (CO2), methane (CH4) and nitric oxide (N2O), arising from the burning of petrol by official cars and rental vehicles and burning of diesel by freight vehicles, combustion of liquefied petroleum gas utilized in canteens; and the emission of CO2 greenhouse gas due to usage of electricity purchased from the external parties. Industrial wastewater is mainly produced in the repairing and cleaning of our own vehicles, while domestic wastewater is mainly produced in daily office work and car rental outlet operations. Waste gas and particulate matters mainly include organic waste gas and overspray painting mist generated in the maintenance and preparing of vehicles at our own vehicle repair shops, while emission of organic waste gas and fog of overspray paint are carried out in accordance with requirements of the place of operation and relevant state regulations. Wastes mainly include waste oil, waste tires and lead car battery scraps etc., which have achieved 100% recycling, and qualified processors are selected to recycle and dispose of the wastes properly. Besides, there are domestic wastes generated by office operations, which are all passed to third parties for proper emission and treatment.

• • Emission management policies

  •  Greenhouse gas management: On the basis of basic compliance, various effective measures have been taken to reduce exhaust gas and greenhouse gas emissions with reference to the Vienna Convention for the Protection of the Ozone Layer, the Montreal Protocol, and the Framework Convention on Climate Change. In scope 1 - greenhouse gas direct emissions, the Company reduced direct greenhouse gas emissions by increasing the proportion of low-emission vehicles and new energy vehicles in the procurement of operating vehicles, increasing self-served check-in points to improve the utilization of vehicles and other means. In scope 2 - greenhouse gas indirect emissions, measures such as saving electricity were adopted to reduce emissions. In scope 3 - other indirect emissions, the Company advocated the use of video or teleconference and other methods among the staff in our work-related communications to minimize greenhouse gas emissions from business travels.

  •  Waste gas management: During the construction and operation of repair shops, the Company configured facilities and equipment for maintenance and exhaust gas treatment in accordance with the Conditions for the Opening of the Automobile Maintenance Industry ( ӛԓၪࡌุකุૢ΁'), the Administrative Regulations for Motor Vehicle Maintenance( ዚਗԓၪࡌ၍ଣ஝֛') and other regulations, to ensure that exhaust gas is purified via collection facilities and processing facilities and discharged within specified limits.

  •  Waste water management: During the construction and operation of repair shops, sewage management measures are formulated in accordance with the Water Law of the People's Republic of China ( ʕശɛ͏΍ձ਷˥ج'), the Water Pollution Prevention and Control Law of the People's Republic of China ( ʕശɛ͏΍ձ਷˥Ϯݑԣطج'), the Environmental Impact Assessment Law of the People's Republic of China ( ʕശɛ ͏΍ձ਷ᐑྤᅂᚤ൙ᄆج') and the administrative regulations such as the Regulations on Urban Drainage and Sewage Treatment ( ۬ᕄર˥ၾϮ˥ஈଣૢԷ'), estimate the sewage emission and equip with sewage treatment facilities with corresponding capacity according to operation needs. Sewage generated is treated in a centralized manner and discharged in accordance with the national and local standards. We arrange professionals to regularly repair the sewage treatment facilities, regularly review the sewage discharge and conduct relevant trainings. In addition, the Company promotes the concept of water saving and water reuse. We deploy the daily water waste generated from the office areas to the municipal pipeline network by strictly complying with national requirements.

•  Solid waste management: The Company has formulated treatment specifications for different types of wastes in accordance with the Law on the Prevention and Control of Environmental Pollution by Solid Wastes of the People's Republic of China ( ʕശɛ͏ ΍ձ਷ո᜗ᄻيϮݑᐑྤԣطج') and the Administrative Regulations on Environmental Protection for Construction Projects( ܔணਖ਼ࣩᐑྤڭᚐ၍ଣૢԷ') and other regulations as well as the National Hazardous Waste List (਷࢕ΚᎈᄻيΤ፽), for example, the Company requires every repair shop guarantees that orders are duly completed when repairing batteries and tyres, and keep the corresponding records and regularly recycled.

•  Hazardous waste management: All hazardous waste in every repair shop should be stored separately and posted with specific labels. When disposing hazardous waste, every repair shop should enter into Hazardous Waste Transfer Contract ( Κᎈᄻ૝يᔷ ୅ΥΝ') with environmental treatment companies designated by the local environmental departments and transfer the hazardous waste to those environmental treatment companies, or seek for those companies by themselves to dispose the wastes and regularly report to the environmental department.

•  Harmless waste management: The Company has centralized the recycle of harmless waste and reuse; for the wastes which are unable to be reused temporarily or at all, they are stored according to the requirements stipulated by the relevant PRC authorities. For the example of daily waste generated in office and production areas, the Company set up garbage bins for classification and guide staff to recycle the wastes according to the classifications of recyclable waste, food waste, hazardous waste and other waste, and dispose them into areas designated by the governmental authorities by independent parties.

• • Measures on emission reduction

  •  Comprehensive vehicle allocation management: In 2020, the Company has further optimized the management of vehicle allocation and developed the internal system of vehicle allocation carrier, which allows matching different carrier modes according to urgency level of allocation demands. When the allocation demand is not urgent, customers can choose to take rides on the way or joint carrier, which saves transportation costs and reduces emissions.

  •  Promote on-site maintenance: In 2020, the headquarter has increased the proportion of on-site maintenance service of every repair shops. Compared with traditional in-plant maintenance, on-site maintenance not only increases staff utilization, but also decreases the fuel and electricity consumptions generated during vehicle pick-up and in-plant maintenance, achieving the purpose of energy saving. At of the end of the Reporting Period, the proportion of on-site maintenance has increased from less than 40% in 2019 to 50%.

  •  Clear maintenance standard: A clear maintenance standard is formulated to different vehicle components, such as changing tyres when reaching designated wear point, changing engine oil and filter after reaching certain mileage, and changing brake pads after reaching certain thickness. This can effectively increase the efficiency of components and prevent from emission led by frequent maintenance.

  •  Replace the heat source for painting work: Certain repair shops used diesel heating for painting work. In 2020, it was centralized to replace with reusable energy (such as electricity) for heating, reducing emissions by the decrease in the use of fossil energy.

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